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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. Net Investment Income
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
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
EAT / Sales
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

2. 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)
Earnings Before Interest & Taxes
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

3. CFP Ethical principles
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Total Long-term Debt / Equity
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

4. Assets to Equity ratio
g = ROE X b - where b is equal to the retention ratio
Total Assets / Equity
Earnings Before Interest & Taxes
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

5. The payout ratio
Total Long-term Debt / Equity
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Sales / Average Total Assets
dividends / earnings

6. 'normal' ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
P*(1+g)/(k-g) P=div per share divided by other div
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
current assets - current liabilities

7. Attributes of Effective Advisor communiations
Net Worth/Total Assets
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
[(1+ NR) / (1 + CCL)] - 1
driving - expressive - amiable - analytical

8. Total Debt to Equity ratio
Total Liabilities / Equity
Earnings After Taxes
EAT / Sales
(P1 + D - P0)/P0

9. EBIT
P*(1+g)/(k-g) P=div per share divided by other div
dividends / earnings
Earnings Before Interest & Taxes
Total Liabilities / Equity

10. Asset Turnover Ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
current assets / current liabilities
Sales / Average Total Assets
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

11. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
[(1+ NR) / (1 + CCL)] - 1
EAT / Sales
Tax Credit/marginal tax rate
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

12. financial planning pyramid
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

13. Times Interest Earned
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 - inventory) / current liabilities
EBIT/I (Where I = Interest Expense)
Dollars of coupon interest per year/Bond's current market price

14. Gross Investment income
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
taxable interest - non-qual. divs - short-term cap. gains

15. financial life cycle
current assets - 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)
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

16. Major CFP Planning Areas
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Liabilities / Equity
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

17. P/E ratio
Sources of Funds-Use of Funds or Money in- Money out
Earnings Before Interest & Taxes
(current assets - inventory) / current liabilities
Price/Earnings per share

18. Social Styles
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
driving - expressive - amiable - analytical
1 - the payout ratio
assets less liabilities - divided by the number of shares of common stock of a company

19. Quick Ratio (aka Acid test)
(Mortgage+Debt Repayment)/Net Income
(current assets - inventory) / current liabilities
Earnings After Taxes
taxable interest - non-qual. divs - short-term cap. gains

20. Equivalent Tax Deduction
Net Worth/Total Assets
(1/T)(r1+r2+...+rT)
Tax Credit/marginal tax rate
assets less liabilities - divided by the number of shares of common stock of a company

21. Liquidity Ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
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
P*(1+g)/(k-g) P=div per share divided by other div

22. 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
1 - the payout ratio
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 - inventory) / current liabilities

23. Book Value (of company stock)
assets less liabilities - divided by the number of shares of common stock of a company
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Total Assets / Equity
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

24. Net After Tax Profit Margin
Total Assets / Equity
taxable interest - non-qual. divs - short-term cap. gains
EAT / Sales
[(1+ NR) / (1 + CCL)] - 1

25. Working Capital
current assets - current liabilities
(current assets - inventory) / current liabilities
Tax Credit/marginal tax rate
(Mortgage+Debt Repayment)/Net Income

26. PEG ratio
Tax Deduction * marginal tax rate
Price Earnings Growth ratio; P/E divided by projected earnings growth
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)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

27. Net Cash Flow
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Sources of Funds-Use of Funds or Money in- Money out
Earnings After Taxes
(P1 + D - P0)/P0

28. Opportunities in Financial Planning
1 - the payout ratio
assets less liabilities - divided by the number of shares of common stock of a company
Price/Earnings per share
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

29. Equivalent Tax Credit
(current assets - inventory) / current liabilities
Tax Deduction * marginal tax rate
EAT / Sales
Tax Credit/marginal tax rate

30. Types of Understanding Responses Associated With Active Listening
Price/Earnings per share
g = ROE X b - where b is equal to the retention ratio
current assets - current liabilities
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

31. Debt to Equity ratio
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)
P*(1+g)/(k-g) P=div per share divided by other div
Total Long-term Debt / Equity

32. After-tax Return
EBIT/I (Where I = Interest Expense)
Total Return (1 - tax bracket)
Sources of Funds-Use of Funds or Money in- Money out
Tax Free Yield/(1 - Tax Bracket)

33. Debt Service Ratio
Explanatory - Interpretive - Reassuring - Suggestive
(Mortgage+Debt Repayment)/Net Income
EBIT/I (Where I = Interest Expense)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

34. ROE (Return On Equity)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Price Earnings Growth ratio; P/E divided by projected earnings growth
Net Income/Equity
(cash + marketable securities) / current liabilities

35. aka Net Income
Total Long-term Debt / Equity
current assets - current liabilities
(cash + marketable securities) / current liabilities
Earnings After Taxes

36. Types of Leading Responses
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Tax Credit/marginal tax rate
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Explanatory - Interpretive - Reassuring - Suggestive

37. Holding Period Return
(P1 + D - P0)/P0
Tax Credit/marginal tax rate
Sales / Average Total Assets
1 - the payout ratio

38. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
current assets / current liabilities
(P1 + D - P0)/P0
(1/T)(r1+r2+...+rT)
Tax Credit/marginal tax rate

39. Current Yield of a bond

40. Sustainable Growth Rate
g = ROE X b - where b is equal to the retention 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
Earnings After Taxes

41. Savings Ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Net Income/Equity
Sales / Average Total Assets
Price Earnings Growth ratio; P/E divided by projected earnings growth

42. Present value of a Bond
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Price/Earnings per share
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Tax Credit/marginal tax rate

43. After-tax Yield
Net Worth/Total Assets
(1/T)(r1+r2+...+rT)
Tax Free Yield/(1 - Tax Bracket)
Tax Deduction * marginal tax rate

44. The retention ratio
1 - the payout ratio
Tax Credit/marginal tax rate
Net Worth/Total Assets
P*(1+g)/(k-g) P=div per share divided by other div

45. Solvency 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
Net Worth/Total Assets
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(P1 + D - P0)/P0

46. Current Ratio
Total Assets / Equity
Price Earnings Growth ratio; P/E divided by projected earnings growth
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
current assets / current liabilities