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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. Gross Investment income
Total Long-term Debt / Equity
Total Assets / Equity
taxable interest - non-qual. divs - short-term cap. gains
Earnings After Taxes

2. Types of Understanding Responses Associated With Active Listening
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
taxable interest - non-qual. divs - short-term cap. gains
(current assets - inventory) / current liabilities
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

3. Sustainable Growth Rate
Explanatory - Interpretive - Reassuring - Suggestive
g = ROE X b - where b is equal to the retention ratio
Dollars of coupon interest per year/Bond's current market price
Sources of Funds-Use of Funds or Money in- Money out

4. Net Cash Flow
Tax Deduction * marginal tax rate
Sources of Funds-Use of Funds or Money in- Money out
Total Liabilities / Equity
current assets / current liabilities

5. financial planning pyramid
Total Liabilities / Equity
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(Mortgage+Debt Repayment)/Net Income

6. 'normal' ratio
Net Income/Equity
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
P*(1+g)/(k-g) P=div per share divided by other div
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

7. ROE (Return On Equity)
Net Income/Equity
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
EBIT/I (Where I = Interest Expense)
(Mortgage+Debt Repayment)/Net Income

8. The retention ratio
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
(cash + marketable securities) / current liabilities
1 - the payout ratio
Price/Earnings per share

9. Liquidity Ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Liabilities / Equity
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Total Assets / Equity

10. EBIT
Earnings Before Interest & Taxes
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
Total Return (1 - tax bracket)

11. Holding Period Return
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Net Worth/Total Assets
Net Income/Equity
(P1 + D - P0)/P0

12. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
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
(1/T)(r1+r2+...+rT)
Tax Deduction * marginal tax rate

13. Debt to Equity ratio
EAT / Sales
(current assets - inventory) / current liabilities
Total Long-term Debt / Equity
Price Earnings Growth ratio; P/E divided by projected earnings growth

14. Total Debt to Equity ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Sources of Funds-Use of Funds or Money in- Money out
Total Liabilities / Equity
Sales / Average Total Assets

15. aka Net Income
Earnings After Taxes
current assets - current liabilities
Total Return (1 - tax bracket)
Earnings Before Interest & Taxes

16. PEG ratio
Price/Earnings per share
Price Earnings Growth ratio; P/E divided by projected earnings growth
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(Mortgage+Debt Repayment)/Net Income

17. CFP Ethical principles
Earnings After Taxes
Total Long-term Debt / Equity
g = ROE X b - where b is equal to the retention ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

18. Major CFP Planning Areas
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
EBIT/I (Where I = Interest Expense)

19. Working Capital
(Mortgage+Debt Repayment)/Net Income
current assets - current liabilities
Net Worth/Total Assets
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

20. Book Value (of company stock)
EBIT/I (Where I = Interest Expense)
assets less liabilities - divided by the number of shares of common stock of a company
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Net Income/Equity

21. P/E ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
P*(1+g)/(k-g) P=div per share divided by other div
Price/Earnings per share

22. Assets to Equity ratio
(Mortgage+Debt Repayment)/Net Income
Total Assets / Equity
assets less liabilities - divided by the number of shares of common stock of a company
current assets - current liabilities

23. After-tax Return
Total Return (1 - tax bracket)
g = ROE X b - where b is equal to the retention ratio
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

24. Current Ratio
Dollars of coupon interest per year/Bond's current market price
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)
current assets / current liabilities
(cash + marketable securities) / current liabilities

25. After-tax Yield
Sales / Average Total Assets
(current assets - inventory) / current liabilities
current assets / current liabilities
Tax Free Yield/(1 - Tax Bracket)

26. Net Investment Income
dividends / earnings
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

27. Types of Leading Responses
taxable interest - non-qual. divs - short-term cap. gains
g = ROE X b - where b is equal to the retention ratio
Explanatory - Interpretive - Reassuring - Suggestive
Price Earnings Growth ratio; P/E divided by projected earnings growth

28. Times Interest Earned
Net Cash Flow+Already Being Saved or Invested/Annual After Tax 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
EBIT/I (Where I = Interest Expense)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

29. Asset Turnover Ratio
Sales / Average Total Assets
driving - expressive - amiable - analytical
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
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

30. The payout ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
current assets - current liabilities
Dollars of coupon interest per year/Bond's current market price
dividends / earnings

31. Solvency Ratio
[(1+ NR) / (1 + CCL)] - 1
Net Worth/Total Assets
EAT / Sales
Total Long-term Debt / Equity

32. Attributes of Effective Advisor communiations
Total Return (1 - tax bracket)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Sales / Average Total Assets
Price Earnings Growth ratio; P/E divided by projected earnings growth

33. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
[(1+ NR) / (1 + CCL)] - 1
Net Worth/Total Assets
Tax Free Yield/(1 - Tax Bracket)
g = ROE X b - where b is equal to the retention ratio

34. Social Styles
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
driving - expressive - amiable - analytical

35. Cash Ratio
(cash + marketable securities) / current liabilities
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)
EBIT/I (Where I = Interest Expense)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

36. Present value of a Bond
Earnings Before Interest & Taxes
(P1 + D - P0)/P0
Tax Deduction * marginal tax rate
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

37. Opportunities in Financial Planning
Earnings After Taxes
(1/T)(r1+r2+...+rT)
P*(1+g)/(k-g) P=div per share divided by other div
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

38. Domains of a CFP
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Net Worth/Total Assets
(cash + marketable securities) / current liabilities
(1/T)(r1+r2+...+rT)

39. financial life cycle
Price Earnings Growth ratio; P/E divided by projected earnings growth
Earnings Before Interest & Taxes
dividends / earnings
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)

40. Equivalent Tax Credit
Tax Deduction * marginal tax rate
Price Earnings Growth ratio; P/E divided by projected earnings growth
Net Worth/Total Assets
Dollars of coupon interest per year/Bond's current market price

41. Equivalent Tax Deduction
Total Long-term Debt / Equity
Tax Credit/marginal tax rate
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Sources of Funds-Use of Funds or Money in- Money out

42. Savings Ratio
driving - expressive - amiable - analytical
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Sales / Average Total Assets
taxable interest - non-qual. divs - short-term cap. gains

43. Current Yield of a bond

44. Debt Service Ratio
(Mortgage+Debt Repayment)/Net Income
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Sources of Funds-Use of Funds or Money in- Money out
P*(1+g)/(k-g) P=div per share divided by other div

45. Net After Tax Profit Margin
g = ROE X b - where b is equal to the retention ratio
EAT / Sales
Net Income/Equity
Total Assets / Equity

46. Quick Ratio (aka Acid test)
(current assets - inventory) / current liabilities
Total Long-term Debt / Equity
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
dividends / earnings