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