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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 After Tax Profit Margin
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
Total Return (1 - tax bracket)
EAT / Sales

2. Net Cash Flow
Sources of Funds-Use of Funds or Money in- Money out
g = ROE X b - where b is equal to the retention ratio
(Mortgage+Debt Repayment)/Net Income
assets less liabilities - divided by the number of shares of common stock of a company

3. Current Yield of a bond

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4. The payout ratio
assets less liabilities - divided by the number of shares of common stock of a company
Net Income/Equity
dividends / earnings
EAT / Sales

5. Types of Leading Responses
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Price Earnings Growth ratio; P/E divided by projected earnings growth
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Explanatory - Interpretive - Reassuring - Suggestive

6. Savings Ratio
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)
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

7. Total Debt to Equity ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Liabilities / Equity
EAT / Sales
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

8. Equivalent Tax Deduction
Tax Credit/marginal tax rate
Earnings After Taxes
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

9. Sustainable Growth Rate
Earnings Before Interest & Taxes
Price Earnings Growth ratio; P/E divided by projected earnings growth
Earnings After Taxes
g = ROE X b - where b is equal to the retention ratio

10. Present value of a Bond
Price/Earnings per share
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Price Earnings Growth ratio; P/E divided by projected earnings growth

11. Debt to Equity ratio
Price/Earnings per share
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
EAT / Sales
Total Long-term Debt / Equity

12. financial planning pyramid
Explanatory - Interpretive - Reassuring - Suggestive
Dollars of coupon interest per year/Bond's current market price
Total Assets / Equity
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

13. P/E ratio
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
1 - the payout ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

14. Domains of a CFP
current assets / current liabilities
driving - expressive - amiable - analytical
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

15. aka Net Income
EAT / Sales
Earnings After Taxes
Explanatory - Interpretive - Reassuring - Suggestive
Net Income/Equity

16. After-tax Return
[(1+ NR) / (1 + CCL)] - 1
Total Return (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
Sources of Funds-Use of Funds or Money in- Money out

17. Asset Turnover Ratio
g = ROE X b - where b is equal to the retention ratio
Sales / Average Total Assets
(1/T)(r1+r2+...+rT)
Sources of Funds-Use of Funds or Money in- Money out

18. Gross Investment 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)
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
taxable interest - non-qual. divs - short-term cap. gains

19. After-tax Yield
(current assets - inventory) / current liabilities
Explanatory - Interpretive - Reassuring - Suggestive
Tax Free Yield/(1 - Tax Bracket)
Earnings After Taxes

20. Major CFP Planning Areas
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Net Worth/Total Assets
P*(1+g)/(k-g) P=div per share divided by other div

21. Types of Understanding Responses Associated With Active Listening
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
1 - the payout ratio
Sales / Average Total Assets
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

22. Current Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Sources of Funds-Use of Funds or Money in- Money out
current assets / current liabilities
Total Return (1 - tax bracket)

23. Times Interest Earned
Total Assets / Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
EBIT/I (Where I = Interest Expense)
Tax Credit/marginal tax rate

24. CFP Ethical principles
Earnings Before Interest & Taxes
current assets - current liabilities
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

25. Debt Service Ratio
dividends / earnings
assets less liabilities - divided by the number of shares of common stock of a company
(Mortgage+Debt Repayment)/Net Income
current assets - current liabilities

26. Cash Ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
(cash + marketable securities) / current liabilities
Dollars of coupon interest per year/Bond's current market price
Total Assets / Equity

27. PEG ratio
Sales / Average Total Assets
current assets - current liabilities
Tax Deduction * marginal tax rate
Price Earnings Growth ratio; P/E divided by projected earnings growth

28. EBIT
Earnings Before Interest & Taxes
Tax Free Yield/(1 - Tax Bracket)
Price Earnings Growth ratio; P/E divided by projected earnings growth
Total Return (1 - tax bracket)

29. Book Value (of company stock)
Total Assets / Equity
assets less liabilities - divided by the number of shares of common stock of a company
EBIT/I (Where I = Interest Expense)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

30. The retention ratio
Tax Credit/marginal tax rate
1 - the payout ratio
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

31. 'normal' ratio
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Dollars of coupon interest per year/Bond's current market price
Sales / Average Total Assets
P*(1+g)/(k-g) P=div per share divided by other div

32. Solvency Ratio
taxable interest - non-qual. divs - short-term cap. gains
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 Worth/Total Assets
Price/Earnings per share

33. Quick Ratio (aka Acid test)
(current assets - inventory) / current liabilities
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Explanatory - Interpretive - Reassuring - Suggestive
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

34. Working Capital
current assets - current liabilities
Earnings After Taxes
Net Worth/Total Assets
Explanatory - Interpretive - Reassuring - Suggestive

35. Social Styles
EAT / Sales
current assets - current liabilities
driving - expressive - amiable - analytical
Explanatory - Interpretive - Reassuring - Suggestive

36. Net Investment Income
Price/Earnings per share
Sales / Average Total Assets
Total Assets / Equity
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

37. Assets to Equity ratio
assets less liabilities - divided by the number of shares of common stock of a company
Tax Deduction * marginal tax rate
Total Assets / Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

38. ROE (Return On Equity)
current assets - current liabilities
Net Income/Equity
EAT / Sales
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

39. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
Total Assets / Equity
[(1+ NR) / (1 + CCL)] - 1
Dollars of coupon interest per year/Bond's current market price
Net Income/Equity

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

41. Opportunities in Financial Planning
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
Price Earnings Growth ratio; P/E divided by projected earnings growth
(cash + marketable securities) / current liabilities

42. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
(1/T)(r1+r2+...+rT)
Price/Earnings per share
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
EAT / Sales

43. Equivalent Tax Credit
Total Return (1 - tax bracket)
Tax Credit/marginal tax rate
current assets / current liabilities
Tax Deduction * marginal tax rate

44. Attributes of Effective Advisor communiations
dividends / earnings
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Explanatory - Interpretive - Reassuring - Suggestive

45. financial life cycle
(current assets - inventory) / 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)
Tax Credit/marginal tax rate
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

46. Holding Period Return
Net Worth/Total Assets
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(P1 + D - P0)/P0
(Mortgage+Debt Repayment)/Net Income