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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. Current Ratio
Price/Earnings per share
current assets / current liabilities
EBIT/I (Where I = Interest Expense)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

2. Social Styles
P*(1+g)/(k-g) P=div per share divided by other div
(P1 + D - P0)/P0
current assets / current liabilities
driving - expressive - amiable - analytical

3. Attributes of Effective Advisor communiations
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
current assets - current liabilities
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
(1/T)(r1+r2+...+rT)

4. Net Cash Flow
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Sources of Funds-Use of Funds or Money in- Money out
(current assets - inventory) / current liabilities
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

5. Debt to Equity ratio
P*(1+g)/(k-g) P=div per share divided by other div
Total Long-term Debt / Equity
EBIT/I (Where I = Interest Expense)
[(1+ NR) / (1 + CCL)] - 1

6. EBIT
Earnings Before Interest & Taxes
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
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

7. aka Net Income
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
Earnings After Taxes
(P1 + D - P0)/P0

8. Types of Understanding Responses Associated With Active Listening
EBIT/I (Where I = Interest Expense)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Dollars of coupon interest per year/Bond's current market price
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

9. After-tax Yield
Total Long-term Debt / Equity
Total Assets / Equity
Price Earnings Growth ratio; P/E divided by projected earnings growth
Tax Free Yield/(1 - Tax Bracket)

10. The payout ratio
dividends / earnings
driving - expressive - amiable - analytical
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
current assets / current liabilities

11. CFP Ethical principles
current assets / current liabilities
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
[(1+ NR) / (1 + CCL)] - 1
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

12. Major CFP Planning Areas
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
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
EAT / Sales

13. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Earnings After Taxes
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)
current assets - current liabilities
(1/T)(r1+r2+...+rT)

14. Solvency Ratio
Tax Free Yield/(1 - Tax Bracket)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Net Worth/Total Assets

15. Holding Period Return
Sources of Funds-Use of Funds or Money in- Money out
(P1 + D - P0)/P0
Tax Deduction * marginal tax rate
(current assets - inventory) / current liabilities

16. Debt Service Ratio
(Mortgage+Debt Repayment)/Net Income
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Sources of Funds-Use of Funds or Money in- Money out
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

17. Net After Tax Profit Margin
EBIT/I (Where I = Interest Expense)
(Mortgage+Debt Repayment)/Net Income
EAT / Sales
Total Long-term Debt / Equity

18. Liquidity Ratio
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Tax Credit/marginal tax rate
Total Assets / Equity
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

19. Assets to Equity ratio
current assets - current liabilities
Total Assets / Equity
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
P*(1+g)/(k-g) P=div per share divided by other div

20. After-tax Return
1 - the payout ratio
[(1+ NR) / (1 + CCL)] - 1
Total Return (1 - tax bracket)
(1/T)(r1+r2+...+rT)

21. Book Value (of company stock)
assets less liabilities - divided by the number of shares of common stock of a company
Net Income/Equity
Explanatory - Interpretive - Reassuring - Suggestive
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

22. Working Capital
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Dollars of coupon interest per year/Bond's current market price
(P1 + D - P0)/P0
current assets - current liabilities

23. Present value of a Bond
(cash + marketable securities) / current liabilities
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
EBIT/I (Where I = Interest Expense)
Net Worth/Total Assets

24. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
[(1+ NR) / (1 + CCL)] - 1
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Sources of Funds-Use of Funds or Money in- Money out
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

25. Net Investment Income
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Dollars of coupon interest per year/Bond's current market price
(P1 + D - P0)/P0
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

26. Opportunities in Financial Planning
(Mortgage+Debt Repayment)/Net Income
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
Explanatory - Interpretive - Reassuring - Suggestive

27. Domains of a CFP
Price Earnings Growth ratio; P/E divided by projected earnings growth
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
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

28. 'normal' ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
P*(1+g)/(k-g) P=div per share divided by other div
[(1+ NR) / (1 + CCL)] - 1
g = ROE X b - where b is equal to the retention ratio

29. ROE (Return On Equity)
P*(1+g)/(k-g) P=div per share divided by other div
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Net Income/Equity
[(1+ NR) / (1 + CCL)] - 1

30. Sustainable Growth Rate
Sales / Average Total Assets
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
g = ROE X b - where b is equal to the retention ratio

31. financial life cycle
(1/T)(r1+r2+...+rT)
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)
dividends / earnings
EBIT/I (Where I = Interest Expense)

32. P/E ratio
Price/Earnings per share
dividends / earnings
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Tax Free Yield/(1 - Tax Bracket)

33. Total Debt to Equity ratio
Earnings After Taxes
Earnings Before Interest & Taxes
Total Liabilities / Equity
Net Income/Equity

34. Equivalent Tax Deduction
Total Assets / Equity
Tax Credit/marginal tax rate
Total Liabilities / Equity
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

35. financial planning pyramid
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
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/T)(r1+r2+...+rT)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

36. Savings 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)
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
current assets - current liabilities

37. Types of Leading Responses
Explanatory - Interpretive - Reassuring - Suggestive
EAT / Sales
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Price Earnings Growth ratio; P/E divided by projected earnings growth

38. Current Yield of a bond

39. Quick Ratio (aka Acid test)
Tax Credit/marginal tax rate
[(1+ NR) / (1 + CCL)] - 1
Dollars of coupon interest per year/Bond's current market price
(current assets - inventory) / current liabilities

40. Cash Ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(cash + marketable securities) / current liabilities

41. Gross Investment income
taxable interest - non-qual. divs - short-term cap. gains
Total Assets / Equity
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Explanatory - Interpretive - Reassuring - Suggestive

42. The retention ratio
1 - the payout ratio
Tax Deduction * marginal tax rate
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
taxable interest - non-qual. divs - short-term cap. gains

43. Times Interest Earned
Explanatory - Interpretive - Reassuring - Suggestive
Net Income/Equity
current assets - current liabilities
EBIT/I (Where I = Interest Expense)

44. PEG ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
Net Income/Equity
Price/Earnings per share
Earnings After Taxes

45. Equivalent Tax Credit
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Tax Deduction * marginal tax rate
Tax Credit/marginal tax rate
(1/T)(r1+r2+...+rT)

46. Asset Turnover Ratio
Total Long-term Debt / Equity
driving - expressive - amiable - analytical
Sales / Average Total Assets
Earnings After Taxes