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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. 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