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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. Savings Ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Liabilities / Equity
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

2. After-tax Return
Explanatory - Interpretive - Reassuring - Suggestive
Total Return (1 - tax bracket)
Net Income/Equity
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

3. 'normal' ratio
(P1 + D - P0)/P0
(1/T)(r1+r2+...+rT)
Total Return (1 - tax bracket)
P*(1+g)/(k-g) P=div per share divided by other div

4. Net After Tax Profit Margin
(current assets - inventory) / current liabilities
P*(1+g)/(k-g) P=div per share divided by other div
EAT / Sales
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

5. Equivalent Tax Deduction
Total Assets / Equity
Tax Credit/marginal tax rate
Sources of Funds-Use of Funds or Money in- Money out
Net Worth/Total Assets

6. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
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)
(1/T)(r1+r2+...+rT)

7. Times Interest Earned
EBIT/I (Where I = Interest Expense)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(1/T)(r1+r2+...+rT)
Tax Deduction * marginal tax rate

8. After-tax Yield
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
current assets - current liabilities
Tax Free Yield/(1 - Tax Bracket)

9. Attributes of Effective Advisor communiations
driving - expressive - amiable - analytical
Price Earnings Growth ratio; P/E divided by projected earnings growth
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Earnings After Taxes

10. Cash Ratio
Dollars of coupon interest per year/Bond's current market price
Earnings Before Interest & Taxes
(cash + marketable securities) / current liabilities
Total Return (1 - tax bracket)

11. ROE (Return On Equity)
Net Income/Equity
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Sales / Average Total Assets
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

12. Book Value (of company stock)
1 - the payout ratio
assets less liabilities - divided by the number of shares of common stock of a company
EAT / Sales
Earnings Before Interest & Taxes

13. Types of Understanding Responses Associated With Active Listening
EBIT/I (Where I = Interest Expense)
Tax Credit/marginal tax rate
(current assets - inventory) / current liabilities
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

14. aka Net Income
(1/T)(r1+r2+...+rT)
[(1+ NR) / (1 + CCL)] - 1
Earnings After Taxes
1 - the payout ratio

15. Current Ratio
Total Assets / Equity
current assets / current liabilities
Total Long-term Debt / Equity
Net Income/Equity

16. Debt Service Ratio
Tax Deduction * marginal tax rate
(Mortgage+Debt Repayment)/Net Income
Sources of Funds-Use of Funds or Money in- Money out
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

17. 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)
taxable interest - non-qual. divs - short-term cap. gains
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Tax Deduction * marginal tax rate

18. Domains of a CFP
Total Long-term Debt / Equity
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
g = ROE X b - where b is equal to the retention ratio
(cash + marketable securities) / current liabilities

19. Present value of a Bond
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Total Long-term Debt / Equity
Dollars of coupon interest per year/Bond's current market price
current assets - current liabilities

20. Solvency Ratio
Earnings Before Interest & Taxes
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
g = ROE X b - where b is equal to the retention ratio
Net Worth/Total Assets

21. Quick Ratio (aka Acid test)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(current assets - inventory) / current liabilities
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
taxable interest - non-qual. divs - short-term cap. gains

22. financial life cycle
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Price/Earnings per share
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)
(cash + marketable securities) / current liabilities

23. Gross Investment income
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
taxable interest - non-qual. divs - short-term cap. gains
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
P*(1+g)/(k-g) P=div per share divided by other div

24. Major CFP Planning Areas
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Net Worth/Total Assets
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

25. P/E ratio
Price/Earnings per share
taxable interest - non-qual. divs - short-term cap. gains
Total Long-term Debt / Equity
dividends / earnings

26. Social Styles
1 - the payout ratio
driving - expressive - amiable - analytical
g = ROE X b - where b is equal to the retention ratio
dividends / earnings

27. financial planning pyramid
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
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Earnings Before Interest & Taxes
Tax Free Yield/(1 - Tax Bracket)

28. Current Yield of a bond

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29. Assets to Equity ratio
Total Assets / Equity
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Total Return (1 - tax bracket)
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
dividends / earnings
Explanatory - Interpretive - Reassuring - Suggestive
(Mortgage+Debt Repayment)/Net Income
Total Liabilities / Equity

31. Asset Turnover 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
Earnings After Taxes
Sales / Average Total Assets
1 - the payout ratio

32. Debt to Equity 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
current assets / current liabilities
Total Long-term Debt / Equity
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

33. Net Investment Income
(current assets - inventory) / current liabilities
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Net Income/Equity
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

34. The payout ratio
P*(1+g)/(k-g) P=div per share divided by other div
dividends / earnings
Price Earnings Growth ratio; P/E divided by projected earnings growth
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

35. PEG ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
Total Long-term Debt / Equity
taxable interest - non-qual. divs - short-term cap. gains
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

36. Opportunities in Financial Planning
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
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
Total Return (1 - tax bracket)
g = ROE X b - where b is equal to the retention ratio

37. Liquidity Ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
EAT / Sales
Explanatory - Interpretive - Reassuring - Suggestive

38. EBIT
Earnings Before Interest & Taxes
driving - expressive - amiable - analytical
taxable interest - non-qual. divs - short-term cap. gains
current assets / current liabilities

39. CFP Ethical principles
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Explanatory - Interpretive - Reassuring - Suggestive
g = ROE X b - where b is equal to the retention ratio
EAT / Sales

40. Working Capital
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
current assets - current liabilities
Sources of Funds-Use of Funds or Money in- Money out
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

41. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
Total Return (1 - tax bracket)
[(1+ NR) / (1 + CCL)] - 1
(1/T)(r1+r2+...+rT)
Net Income/Equity

42. Net Cash Flow
Sources of Funds-Use of Funds or Money in- Money out
Net Worth/Total Assets
Explanatory - Interpretive - Reassuring - Suggestive
(current assets - inventory) / current liabilities

43. Holding Period Return
(P1 + D - P0)/P0
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
(cash + marketable securities) / current liabilities

44. The retention ratio
EBIT/I (Where I = Interest Expense)
1 - the payout ratio
(current assets - inventory) / current liabilities
assets less liabilities - divided by the number of shares of common stock of a company

45. Sustainable Growth Rate
g = ROE X b - where b is equal to the retention ratio
dividends / earnings
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
current assets - current liabilities

46. Types of Leading Responses
Explanatory - Interpretive - Reassuring - Suggestive
Sales / Average Total Assets
Net Income/Equity
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)