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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. Social Styles
Sales / Average Total Assets
assets less liabilities - divided by the number of shares of common stock of a company
driving - expressive - amiable - analytical
Earnings After Taxes

2. Present value of a Bond
taxable interest - non-qual. divs - short-term cap. gains
(current assets - inventory) / current liabilities
(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

3. Cash Ratio
dividends / earnings
(1/T)(r1+r2+...+rT)
(Mortgage+Debt Repayment)/Net Income
(cash + marketable securities) / current liabilities

4. Sustainable Growth Rate
Earnings Before Interest & Taxes
g = ROE X b - where b is equal to the retention 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
[(1+ NR) / (1 + CCL)] - 1

5. Attributes of Effective Advisor communiations
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
taxable interest - non-qual. divs - short-term cap. gains
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

6. Debt to Equity ratio
(Mortgage+Debt Repayment)/Net Income
Total Long-term Debt / Equity
Tax Free Yield/(1 - Tax Bracket)
(current assets - inventory) / current liabilities

7. Domains of a CFP
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
Sources of Funds-Use of Funds or Money in- Money out
current assets / current liabilities

8. aka Net Income
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
Earnings After Taxes
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
driving - expressive - amiable - analytical

9. Major CFP Planning Areas
Sources of Funds-Use of Funds or Money in- Money out
Tax Deduction * marginal tax rate
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

10. Opportunities in Financial Planning
driving - expressive - amiable - analytical
Net Income/Equity
(1/T)(r1+r2+...+rT)
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. Equivalent Tax Credit
(cash + marketable securities) / current liabilities
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
current assets - current liabilities
Tax Deduction * marginal tax rate

12. PEG ratio
Total Liabilities / Equity
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
1 - the payout ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth

13. Equivalent Tax Deduction
Net Worth/Total Assets
Price Earnings Growth ratio; P/E divided by projected earnings growth
Tax Credit/marginal tax rate
Sources of Funds-Use of Funds or Money in- Money out

14. EBIT
(P1 + D - P0)/P0
Tax Credit/marginal tax rate
(Mortgage+Debt Repayment)/Net Income
Earnings Before Interest & Taxes

15. financial planning pyramid
[(1+ NR) / (1 + CCL)] - 1
Explanatory - Interpretive - Reassuring - Suggestive
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

16. The payout ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
dividends / earnings
(current assets - inventory) / current liabilities
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

17. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
(1/T)(r1+r2+...+rT)
[(1+ NR) / (1 + CCL)] - 1
Total Return (1 - tax bracket)
current assets / current liabilities

18. Savings Ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
dividends / earnings
Total Return (1 - tax bracket)
EBIT/I (Where I = Interest Expense)

19. Types of Understanding Responses Associated With Active Listening
(Mortgage+Debt Repayment)/Net Income
g = ROE X b - where b is equal to the retention ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
current assets / current liabilities

20. After-tax Yield
Tax Free Yield/(1 - Tax Bracket)
Net Worth/Total Assets
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
current assets - current liabilities

21. Net Investment Income
current assets - current liabilities
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
dividends / earnings
Total Liabilities / Equity

22. Liquidity Ratio
EBIT/I (Where I = Interest Expense)
EAT / Sales
Explanatory - Interpretive - Reassuring - Suggestive
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

23. Gross Investment 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)
current assets - current liabilities
Net Worth/Total Assets
taxable interest - non-qual. divs - short-term cap. gains

24. Holding Period Return
(Mortgage+Debt Repayment)/Net Income
Earnings After Taxes
(P1 + D - P0)/P0
Tax Deduction * marginal tax rate

25. The retention ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
1 - the payout ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
assets less liabilities - divided by the number of shares of common stock of a company

26. CFP Ethical principles
Sales / Average Total Assets
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
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

27. ROE (Return On Equity)
Price/Earnings per share
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)
Net Income/Equity
Total Return (1 - tax bracket)

28. 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)
(current assets - inventory) / current liabilities
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Net Income/Equity

29. Asset Turnover Ratio
Explanatory - Interpretive - Reassuring - Suggestive
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
current assets - current liabilities
Sales / Average Total Assets

30. Book Value (of company stock)
Earnings After 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
assets less liabilities - divided by the number of shares of common stock of a company
Net Income/Equity

31. Current Ratio
dividends / earnings
current assets / current liabilities
Sales / Average Total Assets
EAT / Sales

32. Times Interest Earned
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Total Liabilities / Equity
dividends / earnings
EBIT/I (Where I = Interest Expense)

33. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
(1/T)(r1+r2+...+rT)
Tax Credit/marginal tax rate
Net Worth/Total Assets
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

34. 'normal' ratio
(current assets - inventory) / current liabilities
P*(1+g)/(k-g) P=div per share divided by other div
EAT / Sales
(1/T)(r1+r2+...+rT)

35. Current Yield of a bond

36. Quick Ratio (aka Acid test)
Net Worth/Total Assets
(current assets - inventory) / current liabilities
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

37. Working Capital
Dollars of coupon interest per year/Bond's current market price
current assets - current liabilities
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Earnings After Taxes

38. Net Cash Flow
Price Earnings Growth ratio; P/E divided by projected earnings growth
current assets - current liabilities
Sources of Funds-Use of Funds or Money in- Money out
(Mortgage+Debt Repayment)/Net Income

39. Debt Service Ratio
Tax Deduction * marginal tax rate
driving - expressive - amiable - analytical
(Mortgage+Debt Repayment)/Net Income
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

40. Total Debt to Equity ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Liabilities / Equity
Total Return (1 - tax bracket)

41. Solvency Ratio
driving - expressive - amiable - analytical
Price/Earnings per share
1 - the payout ratio
Net Worth/Total Assets

42. After-tax Return
Total Return (1 - tax bracket)
Tax Deduction * marginal tax rate
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

43. P/E ratio
Price/Earnings per share
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(Mortgage+Debt Repayment)/Net Income

44. Types of Leading Responses
Dollars of coupon interest per year/Bond's current market price
Earnings Before Interest & Taxes
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Explanatory - Interpretive - Reassuring - Suggestive

45. Net After Tax Profit Margin
Tax Credit/marginal tax rate
(Mortgage+Debt Repayment)/Net Income
EAT / Sales
Total Long-term Debt / Equity

46. Assets to Equity ratio
(cash + marketable securities) / current liabilities
Total Long-term Debt / Equity
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Assets / Equity