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Test your basic knowledge |
CFP: Certified Financial Planner
Start Test
Study First
Subjects
:
certifications
,
cfp
,
business-skills
Instructions:
Answer 46 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
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. Cash Ratio
(cash + marketable securities) / current liabilities
current assets - current liabilities
Dollars of coupon interest per year/Bond's current market price
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
2. ROE (Return On Equity)
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Total Assets / Equity
Net Income/Equity
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
3. financial planning pyramid
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Liabilities / Equity
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
4. EBIT
Earnings Before Interest & Taxes
driving - expressive - amiable - analytical
Net Worth/Total Assets
Tax Credit/marginal tax rate
5. Working Capital
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)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
current assets - current liabilities
Net Income/Equity
6. CFP Ethical principles
Tax Credit/marginal tax rate
Price/Earnings per share
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Explanatory - Interpretive - Reassuring - Suggestive
7. Net After Tax Profit Margin
Tax Free Yield/(1 - Tax Bracket)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
EAT / Sales
1 - the payout ratio
8. financial life cycle
1 - the payout ratio
Sales / Average Total Assets
(current assets - inventory) / current liabilities
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)
9. Types of Understanding Responses Associated With Active Listening
Net Income/Equity
Tax Deduction * marginal tax rate
g = ROE X b - where b is equal to the retention ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
10. Net Investment Income
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Liabilities / Equity
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
11. Debt to Equity ratio
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)
[(1+ NR) / (1 + CCL)] - 1
EAT / Sales
Total Long-term Debt / Equity
12. Holding Period Return
(P1 + D - P0)/P0
Explanatory - Interpretive - Reassuring - Suggestive
Net Income/Equity
current assets / current liabilities
13. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
g = ROE X b - where b is equal to the retention ratio
current assets - current liabilities
Earnings After Taxes
[(1+ NR) / (1 + CCL)] - 1
14. Current Yield of a bond
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15. After-tax Return
Total Return (1 - tax bracket)
Tax Credit/marginal tax rate
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Assets / Equity
16. Equivalent Tax Deduction
Price Earnings Growth ratio; P/E divided by projected earnings growth
driving - expressive - amiable - analytical
Total Assets / Equity
Tax Credit/marginal tax rate
17. Book Value (of company stock)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Return (1 - tax bracket)
Price/Earnings per share
assets less liabilities - divided by the number of shares of common stock of a company
18. Net Cash Flow
EAT / Sales
Total Long-term Debt / Equity
Sources of Funds-Use of Funds or Money in- Money out
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
19. The payout ratio
Price/Earnings per share
driving - expressive - amiable - analytical
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
dividends / earnings
20. PEG ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
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)
Earnings After Taxes
Dollars of coupon interest per year/Bond's current market price
21. 'normal' ratio
P*(1+g)/(k-g) P=div per share divided by other div
(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)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
22. Quick Ratio (aka Acid test)
(current assets - inventory) / current liabilities
Tax Credit/marginal tax rate
Net Income/Equity
(P1 + D - P0)/P0
23. Times Interest Earned
Price Earnings Growth ratio; P/E divided by projected earnings growth
EBIT/I (Where I = Interest Expense)
Explanatory - Interpretive - Reassuring - Suggestive
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)
24. aka Net Income
Earnings After Taxes
driving - expressive - amiable - analytical
assets less liabilities - divided by the number of shares of common stock of a company
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
25. Domains of a CFP
EAT / Sales
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Explanatory - Interpretive - Reassuring - Suggestive
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
26. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
1 - the payout ratio
current assets / current liabilities
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(1/T)(r1+r2+...+rT)
27. Equivalent Tax Credit
current assets - current liabilities
Total Assets / Equity
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Tax Deduction * marginal tax rate
28. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
taxable interest - non-qual. divs - short-term cap. gains
dividends / earnings
(Mortgage+Debt Repayment)/Net Income
29. Attributes of Effective Advisor communiations
Earnings Before Interest & Taxes
Earnings After Taxes
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
30. Sustainable Growth Rate
g = ROE X b - where b is equal to the retention ratio
dividends / earnings
Explanatory - Interpretive - Reassuring - Suggestive
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
31. Asset Turnover Ratio
Sales / Average Total Assets
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Dollars of coupon interest per year/Bond's current market price
Total Return (1 - tax bracket)
32. P/E ratio
Price/Earnings per share
P*(1+g)/(k-g) P=div per share divided by other div
(Mortgage+Debt Repayment)/Net Income
Tax Credit/marginal tax rate
33. After-tax Yield
Tax Credit/marginal tax rate
Dollars of coupon interest per year/Bond's current market price
Explanatory - Interpretive - Reassuring - Suggestive
Tax Free Yield/(1 - Tax Bracket)
34. Types of Leading Responses
Explanatory - Interpretive - Reassuring - Suggestive
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
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
current assets / current liabilities
35. The retention ratio
(P1 + D - P0)/P0
1 - the payout ratio
dividends / earnings
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
36. Assets to Equity ratio
taxable interest - non-qual. divs - short-term cap. gains
Earnings Before Interest & Taxes
Total Assets / Equity
g = ROE X b - where b is equal to the retention ratio
37. Major CFP Planning Areas
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Tax Deduction * marginal tax rate
(current assets - inventory) / current liabilities
(Mortgage+Debt Repayment)/Net Income
38. Social Styles
Price/Earnings per share
driving - expressive - amiable - analytical
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
g = ROE X b - where b is equal to the retention ratio
39. Present value of a Bond
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Dollars of coupon interest per year/Bond's current market price
Sources of Funds-Use of Funds or Money in- Money out
P*(1+g)/(k-g) P=div per share divided by other div
40. Gross Investment income
Total Return (1 - tax bracket)
(1/T)(r1+r2+...+rT)
taxable interest - non-qual. divs - short-term cap. gains
dividends / earnings
41. Total Debt to Equity ratio
Tax Deduction * marginal tax rate
(1/T)(r1+r2+...+rT)
Total Assets / Equity
Total Liabilities / Equity
42. Debt Service Ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Return (1 - tax bracket)
(Mortgage+Debt Repayment)/Net Income
Earnings Before Interest & Taxes
43. Solvency Ratio
dividends / earnings
Dollars of coupon interest per year/Bond's current market price
Net Worth/Total Assets
Earnings Before Interest & Taxes
44. Opportunities in Financial Planning
assets less liabilities - divided by the number of shares of common stock of a company
Sources of Funds-Use of Funds or Money in- Money out
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
45. Current Ratio
Tax Credit/marginal tax rate
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Earnings Before Interest & Taxes
current assets / current liabilities
46. Savings Ratio
Net Income/Equity
(Mortgage+Debt Repayment)/Net Income
Explanatory - Interpretive - Reassuring - Suggestive
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income