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