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

2. ROE (Return On Equity)
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
Net Income/Equity
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

3. financial planning pyramid
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Liabilities / Equity
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

4. EBIT
Earnings Before Interest & Taxes
driving - expressive - amiable - analytical
Net Worth/Total Assets
Tax Credit/marginal tax rate

5. Working Capital
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 RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
current assets - current liabilities
Net Income/Equity

6. CFP Ethical principles
Tax Credit/marginal tax rate
Price/Earnings per share
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Explanatory - Interpretive - Reassuring - Suggestive

7. Net After Tax Profit Margin
Tax Free Yield/(1 - Tax Bracket)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
EAT / Sales
1 - the payout ratio

8. financial life cycle
1 - the payout ratio
Sales / Average Total Assets
(current assets - inventory) / current liabilities
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)

9. Types of Understanding Responses Associated With Active Listening
Net Income/Equity
Tax Deduction * marginal tax rate
g = ROE X b - where b is equal to the retention ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

10. Net Investment Income
(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)
Total Liabilities / Equity
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

11. Debt to Equity ratio
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)
[(1+ NR) / (1 + CCL)] - 1
EAT / Sales
Total Long-term Debt / Equity

12. Holding Period Return
(P1 + D - P0)/P0
Explanatory - Interpretive - Reassuring - Suggestive
Net Income/Equity
current assets / current liabilities

13. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
g = ROE X b - where b is equal to the retention ratio
current assets - current liabilities
Earnings After Taxes
[(1+ NR) / (1 + CCL)] - 1

14. Current Yield of a bond

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15. After-tax Return
Total Return (1 - tax bracket)
Tax Credit/marginal tax rate
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Assets / Equity

16. Equivalent Tax Deduction
Price Earnings Growth ratio; P/E divided by projected earnings growth
driving - expressive - amiable - analytical
Total Assets / Equity
Tax Credit/marginal tax rate

17. Book Value (of company stock)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Return (1 - tax bracket)
Price/Earnings per share
assets less liabilities - divided by the number of shares of common stock of a company

18. Net Cash Flow
EAT / Sales
Total Long-term Debt / Equity
Sources of Funds-Use of Funds or Money in- Money out
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

19. The payout ratio
Price/Earnings per share
driving - expressive - amiable - analytical
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
dividends / earnings

20. PEG ratio
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)
Earnings After Taxes
Dollars of coupon interest per year/Bond's current market price

21. 'normal' ratio
P*(1+g)/(k-g) P=div per share divided by other div
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

22. Quick Ratio (aka Acid test)
(current assets - inventory) / current liabilities
Tax Credit/marginal tax rate
Net Income/Equity
(P1 + D - P0)/P0

23. Times Interest Earned
Price Earnings Growth ratio; P/E divided by projected earnings growth
EBIT/I (Where I = Interest Expense)
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)

24. aka Net Income
Earnings After Taxes
driving - expressive - amiable - analytical
assets less liabilities - divided by the number of shares of common stock of a company
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

25. Domains of a CFP
EAT / Sales
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Explanatory - Interpretive - Reassuring - Suggestive
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

26. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
1 - the payout ratio
current assets / current liabilities
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(1/T)(r1+r2+...+rT)

27. Equivalent Tax Credit
current assets - current liabilities
Total Assets / Equity
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Tax Deduction * marginal tax rate

28. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
taxable interest - non-qual. divs - short-term cap. gains
dividends / earnings
(Mortgage+Debt Repayment)/Net Income

29. Attributes of Effective Advisor communiations
Earnings Before Interest & Taxes
Earnings After Taxes
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

30. Sustainable Growth Rate
g = ROE X b - where b is equal to the retention ratio
dividends / earnings
Explanatory - Interpretive - Reassuring - Suggestive
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

31. Asset Turnover Ratio
Sales / Average Total Assets
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Dollars of coupon interest per year/Bond's current market price
Total Return (1 - tax bracket)

32. P/E ratio
Price/Earnings per share
P*(1+g)/(k-g) P=div per share divided by other div
(Mortgage+Debt Repayment)/Net Income
Tax Credit/marginal tax rate

33. After-tax Yield
Tax Credit/marginal tax rate
Dollars of coupon interest per year/Bond's current market price
Explanatory - Interpretive - Reassuring - Suggestive
Tax Free Yield/(1 - Tax Bracket)

34. Types of Leading Responses
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
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
current assets / current liabilities

35. The retention ratio
(P1 + D - P0)/P0
1 - the payout ratio
dividends / earnings
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

36. Assets to Equity ratio
taxable interest - non-qual. divs - short-term cap. gains
Earnings Before Interest & Taxes
Total Assets / Equity
g = ROE X b - where b is equal to the retention ratio

37. Major CFP Planning Areas
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Tax Deduction * marginal tax rate
(current assets - inventory) / current liabilities
(Mortgage+Debt Repayment)/Net Income

38. Social Styles
Price/Earnings per share
driving - expressive - amiable - analytical
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
g = ROE X b - where b is equal to the retention ratio

39. Present value of a Bond
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Dollars of coupon interest per year/Bond's current market price
Sources of Funds-Use of Funds or Money in- Money out
P*(1+g)/(k-g) P=div per share divided by other div

40. Gross Investment income
Total Return (1 - tax bracket)
(1/T)(r1+r2+...+rT)
taxable interest - non-qual. divs - short-term cap. gains
dividends / earnings

41. Total Debt to Equity ratio
Tax Deduction * marginal tax rate
(1/T)(r1+r2+...+rT)
Total Assets / Equity
Total Liabilities / Equity

42. Debt Service Ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Return (1 - tax bracket)
(Mortgage+Debt Repayment)/Net Income
Earnings Before Interest & Taxes

43. Solvency Ratio
dividends / earnings
Dollars of coupon interest per year/Bond's current market price
Net Worth/Total Assets
Earnings Before Interest & Taxes

44. Opportunities in Financial Planning
assets less liabilities - divided by the number of shares of common stock of a company
Sources of Funds-Use of Funds or Money in- Money out
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
Net Worth/Total Assets

45. Current Ratio
Tax Credit/marginal tax rate
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Earnings Before Interest & Taxes
current assets / current liabilities

46. Savings Ratio
Net Income/Equity
(Mortgage+Debt Repayment)/Net Income
Explanatory - Interpretive - Reassuring - Suggestive
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income