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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. Types of Leading Responses
Explanatory - Interpretive - Reassuring - Suggestive
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Long-term Debt / Equity
Total Liabilities / Equity

2. Current Yield of a bond

3. Sustainable Growth Rate
dividends / earnings
EBIT/I (Where I = Interest Expense)
Total Return (1 - tax bracket)
g = ROE X b - where b is equal to the retention ratio

4. Working Capital
dividends / earnings
Tax Credit/marginal tax rate
EAT / Sales
current assets - current liabilities

5. 'normal' ratio
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Explanatory - Interpretive - Reassuring - Suggestive
EAT / Sales
P*(1+g)/(k-g) P=div per share divided by other div

6. Cash Ratio
(cash + marketable securities) / current liabilities
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(1/T)(r1+r2+...+rT)
Tax Free Yield/(1 - Tax Bracket)

7. Domains of a CFP
current assets - current liabilities
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
driving - expressive - amiable - analytical
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

8. Equivalent Tax Credit
Tax Deduction * marginal tax rate
(1/T)(r1+r2+...+rT)
Sales / Average Total Assets
(current assets - inventory) / current liabilities

9. Major CFP Planning Areas
Earnings Before Interest & Taxes
Price/Earnings per share
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

10. The retention ratio
(current assets - inventory) / current liabilities
1 - the payout ratio
(Mortgage+Debt Repayment)/Net Income
Explanatory - Interpretive - Reassuring - Suggestive

11. Current Ratio
EAT / Sales
(1/T)(r1+r2+...+rT)
[(1+ NR) / (1 + CCL)] - 1
current assets / current liabilities

12. Holding Period Return
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Liabilities / Equity
(P1 + D - P0)/P0
P*(1+g)/(k-g) P=div per share divided by other div

13. Solvency Ratio
(1/T)(r1+r2+...+rT)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
current assets - current liabilities
Net Worth/Total Assets

14. Net Cash Flow
(P1 + D - P0)/P0
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
dividends / earnings
Sources of Funds-Use of Funds or Money in- Money out

15. Debt to Equity ratio
dividends / earnings
g = ROE X b - where b is equal to the retention ratio
P*(1+g)/(k-g) P=div per share divided by other div
Total Long-term Debt / Equity

16. Liquidity Ratio
current assets - current liabilities
Earnings Before Interest & Taxes
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

17. Equivalent Tax Deduction
Sales / Average Total Assets
Total Liabilities / Equity
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Tax Credit/marginal tax rate

18. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(1/T)(r1+r2+...+rT)
Tax Deduction * marginal tax rate
Price Earnings Growth ratio; P/E divided by projected earnings growth

19. Total Debt to Equity ratio
Earnings After Taxes
Total Liabilities / Equity
Total Long-term Debt / Equity
Tax Deduction * marginal tax rate

20. aka Net Income
Earnings After Taxes
g = ROE X b - where b is equal to the retention ratio
(current assets - inventory) / current liabilities
[(1+ NR) / (1 + CCL)] - 1

21. Times Interest Earned
EBIT/I (Where I = Interest Expense)
dividends / earnings
Dollars of coupon interest per year/Bond's current market price
Price/Earnings per share

22. Attributes of Effective Advisor communiations
P*(1+g)/(k-g) P=div per share divided by other div
Total Assets / Equity
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)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

23. EBIT
Earnings Before Interest & Taxes
current assets - current liabilities
P*(1+g)/(k-g) P=div per share divided by other div
assets less liabilities - divided by the number of shares of common stock of a company

24. financial life cycle
Earnings After Taxes
Price Earnings Growth ratio; P/E divided by projected earnings growth
Explanatory - Interpretive - Reassuring - Suggestive
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)

25. Book Value (of company stock)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
driving - expressive - amiable - analytical
assets less liabilities - divided by the number of shares of common stock of a company
(Mortgage+Debt Repayment)/Net Income

26. ROE (Return On Equity)
Net Worth/Total Assets
Net Income/Equity
(Mortgage+Debt Repayment)/Net Income
Tax Deduction * marginal tax rate

27. Debt Service Ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
taxable interest - non-qual. divs - short-term cap. gains
(Mortgage+Debt Repayment)/Net Income
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

28. Types of Understanding Responses Associated With Active Listening
EBIT/I (Where I = Interest Expense)
Price/Earnings per share
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Tax Free Yield/(1 - Tax Bracket)

29. 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
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

30. Social Styles
(Mortgage+Debt Repayment)/Net Income
driving - expressive - amiable - analytical
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

31. Assets to Equity ratio
Sales / Average Total Assets
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Assets / Equity
taxable interest - non-qual. divs - short-term cap. gains

32. 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
(P1 + D - P0)/P0
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
taxable interest - non-qual. divs - short-term cap. gains

33. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
Earnings After Taxes
[(1+ NR) / (1 + CCL)] - 1
Explanatory - Interpretive - Reassuring - Suggestive
Total Liabilities / Equity

34. The payout ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(Mortgage+Debt Repayment)/Net Income
dividends / earnings
1 - the payout ratio

35. Savings Ratio
Total Return (1 - tax bracket)
Net Worth/Total Assets
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Total Assets / Equity

36. Present value of a Bond
1 - the payout ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Tax Free Yield/(1 - Tax Bracket)
P*(1+g)/(k-g) P=div per share divided by other div

37. Quick Ratio (aka Acid test)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(current assets - inventory) / current liabilities
1 - the payout ratio
Tax Credit/marginal tax rate

38. Net Investment Income
Tax Deduction * marginal tax rate
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(1/T)(r1+r2+...+rT)

39. P/E ratio
P*(1+g)/(k-g) P=div per share divided by other div
Price/Earnings per share
Tax Free Yield/(1 - Tax Bracket)
Total Assets / Equity

40. Asset Turnover Ratio
dividends / earnings
Dollars of coupon interest per year/Bond's current market price
Sales / Average Total Assets
Net Worth/Total Assets

41. CFP Ethical principles
Tax Credit/marginal tax rate
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
current assets / current liabilities
assets less liabilities - divided by the number of shares of common stock of a company

42. After-tax Yield
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
EBIT/I (Where I = Interest Expense)
Tax Free Yield/(1 - Tax Bracket)

43. After-tax Return
Total Return (1 - tax bracket)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
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

44. financial planning pyramid
Total Liabilities / Equity
g = ROE X b - where b is equal to the retention ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

45. PEG ratio
Explanatory - Interpretive - Reassuring - Suggestive
EAT / Sales
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)

46. Net After Tax Profit Margin
Total Long-term Debt / Equity
EAT / Sales
Sales / Average Total Assets
(current assets - inventory) / current liabilities