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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. P/E ratio
Price/Earnings per share
(cash + marketable securities) / current liabilities
taxable interest - non-qual. divs - short-term cap. gains
Earnings Before Interest & Taxes

2. ROE (Return On Equity)
Net Income/Equity
taxable interest - non-qual. divs - short-term cap. gains
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Sales / Average Total Assets

3. Current Ratio
Net Worth/Total Assets
Earnings After Taxes
current assets / current liabilities
g = ROE X b - where b is equal to the retention ratio

4. Times Interest Earned
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
current assets / current liabilities
current assets - current liabilities
EBIT/I (Where I = Interest Expense)

5. Net Cash Flow
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
EAT / Sales
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Sources of Funds-Use of Funds or Money in- Money out

6. Total Debt to Equity ratio
Total Liabilities / Equity
[(1+ NR) / (1 + CCL)] - 1
Total Return (1 - tax bracket)
taxable interest - non-qual. divs - short-term cap. gains

7. Savings Ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
driving - expressive - amiable - analytical
current assets - current liabilities
dividends / earnings

8. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Total Liabilities / Equity
(1/T)(r1+r2+...+rT)
EAT / Sales
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

9. Book Value (of company stock)
current assets / current liabilities
EBIT/I (Where I = Interest Expense)
(1/T)(r1+r2+...+rT)
assets less liabilities - divided by the number of shares of common stock of a company

10. financial life cycle
dividends / earnings
Price Earnings Growth ratio; P/E divided by projected earnings growth
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)
Total Assets / Equity

11. financial planning pyramid
(P1 + D - P0)/P0
Sources of Funds-Use of Funds or Money in- Money out
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

12. Current Yield of a bond
Dollars of coupon interest per year/Bond's current market price
driving - expressive - amiable - analytical
Tax Credit/marginal tax rate
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

13. Social Styles
driving - expressive - amiable - analytical
Total Return (1 - tax bracket)
Sources of Funds-Use of Funds or Money in- Money out
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

14. CFP Ethical principles
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
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(1/T)(r1+r2+...+rT)
current assets / current liabilities

15. Debt Service Ratio
(1/T)(r1+r2+...+rT)
Explanatory - Interpretive - Reassuring - Suggestive
Net Worth/Total Assets
(Mortgage+Debt Repayment)/Net Income

16. 'normal' ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
P*(1+g)/(k-g) P=div per share divided by other div
Net Worth/Total Assets
Earnings After Taxes

17. Cash Ratio
g = ROE X b - where b is equal to the retention ratio
(cash + marketable securities) / current liabilities
EAT / Sales
taxable interest - non-qual. divs - short-term cap. gains

18. Major CFP Planning Areas
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Long-term Debt / Equity
taxable interest - non-qual. divs - short-term cap. gains
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

19. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
Sources of Funds-Use of Funds or Money in- Money out
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)
EAT / Sales
[(1+ NR) / (1 + CCL)] - 1

20. Debt to Equity ratio
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Long-term Debt / Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Explanatory - Interpretive - Reassuring - Suggestive

21. Solvency Ratio
Price/Earnings per share
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Net Worth/Total Assets
Tax Deduction * marginal tax rate

22. PEG ratio
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)
Price Earnings Growth ratio; P/E divided by projected earnings growth
(cash + marketable securities) / current liabilities
EAT / Sales

23. Gross Investment income
taxable interest - non-qual. divs - short-term cap. gains
Net Worth/Total Assets
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

24. Present value of a Bond
Dollars of coupon interest per year/Bond's current market price
Tax Credit/marginal tax rate
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
dividends / earnings

25. aka Net Income
Earnings After Taxes
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
EBIT/I (Where I = Interest Expense)
[(1+ NR) / (1 + CCL)] - 1

26. Equivalent Tax Credit
Tax Deduction * marginal tax rate
(current assets - inventory) / current liabilities
Price Earnings Growth ratio; P/E divided by projected earnings growth
Dollars of coupon interest per year/Bond's current market price

27. Domains of a CFP
Net Worth/Total Assets
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
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

28. EBIT
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 Before Interest & Taxes
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(1/T)(r1+r2+...+rT)

29. Net Investment Income
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(cash + marketable securities) / current liabilities
g = ROE X b - where b is equal to the retention ratio
taxable interest - non-qual. divs - short-term cap. gains

30. Liquidity Ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Price/Earnings per share

31. Holding Period Return
(cash + marketable securities) / 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 Liabilities / Equity
(P1 + D - P0)/P0

32. Equivalent Tax Deduction
(P1 + D - P0)/P0
Tax Credit/marginal tax rate
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

33. Sustainable Growth Rate
Sources of Funds-Use of Funds or Money in- Money out
current assets - current liabilities
g = ROE X b - where b is equal to the retention ratio
EBIT/I (Where I = Interest Expense)

34. Attributes of Effective Advisor communiations
Sources of Funds-Use of Funds or Money in- Money out
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
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

35. After-tax Yield
Tax Free Yield/(1 - Tax Bracket)
Earnings Before Interest & Taxes
current assets - current liabilities
current assets / current liabilities

36. Working Capital
Tax Credit/marginal tax rate
[(1+ NR) / (1 + CCL)] - 1
Sales / Average Total Assets
current assets - current liabilities

37. After-tax Return
g = ROE X b - where b is equal to the retention ratio
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)
Price Earnings Growth ratio; P/E divided by projected earnings growth

38. The payout ratio
dividends / earnings
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
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

39. Types of Understanding Responses Associated With Active Listening
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Assets / Equity
(1/T)(r1+r2+...+rT)
EBIT/I (Where I = Interest Expense)

40. Assets to Equity ratio
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
Sales / Average Total Assets
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

41. Net After Tax Profit Margin
EAT / Sales
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
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

42. Quick Ratio (aka Acid test)
Total Assets / Equity
assets less liabilities - divided by the number of shares of common stock of a company
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(current assets - inventory) / current liabilities

43. Asset Turnover Ratio
[(1+ NR) / (1 + CCL)] - 1
Sales / Average Total Assets
Price/Earnings per share
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

44. Types of Leading Responses
taxable interest - non-qual. divs - short-term cap. gains
Earnings After Taxes
Explanatory - Interpretive - Reassuring - Suggestive
(cash + marketable securities) / current liabilities

45. Opportunities in Financial Planning
Net Income/Equity
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
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(P1 + D - P0)/P0

46. The retention ratio
(current assets - inventory) / current liabilities
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
1 - the payout ratio
[(1+ NR) / (1 + CCL)] - 1

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CFP: Certified Financial Planner

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