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CFP: Certified Financial Planner

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. Quick Ratio (aka Acid test)
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
Net Worth/Total Assets
Total Long-term Debt / Equity

2. After-tax Yield
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Tax Free Yield/(1 - Tax Bracket)
g = ROE X b - where b is equal to the retention ratio
Total Long-term Debt / Equity

3. financial life cycle
Tax Free Yield/(1 - Tax Bracket)
(current assets - inventory) / current liabilities
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
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)

4. Opportunities in Financial Planning
Tax Free Yield/(1 - Tax Bracket)
EAT / Sales
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
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

5. Total Debt to Equity ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
P*(1+g)/(k-g) P=div per share divided by other div
Total Liabilities / Equity

6. Gross Investment income
taxable interest - non-qual. divs - short-term cap. gains
current assets - current liabilities
Earnings After Taxes
current assets / current liabilities

7. financial planning pyramid
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
[(1+ NR) / (1 + CCL)] - 1

8. Current Yield of a bond

9. 'normal' ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
P*(1+g)/(k-g) P=div per share divided by other div
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
EBIT/I (Where I = Interest Expense)

10. Equivalent Tax Credit
Tax Deduction * marginal tax rate
Total Return (1 - tax bracket)
1 - the payout ratio
dividends / earnings

11. Assets to Equity ratio
Total Assets / Equity
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
driving - expressive - amiable - analytical
assets less liabilities - divided by the number of shares of common stock of a company

12. CFP Ethical principles
(1/T)(r1+r2+...+rT)
assets less liabilities - divided by the number of shares of common stock of a company
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Net Worth/Total Assets

13. Attributes of Effective Advisor communiations
(Mortgage+Debt Repayment)/Net Income
Sources of Funds-Use of Funds or Money in- Money out
Net Worth/Total Assets
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

14. Equivalent Tax Deduction
Sales / Average Total Assets
Tax Credit/marginal tax rate
Sources of Funds-Use of Funds or Money in- Money out
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

15. P/E ratio
g = ROE X b - where b is equal to the retention ratio
Price/Earnings per share
Dollars of coupon interest per year/Bond's current market price
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

16. ROE (Return On Equity)
Tax Credit/marginal tax rate
taxable interest - non-qual. divs - short-term cap. gains
Net Income/Equity
Explanatory - Interpretive - Reassuring - Suggestive

17. Asset Turnover Ratio
Sales / Average Total Assets
Tax Free Yield/(1 - Tax Bracket)
EBIT/I (Where I = Interest Expense)
Price Earnings Growth ratio; P/E divided by projected earnings growth

18. EBIT
Earnings Before Interest & Taxes
Explanatory - Interpretive - Reassuring - Suggestive
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

19. Current Ratio
Net Income/Equity
current assets / current liabilities
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Explanatory - Interpretive - Reassuring - Suggestive

20. After-tax Return
P*(1+g)/(k-g) P=div per share divided by other div
Total Return (1 - tax bracket)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
1 - the payout ratio

21. Debt to Equity ratio
Total Long-term Debt / Equity
Tax Deduction * marginal tax rate
EBIT/I (Where I = Interest Expense)
(Mortgage+Debt Repayment)/Net Income

22. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Earnings Before Interest & Taxes
[(1+ NR) / (1 + CCL)] - 1
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

23. Debt Service Ratio
[(1+ NR) / (1 + CCL)] - 1
(current assets - inventory) / current liabilities
Total Assets / Equity
(Mortgage+Debt Repayment)/Net Income

24. Social Styles
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Tax Credit/marginal tax rate
driving - expressive - amiable - analytical
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

25. Holding Period Return
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
Price Earnings Growth ratio; P/E divided by projected earnings growth
(P1 + D - P0)/P0
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

26. Types of Leading Responses
EAT / Sales
Explanatory - Interpretive - Reassuring - Suggestive
current assets / current liabilities
Price Earnings Growth ratio; P/E divided by projected earnings growth

27. Cash Ratio
assets less liabilities - divided by the number of shares of common stock of a company
Tax Credit/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
(cash + marketable securities) / current liabilities

28. Times Interest Earned
(cash + marketable securities) / current liabilities
Earnings Before Interest & Taxes
EBIT/I (Where I = Interest Expense)
Total Return (1 - tax bracket)

29. The retention ratio
1 - the payout ratio
current assets / current liabilities
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Net Worth/Total Assets

30. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
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
1 - the payout ratio
(1/T)(r1+r2+...+rT)
taxable interest - non-qual. divs - short-term cap. gains

31. Present value of a Bond
Sources of Funds-Use of Funds or Money in- Money out
Total Assets / Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(1/T)(r1+r2+...+rT)

32. The payout ratio
dividends / earnings
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
1 - the payout ratio
Earnings Before Interest & Taxes

33. Major CFP Planning Areas
assets less liabilities - divided by the number of shares of common stock of a company
g = ROE X b - where b is equal to the retention ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
EAT / Sales

34. Solvency Ratio
(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)
Net Worth/Total Assets
Earnings After Taxes

35. PEG ratio
Net Income/Equity
g = ROE X b - where b is equal to the retention ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
Sources of Funds-Use of Funds or Money in- Money out

36. Working Capital
(cash + marketable securities) / current liabilities
current assets - current liabilities
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
current assets / current liabilities

37. Savings Ratio
EAT / Sales
Total Liabilities / Equity
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

38. Net Cash Flow
Dollars of coupon interest per year/Bond's current market price
Sources of Funds-Use of Funds or Money in- Money out
Explanatory - Interpretive - Reassuring - Suggestive
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

39. Domains of a CFP
Tax Credit/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
Total Liabilities / Equity
g = ROE X b - where b is equal to the retention ratio

40. Sustainable Growth Rate
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
g = ROE X b - where b is equal to the retention ratio
dividends / earnings

41. Book Value (of company stock)
Dollars of coupon interest per year/Bond's current market price
Net Income/Equity
assets less liabilities - divided by the number of shares of common stock of a company
Net Worth/Total Assets

42. Net After Tax Profit Margin
(1/T)(r1+r2+...+rT)
EAT / Sales
Tax Credit/marginal tax rate
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

43. Types of Understanding Responses Associated With Active Listening
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Net Income/Equity
current assets / current liabilities

44. Net Investment Income
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
EAT / Sales
Price Earnings Growth ratio; P/E divided by projected earnings growth
Total Liabilities / Equity

45. Liquidity Ratio
Total Long-term Debt / Equity
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(1/T)(r1+r2+...+rT)
dividends / earnings

46. aka Net Income
Price/Earnings per share
Dollars of coupon interest per year/Bond's current market price
Earnings After Taxes
current assets / current liabilities