Test your basic knowledge |

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. Major CFP Planning Areas
(P1 + D - P0)/P0
Total Return (1 - tax bracket)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

2. Net Cash Flow
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Price Earnings Growth ratio; P/E divided by projected earnings growth
Sources of Funds-Use of Funds or Money in- Money out
Total Assets / Equity

3. Types of Leading Responses
Explanatory - Interpretive - Reassuring - Suggestive
Total Liabilities / Equity
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)
Total Return (1 - tax bracket)

4. Assets to Equity ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Assets / Equity

5. aka Net Income
Sources of Funds-Use of Funds or Money in- Money out
Dollars of coupon interest per year/Bond's current market price
Earnings After Taxes
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

6. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
(1/T)(r1+r2+...+rT)
Total Long-term Debt / Equity
Net Income/Equity
(Mortgage+Debt Repayment)/Net Income

7. Types of Understanding Responses Associated With Active Listening
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
g = ROE X b - where b is equal to the retention ratio
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

8. Asset Turnover Ratio
1 - the payout ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Sales / Average Total Assets
Sources of Funds-Use of Funds or Money in- Money out

9. Liquidity Ratio
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
EBIT/I (Where I = Interest Expense)
1 - the payout ratio

10. Gross Investment income
EBIT/I (Where I = Interest Expense)
(P1 + D - P0)/P0
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
taxable interest - non-qual. divs - short-term cap. gains

11. Total Debt to Equity ratio
Sources of Funds-Use of Funds or Money in- Money out
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Total Liabilities / Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

12. Savings Ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
current assets - current liabilities
Total Liabilities / Equity

13. Net Investment Income
(current assets - inventory) / current liabilities
(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)
(Mortgage+Debt Repayment)/Net Income

14. After-tax Yield
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
1 - the payout ratio
Tax Free Yield/(1 - Tax Bracket)

15. Domains of a CFP
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Net Worth/Total Assets
(1/T)(r1+r2+...+rT)
Total Assets / Equity

16. Social Styles
driving - expressive - amiable - analytical
Tax Deduction * marginal tax rate
Tax Credit/marginal tax rate
P*(1+g)/(k-g) P=div per share divided by other div

17. Debt Service Ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(Mortgage+Debt Repayment)/Net Income
1 - the payout ratio
Tax Deduction * marginal tax rate

18. financial planning pyramid
(current assets - inventory) / current liabilities
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
P*(1+g)/(k-g) P=div per share divided by other div

19. After-tax Return
Total Return (1 - tax bracket)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Explanatory - Interpretive - Reassuring - Suggestive
Dollars of coupon interest per year/Bond's current market price

20. ROE (Return On Equity)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
taxable interest - non-qual. divs - short-term cap. gains
Net Income/Equity
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)

21. Equivalent Tax Credit
Total Long-term Debt / Equity
Total Liabilities / Equity
Total Assets / Equity
Tax Deduction * marginal tax rate

22. Working Capital
(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)
(1/T)(r1+r2+...+rT)
current assets - current liabilities

23. EBIT
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(current assets - inventory) / current liabilities
current assets - current liabilities
Earnings Before Interest & Taxes

24. Net After Tax Profit Margin
EAT / Sales
(current assets - inventory) / current liabilities
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Total Return (1 - tax bracket)

25. PEG ratio
Sales / Average Total Assets
Total Liabilities / Equity
Price Earnings Growth ratio; P/E divided by projected earnings growth
Dollars of coupon interest per year/Bond's current market price

26. Present value of a Bond
Total Long-term Debt / Equity
EBIT/I (Where I = Interest Expense)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(1/T)(r1+r2+...+rT)

27. Debt to Equity ratio
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Tax Credit/marginal tax rate
Total Long-term Debt / Equity
taxable interest - non-qual. divs - short-term cap. gains

28. Quick Ratio (aka Acid test)
(current assets - inventory) / current liabilities
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Tax Credit/marginal tax rate
1 - the payout ratio

29. Cash Ratio
(cash + marketable securities) / current liabilities
Sales / Average Total Assets
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Price/Earnings per share

30. CFP Ethical principles
(cash + marketable securities) / current liabilities
1 - the payout ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
dividends / earnings

31. Attributes of Effective Advisor communiations
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
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
EAT / Sales

32. Equivalent Tax Deduction
Total Assets / Equity
[(1+ NR) / (1 + CCL)] - 1
Tax Credit/marginal tax rate
Price Earnings Growth ratio; P/E divided by projected earnings growth

33. 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
1 - the payout ratio
[(1+ NR) / (1 + CCL)] - 1

34. Sustainable Growth Rate
g = ROE X b - where b is equal to the retention ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
taxable interest - non-qual. divs - short-term cap. gains
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

35. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
(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
(1/T)(r1+r2+...+rT)
[(1+ NR) / (1 + CCL)] - 1

36. Times Interest Earned
EBIT/I (Where I = Interest Expense)
taxable interest - non-qual. divs - short-term cap. gains
assets less liabilities - divided by the number of shares of common stock of a company
g = ROE X b - where b is equal to the retention ratio

37. Current Ratio
current assets / current liabilities
[(1+ NR) / (1 + CCL)] - 1
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

38. Holding Period Return
(P1 + D - P0)/P0
(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)
Net Worth/Total Assets

39. Current Yield of a bond

Warning: Invalid argument supplied for foreach() in /var/www/html/basicversity.com/show_quiz.php on line 183

40. Opportunities in Financial Planning
dividends / earnings
(1/T)(r1+r2+...+rT)
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
P*(1+g)/(k-g) P=div per share divided by other div

41. Book Value (of company stock)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
assets less liabilities - divided by the number of shares of common stock of a company
Tax Deduction * marginal tax rate
EAT / Sales

42. 'normal' ratio
Net Worth/Total Assets
Tax Free Yield/(1 - Tax Bracket)
Net Income/Equity
P*(1+g)/(k-g) P=div per share divided by other div

43. Solvency Ratio
Net Worth/Total Assets
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
1 - the payout ratio
(P1 + D - P0)/P0

44. The retention ratio
current assets / current liabilities
1 - the payout ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Sales / Average Total Assets

45. financial life cycle
current assets / current liabilities
Sources of Funds-Use of Funds or Money in- Money out
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)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

46. P/E ratio
Total Return (1 - tax bracket)
[(1+ NR) / (1 + CCL)] - 1
Price/Earnings per share
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)