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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. Quick Ratio (aka Acid test)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(current assets - inventory) / current liabilities
1 - the payout ratio

2. Cash 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
Dollars of coupon interest per year/Bond's current market price
Total Return (1 - tax bracket)
(cash + marketable securities) / current liabilities

3. Types of Understanding Responses Associated With Active Listening
P*(1+g)/(k-g) P=div per share divided by other div
Earnings Before Interest & Taxes
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

4. Equivalent Tax Credit
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 Deduction * marginal tax rate
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(1/T)(r1+r2+...+rT)

5. Total Debt to Equity ratio
Total Liabilities / Equity
Explanatory - Interpretive - Reassuring - Suggestive
Tax Credit/marginal tax rate
Sales / Average Total Assets

6. Equivalent Tax Deduction
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Tax Credit/marginal tax rate
Dollars of coupon interest per year/Bond's current market price
driving - expressive - amiable - analytical

7. EBIT
Total Liabilities / Equity
[(1+ NR) / (1 + CCL)] - 1
Earnings After Taxes
Earnings Before Interest & Taxes

8. Solvency Ratio
Explanatory - Interpretive - Reassuring - Suggestive
Dollars of coupon interest per year/Bond's current market price
Net Worth/Total Assets
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

9. financial life cycle
Net Worth/Total Assets
driving - expressive - amiable - analytical
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)
EBIT/I (Where I = Interest Expense)

10. After-tax Yield
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)
(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

11. Debt to Equity ratio
EBIT/I (Where I = Interest Expense)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
current assets / current liabilities
Total Long-term Debt / Equity

12. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
Net Worth/Total Assets
[(1+ NR) / (1 + CCL)] - 1
Price Earnings Growth ratio; P/E divided by projected earnings growth
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

13. Holding Period Return
g = ROE X b - where b is equal to the retention ratio
dividends / earnings
Explanatory - Interpretive - Reassuring - Suggestive
(P1 + D - P0)/P0

14. CFP Ethical principles
taxable interest - non-qual. divs - short-term cap. gains
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
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

15. 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
Tax Credit/marginal tax rate
Explanatory - Interpretive - Reassuring - Suggestive
Total Assets / Equity

16. Current Yield of a bond

17. Net After Tax Profit Margin
EAT / Sales
Tax Free Yield/(1 - Tax Bracket)
current assets - current liabilities
(1/T)(r1+r2+...+rT)

18. Sustainable Growth Rate
(Mortgage+Debt Repayment)/Net Income
(cash + marketable securities) / current liabilities
Tax Deduction * marginal tax rate
g = ROE X b - where b is equal to the retention ratio

19. P/E ratio
Price/Earnings per share
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
EBIT/I (Where I = Interest Expense)
Dollars of coupon interest per year/Bond's current market price

20. Liquidity 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
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Assets / Equity
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

21. The retention ratio
Tax Free Yield/(1 - Tax Bracket)
Total Return (1 - tax bracket)
Tax Credit/marginal tax rate
1 - the payout ratio

22. Net Cash Flow
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
Net Income/Equity
(Mortgage+Debt Repayment)/Net Income

23. Working Capital
(1/T)(r1+r2+...+rT)
current assets - current liabilities
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Earnings After Taxes

24. Domains of a CFP
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
Total Assets / Equity
1 - the payout ratio

25. PEG ratio
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
Price Earnings Growth ratio; P/E divided by projected earnings growth
assets less liabilities - divided by the number of shares of common stock of a company

26. Savings Ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Dollars of coupon interest per year/Bond's current market price
current assets / current liabilities
Tax Free Yield/(1 - Tax Bracket)

27. aka Net Income
Tax Credit/marginal tax rate
driving - expressive - amiable - analytical
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Earnings After Taxes

28. After-tax Return
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Total Return (1 - tax bracket)
Tax Free Yield/(1 - Tax Bracket)
Price Earnings Growth ratio; P/E divided by projected earnings growth

29. Assets to Equity ratio
EBIT/I (Where I = Interest Expense)
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)
Dollars of coupon interest per year/Bond's current market price

30. Types of Leading Responses
assets less liabilities - divided by the number of shares of common stock of a company
Explanatory - Interpretive - Reassuring - Suggestive
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
EAT / Sales

31. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
(1/T)(r1+r2+...+rT)
Price/Earnings per share
current assets - current liabilities
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

32. Gross Investment income
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
taxable interest - non-qual. divs - short-term cap. gains
(1/T)(r1+r2+...+rT)
Sales / Average Total Assets

33. Social Styles
driving - expressive - amiable - analytical
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Tax Deduction * marginal tax rate
Total Liabilities / Equity

34. Current Ratio
current assets / current liabilities
EBIT/I (Where I = Interest Expense)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

35. Major CFP Planning Areas
taxable interest - non-qual. divs - short-term cap. gains
Sales / Average Total Assets
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(P1 + D - P0)/P0

36. 'normal' ratio
P*(1+g)/(k-g) P=div per share divided by other div
1 - the payout ratio
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Price/Earnings per share

37. Times Interest Earned
Net Income/Equity
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Tax Credit/marginal tax rate
EBIT/I (Where I = Interest Expense)

38. Attributes of Effective Advisor communiations
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
EAT / Sales
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
dividends / earnings

39. ROE (Return On Equity)
P*(1+g)/(k-g) P=div per share divided by other div
Net Income/Equity
assets less liabilities - divided by the number of shares of common stock of a company
Total Return (1 - tax bracket)

40. financial planning pyramid
(cash + marketable securities) / current liabilities
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
[(1+ NR) / (1 + CCL)] - 1
assets less liabilities - divided by the number of shares of common stock of a company

41. Asset Turnover Ratio
Tax Deduction * marginal tax rate
Total Long-term Debt / Equity
Sales / Average Total Assets
dividends / earnings

42. Debt Service Ratio
Total Liabilities / Equity
(Mortgage+Debt Repayment)/Net Income
1 - the payout ratio
Tax Deduction * marginal tax rate

43. Present value of a Bond
Total Assets / Equity
g = ROE X b - where b is equal to the retention ratio
Sales / Average Total Assets
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

44. Net Investment Income
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(Mortgage+Debt Repayment)/Net 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)
P*(1+g)/(k-g) P=div per share divided by other div

45. The payout ratio
driving - expressive - amiable - analytical
EAT / Sales
dividends / earnings
Price/Earnings per share

46. Book Value (of company stock)
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
assets less liabilities - divided by the number of shares of common stock of a company
(Mortgage+Debt Repayment)/Net Income