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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. 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
assets less liabilities - divided by the number of shares of common stock of a company
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Assets / Equity

2. 'normal' ratio
P*(1+g)/(k-g) P=div per share divided by other div
1 - the payout ratio
current assets - current liabilities
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

3. Net Cash Flow
dividends / earnings
g = ROE X b - where b is equal to the retention ratio
Sources of Funds-Use of Funds or Money in- Money out
1 - the payout ratio

4. Debt to Equity ratio
Explanatory - Interpretive - Reassuring - Suggestive
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Long-term Debt / Equity
assets less liabilities - divided by the number of shares of common stock of a company

5. Quick Ratio (aka Acid test)
Sales / Average Total Assets
(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
(current assets - inventory) / current liabilities

6. Gross Investment income
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
taxable interest - non-qual. divs - short-term cap. gains
driving - expressive - amiable - analytical
Total Assets / Equity

7. Net After Tax Profit Margin
(current assets - inventory) / current liabilities
current assets - current liabilities
EAT / Sales
Price/Earnings per share

8. Asset Turnover Ratio
dividends / earnings
Sales / Average Total Assets
taxable interest - non-qual. divs - short-term cap. gains
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

9. PEG ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Net Worth/Total Assets

10. Solvency Ratio
assets less liabilities - divided by the number of shares of common stock of a company
1 - the payout ratio
Net Worth/Total Assets
Explanatory - Interpretive - Reassuring - Suggestive

11. Social Styles
driving - expressive - amiable - analytical
(current assets - inventory) / current liabilities
Explanatory - Interpretive - Reassuring - Suggestive
g = ROE X b - where b is equal to the retention ratio

12. Types of Understanding Responses Associated With Active Listening
(P1 + D - P0)/P0
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Long-term Debt / Equity
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

13. aka Net Income
Total Liabilities / Equity
P*(1+g)/(k-g) P=div per share divided by other div
Tax Deduction * marginal tax rate
Earnings After Taxes

14. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
assets less liabilities - divided by the number of shares of common stock of a company
[(1+ NR) / (1 + CCL)] - 1
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

15. 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)
g = ROE X b - where b is equal to the retention ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth

16. financial planning pyramid
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Total Long-term Debt / Equity
(1/T)(r1+r2+...+rT)
Total Liabilities / Equity

17. financial life cycle
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)
(P1 + D - P0)/P0
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

18. Book Value (of company stock)
Tax Credit/marginal tax rate
Price/Earnings per share
EBIT/I (Where I = Interest Expense)
assets less liabilities - divided by the number of shares of common stock of a company

19. Cash Ratio
(cash + marketable securities) / current liabilities
Tax Credit/marginal tax rate
Total Return (1 - tax bracket)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

20. Working Capital
Price Earnings Growth ratio; P/E divided by projected earnings growth
Total Long-term Debt / Equity
current assets - current liabilities
EAT / Sales

21. After-tax Yield
Tax Free Yield/(1 - Tax Bracket)
Tax Deduction * marginal tax rate
Earnings Before Interest & Taxes
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)

22. EBIT
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 Before Interest & Taxes
Price Earnings Growth ratio; P/E divided by projected earnings growth
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

23. Current Yield of a bond

24. CFP Ethical principles
dividends / earnings
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
current assets - current liabilities

25. Equivalent Tax Deduction
Total Return (1 - tax bracket)
Tax Credit/marginal tax rate
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(Mortgage+Debt Repayment)/Net Income

26. Sustainable Growth Rate
g = ROE X b - where b is equal to the retention ratio
Total Return (1 - tax bracket)
(cash + marketable securities) / current liabilities
Total Long-term Debt / Equity

27. Major CFP Planning Areas
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(cash + marketable securities) / current liabilities
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Tax Deduction * marginal tax rate

28. Current Ratio
Total Long-term Debt / Equity
current assets / current liabilities
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
P*(1+g)/(k-g) P=div per share divided by other div

29. The payout ratio
dividends / earnings
current assets / current liabilities
Total Liabilities / Equity
P*(1+g)/(k-g) P=div per share divided by other div

30. Equivalent Tax Credit
Earnings Before Interest & Taxes
P*(1+g)/(k-g) P=div per share divided by other div
(P1 + D - P0)/P0
Tax Deduction * marginal tax rate

31. Attributes of Effective Advisor communiations
Earnings After Taxes
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Earnings Before Interest & Taxes

32. P/E ratio
Tax Deduction * marginal tax rate
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)
Price/Earnings per share

33. Times Interest Earned
Dollars of coupon interest per year/Bond's current market price
EAT / Sales
(Mortgage+Debt Repayment)/Net Income
EBIT/I (Where I = Interest Expense)

34. Assets to Equity ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
current assets - current liabilities
Total Assets / Equity
(current assets - inventory) / current liabilities

35. ROE (Return On Equity)
Net Income/Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
EAT / Sales
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

36. Savings Ratio
(P1 + D - P0)/P0
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Tax Free Yield/(1 - Tax Bracket)
[(1+ NR) / (1 + CCL)] - 1

37. Holding Period Return
Total Long-term Debt / Equity
(P1 + D - P0)/P0
Tax Free Yield/(1 - Tax Bracket)
Price Earnings Growth ratio; P/E divided by projected earnings growth

38. Types of Leading Responses
Total Assets / Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
driving - expressive - amiable - analytical
Explanatory - Interpretive - Reassuring - Suggestive

39. Net Investment Income
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
[(1+ NR) / (1 + CCL)] - 1
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

40. Total Debt to Equity ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
P*(1+g)/(k-g) P=div per share divided by other div
Tax Credit/marginal tax rate
Total Liabilities / Equity

41. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
[(1+ NR) / (1 + CCL)] - 1
(1/T)(r1+r2+...+rT)
(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

42. Debt Service Ratio
P*(1+g)/(k-g) P=div per share divided by other div
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(Mortgage+Debt Repayment)/Net Income
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)

43. Opportunities in Financial Planning
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
taxable interest - non-qual. divs - short-term cap. gains
Sales / Average Total Assets

44. The retention ratio
Net Income/Equity
Total Return (1 - tax bracket)
1 - the payout ratio
taxable interest - non-qual. divs - short-term cap. gains

45. Liquidity Ratio
P*(1+g)/(k-g) P=div per share divided by other div
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Liabilities / Equity
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

46. After-tax Return
1 - the payout ratio
Total Return (1 - tax bracket)
Total Long-term Debt / Equity
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence