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Test your basic knowledge |
CFP: Certified Financial Planner
Start Test
Study First
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. Social Styles
driving - expressive - amiable - analytical
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
EAT / Sales
current assets / current liabilities
2. Opportunities in Financial Planning
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 Assets / Equity
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
taxable interest - non-qual. divs - short-term cap. gains
3. Gross Investment income
taxable interest - non-qual. divs - short-term cap. gains
Dollars of coupon interest per year/Bond's current market price
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
driving - expressive - amiable - analytical
4. Present value of a Bond
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
[(1+ NR) / (1 + CCL)] - 1
5. Savings Ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
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
P*(1+g)/(k-g) P=div per share divided by other div
6. Total Debt to Equity ratio
Total Liabilities / Equity
dividends / earnings
Price/Earnings per share
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
7. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Net Income/Equity
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(1/T)(r1+r2+...+rT)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
8. aka Net Income
g = ROE X b - where b is equal to the retention ratio
EBIT/I (Where I = Interest Expense)
Earnings After Taxes
current assets / current liabilities
9. EBIT
Tax Credit/marginal tax rate
Earnings Before Interest & Taxes
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
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)
10. Types of Understanding Responses Associated With Active Listening
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(Mortgage+Debt Repayment)/Net Income
current assets - current liabilities
11. Current Yield of a bond
12. financial planning pyramid
(Mortgage+Debt Repayment)/Net Income
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
EAT / Sales
(current assets - inventory) / current liabilities
13. 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
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Explanatory - Interpretive - Reassuring - Suggestive
Total Return (1 - tax bracket)
14. Net After Tax Profit Margin
[(1+ NR) / (1 + CCL)] - 1
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Earnings Before Interest & Taxes
EAT / Sales
15. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
[(1+ NR) / (1 + CCL)] - 1
current assets - current liabilities
Price Earnings Growth ratio; P/E divided by projected earnings growth
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
16. After-tax Return
P*(1+g)/(k-g) P=div per share divided by other div
Total Return (1 - tax bracket)
Sales / Average Total Assets
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
17. Asset Turnover Ratio
g = ROE X b - where b is equal to the retention ratio
Sales / Average Total Assets
Explanatory - Interpretive - Reassuring - Suggestive
EBIT/I (Where I = Interest Expense)
18. The retention ratio
current assets / current liabilities
g = ROE X b - where b is equal to the retention ratio
Earnings After Taxes
1 - the payout ratio
19. After-tax Yield
Sales / Average Total Assets
Tax Free Yield/(1 - Tax Bracket)
dividends / earnings
P*(1+g)/(k-g) P=div per share divided by other div
20. Book Value (of company stock)
Price Earnings Growth ratio; P/E divided by projected earnings growth
Total Long-term Debt / Equity
dividends / earnings
assets less liabilities - divided by the number of shares of common stock of a company
21. Equivalent Tax Deduction
Tax Free Yield/(1 - Tax Bracket)
current assets - current liabilities
Total Assets / Equity
Tax Credit/marginal tax rate
22. Attributes of Effective Advisor communiations
Earnings Before Interest & Taxes
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
23. 'normal' ratio
Earnings Before Interest & Taxes
Earnings After Taxes
P*(1+g)/(k-g) P=div per share divided by other div
driving - expressive - amiable - analytical
24. PEG ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
Net Income/Equity
(P1 + D - P0)/P0
Total Assets / Equity
25. Types of Leading Responses
Explanatory - Interpretive - Reassuring - Suggestive
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Net Income/Equity
Total Return (1 - tax bracket)
26. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
1 - the payout ratio
EBIT/I (Where I = Interest Expense)
Price Earnings Growth ratio; P/E divided by projected earnings growth
27. The payout ratio
dividends / earnings
Price/Earnings per share
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Dollars of coupon interest per year/Bond's current market price
28. ROE (Return On Equity)
g = ROE X b - where b is equal to the retention ratio
Net Income/Equity
assets less liabilities - divided by the number of shares of common stock of a company
(current assets - inventory) / current liabilities
29. Assets to Equity ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Total Return (1 - tax bracket)
(current assets - inventory) / current liabilities
Total Assets / Equity
30. Solvency Ratio
Price/Earnings per share
current assets - current liabilities
assets less liabilities - divided by the number of shares of common stock of a company
Net Worth/Total Assets
31. Current Ratio
current assets - current liabilities
(P1 + D - P0)/P0
Price/Earnings per share
current assets / current liabilities
32. Net Investment Income
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Price/Earnings per share
driving - expressive - amiable - analytical
EBIT/I (Where I = Interest Expense)
33. Sustainable Growth Rate
g = ROE X b - where b is equal to the retention ratio
(1/T)(r1+r2+...+rT)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
[(1+ NR) / (1 + CCL)] - 1
34. Holding Period Return
(P1 + D - P0)/P0
(current assets - inventory) / current liabilities
Explanatory - Interpretive - Reassuring - Suggestive
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
35. Debt to Equity ratio
(Mortgage+Debt Repayment)/Net Income
(P1 + D - P0)/P0
Price Earnings Growth ratio; P/E divided by projected earnings growth
Total Long-term Debt / Equity
36. Quick Ratio (aka Acid test)
Dollars of coupon interest per year/Bond's current market price
Sales / Average Total Assets
taxable interest - non-qual. divs - short-term cap. gains
(current assets - inventory) / current liabilities
37. Equivalent Tax Credit
Earnings Before Interest & Taxes
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Total Liabilities / Equity
Tax Deduction * marginal tax rate
38. Times Interest Earned
Tax Free Yield/(1 - Tax Bracket)
EBIT/I (Where I = Interest Expense)
(1/T)(r1+r2+...+rT)
P*(1+g)/(k-g) P=div per share divided by other div
39. Net Cash Flow
(1/T)(r1+r2+...+rT)
1 - the payout ratio
Explanatory - Interpretive - Reassuring - Suggestive
Sources of Funds-Use of Funds or Money in- Money out
40. Working Capital
Total Assets / Equity
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
current assets - current liabilities
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
41. Cash Ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
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)
(cash + marketable securities) / current liabilities
current assets / current liabilities
42. Major CFP Planning Areas
(1/T)(r1+r2+...+rT)
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
Total Return (1 - tax bracket)
43. CFP Ethical principles
Net Worth/Total Assets
Price/Earnings per share
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
EBIT/I (Where I = Interest Expense)
44. Debt Service Ratio
current assets - current liabilities
(Mortgage+Debt Repayment)/Net Income
Total Return (1 - tax bracket)
Explanatory - Interpretive - Reassuring - Suggestive
45. financial life cycle
Earnings Before Interest & 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
Tax Free Yield/(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)
46. P/E ratio
(cash + marketable securities) / current liabilities
Tax Free Yield/(1 - Tax Bracket)
1 - the payout ratio
Price/Earnings per share