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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. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
(P1 + D - P0)/P0
(1/T)(r1+r2+...+rT)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(cash + marketable securities) / current liabilities

2. Equivalent Tax Credit
Tax Credit/marginal tax rate
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Tax Deduction * marginal tax rate
taxable interest - non-qual. divs - short-term cap. gains

3. PEG ratio
driving - expressive - amiable - analytical
current assets / current liabilities
Price Earnings Growth ratio; P/E divided by projected earnings growth
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

4. Book Value (of company stock)
Sources of Funds-Use of Funds or Money in- Money out
Sales / Average Total Assets
(cash + marketable securities) / current liabilities
assets less liabilities - divided by the number of shares of common stock of a company

5. Present value of a Bond
Total Return (1 - tax bracket)
Explanatory - Interpretive - Reassuring - Suggestive
(cash + marketable securities) / current liabilities
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

6. Net Cash Flow
Net Worth/Total Assets
1 - the payout ratio
(P1 + D - P0)/P0
Sources of Funds-Use of Funds or Money in- Money out

7. P/E ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
[(1+ NR) / (1 + CCL)] - 1
Price/Earnings per share
assets less liabilities - divided by the number of shares of common stock of a company

8. Savings Ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Total Long-term Debt / Equity
Total Return (1 - tax bracket)
1 - the payout ratio

9. After-tax Yield
Tax Free Yield/(1 - Tax Bracket)
taxable interest - non-qual. divs - short-term cap. gains
assets less liabilities - divided by the number of shares of common stock of a company
1 - the payout ratio

10. The retention ratio
Tax Deduction * marginal tax rate
Net Worth/Total Assets
1 - the payout ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

11. Current Yield of a bond

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12. The payout ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
1 - the payout ratio
dividends / earnings
current assets - current liabilities

13. financial planning pyramid
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
current assets / current liabilities
assets less liabilities - divided by the number of shares of common stock of a company
(Mortgage+Debt Repayment)/Net Income

14. Sustainable Growth Rate
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(1/T)(r1+r2+...+rT)
g = ROE X b - where b is equal to the retention ratio
Tax Credit/marginal tax rate

15. After-tax Return
Sources of Funds-Use of Funds or Money in- Money out
Total Return (1 - tax bracket)
taxable interest - non-qual. divs - short-term cap. gains
(Mortgage+Debt Repayment)/Net Income

16. Total Debt to Equity ratio
Total Liabilities / Equity
assets less liabilities - divided by the number of shares of common stock of a company
dividends / earnings
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

17. Debt to Equity ratio
Total Long-term Debt / Equity
Tax Credit/marginal tax rate
assets less liabilities - divided by the number of shares of common stock of a company
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

18. Attributes of Effective Advisor communiations
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Earnings After Taxes
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
taxable interest - non-qual. divs - short-term cap. gains

19. Opportunities in Financial Planning
1 - 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
EAT / Sales
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

20. Equivalent Tax Deduction
dividends / earnings
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
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 Credit/marginal tax rate

21. Social Styles
(1/T)(r1+r2+...+rT)
driving - expressive - amiable - analytical
Sales / Average Total Assets
Earnings Before Interest & Taxes

22. Debt Service Ratio
(Mortgage+Debt Repayment)/Net Income
current assets / current liabilities
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

23. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
[(1+ NR) / (1 + CCL)] - 1
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
1 - the payout ratio

24. Gross Investment income
Net Worth/Total Assets
taxable interest - non-qual. divs - short-term cap. gains
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

25. Types of Understanding Responses Associated With Active Listening
Total Assets / Equity
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Price/Earnings per share

26. CFP Ethical principles
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
current assets / current liabilities
(current assets - inventory) / current liabilities

27. financial life cycle
driving - expressive - amiable - analytical
Net Cash Flow+Already Being Saved or Invested/Annual After Tax 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)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

28. Holding Period Return
(P1 + D - P0)/P0
Total Liabilities / Equity
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
1 - the payout ratio

29. aka Net Income
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(cash + marketable securities) / current liabilities
Earnings After Taxes
(P1 + D - P0)/P0

30. Types of Leading Responses
1 - the payout ratio
Total Return (1 - tax bracket)
Explanatory - Interpretive - Reassuring - Suggestive
(P1 + D - P0)/P0

31. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
[(1+ NR) / (1 + CCL)] - 1
Tax Free Yield/(1 - Tax Bracket)
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)
driving - expressive - amiable - analytical

32. EBIT
1 - the payout ratio
[(1+ NR) / (1 + CCL)] - 1
(Mortgage+Debt Repayment)/Net Income
Earnings Before Interest & Taxes

33. Net After Tax Profit Margin
EAT / Sales
(1/T)(r1+r2+...+rT)
Sales / Average Total Assets
Net Income/Equity

34. Assets to Equity ratio
Total Assets / Equity
Total Liabilities / Equity
Tax Deduction * marginal tax rate
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

35. 'normal' ratio
P*(1+g)/(k-g) P=div per share divided by other div
Total Assets / Equity
Dollars of coupon interest per year/Bond's current market price
Price/Earnings per share

36. Times Interest Earned
EBIT/I (Where I = Interest Expense)
Tax Credit/marginal tax rate
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
driving - expressive - amiable - analytical

37. Cash Ratio
(cash + marketable securities) / current liabilities
Sources of Funds-Use of Funds or Money in- Money out
taxable interest - non-qual. divs - short-term cap. gains
(Mortgage+Debt Repayment)/Net Income

38. Major CFP Planning Areas
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
Sales / Average Total Assets
g = ROE X b - where b is equal to the retention ratio

39. Domains of a CFP
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Price Earnings Growth ratio; P/E divided by projected earnings growth
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
current assets / current liabilities

40. ROE (Return On Equity)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(P1 + D - P0)/P0
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Net Income/Equity

41. Asset Turnover Ratio
assets less liabilities - divided by the number of shares of common stock of a company
Earnings Before Interest & Taxes
Sales / Average Total Assets
Total Return (1 - tax bracket)

42. Quick Ratio (aka Acid test)
taxable interest - non-qual. divs - short-term cap. gains
Tax Deduction * marginal tax rate
(current assets - inventory) / current liabilities
current assets / current liabilities

43. Net Investment Income
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
P*(1+g)/(k-g) P=div per share divided by other div
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Assets / Equity

44. Solvency Ratio
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Net Worth/Total Assets
Price/Earnings per share
Total Liabilities / Equity

45. Current Ratio
(1/T)(r1+r2+...+rT)
current assets / current liabilities
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Tax Credit/marginal tax rate

46. Working Capital
Sales / Average Total Assets
Total Assets / Equity
Net Worth/Total Assets
current assets - current liabilities