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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 retention ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
1 - the payout ratio
current assets / current liabilities
Total Assets / Equity

2. Net After Tax Profit Margin
Earnings After Taxes
(current assets - inventory) / current liabilities
taxable interest - non-qual. divs - short-term cap. gains
EAT / Sales

3. P/E ratio
Price/Earnings per share
Tax Free Yield/(1 - Tax Bracket)
Price Earnings Growth ratio; P/E divided by projected earnings growth
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

4. EBIT
Earnings After Taxes
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 Before Interest & Taxes
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

5. Debt Service Ratio
Explanatory - Interpretive - Reassuring - Suggestive
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(Mortgage+Debt Repayment)/Net Income
(P1 + D - P0)/P0

6. 'normal' ratio
P*(1+g)/(k-g) P=div per share divided by other div
dividends / earnings
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(1/T)(r1+r2+...+rT)

7. financial planning pyramid
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Total Long-term Debt / Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

8. Major CFP Planning Areas
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Net Worth/Total Assets
driving - expressive - amiable - analytical

9. CFP Ethical principles
assets less liabilities - divided by the number of shares of common stock of a company
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Earnings Before Interest & Taxes

10. Quick Ratio (aka Acid test)
(current assets - inventory) / current liabilities
g = ROE X b - where b is equal to the retention ratio
dividends / earnings
Total Long-term Debt / Equity

11. Cash Ratio
(cash + marketable securities) / current liabilities
(Mortgage+Debt Repayment)/Net Income
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

12. ROE (Return On Equity)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Total Assets / Equity
Net Income/Equity
(1/T)(r1+r2+...+rT)

13. Equivalent Tax Deduction
Tax Credit/marginal tax rate
Total Liabilities / Equity
[(1+ NR) / (1 + CCL)] - 1
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

14. Current Ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Earnings After Taxes
Tax Deduction * marginal tax rate
current assets / current liabilities

15. Liquidity Ratio
Price/Earnings per share
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
EBIT/I (Where I = Interest Expense)
[(1+ NR) / (1 + CCL)] - 1

16. aka Net Income
current assets / current liabilities
Net Worth/Total Assets
(1/T)(r1+r2+...+rT)
Earnings After Taxes

17. Book Value (of company stock)
assets less liabilities - divided by the number of shares of common stock of a company
Net Income/Equity
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(1/T)(r1+r2+...+rT)

18. Working Capital
(1/T)(r1+r2+...+rT)
g = ROE X b - where b is equal to the retention ratio
(Mortgage+Debt Repayment)/Net Income
current assets - current liabilities

19. Total Debt to Equity ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Liabilities / Equity

20. Net Investment Income
EBIT/I (Where I = Interest Expense)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Return (1 - tax bracket)
Total Assets / Equity

21. Present value of a Bond
Net Income/Equity
[(1+ NR) / (1 + CCL)] - 1
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Total Return (1 - tax bracket)

22. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Total Liabilities / Equity
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(1/T)(r1+r2+...+rT)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

23. PEG ratio
dividends / earnings
Price Earnings Growth ratio; P/E divided by projected earnings growth
Earnings Before Interest & Taxes
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

24. Solvency Ratio
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Net Worth/Total Assets
Explanatory - Interpretive - Reassuring - Suggestive
Sources of Funds-Use of Funds or Money in- Money out

25. Equivalent Tax Credit
Sales / Average Total Assets
Price Earnings Growth ratio; P/E divided by projected earnings growth
Tax Deduction * marginal tax rate
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

26. 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 Long-term Debt / Equity
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
current assets / current liabilities

27. Holding Period Return
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
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)
(P1 + D - P0)/P0

28. Asset Turnover Ratio
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Sources of Funds-Use of Funds or Money in- Money out
(Mortgage+Debt Repayment)/Net Income
Sales / Average Total Assets

29. Types of Leading Responses
Explanatory - Interpretive - Reassuring - Suggestive
Total Long-term Debt / Equity
(cash + marketable securities) / current liabilities
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

30. Social Styles
g = ROE X b - where b is equal to the retention ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
driving - expressive - amiable - analytical

31. Current Yield of a bond

32. Types of Understanding Responses Associated With Active Listening
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
EBIT/I (Where I = Interest Expense)
EAT / Sales

33. After-tax Yield
Net Worth/Total Assets
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Tax Free Yield/(1 - Tax Bracket)
Sources of Funds-Use of Funds or Money in- Money out

34. Savings Ratio
EAT / Sales
(Mortgage+Debt Repayment)/Net Income
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

35. Assets to Equity ratio
Total Assets / Equity
(cash + marketable securities) / current liabilities
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
EBIT/I (Where I = Interest Expense)

36. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
[(1+ NR) / (1 + CCL)] - 1
taxable interest - non-qual. divs - short-term cap. gains
Net Worth/Total Assets
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

37. Sustainable Growth Rate
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
current assets / current liabilities
1 - the payout ratio

38. Net Cash Flow
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
current assets - current liabilities
Sources of Funds-Use of Funds or Money in- Money out

39. Times Interest Earned
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
EBIT/I (Where I = Interest Expense)

40. The payout ratio
Total Return (1 - tax bracket)
(current assets - inventory) / current liabilities
dividends / earnings
Total Liabilities / Equity

41. financial life cycle
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
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)
Price/Earnings per share
P*(1+g)/(k-g) P=div per share divided by other div

42. Debt to Equity ratio
Earnings After Taxes
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Net Income/Equity
Total Long-term Debt / Equity

43. Gross Investment income
Tax Free Yield/(1 - Tax Bracket)
Earnings After Taxes
taxable interest - non-qual. divs - short-term cap. gains
Sales / Average Total Assets

44. Attributes of Effective Advisor communiations
(Mortgage+Debt Repayment)/Net Income
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Net Worth/Total Assets
Explanatory - Interpretive - Reassuring - Suggestive

45. Opportunities in Financial Planning
Tax Credit/marginal tax rate
(cash + marketable securities) / current liabilities
(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

46. After-tax Return
dividends / earnings
Total Return (1 - tax bracket)
assets less liabilities - divided by the number of shares of common stock of a company
P*(1+g)/(k-g) P=div per share divided by other div