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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. Types of Leading Responses
EAT / Sales
Explanatory - Interpretive - Reassuring - Suggestive
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

2. Holding Period Return
(P1 + D - P0)/P0
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
g = ROE X b - where b is equal to the retention ratio
(Mortgage+Debt Repayment)/Net Income

3. financial life cycle
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
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
EBIT/I (Where I = Interest Expense)

4. Debt Service Ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(Mortgage+Debt Repayment)/Net Income
(current assets - inventory) / current liabilities

5. Assets to Equity ratio
Total Assets / Equity
EBIT/I (Where I = Interest Expense)
Net Income/Equity
Sources of Funds-Use of Funds or Money in- Money out

6. Net Cash Flow
Sources of Funds-Use of Funds or Money in- Money out
(P1 + D - P0)/P0
EBIT/I (Where I = Interest Expense)
(cash + marketable securities) / current liabilities

7. Types of Understanding Responses Associated With Active Listening
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Earnings After Taxes
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

8. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
current assets - current liabilities
(P1 + D - P0)/P0

9. Equivalent Tax Credit
Net Worth/Total Assets
1 - the payout ratio
Tax Deduction * marginal tax rate
g = ROE X b - where b is equal to the retention ratio

10. Book Value (of company stock)
Price/Earnings per share
Tax Free Yield/(1 - Tax Bracket)
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

11. Equivalent Tax Deduction
Tax Credit/marginal tax rate
Total Assets / Equity
Total Long-term Debt / Equity
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

12. Cash Ratio
dividends / earnings
Dollars of coupon interest per year/Bond's current market price
(cash + marketable securities) / current liabilities
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

13. Working Capital
(P1 + D - P0)/P0
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
current assets - current liabilities
(cash + marketable securities) / current liabilities

14. Net Investment Income
current assets / current liabilities
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Return (1 - tax bracket)

15. Opportunities in Financial Planning
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
g = ROE X b - where b is equal to the retention ratio
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Total Return (1 - tax bracket)

16. ROE (Return On Equity)
Net Income/Equity
Tax Credit/marginal tax rate
Price Earnings Growth ratio; P/E divided by projected earnings growth
Total Long-term Debt / Equity

17. Savings Ratio
Tax Credit/marginal tax rate
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Total Return (1 - tax bracket)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

18. Major CFP Planning Areas
Dollars of coupon interest per year/Bond's current market price
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
dividends / earnings
Total Liabilities / Equity

19. Gross Investment income
Total Liabilities / Equity
Total Return (1 - tax bracket)
taxable interest - non-qual. divs - short-term cap. gains
(cash + marketable securities) / current liabilities

20. Net After Tax Profit Margin
EAT / Sales
Total Assets / Equity
Earnings After Taxes
Earnings Before Interest & Taxes

21. P/E ratio
Price/Earnings per share
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
(P1 + D - P0)/P0
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

22. 'normal' ratio
P*(1+g)/(k-g) P=div per share divided by other div
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
[(1+ NR) / (1 + CCL)] - 1

23. Asset Turnover Ratio
(current assets - inventory) / current liabilities
EBIT/I (Where I = Interest Expense)
Sales / Average Total Assets
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

24. PEG ratio
EBIT/I (Where I = Interest Expense)
Price Earnings Growth ratio; P/E divided by projected earnings growth
(P1 + D - P0)/P0
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

25. 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
(P1 + D - P0)/P0
Total Long-term Debt / Equity
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

26. aka Net 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)
Tax Credit/marginal tax rate
Earnings After Taxes
(Mortgage+Debt Repayment)/Net Income

27. Debt to Equity 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
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Total Long-term Debt / Equity
dividends / earnings

28. Times Interest Earned
[(1+ NR) / (1 + CCL)] - 1
EBIT/I (Where I = Interest Expense)
Net Worth/Total Assets
Tax Deduction * marginal tax rate

29. Total Debt to Equity ratio
current assets / current liabilities
1 - the payout ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
Total Liabilities / Equity

30. Quick Ratio (aka Acid test)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(current assets - inventory) / current liabilities
Sales / Average Total Assets
Dollars of coupon interest per year/Bond's current market price

31. EBIT
[(1+ NR) / (1 + CCL)] - 1
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
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
Earnings Before Interest & Taxes

32. Solvency Ratio
(P1 + D - P0)/P0
Net Worth/Total Assets
Tax Free Yield/(1 - Tax Bracket)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

33. The payout ratio
taxable interest - non-qual. divs - short-term cap. gains
dividends / earnings
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
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)

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

35. The retention ratio
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Total Return (1 - tax bracket)
1 - the payout ratio

36. Attributes of Effective Advisor communiations
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)
EAT / Sales
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

37. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
(1/T)(r1+r2+...+rT)
[(1+ NR) / (1 + CCL)] - 1
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Tax Free Yield/(1 - Tax Bracket)

38. Current Yield of a bond

39. After-tax Return
(P1 + D - P0)/P0
Total Return (1 - tax bracket)
1 - the payout ratio
Dollars of coupon interest per year/Bond's current market price

40. After-tax Yield
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Tax Free Yield/(1 - Tax Bracket)
driving - expressive - amiable - analytical
dividends / earnings

41. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
Tax Credit/marginal tax rate
[(1+ NR) / (1 + CCL)] - 1
Sales / Average Total Assets
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

42. Social Styles
EBIT/I (Where I = Interest Expense)
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
driving - expressive - amiable - analytical
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

43. financial planning pyramid
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Tax Deduction * marginal tax rate

44. CFP Ethical principles
Dollars of coupon interest per year/Bond's current market price
[(1+ NR) / (1 + CCL)] - 1
current assets / current liabilities
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

45. Current Ratio
current assets / current liabilities
(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
(current assets - inventory) / current liabilities

46. Sustainable Growth Rate
1 - the payout ratio
g = ROE X b - where b is equal to the retention ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)