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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. Equivalent Tax Credit
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)
Sources of Funds-Use of Funds or Money in- Money out
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Tax Deduction * marginal tax rate

2. After-tax Return
Total Return (1 - tax bracket)
(current assets - inventory) / current liabilities
(P1 + D - P0)/P0
Earnings After Taxes

3. Gross Investment income
(cash + marketable securities) / current liabilities
taxable interest - non-qual. divs - short-term cap. gains
Total Long-term Debt / Equity
Total Liabilities / Equity

4. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
(1/T)(r1+r2+...+rT)
EAT / Sales
(Mortgage+Debt Repayment)/Net Income
Price/Earnings per share

5. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
(cash + marketable securities) / current liabilities
driving - expressive - amiable - analytical
1 - the payout ratio
[(1+ NR) / (1 + CCL)] - 1

6. financial life cycle
EAT / Sales
(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)
Net Income/Equity

7. P/E ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(Mortgage+Debt Repayment)/Net Income
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Price/Earnings per share

8. Holding Period Return
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(P1 + D - P0)/P0
Explanatory - Interpretive - Reassuring - Suggestive
Earnings Before Interest & Taxes

9. Current Yield of a bond

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10. Sustainable Growth Rate
(1/T)(r1+r2+...+rT)
Earnings Before Interest & Taxes
Explanatory - Interpretive - Reassuring - Suggestive
g = ROE X b - where b is equal to the retention ratio

11. Debt to Equity ratio
P*(1+g)/(k-g) P=div per share divided by other div
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Long-term Debt / Equity
g = ROE X b - where b is equal to the retention ratio

12. Net Cash Flow
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
1 - the payout ratio
(P1 + D - P0)/P0
Sources of Funds-Use of Funds or Money in- Money out

13. Current Ratio
1 - the payout ratio
Total Return (1 - tax bracket)
current assets / current liabilities
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

14. After-tax Yield
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(current assets - inventory) / current liabilities
Tax Free Yield/(1 - Tax Bracket)

15. Net After Tax Profit Margin
EAT / Sales
Price/Earnings per share
Net Worth/Total Assets
Total Long-term Debt / Equity

16. Assets to Equity ratio
Dollars of coupon interest per year/Bond's current market price
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
[(1+ NR) / (1 + CCL)] - 1
Total Assets / Equity

17. Book Value (of company stock)
(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
1 - the payout ratio
driving - expressive - amiable - analytical

18. EBIT
current assets / current liabilities
(P1 + D - P0)/P0
Earnings Before Interest & Taxes
Price/Earnings per share

19. The retention ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
1 - the payout ratio
taxable interest - non-qual. divs - short-term cap. gains

20. Major CFP Planning Areas
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Tax Credit/marginal tax rate

21. Liquidity Ratio
Tax Free Yield/(1 - Tax Bracket)
Price/Earnings per share
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

22. ROE (Return On Equity)
Net Income/Equity
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
(Mortgage+Debt Repayment)/Net Income
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

23. Present value of a Bond
Total Return (1 - tax bracket)
(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
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

24. PEG ratio
current assets - current liabilities
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
Tax Free Yield/(1 - Tax Bracket)

25. Cash Ratio
Price/Earnings per share
(cash + marketable securities) / 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
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

26. Types of Understanding Responses Associated With Active Listening
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
1 - the payout ratio
current assets / current liabilities
(Mortgage+Debt Repayment)/Net Income

27. Debt Service Ratio
g = ROE X b - where b is equal to the retention ratio
Earnings Before Interest & Taxes
(Mortgage+Debt Repayment)/Net Income
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

28. Asset Turnover Ratio
Sales / Average Total Assets
(current assets - inventory) / current liabilities
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)
Net Worth/Total Assets

29. Domains of a CFP
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
Total Assets / Equity
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

30. Total Debt to Equity ratio
Total Liabilities / Equity
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Total Assets / Equity
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

31. Types of Leading Responses
EBIT/I (Where I = Interest Expense)
Explanatory - Interpretive - Reassuring - Suggestive
dividends / earnings
Dollars of coupon interest per year/Bond's current market price

32. financial planning pyramid
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(P1 + D - P0)/P0
P*(1+g)/(k-g) P=div per share divided by other div
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)

33. Equivalent Tax Deduction
Tax Credit/marginal tax rate
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Sales / Average Total Assets

34. Savings Ratio
Tax Credit/marginal tax rate
Dollars of coupon interest per year/Bond's current market price
P*(1+g)/(k-g) P=div per share divided by other div
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

35. CFP Ethical principles
Total Return (1 - tax bracket)
current assets - current liabilities
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
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

36. Times Interest Earned
Sources of Funds-Use of Funds or Money in- Money out
EBIT/I (Where I = Interest Expense)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

37. Social Styles
driving - expressive - amiable - analytical
Earnings After Taxes
Tax Deduction * marginal tax rate
current assets / current liabilities

38. Attributes of Effective Advisor communiations
Sales / Average Total Assets
Tax Free Yield/(1 - Tax Bracket)
P*(1+g)/(k-g) P=div per share divided by other div
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

39. Net Investment Income
Price Earnings Growth ratio; P/E divided by projected earnings growth
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Tax Deduction * marginal tax rate
Net Worth/Total Assets

40. Working Capital
current assets - current liabilities
EAT / Sales
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

41. Solvency Ratio
Net Worth/Total Assets
Total Liabilities / Equity
Earnings Before Interest & Taxes
Sources of Funds-Use of Funds or Money in- Money out

42. aka Net Income
Tax Deduction * marginal tax rate
assets less liabilities - divided by the number of shares of common stock of a company
Earnings After Taxes
Total Liabilities / Equity

43. 'normal' ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
(P1 + D - P0)/P0
P*(1+g)/(k-g) P=div per share divided by other div
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

44. The payout ratio
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
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
dividends / earnings

45. Quick Ratio (aka Acid test)
Net Income/Equity
(current assets - inventory) / current liabilities
Tax Credit/marginal tax rate
g = ROE X b - where b is equal to the retention ratio

46. Opportunities in Financial Planning
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
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
(1/T)(r1+r2+...+rT)