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CFP: Certified Financial Planner

Subjects : certifications, cfp, business-skills

Instructions:

Answer 46 questions in 15 minutes.
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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. financial life cycle
Total Assets / Equity
(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)
taxable interest - non-qual. divs - short-term cap. gains

2. Debt to Equity ratio
Net Income/Equity
driving - expressive - amiable - analytical
Total Long-term Debt / Equity
Tax Free Yield/(1 - Tax Bracket)

3. financial planning pyramid
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(Mortgage+Debt Repayment)/Net Income
Net Worth/Total Assets
current assets / current liabilities

4. Total Debt to Equity ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Liabilities / Equity
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Tax Free Yield/(1 - Tax Bracket)

5. CFP Ethical principles
Total Long-term Debt / Equity
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
driving - expressive - amiable - analytical
(cash + marketable securities) / current liabilities

6. The payout ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
dividends / earnings
Total Return (1 - tax bracket)
(current assets - inventory) / current liabilities

7. Net After Tax Profit Margin
Net Income/Equity
EAT / Sales
current assets - current liabilities
Tax Free Yield/(1 - Tax Bracket)

8. After-tax Yield
1 - the payout ratio
driving - expressive - amiable - analytical
Sources of Funds-Use of Funds or Money in- Money out
Tax Free Yield/(1 - Tax Bracket)

9. Debt Service Ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(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
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

10. Cash Ratio
Total Long-term Debt / Equity
(cash + marketable securities) / current liabilities
Tax Free Yield/(1 - Tax Bracket)
[(1+ NR) / (1 + CCL)] - 1

11. Types of Understanding Responses Associated With Active Listening
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
taxable interest - non-qual. divs - short-term cap. gains
Price Earnings Growth ratio; P/E divided by projected earnings growth
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

12. 'normal' ratio
Net Income/Equity
(P1 + D - P0)/P0
P*(1+g)/(k-g) P=div per share divided by other div
Earnings After Taxes

13. ROE (Return On Equity)
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
Total Assets / Equity
Net Income/Equity

14. Net Investment Income
Price/Earnings per share
current assets / current liabilities
Explanatory - Interpretive - Reassuring - Suggestive
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

15. Current Yield of a bond
Sources of Funds-Use of Funds or Money in- Money out
Dollars of coupon interest per year/Bond's current market price
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

16. Quick Ratio (aka Acid test)
(cash + marketable securities) / current liabilities
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Total Assets / Equity
(current assets - inventory) / current liabilities

17. P/E ratio
Price/Earnings per share
current assets - current liabilities
assets less liabilities - divided by the number of shares of common stock of a company
dividends / earnings

18. Social Styles
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
driving - expressive - amiable - analytical
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Tax Free Yield/(1 - Tax Bracket)

19. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
assets less liabilities - divided by the number of shares of common stock of a company
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(1/T)(r1+r2+...+rT)
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

20. Sustainable Growth Rate
g = ROE X b - where b is equal to the retention 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
Sources of Funds-Use of Funds or Money in- Money out
Total Return (1 - tax bracket)

21. Major CFP Planning Areas
(1/T)(r1+r2+...+rT)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Sales / Average Total Assets
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

22. The retention ratio
Dollars of coupon interest per year/Bond's current market price
assets less liabilities - divided by the number of shares of common stock of a company
1 - the payout ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

23. Gross Investment income
EAT / Sales
(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
taxable interest - non-qual. divs - short-term cap. gains

24. PEG ratio
Tax Deduction * marginal tax rate
Earnings Before Interest & Taxes
Price Earnings Growth ratio; P/E divided by projected earnings growth
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

25. Types of Leading Responses
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Explanatory - Interpretive - Reassuring - Suggestive
current assets / current liabilities
(Mortgage+Debt Repayment)/Net Income

26. Present value of a Bond
driving - expressive - amiable - analytical
Explanatory - Interpretive - Reassuring - Suggestive
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

27. Opportunities in Financial Planning
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
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)
g = ROE X b - where b is equal to the retention ratio

28. Book Value (of company stock)
assets less liabilities - divided by the number of shares of common stock of a company
Sales / Average Total Assets
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

29. Savings Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
current assets - current liabilities
EAT / Sales
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

30. After-tax Return
Tax Deduction * marginal tax rate
dividends / earnings
Total Return (1 - tax bracket)
Earnings Before Interest & Taxes

31. Net Cash Flow
Sources of Funds-Use of Funds or Money in- Money out
Earnings Before Interest & Taxes
(P1 + D - P0)/P0
Total Long-term Debt / Equity

32. Equivalent Tax Credit
Tax Deduction * marginal tax rate
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)
taxable interest - non-qual. divs - short-term cap. gains
Total Liabilities / Equity

33. Equivalent Tax Deduction
taxable interest - non-qual. divs - short-term cap. gains
g = ROE X b - where b is equal to the retention ratio
Tax Credit/marginal tax rate
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

34. Asset Turnover Ratio
Sales / Average Total Assets
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
current assets - current liabilities
Total Long-term Debt / Equity

35. Assets to Equity ratio
current assets / current liabilities
Total Liabilities / Equity
Total Return (1 - tax bracket)
Total Assets / Equity

36. aka Net Income
EAT / Sales
(cash + marketable securities) / current liabilities
dividends / earnings
Earnings After Taxes

37. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
[(1+ NR) / (1 + CCL)] - 1
Sales / Average 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)
1 - the payout ratio

38. Domains of a CFP
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
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)
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

39. Times Interest Earned
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
EBIT/I (Where I = Interest Expense)
Sources of Funds-Use of Funds or Money in- Money out

40. EBIT
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Earnings Before Interest & Taxes
EAT / Sales
(current assets - inventory) / current liabilities

41. Current Ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(P1 + D - P0)/P0
EBIT/I (Where I = Interest Expense)
current assets / current liabilities

42. Attributes of Effective Advisor communiations
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
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
Net Worth/Total Assets
Total Assets / Equity

43. Solvency Ratio
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Price/Earnings per share
(Mortgage+Debt Repayment)/Net Income
Net Worth/Total Assets

44. Holding Period Return
Total Assets / Equity
assets less liabilities - divided by the number of shares of common stock of a company
(P1 + D - P0)/P0
Price Earnings Growth ratio; P/E divided by projected earnings growth

45. Liquidity Ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
[(1+ NR) / (1 + CCL)] - 1
Earnings After Taxes
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

46. Working Capital
[(1+ NR) / (1 + CCL)] - 1
current assets - current liabilities
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(P1 + D - P0)/P0

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CFP: Certified Financial Planner

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