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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. 'normal' ratio
(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)
P*(1+g)/(k-g) P=div per share divided by other div
(current assets - inventory) / current liabilities

2. Total Debt to Equity ratio
EBIT/I (Where I = Interest Expense)
current assets / current liabilities
g = ROE X b - where b is equal to the retention ratio
Total Liabilities / Equity

3. Current Yield of a bond

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4. After-tax Return
taxable interest - non-qual. divs - short-term cap. gains
Total Return (1 - tax bracket)
EBIT/I (Where I = Interest Expense)
(1/T)(r1+r2+...+rT)

5. Asset Turnover Ratio
Price/Earnings per share
Tax Credit/marginal tax rate
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Sales / Average Total Assets

6. After-tax Yield
current assets / current liabilities
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Tax Free Yield/(1 - Tax Bracket)
EBIT/I (Where I = Interest Expense)

7. ROE (Return On Equity)
Net Income/Equity
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(P1 + D - P0)/P0

8. Net After Tax Profit Margin
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
dividends / earnings
driving - expressive - amiable - analytical
EAT / Sales

9. Sustainable Growth Rate
g = ROE X b - where b is equal to the retention ratio
Earnings After Taxes
Tax Deduction * marginal tax rate
Net Worth/Total Assets

10. financial life cycle
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
current assets / current liabilities
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)

11. PEG ratio
(P1 + D - P0)/P0
Earnings Before Interest & Taxes
Price Earnings Growth ratio; P/E divided by projected earnings growth
current assets - current liabilities

12. Equivalent Tax Credit
Net Worth/Total Assets
Tax Deduction * marginal tax rate
assets less liabilities - divided by the number of shares of common stock of a company
Price Earnings Growth ratio; P/E divided by projected earnings growth

13. financial planning pyramid
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Long-term Debt / Equity
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
dividends / earnings

14. Working Capital
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
Sales / Average Total Assets
current assets - current liabilities
Dollars of coupon interest per year/Bond's current market price

15. Times Interest Earned
[(1+ NR) / (1 + CCL)] - 1
Price/Earnings per share
EBIT/I (Where I = Interest Expense)
g = ROE X b - where b is equal to the retention ratio

16. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
Earnings After Taxes
(1/T)(r1+r2+...+rT)
[(1+ NR) / (1 + CCL)] - 1
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

17. aka Net Income
Tax Free Yield/(1 - Tax Bracket)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Earnings After Taxes
current assets / current liabilities

18. Cash Ratio
(Mortgage+Debt Repayment)/Net Income
Total Long-term Debt / Equity
(cash + marketable securities) / current liabilities
Sales / Average Total Assets

19. Net Cash Flow
Sources of Funds-Use of Funds or Money in- Money out
1 - the payout ratio
Sales / Average Total Assets
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

20. Social Styles
driving - expressive - amiable - analytical
P*(1+g)/(k-g) P=div per share divided by other div
Explanatory - Interpretive - Reassuring - Suggestive
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

21. Debt to Equity ratio
Dollars of coupon interest per year/Bond's current market price
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Long-term Debt / Equity
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

22. Gross Investment income
taxable interest - non-qual. divs - short-term cap. gains
Total Return (1 - tax bracket)
Sales / Average Total Assets
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

23. Net Investment Income
(current assets - inventory) / current liabilities
Tax Credit/marginal tax rate
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
assets less liabilities - divided by the number of shares of common stock of a company

24. Debt Service Ratio
EBIT/I (Where I = Interest Expense)
(Mortgage+Debt Repayment)/Net Income
g = ROE X b - where b is equal to the retention ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

25. Assets to Equity ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Total Long-term Debt / Equity
Total Assets / Equity
Sales / Average Total Assets

26. Opportunities in Financial Planning
Sales / Average Total Assets
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
Dollars of coupon interest per year/Bond's current market price
P*(1+g)/(k-g) P=div per share divided by other div

27. Domains of a CFP
Price Earnings Growth ratio; P/E divided by projected earnings growth
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
Price/Earnings per share

28. Liquidity Ratio
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(P1 + D - P0)/P0
Total Assets / Equity

29. Solvency Ratio
(cash + marketable securities) / current liabilities
Net Worth/Total Assets
Tax Free Yield/(1 - Tax Bracket)
Tax Deduction * marginal tax rate

30. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Net Income/Equity
(1/T)(r1+r2+...+rT)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

31. Present value of a Bond
(1/T)(r1+r2+...+rT)
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
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

32. Savings Ratio
Tax Deduction * marginal tax rate
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Total Liabilities / Equity
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

33. CFP Ethical principles
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(P1 + D - P0)/P0
P*(1+g)/(k-g) P=div per share divided by other div
current assets - current liabilities

34. Types of Understanding Responses Associated With Active Listening
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
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
current assets - current liabilities

35. Holding Period Return
Net Worth/Total Assets
(P1 + D - P0)/P0
[(1+ NR) / (1 + CCL)] - 1
Sources of Funds-Use of Funds or Money in- Money out

36. EBIT
Earnings Before Interest & Taxes
Tax Deduction * marginal tax rate
(Mortgage+Debt Repayment)/Net Income
g = ROE X b - where b is equal to the retention ratio

37. Types of Leading Responses
Explanatory - Interpretive - Reassuring - Suggestive
Price Earnings Growth ratio; P/E divided by projected earnings growth
taxable interest - non-qual. divs - short-term cap. gains
Tax Credit/marginal tax rate

38. Major CFP Planning Areas
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Return (1 - tax bracket)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

39. Quick Ratio (aka Acid test)
(current assets - inventory) / current liabilities
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

40. Equivalent Tax Deduction
Tax Credit/marginal tax rate
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Assets / Equity

41. The retention 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
1 - the payout ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

42. Current Ratio
assets less liabilities - divided by the number of shares of common stock of a company
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Tax Deduction * marginal tax rate
current assets / current liabilities

43. Attributes of Effective Advisor communiations
Earnings Before Interest & Taxes
driving - expressive - amiable - analytical
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Net Income/Equity

44. Book Value (of company stock)
P*(1+g)/(k-g) P=div per share divided by other div
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
assets less liabilities - divided by the number of shares of common stock of a company

45. The payout ratio
dividends / earnings
g = ROE X b - where b is equal to the retention ratio
(1/T)(r1+r2+...+rT)
assets less liabilities - divided by the number of shares of common stock of a company

46. P/E ratio
Total Long-term Debt / Equity
Total Assets / Equity
taxable interest - non-qual. divs - short-term cap. gains
Price/Earnings per share