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