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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. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
Tax Deduction * marginal tax rate
(Mortgage+Debt Repayment)/Net Income
EBIT/I (Where I = Interest Expense)
[(1+ NR) / (1 + CCL)] - 1

2. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
P*(1+g)/(k-g) P=div per share divided by other div
(Mortgage+Debt Repayment)/Net Income
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. Cash Ratio
Net Income/Equity
(cash + marketable securities) / current liabilities
Total Return (1 - tax bracket)
driving - expressive - amiable - analytical

4. Solvency Ratio
Net Worth/Total Assets
Tax Free Yield/(1 - Tax Bracket)
Earnings Before Interest & Taxes
Net Income/Equity

5. Gross Investment income
1 - the payout ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Earnings Before Interest & Taxes
taxable interest - non-qual. divs - short-term cap. gains

6. Types of Understanding Responses Associated With Active Listening
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Tax Free Yield/(1 - Tax Bracket)
(current assets - inventory) / current liabilities
current assets - current liabilities

7. Equivalent Tax Credit
Total Liabilities / 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)
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

8. Debt Service Ratio
(Mortgage+Debt Repayment)/Net Income
current assets - current liabilities
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Net Worth/Total Assets

9. Savings Ratio
Total Long-term Debt / Equity
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Tax Free Yield/(1 - Tax Bracket)

10. aka Net Income
Sources of Funds-Use of Funds or Money in- Money out
Earnings Before Interest & Taxes
Earnings After Taxes
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

11. Working Capital
Net Income/Equity
current assets / current liabilities
current assets - current liabilities
P*(1+g)/(k-g) P=div per share divided by other div

12. Quick Ratio (aka Acid test)
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
(current assets - inventory) / current liabilities
dividends / earnings
Explanatory - Interpretive - Reassuring - Suggestive

13. Net Cash Flow
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Net Worth/Total Assets
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Sources of Funds-Use of Funds or Money in- Money out

14. Present value of a Bond
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Tax Credit/marginal tax rate
Explanatory - Interpretive - Reassuring - Suggestive
[(1+ NR) / (1 + CCL)] - 1

15. Debt to Equity ratio
Total Long-term Debt / Equity
(current assets - inventory) / current liabilities
Tax Credit/marginal tax rate
P*(1+g)/(k-g) P=div per share divided by other div

16. financial planning pyramid
(Mortgage+Debt Repayment)/Net Income
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
assets less liabilities - divided by the number of shares of common stock of a company

17. Types of Leading Responses
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
Explanatory - Interpretive - Reassuring - Suggestive
taxable interest - non-qual. divs - short-term cap. gains
Total Liabilities / Equity

18. Current Yield of a bond

19. 'normal' ratio
P*(1+g)/(k-g) P=div per share divided by other div
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Price/Earnings per share
dividends / earnings

20. ROE (Return On Equity)
current assets / current liabilities
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Net Income/Equity
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

21. The retention ratio
1 - the payout ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Earnings After Taxes
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

22. After-tax Yield
Total Liabilities / Equity
Tax Free Yield/(1 - Tax Bracket)
(cash + marketable securities) / current liabilities
current assets - current liabilities

23. P/E ratio
Sources of Funds-Use of Funds or Money in- Money out
Price/Earnings per share
Total Assets / Equity
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

24. Net After Tax Profit Margin
(P1 + D - P0)/P0
Sources of Funds-Use of Funds or Money in- Money out
Net Income/Equity
EAT / Sales

25. Social Styles
Tax Deduction * marginal tax rate
1 - the payout ratio
driving - expressive - amiable - analytical
Total Assets / Equity

26. Times Interest Earned
Earnings Before Interest & Taxes
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)
EBIT/I (Where I = Interest Expense)

27. Book Value (of company stock)
(cash + marketable securities) / current liabilities
assets less liabilities - divided by the number of shares of common stock of a company
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
current assets / current liabilities

28. financial life cycle
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Net Income/Equity
assets less liabilities - divided by the number of shares of common stock of a company
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)

29. Equivalent Tax Deduction
(cash + marketable securities) / current liabilities
Tax Credit/marginal tax rate
current assets - current liabilities
(P1 + D - P0)/P0

30. Total Debt to Equity ratio
Sources of Funds-Use of Funds or Money in- Money out
Total Liabilities / Equity
Total Assets / Equity
Total Long-term Debt / Equity

31. Assets to Equity ratio
Tax Free Yield/(1 - Tax Bracket)
Total Assets / Equity
1 - the payout ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

32. Holding Period Return
(P1 + D - P0)/P0
(cash + marketable securities) / current liabilities
Total Liabilities / Equity
Tax Free Yield/(1 - Tax Bracket)

33. The payout ratio
[(1+ NR) / (1 + CCL)] - 1
dividends / earnings
current assets / current liabilities
Earnings After Taxes

34. CFP Ethical principles
Total Assets / Equity
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

35. Current Ratio
assets less liabilities - divided by the number of shares of common stock of a company
Price Earnings Growth ratio; P/E divided by projected earnings growth
current assets / current liabilities
(cash + marketable securities) / current liabilities

36. Attributes of Effective Advisor communiations
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(P1 + D - P0)/P0
Tax Credit/marginal tax rate

37. PEG ratio
driving - expressive - amiable - analytical
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
Sales / Average Total Assets

38. Major CFP Planning Areas
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(P1 + D - P0)/P0
dividends / earnings
EAT / Sales

39. Domains of a CFP
Tax Free Yield/(1 - Tax Bracket)
(1/T)(r1+r2+...+rT)
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

40. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
(current assets - inventory) / current liabilities
(1/T)(r1+r2+...+rT)
taxable interest - non-qual. divs - short-term cap. gains
g = ROE X b - where b is equal to the retention ratio

41. Asset Turnover Ratio
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Sales / Average Total Assets
Dollars of coupon interest per year/Bond's current market price
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

42. Opportunities in Financial Planning
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Total Liabilities / 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
EBIT/I (Where I = Interest Expense)

43. Sustainable Growth Rate
g = ROE X b - where b is equal to the retention ratio
Total Assets / Equity
(cash + marketable securities) / current liabilities
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

44. After-tax Return
1 - the payout ratio
Earnings Before Interest & Taxes
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Return (1 - tax bracket)

45. Net Investment Income
driving - expressive - amiable - analytical
current assets / current liabilities
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Earnings After Taxes

46. EBIT
Explanatory - Interpretive - Reassuring - Suggestive
Earnings Before Interest & Taxes
Sales / Average Total Assets
Price Earnings Growth ratio; P/E divided by projected earnings growth