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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. The payout 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
dividends / earnings

2. Major CFP Planning Areas
dividends / earnings
P*(1+g)/(k-g) P=div per share divided by other div
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Explanatory - Interpretive - Reassuring - Suggestive

3. financial planning pyramid
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
EAT / Sales
Price Earnings Growth ratio; P/E divided by projected earnings growth
Sources of Funds-Use of Funds or Money in- Money out

4. EBIT
Tax Free Yield/(1 - Tax Bracket)
Earnings Before Interest & Taxes
Explanatory - Interpretive - Reassuring - Suggestive
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

5. Working Capital
Tax Deduction * marginal tax rate
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
current assets - current liabilities
(1/T)(r1+r2+...+rT)

6. Gross Investment income
current assets / current liabilities
Total Return (1 - tax bracket)
Tax Credit/marginal tax rate
taxable interest - non-qual. divs - short-term cap. gains

7. Types of Leading Responses
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Explanatory - Interpretive - Reassuring - Suggestive
(current assets - inventory) / current liabilities
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

8. financial life cycle
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)
dividends / earnings
assets less liabilities - divided by the number of shares of common stock of a company
Net Worth/Total Assets

9. The retention ratio
Dollars of coupon interest per year/Bond's current market price
1 - the payout ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

10. P/E ratio
Price/Earnings per share
Total Long-term Debt / Equity
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Assets / Equity

11. Debt Service Ratio
Total Long-term Debt / Equity
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

12. After-tax Return
Total Return (1 - tax bracket)
driving - expressive - amiable - analytical
Net Worth/Total Assets
Explanatory - Interpretive - Reassuring - Suggestive

13. Equivalent Tax Deduction
(1/T)(r1+r2+...+rT)
Earnings After Taxes
Tax Credit/marginal tax rate
Tax Free Yield/(1 - Tax Bracket)

14. Savings Ratio
(P1 + D - P0)/P0
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
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)

15. Total Debt to Equity ratio
Total Liabilities / Equity
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Long-term Debt / Equity
(cash + marketable securities) / current liabilities

16. Current Ratio
Sales / Average Total Assets
current assets / current liabilities
Earnings After Taxes
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)

17. Net Cash Flow
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
[(1+ NR) / (1 + CCL)] - 1
Sources of Funds-Use of Funds or Money in- Money out
(Mortgage+Debt Repayment)/Net Income

18. Present value of a Bond
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(cash + marketable securities) / 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)
Earnings After Taxes

19. 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
Total Liabilities / Equity
Total Return (1 - tax bracket)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

20. 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
dividends / earnings
Net Income/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)

21. aka Net Income
Net Worth/Total Assets
current assets - current liabilities
Earnings After Taxes
EAT / Sales

22. Asset Turnover Ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
(1/T)(r1+r2+...+rT)
Sales / Average Total Assets
driving - expressive - amiable - analytical

23. Social Styles
Tax Credit/marginal tax rate
driving - expressive - amiable - analytical
Net Worth/Total Assets
(P1 + D - P0)/P0

24. After-tax Yield
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Total Long-term Debt / Equity
Tax Free Yield/(1 - Tax Bracket)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

25. 'normal' ratio
P*(1+g)/(k-g) P=div per share divided by other div
Net Income/Equity
Price Earnings Growth ratio; P/E divided by projected earnings growth
Sales / Average Total Assets

26. Liquidity Ratio
Price/Earnings per share
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
1 - the payout ratio
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

27. Solvency Ratio
Net Worth/Total Assets
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
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)

28. Book Value (of company stock)
taxable interest - non-qual. divs - short-term cap. gains
assets less liabilities - divided by the number of shares of common stock of a company
Dollars of coupon interest per year/Bond's current market price
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

29. Current Yield of a bond

30. Cash Ratio
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Explanatory - Interpretive - Reassuring - Suggestive
(cash + marketable securities) / current liabilities
taxable interest - non-qual. divs - short-term cap. gains

31. Equivalent Tax Credit
(cash + marketable securities) / current liabilities
Tax Deduction * marginal tax rate
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)
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

32. Holding Period Return
[(1+ NR) / (1 + CCL)] - 1
Total Return (1 - tax bracket)
(P1 + D - P0)/P0
P*(1+g)/(k-g) P=div per share divided by other div

33. Types of Understanding Responses Associated With Active Listening
1 - the payout ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Price Earnings Growth ratio; P/E divided by projected earnings growth
Total Assets / Equity

34. Quick Ratio (aka Acid test)
(current assets - inventory) / current liabilities
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(cash + marketable securities) / current liabilities
Earnings After Taxes

35. Debt to Equity ratio
Total Long-term Debt / Equity
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
[(1+ NR) / (1 + CCL)] - 1

36. Assets to Equity ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Total Long-term Debt / Equity
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Assets / Equity

37. Net After Tax Profit Margin
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
EAT / Sales
driving - expressive - amiable - analytical
Earnings After Taxes

38. Sustainable Growth Rate
g = ROE X b - where b is equal to the retention ratio
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
Total Long-term Debt / Equity

39. ROE (Return On Equity)
Earnings After Taxes
Price/Earnings per share
Net Income/Equity
Earnings Before Interest & Taxes

40. Net Investment Income
1 - the payout ratio
Earnings Before Interest & Taxes
(current assets - inventory) / current liabilities
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

41. Attributes of Effective Advisor communiations
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
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 = ROE X b - where b is equal to the retention ratio

42. Times Interest Earned
Total Return (1 - tax bracket)
current assets - current liabilities
Total Liabilities / Equity
EBIT/I (Where I = Interest Expense)

43. CFP Ethical principles
taxable interest - non-qual. divs - short-term cap. gains
Earnings Before Interest & Taxes
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Dollars of coupon interest per year/Bond's current market price

44. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
[(1+ NR) / (1 + CCL)] - 1
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
P*(1+g)/(k-g) P=div per share divided by other div
Price/Earnings per share

45. PEG ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
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 = ROE X b - where b is equal to the retention ratio
Tax Free Yield/(1 - Tax Bracket)

46. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Tax Free Yield/(1 - Tax Bracket)
(1/T)(r1+r2+...+rT)