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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 Yield
Tax Free Yield/(1 - Tax Bracket)
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
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Net Worth/Total Assets

2. Book Value (of company stock)
current assets - current liabilities
(Mortgage+Debt Repayment)/Net Income
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
assets less liabilities - divided by the number of shares of common stock of a company

3. Debt to Equity ratio
Earnings After Taxes
dividends / earnings
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Total Long-term Debt / Equity

4. Gross Investment income
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
EAT / Sales
taxable interest - non-qual. divs - short-term cap. gains
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

5. PEG ratio
Net Income/Equity
[(1+ NR) / (1 + CCL)] - 1
Price Earnings Growth ratio; P/E divided by projected earnings growth
assets less liabilities - divided by the number of shares of common stock of a company

6. Major CFP Planning Areas
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)
Tax Credit/marginal tax rate
Total Return (1 - tax bracket)

7. P/E ratio
Price/Earnings per share
P*(1+g)/(k-g) P=div per share divided by other div
taxable interest - non-qual. divs - short-term cap. gains
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

8. Solvency Ratio
(cash + marketable securities) / current liabilities
Total Long-term Debt / Equity
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Net Worth/Total Assets

9. Savings Ratio
EAT / Sales
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

10. Current Yield of a bond

11. Domains of a CFP
Net Worth/Total Assets
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
P*(1+g)/(k-g) P=div per share divided by other div

12. Net Investment 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)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(1/T)(r1+r2+...+rT)

13. Equivalent Tax Deduction
Tax Credit/marginal tax rate
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
current assets / current liabilities
Price Earnings Growth ratio; P/E divided by projected earnings growth

14. Asset Turnover Ratio
Net Worth/Total Assets
Sales / Average Total Assets
[(1+ NR) / (1 + CCL)] - 1
current assets / current liabilities

15. Net After Tax Profit Margin
EAT / Sales
(Mortgage+Debt Repayment)/Net Income
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Liabilities / Equity

16. ROE (Return On Equity)
Tax Free Yield/(1 - Tax Bracket)
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
Net Income/Equity
Earnings After Taxes

17. financial planning pyramid
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
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)
EBIT/I (Where I = Interest Expense)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

18. The payout ratio
Tax Deduction * marginal tax rate
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
dividends / earnings
Dollars of coupon interest per year/Bond's current market price

19. Total Debt to Equity ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Liabilities / Equity
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

20. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Tax Credit/marginal tax rate
Total Long-term Debt / Equity
Sales / Average Total Assets
(1/T)(r1+r2+...+rT)

21. Times Interest Earned
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
EBIT/I (Where I = Interest Expense)
Explanatory - Interpretive - Reassuring - Suggestive
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

22. Debt Service Ratio
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
(Mortgage+Debt Repayment)/Net Income
Tax Deduction * marginal tax rate

23. 'normal' ratio
EBIT/I (Where I = Interest Expense)
current assets / current liabilities
P*(1+g)/(k-g) P=div per share divided by other div
Net Worth/Total Assets

24. Attributes of Effective Advisor communiations
1 - the payout ratio
assets less liabilities - divided by the number of shares of common stock of a company
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Tax Free Yield/(1 - Tax Bracket)

25. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Earnings After Taxes
1 - the payout ratio
(P1 + D - P0)/P0

26. Working Capital
(1/T)(r1+r2+...+rT)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
current assets - current liabilities
Total Return (1 - tax bracket)

27. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
[(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
P*(1+g)/(k-g) P=div per share divided by other div
(1/T)(r1+r2+...+rT)

28. Net Cash Flow
Net Worth/Total Assets
Sources of Funds-Use of Funds or Money in- Money out
Price/Earnings per share
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

29. CFP Ethical principles
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Earnings After Taxes
EAT / Sales
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

30. Assets to Equity ratio
1 - the payout ratio
Total Assets / Equity
Sources of Funds-Use of Funds or Money in- Money out
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

31. 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
(cash + marketable securities) / current liabilities
Total Assets / Equity
Net Income/Equity

32. Social Styles
driving - expressive - amiable - analytical
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
dividends / earnings
(cash + marketable securities) / current liabilities

33. Current Ratio
(1/T)(r1+r2+...+rT)
Explanatory - Interpretive - Reassuring - Suggestive
driving - expressive - amiable - analytical
current assets / current liabilities

34. Cash Ratio
(1/T)(r1+r2+...+rT)
Explanatory - Interpretive - Reassuring - Suggestive
(cash + marketable securities) / current liabilities
Earnings After Taxes

35. Sustainable Growth Rate
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
driving - expressive - amiable - analytical
Net Income/Equity
g = ROE X b - where b is equal to the retention ratio

36. financial life cycle
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
EAT / Sales
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)

37. Quick Ratio (aka Acid test)
[(1+ NR) / (1 + CCL)] - 1
Sales / Average Total Assets
(cash + marketable securities) / current liabilities
(current assets - inventory) / current liabilities

38. EBIT
(current assets - inventory) / current liabilities
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Tax Deduction * marginal tax rate
Earnings Before Interest & Taxes

39. Present value of a Bond
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
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

40. After-tax Return
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Total Return (1 - tax bracket)
Sales / Average Total Assets
Dollars of coupon interest per year/Bond's current market price

41. aka Net Income
Total Liabilities / Equity
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Earnings After Taxes
Total Return (1 - tax bracket)

42. Equivalent Tax Credit
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
[(1+ NR) / (1 + CCL)] - 1
1 - the payout ratio
Tax Deduction * marginal tax rate

43. Holding Period Return
Sales / Average Total Assets
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(P1 + D - P0)/P0
Price Earnings Growth ratio; P/E divided by projected earnings growth

44. Types of Leading Responses
Sales / Average Total Assets
Explanatory - Interpretive - Reassuring - Suggestive
(Mortgage+Debt Repayment)/Net Income
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

45. The retention ratio
1 - the payout ratio
Total Assets / Equity
EBIT/I (Where I = Interest Expense)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

46. Types of Understanding Responses Associated With Active Listening
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Explanatory - Interpretive - Reassuring - Suggestive
Earnings Before Interest & Taxes
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income