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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. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Sales / Average Total Assets
(cash + marketable securities) / current liabilities

2. Times Interest Earned
EBIT/I (Where I = Interest Expense)
(1/T)(r1+r2+...+rT)
taxable interest - non-qual. divs - short-term cap. gains
1 - the payout ratio

3. Book Value (of company stock)
Earnings After Taxes
(1/T)(r1+r2+...+rT)
assets less liabilities - divided by the number of shares of common stock of a company
g = ROE X b - where b is equal to the retention ratio

4. The retention ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Net Income/Equity
1 - the payout ratio

5. Net Cash Flow
EBIT/I (Where I = Interest Expense)
Sources of Funds-Use of Funds or Money in- Money out
(Mortgage+Debt Repayment)/Net Income
Tax Deduction * marginal tax rate

6. The payout ratio
Net Income/Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
dividends / earnings
Total Liabilities / Equity

7. 'normal' ratio
Earnings Before Interest & Taxes
P*(1+g)/(k-g) P=div per share divided by other div
Total Liabilities / Equity
Sales / Average Total Assets

8. After-tax Yield
Net Worth/Total Assets
(P1 + D - P0)/P0
Tax Free Yield/(1 - Tax Bracket)
Total Assets / Equity

9. EBIT
Earnings Before Interest & Taxes
current assets - current liabilities
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

10. Cash Ratio
EAT / Sales
(cash + marketable securities) / current liabilities
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Total Liabilities / Equity

11. Solvency Ratio
assets less liabilities - divided by the number of shares of common stock of a company
g = ROE X b - where b is equal to the retention ratio
Net Worth/Total Assets
Tax Credit/marginal tax rate

12. Gross Investment income
dividends / earnings
taxable interest - non-qual. divs - short-term cap. gains
(Mortgage+Debt Repayment)/Net Income
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

13. ROE (Return On Equity)
taxable interest - non-qual. divs - short-term cap. gains
Price Earnings Growth ratio; P/E divided by projected earnings growth
Net Income/Equity
Total Assets / Equity

14. Holding Period Return
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)
(P1 + D - P0)/P0
EBIT/I (Where I = Interest Expense)
taxable interest - non-qual. divs - short-term cap. gains

15. Current Yield of a bond

16. After-tax Return
Price/Earnings per share
Total Return (1 - tax bracket)
dividends / earnings
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

17. Equivalent Tax Credit
(cash + marketable securities) / current liabilities
Tax Deduction * marginal tax rate
current assets / current liabilities
dividends / earnings

18. Assets to Equity ratio
[(1+ NR) / (1 + CCL)] - 1
(cash + marketable securities) / current liabilities
Total Assets / Equity
Tax Credit/marginal tax rate

19. Net After Tax Profit Margin
Total Return (1 - tax bracket)
Dollars of coupon interest per year/Bond's current market price
(P1 + D - P0)/P0
EAT / Sales

20. Quick Ratio (aka Acid test)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(current assets - inventory) / current liabilities
Total Return (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)

21. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Net Income/Equity
(1/T)(r1+r2+...+rT)
dividends / earnings
EBIT/I (Where I = Interest Expense)

22. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
1 - the payout ratio
[(1+ NR) / (1 + CCL)] - 1
(cash + marketable securities) / current liabilities
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

23. Sustainable Growth Rate
P*(1+g)/(k-g) P=div per share divided by other div
driving - expressive - amiable - analytical
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

24. Types of Leading Responses
Sales / Average Total Assets
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Return (1 - tax bracket)
Explanatory - Interpretive - Reassuring - Suggestive

25. Types of Understanding Responses Associated With Active Listening
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
dividends / earnings

26. aka Net Income
Sources of Funds-Use of Funds or Money in- Money out
1 - the payout ratio
Earnings After Taxes
(current assets - inventory) / current liabilities

27. Present value of a Bond
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)
(1/T)(r1+r2+...+rT)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

28. Debt to Equity ratio
Total Long-term Debt / Equity
(Mortgage+Debt Repayment)/Net Income
Net Income/Equity
Dollars of coupon interest per year/Bond's current market price

29. PEG ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
Net Income/Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
current assets / current liabilities

30. P/E 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
Price/Earnings per share
Explanatory - Interpretive - Reassuring - Suggestive
Earnings Before Interest & Taxes

31. Attributes of Effective Advisor communiations
Total Return (1 - tax bracket)
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
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

32. financial planning pyramid
Total Assets / Equity
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Sources of Funds-Use of Funds or Money in- Money out
1 - the payout ratio

33. 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
Total Return (1 - tax bracket)
g = ROE X b - where b is equal to the retention ratio
Price/Earnings per share

34. Working Capital
Sources of Funds-Use of Funds or Money in- Money out
Price/Earnings per share
Explanatory - Interpretive - Reassuring - Suggestive
current assets - current liabilities

35. Asset Turnover Ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
current assets - current liabilities
Sales / Average Total Assets
Total Return (1 - tax bracket)

36. Major CFP Planning Areas
Tax Free Yield/(1 - Tax Bracket)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Long-term Debt / Equity
Price Earnings Growth ratio; P/E divided by projected earnings growth

37. CFP Ethical principles
g = ROE X b - where b is equal to the retention ratio
Sources of Funds-Use of Funds or Money in- Money out
current assets - current liabilities
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

38. Total Debt to Equity ratio
Total Liabilities / Equity
dividends / earnings
1 - the payout ratio
Sales / Average Total Assets

39. financial life cycle
Net Worth/Total Assets
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)
Net Income/Equity

40. Opportunities in Financial Planning
Explanatory - Interpretive - Reassuring - Suggestive
Price Earnings Growth ratio; P/E divided by projected earnings growth
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

41. Savings Ratio
(Mortgage+Debt Repayment)/Net Income
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

42. Net Investment Income
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
EBIT/I (Where I = Interest Expense)
Total Long-term Debt / Equity
Tax Deduction * marginal tax rate

43. Current Ratio
Sources of Funds-Use of Funds or Money in- Money out
taxable interest - non-qual. divs - short-term cap. gains
current assets / current liabilities
current assets - current liabilities

44. Debt Service Ratio
(Mortgage+Debt Repayment)/Net Income
P*(1+g)/(k-g) P=div per share divided by other div
Tax Deduction * marginal tax rate
Tax Credit/marginal tax rate

45. Social Styles
Explanatory - Interpretive - Reassuring - Suggestive
Dollars of coupon interest per year/Bond's current market price
driving - expressive - amiable - analytical
(current assets - inventory) / current liabilities

46. Equivalent Tax Deduction
Tax Credit/marginal tax rate
(cash + marketable securities) / 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
Net Income/Equity