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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. The payout ratio
dividends / earnings
g = ROE X b - where b is equal to the retention ratio
(cash + marketable securities) / current liabilities
(1/T)(r1+r2+...+rT)

2. 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
Price/Earnings per share
Total Liabilities / Equity
Earnings After Taxes

3. Working Capital
current assets - current liabilities
Earnings Before Interest & Taxes
Total Assets / Equity
Explanatory - Interpretive - Reassuring - Suggestive

4. Social Styles
(P1 + D - P0)/P0
Earnings Before Interest & Taxes
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
driving - expressive - amiable - analytical

5. Quick Ratio (aka Acid test)
(current assets - inventory) / current liabilities
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
P*(1+g)/(k-g) P=div per share divided by other div

6. 'normal' ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Liabilities / Equity
Earnings Before Interest & Taxes
P*(1+g)/(k-g) P=div per share divided by other div

7. Major CFP Planning Areas
assets less liabilities - divided by the number of shares of common stock of a company
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Assets / Equity
Total Liabilities / Equity

8. Net Investment Income
g = ROE X b - where b is equal to the retention ratio
Sources of Funds-Use of Funds or Money in- Money out
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Earnings After Taxes

9. PEG ratio
P*(1+g)/(k-g) P=div per share divided by other div
Price Earnings Growth ratio; P/E divided by projected earnings growth
Price/Earnings per share
Earnings After Taxes

10. Attributes of Effective Advisor communiations
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(Mortgage+Debt Repayment)/Net Income
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

11. Total Debt to Equity ratio
Total Liabilities / Equity
dividends / earnings
taxable interest - non-qual. divs - short-term cap. gains
Tax Free Yield/(1 - Tax Bracket)

12. Net Cash Flow
Sources of Funds-Use of Funds or Money in- Money out
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
Dollars of coupon interest per year/Bond's current market price

13. The retention ratio
1 - the payout ratio
Price/Earnings per share
taxable interest - non-qual. divs - short-term cap. gains
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

14. After-tax Yield
Tax Free Yield/(1 - Tax Bracket)
(1/T)(r1+r2+...+rT)
driving - expressive - amiable - analytical
Total Assets / Equity

15. Asset Turnover Ratio
Total Return (1 - tax bracket)
Tax Deduction * marginal tax rate
Sales / Average Total Assets
1 - the payout ratio

16. Times Interest Earned
(1/T)(r1+r2+...+rT)
1 - the payout ratio
EBIT/I (Where I = Interest Expense)
(cash + marketable securities) / current liabilities

17. CFP Ethical principles
Total Long-term Debt / Equity
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Liabilities / Equity

18. Equivalent Tax Credit
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Tax Deduction * marginal tax rate
Price Earnings Growth ratio; P/E divided by projected earnings growth

19. Debt Service Ratio
Price/Earnings per share
(Mortgage+Debt Repayment)/Net Income
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)

20. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(Mortgage+Debt Repayment)/Net Income
Net Income/Equity
assets less liabilities - divided by the number of shares of common stock of a company

21. Book Value (of company stock)
Sources of Funds-Use of Funds or Money in- Money out
taxable interest - non-qual. divs - short-term cap. gains
(Mortgage+Debt Repayment)/Net Income
assets less liabilities - divided by the number of shares of common stock of a company

22. Opportunities in Financial Planning
Explanatory - Interpretive - Reassuring - Suggestive
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Tax Free Yield/(1 - Tax Bracket)
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

23. Solvency Ratio
Net Worth/Total Assets
P*(1+g)/(k-g) P=div per share divided by other div
Sources of Funds-Use of Funds or Money in- Money out
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

24. financial planning pyramid
Net Worth/Total Assets
Total Liabilities / 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
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

25. Types of Understanding Responses Associated With Active Listening
(Mortgage+Debt Repayment)/Net Income
Earnings After Taxes
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

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

27. Current Yield of a bond

28. Assets to Equity ratio
g = ROE X b - where b is equal to the retention ratio
Tax Credit/marginal tax rate
taxable interest - non-qual. divs - short-term cap. gains
Total Assets / Equity

29. Equivalent Tax Deduction
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
1 - the payout ratio
Tax Credit/marginal tax rate

30. financial life cycle
Total Assets / Equity
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)
Tax Free Yield/(1 - Tax Bracket)

31. Savings Ratio
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
Explanatory - Interpretive - Reassuring - Suggestive
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

32. Current Ratio
1 - the payout ratio
current assets / 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
Total Return (1 - tax bracket)

33. Gross Investment income
taxable interest - non-qual. divs - short-term cap. gains
Total Return (1 - tax bracket)
(cash + marketable securities) / current liabilities
(P1 + D - P0)/P0

34. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Net Worth/Total Assets
Total Liabilities / Equity
(1/T)(r1+r2+...+rT)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

35. Sustainable Growth Rate
Total Return (1 - tax bracket)
(current assets - inventory) / current liabilities
g = ROE X b - where b is equal to the retention ratio
Earnings After Taxes

36. Cash Ratio
(cash + marketable securities) / current liabilities
Tax Credit/marginal tax rate
current assets - current liabilities
Earnings Before Interest & Taxes

37. P/E ratio
Total Liabilities / 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
Price/Earnings per share
taxable interest - non-qual. divs - short-term cap. gains

38. Debt to Equity ratio
Sales / Average Total Assets
Total Long-term Debt / Equity
[(1+ NR) / (1 + CCL)] - 1
Tax Deduction * marginal tax rate

39. EBIT
Earnings Before Interest & Taxes
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(Mortgage+Debt Repayment)/Net Income
1 - the payout ratio

40. Holding Period Return
Sources of Funds-Use of Funds or Money in- Money out
Explanatory - Interpretive - Reassuring - Suggestive
(P1 + D - P0)/P0
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

41. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Tax Free Yield/(1 - Tax Bracket)
(Mortgage+Debt Repayment)/Net Income
[(1+ NR) / (1 + CCL)] - 1

42. Present value of a Bond
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Total Assets / Equity
Total Return (1 - tax bracket)

43. aka Net Income
Price Earnings Growth ratio; P/E divided by projected earnings growth
Earnings After Taxes
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(Mortgage+Debt Repayment)/Net Income

44. Net After Tax Profit Margin
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Tax Free Yield/(1 - Tax Bracket)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
EAT / Sales

45. Types of Leading Responses
Explanatory - Interpretive - Reassuring - Suggestive
Total Return (1 - tax bracket)
Earnings After Taxes
Tax Deduction * marginal tax rate

46. After-tax Return
Total Return (1 - tax bracket)
(P1 + D - P0)/P0
Total Assets / Equity
EBIT/I (Where I = Interest Expense)