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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. Total Debt to Equity ratio
(current assets - inventory) / current liabilities
Total Liabilities / Equity
Total Assets / Equity
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

2. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
current assets / current liabilities
(1/T)(r1+r2+...+rT)
Net Worth/Total Assets
Tax Free Yield/(1 - Tax Bracket)

3. Current Yield of a bond

4. Book Value (of company stock)
Net Worth/Total Assets
assets less liabilities - divided by the number of shares of common stock of a company
Earnings After Taxes
(P1 + D - P0)/P0

5. 'normal' ratio
P*(1+g)/(k-g) P=div per share divided by other div
current assets / current liabilities
EAT / Sales
Price Earnings Growth ratio; P/E divided by projected earnings growth

6. Asset Turnover Ratio
Total Return (1 - tax bracket)
Tax Free Yield/(1 - Tax Bracket)
(current assets - inventory) / current liabilities
Sales / Average Total Assets

7. PEG ratio
Net Worth/Total Assets
Price Earnings Growth ratio; P/E divided by projected earnings growth
EAT / Sales
Tax Free Yield/(1 - Tax Bracket)

8. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
(1/T)(r1+r2+...+rT)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Earnings Before Interest & Taxes
[(1+ NR) / (1 + CCL)] - 1

9. ROE (Return On Equity)
(P1 + D - P0)/P0
Tax Free Yield/(1 - Tax Bracket)
Net Income/Equity
Total Liabilities / Equity

10. Attributes of Effective Advisor communiations
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Earnings Before Interest & Taxes
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

11. Present value of a Bond
[(1+ NR) / (1 + CCL)] - 1
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Net Worth/Total Assets
Tax Deduction * marginal tax rate

12. Gross Investment income
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Net Income/Equity
(cash + marketable securities) / current liabilities
taxable interest - non-qual. divs - short-term cap. gains

13. Assets to Equity ratio
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Explanatory - Interpretive - Reassuring - Suggestive
Total Liabilities / Equity
Total Assets / Equity

14. EBIT
Earnings Before Interest & Taxes
Tax Free Yield/(1 - Tax Bracket)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Price Earnings Growth ratio; P/E divided by projected earnings growth

15. Debt to Equity ratio
assets less liabilities - divided by the number of shares of common stock of a company
(P1 + D - P0)/P0
Total Long-term Debt / Equity
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

16. Debt Service Ratio
Earnings Before Interest & Taxes
(Mortgage+Debt Repayment)/Net Income
taxable interest - non-qual. divs - short-term cap. gains
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

17. Quick Ratio (aka Acid test)
Net Worth/Total Assets
Tax Credit/marginal tax rate
(current assets - inventory) / current liabilities
Price Earnings Growth ratio; P/E divided by projected earnings growth

18. After-tax Yield
current assets / current liabilities
Tax Free Yield/(1 - Tax Bracket)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Return (1 - tax bracket)

19. Current Ratio
Explanatory - Interpretive - Reassuring - Suggestive
current assets / current liabilities
EAT / Sales
taxable interest - non-qual. divs - short-term cap. gains

20. CFP Ethical principles
Dollars of coupon interest per year/Bond's current market price
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
current assets / current liabilities
current assets - current liabilities

21. Times Interest Earned
g = ROE X b - where b is equal to the retention ratio
assets less liabilities - divided by the number of shares of common stock of a company
EBIT/I (Where I = Interest Expense)
driving - expressive - amiable - analytical

22. Holding Period Return
Earnings Before Interest & Taxes
Net Income/Equity
(P1 + D - P0)/P0
Total Long-term Debt / Equity

23. aka Net Income
Net Worth/Total Assets
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Earnings After Taxes
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

24. Domains of a CFP
Tax Credit/marginal tax rate
[(1+ NR) / (1 + CCL)] - 1
P*(1+g)/(k-g) P=div per share divided by other div
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

25. financial planning pyramid
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
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Sources of Funds-Use of Funds or Money in- Money out
Earnings After Taxes

26. Working Capital
(P1 + D - P0)/P0
[(1+ NR) / (1 + CCL)] - 1
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

27. Net Cash Flow
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Sources of Funds-Use of Funds or Money in- Money out
Earnings Before Interest & Taxes

28. The retention ratio
1 - the payout ratio
current assets - current liabilities
Earnings Before Interest & Taxes
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

29. Types of Leading Responses
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)
Tax Credit/marginal tax rate
Explanatory - Interpretive - Reassuring - Suggestive

30. Equivalent Tax Deduction
Explanatory - Interpretive - Reassuring - Suggestive
Total Assets / Equity
[(1+ NR) / (1 + CCL)] - 1
Tax Credit/marginal tax rate

31. Cash Ratio
(cash + marketable securities) / current liabilities
Net Worth/Total Assets
Tax Deduction * marginal tax rate
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

32. Major CFP Planning Areas
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(cash + marketable securities) / current liabilities
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Assets / Equity

33. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
EAT / Sales
driving - expressive - amiable - analytical
Tax Deduction * marginal tax rate

34. Social Styles
Price/Earnings per share
driving - expressive - amiable - analytical
Tax Free Yield/(1 - Tax Bracket)
assets less liabilities - divided by the number of shares of common stock of a company

35. Equivalent Tax Credit
Tax Deduction * marginal tax rate
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 = ROE X b - where b is equal to the retention ratio
(Mortgage+Debt Repayment)/Net Income

36. Net After Tax Profit Margin
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
EAT / Sales
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Price Earnings Growth ratio; P/E divided by projected earnings growth

37. The payout ratio
dividends / earnings
current assets - current liabilities
driving - expressive - amiable - analytical
Total Liabilities / Equity

38. Savings Ratio
(P1 + D - P0)/P0
current assets - current liabilities
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Price/Earnings per share

39. Types of Understanding Responses Associated With Active Listening
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Net Income/Equity
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Sales / Average Total Assets

40. After-tax Return
Tax Credit/marginal tax rate
[(1+ NR) / (1 + CCL)] - 1
Total Return (1 - tax bracket)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

41. P/E ratio
current assets / current liabilities
(current assets - inventory) / current liabilities
Price/Earnings per share
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

42. Net Investment Income
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
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)
Explanatory - Interpretive - Reassuring - Suggestive

43. Opportunities in Financial Planning
Tax Free Yield/(1 - Tax Bracket)
(cash + marketable securities) / 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
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

44. Solvency Ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
g = ROE X b - where b is equal to the retention ratio
Net Worth/Total Assets
Total Long-term Debt / Equity

45. Sustainable Growth Rate
Sales / Average Total Assets
Net Income/Equity
driving - expressive - amiable - analytical
g = ROE X b - where b is equal to the retention ratio

46. financial life cycle
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)
Sources of Funds-Use of Funds or Money in- Money out
assets less liabilities - divided by the number of shares of common stock of a company
(cash + marketable securities) / current liabilities