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