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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. Attributes of Effective Advisor communiations
Sales / Average Total Assets
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Sources of Funds-Use of Funds or Money in- Money out

2. Net Cash Flow
Sources of Funds-Use of Funds or Money in- Money out
Total Assets / Equity
(current assets - inventory) / 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

3. The payout ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
dividends / earnings
Earnings Before Interest & Taxes
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

4. Net After Tax Profit Margin
EAT / Sales
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
driving - expressive - amiable - analytical
[(1+ NR) / (1 + CCL)] - 1

5. CFP Ethical principles
current assets - current liabilities
dividends / earnings
(current assets - inventory) / current liabilities
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

6. Asset Turnover Ratio
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Sales / Average Total Assets
Tax Free Yield/(1 - Tax Bracket)
Total Long-term Debt / Equity

7. Current Ratio
assets less liabilities - divided by the number of shares of common stock of a company
Earnings Before Interest & Taxes
current assets / current liabilities
Tax Free Yield/(1 - Tax Bracket)

8. After-tax Return
g = ROE X b - where b is equal to the retention ratio
Total Return (1 - tax bracket)
Total Long-term Debt / Equity
current assets / current liabilities

9. aka Net Income
Earnings After Taxes
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Explanatory - Interpretive - Reassuring - Suggestive

10. EBIT
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Price Earnings Growth ratio; P/E divided by projected earnings growth
Earnings Before Interest & Taxes
dividends / earnings

11. Solvency Ratio
1 - the payout ratio
(cash + marketable securities) / current liabilities
Sales / Average Total Assets
Net Worth/Total Assets

12. Equivalent Tax Credit
Tax Deduction * marginal tax rate
Sales / Average Total Assets
Total Long-term Debt / Equity
1 - the payout ratio

13. Equivalent Tax Deduction
[(1+ NR) / (1 + CCL)] - 1
Tax Credit/marginal tax rate
1 - the payout ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

14. Working Capital
current assets - current liabilities
g = ROE X b - where b is equal to the retention ratio
driving - expressive - amiable - analytical
Net Worth/Total Assets

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

16. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
Price/Earnings per share
[(1+ NR) / (1 + CCL)] - 1
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
g = ROE X b - where b is equal to the retention ratio

17. Book Value (of company stock)
assets less liabilities - divided by the number of shares of common stock of a company
(1/T)(r1+r2+...+rT)
current assets - current liabilities
(cash + marketable securities) / current liabilities

18. PEG ratio
Total Long-term Debt / Equity
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Price Earnings Growth ratio; P/E divided by projected earnings growth

19. Debt to Equity ratio
Total Long-term Debt / Equity
dividends / earnings
(1/T)(r1+r2+...+rT)
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

20. Social Styles
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Sources of Funds-Use of Funds or Money in- Money out
Sales / Average Total Assets
driving - expressive - amiable - analytical

21. Types of Understanding Responses Associated With Active Listening
Dollars of coupon interest per year/Bond's current market price
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Tax Deduction * marginal tax rate

22. Savings Ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(cash + marketable securities) / current liabilities
Total Return (1 - tax bracket)

23. Cash Ratio
current assets - current liabilities
(cash + marketable securities) / current liabilities
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
EBIT/I (Where I = Interest Expense)

24. 'normal' ratio
(P1 + D - P0)/P0
P*(1+g)/(k-g) P=div per share divided by other div
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Earnings After Taxes

25. Types of Leading Responses
Tax Credit/marginal tax rate
Explanatory - Interpretive - Reassuring - Suggestive
Price/Earnings per share
EAT / Sales

26. Net Investment Income
Total Return (1 - tax bracket)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Assets / Equity
current assets / current liabilities

27. Quick Ratio (aka Acid test)
(current assets - inventory) / current liabilities
1 - the payout ratio
(Mortgage+Debt Repayment)/Net Income
EBIT/I (Where I = Interest Expense)

28. P/E ratio
Net Income/Equity
taxable interest - non-qual. divs - short-term cap. gains
Total Return (1 - tax bracket)
Price/Earnings per share

29. Current Yield of a bond
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
current assets / current liabilities
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Dollars of coupon interest per year/Bond's current market price

30. Holding Period Return
Earnings Before Interest & Taxes
(P1 + D - P0)/P0
Total Assets / Equity
P*(1+g)/(k-g) P=div per share divided by other div

31. After-tax Yield
Tax Free Yield/(1 - Tax Bracket)
Earnings After Taxes
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

32. Gross Investment income
(P1 + D - P0)/P0
taxable interest - non-qual. divs - short-term cap. gains
P*(1+g)/(k-g) P=div per share divided by other div
Total Long-term Debt / Equity

33. 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
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)

34. Domains of a CFP
Sales / Average Total Assets
current assets - current liabilities
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

35. Total Debt to Equity 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)
driving - expressive - amiable - analytical
Total Liabilities / Equity
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

36. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Explanatory - Interpretive - Reassuring - Suggestive
(1/T)(r1+r2+...+rT)
dividends / earnings
driving - expressive - amiable - analytical

37. ROE (Return On Equity)
Total Assets / Equity
Earnings After Taxes
Net Income/Equity
Earnings Before Interest & Taxes

38. financial planning pyramid
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

39. Major CFP Planning Areas
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
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)

40. Sustainable Growth Rate
(P1 + D - P0)/P0
g = ROE X b - where b is equal to the retention ratio
dividends / earnings
taxable interest - non-qual. divs - short-term cap. gains

41. Assets to Equity ratio
Explanatory - Interpretive - Reassuring - Suggestive
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Total Assets / Equity
current assets - current liabilities

42. financial life cycle
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)
Explanatory - Interpretive - Reassuring - Suggestive
Price Earnings Growth ratio; P/E divided by projected earnings growth
(1/T)(r1+r2+...+rT)

43. Opportunities in Financial Planning
(P1 + D - P0)/P0
EAT / Sales
dividends / earnings
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

44. Present value of a Bond
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)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Earnings Before Interest & Taxes

45. The retention ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
1 - the payout ratio
Tax Deduction * marginal tax rate
(cash + marketable securities) / current liabilities

46. Times Interest Earned
Total Return (1 - tax bracket)
Tax Deduction * marginal tax rate
EBIT/I (Where I = Interest Expense)
taxable interest - non-qual. divs - short-term cap. gains

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CFP: Certified Financial Planner

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