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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. After-tax Return
Total Return (1 - tax bracket)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
g = ROE X b - where b is equal to the retention ratio
(1/T)(r1+r2+...+rT)

2. Holding Period Return
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(P1 + D - P0)/P0
Net Worth/Total Assets

3. Asset Turnover Ratio
Sales / Average Total Assets
Net Worth/Total Assets
Total Assets / Equity
(current assets - inventory) / current liabilities

4. aka Net Income
EAT / Sales
Earnings After Taxes
(cash + marketable securities) / current liabilities
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

5. Total Debt to Equity ratio
Total Liabilities / Equity
Sales / Average Total Assets
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
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

6. Opportunities in Financial Planning
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
Tax Deduction * marginal tax rate
Tax Credit/marginal tax rate
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

7. Domains of a CFP
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
1 - the payout ratio
taxable interest - non-qual. divs - short-term cap. gains

8. Debt to Equity ratio
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)
Total Long-term Debt / Equity
Tax Free Yield/(1 - Tax Bracket)

9. Sustainable Growth Rate
g = ROE X b - where b is equal to the retention ratio
EBIT/I (Where I = Interest Expense)
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

10. Equivalent Tax Credit
current assets - current liabilities
Net Worth/Total Assets
Total Assets / Equity
Tax Deduction * marginal tax rate

11. Net After Tax Profit Margin
Earnings After Taxes
(current assets - inventory) / current liabilities
EAT / Sales
taxable interest - non-qual. divs - short-term cap. gains

12. Debt Service Ratio
Net Worth/Total Assets
EBIT/I (Where I = Interest Expense)
g = ROE X b - where b is equal to the retention ratio
(Mortgage+Debt Repayment)/Net Income

13. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
(current assets - inventory) / current liabilities
1 - the payout ratio
(1/T)(r1+r2+...+rT)
Total Assets / Equity

14. EBIT
Total Assets / Equity
taxable interest - non-qual. divs - short-term cap. gains
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Earnings Before Interest & Taxes

15. The payout ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Price/Earnings per share
g = ROE X b - where b is equal to the retention ratio
dividends / earnings

16. Major CFP Planning Areas
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
g = ROE X b - where b is equal to the retention ratio
(current assets - inventory) / current liabilities
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

17. Net Cash Flow
Sources of Funds-Use of Funds or Money in- Money out
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
Earnings Before Interest & Taxes

18. CFP Ethical principles
Tax Credit/marginal tax rate
Tax Deduction * marginal tax rate
Explanatory - Interpretive - Reassuring - Suggestive
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

19. 'normal' ratio
taxable interest - non-qual. divs - short-term cap. gains
P*(1+g)/(k-g) P=div per share divided by other div
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Tax Deduction * marginal tax rate

20. Types of Understanding Responses Associated With Active Listening
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
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Return (1 - tax bracket)

21. After-tax Yield
Tax Free Yield/(1 - Tax Bracket)
EBIT/I (Where I = Interest Expense)
Total Liabilities / Equity
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

22. Current Yield of a bond

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23. Equivalent Tax Deduction
Net Worth/Total Assets
Tax Credit/marginal tax rate
EAT / Sales
g = ROE X b - where b is equal to the retention ratio

24. Attributes of Effective Advisor communiations
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Price Earnings Growth ratio; P/E divided by projected earnings growth
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

25. Present value of a Bond
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
current assets - current liabilities
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Earnings After Taxes

26. PEG ratio
EAT / Sales
Price Earnings Growth ratio; P/E divided by projected earnings growth
current assets - current liabilities
Tax Deduction * marginal tax rate

27. Liquidity Ratio
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
EAT / Sales

28. Current Ratio
current assets / current liabilities
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
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

29. Assets to Equity ratio
Total Assets / Equity
Net Worth/Total Assets
Explanatory - Interpretive - Reassuring - Suggestive
current assets / current liabilities

30. Times Interest Earned
Total Liabilities / Equity
EBIT/I (Where I = Interest Expense)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Total Return (1 - tax bracket)

31. 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
[(1+ NR) / (1 + CCL)] - 1
Tax Credit/marginal tax rate
Total Liabilities / Equity

32. financial life cycle
Net Worth/Total Assets
current assets - 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)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

33. Net Investment Income
EAT / Sales
EBIT/I (Where I = Interest Expense)
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)

34. Savings Ratio
taxable interest - non-qual. divs - short-term cap. gains
[(1+ NR) / (1 + CCL)] - 1
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)

35. Quick Ratio (aka Acid test)
Sources of Funds-Use of Funds or Money in- Money out
[(1+ NR) / (1 + CCL)] - 1
(current assets - inventory) / current liabilities
Price/Earnings per share

36. P/E ratio
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
Tax Free Yield/(1 - Tax Bracket)
Total Long-term Debt / Equity

37. ROE (Return On Equity)
[(1+ NR) / (1 + CCL)] - 1
EBIT/I (Where I = Interest Expense)
Tax Free Yield/(1 - Tax Bracket)
Net Income/Equity

38. Types of Leading Responses
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
Total Long-term Debt / Equity
Price/Earnings per share

39. Book Value (of company stock)
driving - expressive - amiable - analytical
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
assets less liabilities - divided by the number of shares of common stock of a company
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

40. The retention ratio
Total Assets / Equity
1 - the payout ratio
Price/Earnings per share
EBIT/I (Where I = Interest Expense)

41. Social Styles
Total Liabilities / Equity
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
driving - expressive - amiable - analytical
current assets / current liabilities

42. Working Capital
Tax Free Yield/(1 - Tax Bracket)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
current assets - current liabilities

43. Gross Investment income
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
taxable interest - non-qual. divs - short-term cap. gains
current assets - current liabilities
Price Earnings Growth ratio; P/E divided by projected earnings growth

44. Solvency Ratio
(Mortgage+Debt Repayment)/Net Income
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Net Worth/Total Assets
[(1+ NR) / (1 + CCL)] - 1

45. financial planning pyramid
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(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
P*(1+g)/(k-g) P=div per share divided by other div

46. Cash Ratio
current assets - current liabilities
EBIT/I (Where I = Interest Expense)
Price Earnings Growth ratio; P/E divided by projected earnings growth
(cash + marketable securities) / current liabilities