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CFP: Certified Financial Planner

Subjects : certifications, cfp, business-skills

Instructions:

Answer 46 questions in 15 minutes.
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Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.

1. PEG ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Dollars of coupon interest per year/Bond's current market price
Earnings After Taxes
Price Earnings Growth ratio; P/E divided by projected earnings growth

2. Net Investment Income
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Net Income/Equity

3. Opportunities in Financial Planning
1 - the payout ratio
P*(1+g)/(k-g) P=div per share divided by other div
RIVETC - Rising median age - Increased impact of dual-income families - Volatility of financial conditions - Evolving tax environment - Technological change - Concern over fraud and firm failure
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

4. Present value of a Bond
(Mortgage+Debt Repayment)/Net Income
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
(cash + marketable securities) / current liabilities
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

5. The retention ratio
1 - the payout ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(1/T)(r1+r2+...+rT)
Dollars of coupon interest per year/Bond's current market price

6. Asset Turnover Ratio
EBIT/I (Where I = Interest Expense)
Price Earnings Growth ratio; P/E divided by projected earnings growth
current assets - current liabilities
Sales / Average Total Assets

7. Current Yield of a bond
Dollars of coupon interest per year/Bond's current market price
Earnings Before Interest & Taxes
assets less liabilities - divided by the number of shares of common stock of a company
Tax Credit/marginal tax rate

8. CFP Ethical principles
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(Mortgage+Debt Repayment)/Net Income
EAT / Sales

9. Book Value (of company stock)
Sources of Funds-Use of Funds or Money in- Money out
EAT / Sales
assets less liabilities - divided by the number of shares of common stock of a company
1 - the payout ratio

10. 'normal' ratio
Dollars of coupon interest per year/Bond's current market price
taxable interest - non-qual. divs - short-term cap. gains
P*(1+g)/(k-g) P=div per share divided by other div
Total Assets / Equity

11. Domains of a CFP
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
(current assets - inventory) / current liabilities
current assets / current liabilities
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

12. Quick Ratio (aka Acid test)
assets less liabilities - divided by the number of shares of common stock of a company
Earnings Before Interest & Taxes
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(current assets - inventory) / current liabilities

13. Types of Understanding Responses Associated With Active Listening
g = ROE X b - where b is equal to the retention ratio
Sales / Average Total Assets
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Net Worth/Total Assets

14. Equivalent Tax Credit
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Earnings Before Interest & Taxes
Tax Deduction * marginal tax rate
dividends / earnings

15. Working Capital
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
early career (age 25 or younger to age 35) - career development (age 35 to age 50) - peak accumulation (age 50 to ages 58-62) - preretirement (3 to 6 years prior to planned retirement) - retirement (ages 62-66 and older)
current assets - current liabilities
Sales / Average Total Assets

16. financial life cycle
dividends / earnings
assets less liabilities - divided by the number of shares of common stock of a company
early career (age 25 or younger to age 35) - career development (age 35 to age 50) - peak accumulation (age 50 to ages 58-62) - preretirement (3 to 6 years prior to planned retirement) - retirement (ages 62-66 and older)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

17. Debt to Equity ratio
assets less liabilities - divided by the number of shares of common stock of a company
current assets / current liabilities
(current assets - inventory) / current liabilities
Total Long-term Debt / Equity

18. Times Interest Earned
EBIT/I (Where I = Interest Expense)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Explanatory - Interpretive - Reassuring - Suggestive
Price Earnings Growth ratio; P/E divided by projected earnings growth

19. Equivalent Tax Deduction
Tax Credit/marginal tax rate
Price/Earnings per share
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Explanatory - Interpretive - Reassuring - Suggestive

20. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
g = ROE X b - where b is equal to the retention ratio

21. Solvency Ratio
RIVETC - Rising median age - Increased impact of dual-income families - Volatility of financial conditions - Evolving tax environment - Technological change - Concern over fraud and firm failure
Net Worth/Total Assets
Price Earnings Growth ratio; P/E divided by projected earnings growth
driving - expressive - amiable - analytical

22. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
Price/Earnings per share
[(1+ NR) / (1 + CCL)] - 1
Total Return (1 - tax bracket)
Total Long-term Debt / Equity

23. Net After Tax Profit Margin
[(1+ NR) / (1 + CCL)] - 1
Earnings After Taxes
Total Liabilities / Equity
EAT / Sales

24. Attributes of Effective Advisor communiations
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
current assets - current liabilities
Tax Free Yield/(1 - Tax Bracket)
current assets / current liabilities

25. After-tax Yield
Tax Free Yield/(1 - Tax Bracket)
taxable interest - non-qual. divs - short-term cap. gains
(Mortgage+Debt Repayment)/Net Income
g = ROE X b - where b is equal to the retention ratio

26. ROE (Return On Equity)
Total Return (1 - tax bracket)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Net Income/Equity
Total Long-term Debt / Equity

27. After-tax Return
EBIT/I (Where I = Interest Expense)
(P1 + D - P0)/P0
Total Return (1 - tax bracket)
current assets - current liabilities

28. Sustainable Growth Rate
1 - the payout ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
g = ROE X b - where b is equal to the retention ratio

29. Total Debt to Equity ratio
P*(1+g)/(k-g) P=div per share divided by other div
Sales / Average Total Assets
Total Liabilities / Equity
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

30. financial planning pyramid
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Tax Free Yield/(1 - Tax Bracket)
RIVETC - Rising median age - Increased impact of dual-income families - Volatility of financial conditions - Evolving tax environment - Technological change - Concern over fraud and firm failure

31. Savings Ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Total Return (1 - tax bracket)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

32. Social Styles
driving - expressive - amiable - analytical
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Total Long-term Debt / Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

33. Gross Investment income
[(1+ NR) / (1 + CCL)] - 1
Tax Deduction * marginal tax rate
taxable interest - non-qual. divs - short-term cap. gains
(cash + marketable securities) / current liabilities

34. P/E ratio
Price/Earnings per share
(1/T)(r1+r2+...+rT)
driving - expressive - amiable - analytical
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

35. Net Cash Flow
Sources of Funds-Use of Funds or Money in- Money out
1 - the payout ratio
Tax Deduction * marginal tax rate
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

36. Types of Leading Responses
(Mortgage+Debt Repayment)/Net Income
Explanatory - Interpretive - Reassuring - Suggestive
current assets - current liabilities
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

37. Major CFP Planning Areas
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
taxable interest - non-qual. divs - short-term cap. gains
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Long-term Debt / Equity

38. Holding Period Return
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
RIVETC - Rising median age - Increased impact of dual-income families - Volatility of financial conditions - Evolving tax environment - Technological change - Concern over fraud and firm failure
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
(P1 + D - P0)/P0

39. aka Net Income
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Return (1 - tax bracket)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Earnings After Taxes

40. Debt Service Ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
[(1+ NR) / (1 + CCL)] - 1
P*(1+g)/(k-g) P=div per share divided by other div
(Mortgage+Debt Repayment)/Net Income

41. Cash Ratio
(cash + marketable securities) / current liabilities
Earnings After Taxes
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
assets less liabilities - divided by the number of shares of common stock of a company

42. Assets to Equity ratio
(current assets - inventory) / current liabilities
driving - expressive - amiable - analytical
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Assets / Equity

43. The payout ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
dividends / earnings
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(Mortgage+Debt Repayment)/Net Income

44. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
(cash + marketable securities) / current liabilities
Tax Deduction * marginal tax rate
(1/T)(r1+r2+...+rT)
Tax Credit/marginal tax rate

45. Current Ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
current assets / current liabilities
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(cash + marketable securities) / current liabilities

46. EBIT
Tax Credit/marginal tax rate
dividends / earnings
Earnings Before Interest & Taxes
Total Assets / Equity

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CFP: Certified Financial Planner

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