Test your basic knowledge |

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. 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