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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. Net After Tax Profit Margin
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
taxable interest - non-qual. divs - short-term cap. gains
EAT / Sales
current assets - current liabilities

2. Debt Service Ratio
Earnings Before Interest & Taxes
1 - the payout ratio
(Mortgage+Debt Repayment)/Net Income
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

3. ROE (Return On Equity)
[(1+ NR) / (1 + CCL)] - 1
Net Income/Equity
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(P1 + D - P0)/P0

4. CFP Ethical principles
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Sales / Average Total Assets
Net Worth/Total Assets

5. financial planning pyramid
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Net Income/Equity
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
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. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(cash + marketable securities) / current liabilities
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Sources of Funds-Use of Funds or Money in- Money out

7. Sustainable Growth Rate
Explanatory - Interpretive - Reassuring - Suggestive
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
g = ROE X b - where b is equal to the retention ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

8. After-tax Return
Tax Credit/marginal tax rate
Total Return (1 - tax bracket)
assets less liabilities - divided by the number of shares of common stock of a company
1 - the payout ratio

9. Working Capital
(Mortgage+Debt Repayment)/Net Income
current assets - current liabilities
(cash + marketable securities) / current liabilities
Net Worth/Total Assets

10. Major CFP Planning Areas
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)
(P1 + D - P0)/P0
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

11. Equivalent Tax Credit
assets less liabilities - divided by the number of shares of common stock of a company
Total Assets / Equity
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Tax Deduction * marginal tax rate

12. aka Net Income
Tax Free Yield/(1 - Tax Bracket)
(1/T)(r1+r2+...+rT)
Earnings After Taxes
Net Income/Equity

13. Social Styles
Tax Free Yield/(1 - Tax Bracket)
driving - expressive - amiable - analytical
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(current assets - inventory) / current liabilities

14. Attributes of Effective Advisor communiations
taxable interest - non-qual. divs - short-term cap. gains
(P1 + D - P0)/P0
Tax Free Yield/(1 - Tax Bracket)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

15. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Tax Free Yield/(1 - Tax Bracket)
(1/T)(r1+r2+...+rT)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

16. financial life cycle
dividends / earnings
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)
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

17. Book Value (of company stock)
assets less liabilities - divided by the number of shares of common stock of a company
Tax Credit/marginal tax rate
Tax Deduction * marginal tax rate
Explanatory - Interpretive - Reassuring - Suggestive

18. Quick Ratio (aka Acid test)
Net Income/Equity
Total Liabilities / Equity
Total Return (1 - tax bracket)
(current assets - inventory) / current liabilities

19. 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
Earnings After Taxes
EAT / Sales
Total Assets / Equity

20. 'normal' ratio
Total Return (1 - tax bracket)
Total Liabilities / Equity
P*(1+g)/(k-g) P=div per share divided by other div
(Mortgage+Debt Repayment)/Net Income

21. Total Debt to Equity ratio
Total Liabilities / Equity
Price/Earnings per share
Total Return (1 - tax bracket)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

22. EBIT
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(Mortgage+Debt Repayment)/Net Income
Tax Deduction * marginal tax rate
Earnings Before Interest & Taxes

23. Equivalent Tax Deduction
g = ROE X b - where b is equal to the retention ratio
EAT / Sales
driving - expressive - amiable - analytical
Tax Credit/marginal tax rate

24. Cash Ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(1/T)(r1+r2+...+rT)
(cash + marketable securities) / current liabilities
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

25. Types of Leading Responses
Total Liabilities / Equity
Explanatory - Interpretive - Reassuring - Suggestive
dividends / earnings
P*(1+g)/(k-g) P=div per share divided by other div

26. Current Ratio
(Mortgage+Debt Repayment)/Net Income
Sources of Funds-Use of Funds or Money in- Money out
1 - the payout ratio
current assets / current liabilities

27. Holding Period Return
(P1 + D - P0)/P0
(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
Total Return (1 - tax bracket)

28. Domains of a CFP
1 - the payout ratio
(1/T)(r1+r2+...+rT)
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

29. Solvency Ratio
EBIT/I (Where I = Interest Expense)
driving - expressive - amiable - analytical
Net Worth/Total Assets
Price Earnings Growth ratio; P/E divided by projected earnings growth

30. Gross Investment income
Explanatory - Interpretive - Reassuring - Suggestive
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
taxable interest - non-qual. divs - short-term cap. gains
Total Liabilities / Equity

31. Assets to Equity ratio
Total Assets / 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)
Explanatory - Interpretive - Reassuring - Suggestive
current assets - current liabilities

32. Present value of a Bond
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Dollars of coupon interest per year/Bond's current market price
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(current assets - inventory) / current liabilities

33. The retention ratio
Sales / Average Total Assets
current assets / current liabilities
Price/Earnings per share
1 - the payout ratio

34. PEG ratio
P*(1+g)/(k-g) P=div per share divided by other div
EBIT/I (Where I = Interest Expense)
Tax Credit/marginal tax rate
Price Earnings Growth ratio; P/E divided by projected earnings growth

35. P/E ratio
Tax Credit/marginal tax rate
Price/Earnings per share
Tax Free Yield/(1 - Tax Bracket)
(Mortgage+Debt Repayment)/Net Income

36. Net Cash Flow
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
(P1 + D - P0)/P0
Sources of Funds-Use of Funds or Money in- Money out

37. The payout ratio
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Sales / Average Total Assets
dividends / earnings
driving - expressive - amiable - analytical

38. Debt to Equity ratio
assets less liabilities - divided by the number of shares of common stock of a company
Total Long-term Debt / Equity
Sales / Average Total Assets
Total Return (1 - tax bracket)

39. Current Yield of a bond

40. Savings Ratio
Total Long-term Debt / Equity
current assets - current liabilities
dividends / earnings
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

41. After-tax Yield
Tax Free Yield/(1 - Tax Bracket)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
taxable interest - non-qual. divs - short-term cap. gains

42. Times Interest Earned
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(Mortgage+Debt Repayment)/Net Income
EBIT/I (Where I = Interest Expense)
Sales / Average Total Assets

43. Asset Turnover Ratio
Earnings Before Interest & Taxes
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Sales / Average 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)

44. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
(1/T)(r1+r2+...+rT)
driving - expressive - amiable - analytical
1 - the payout ratio
[(1+ NR) / (1 + CCL)] - 1

45. Net Investment Income
Total Long-term Debt / Equity
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
dividends / earnings
Net Income/Equity

46. Types of Understanding Responses Associated With Active Listening
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
current assets - current liabilities
Price Earnings Growth ratio; P/E divided by projected earnings growth
driving - expressive - amiable - analytical