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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)
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
EBIT/I (Where I = Interest Expense)
P*(1+g)/(k-g) P=div per share divided by other div

2. CFP Ethical principles
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
1 - the payout ratio
Explanatory - Interpretive - Reassuring - Suggestive
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

3. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
assets less liabilities - divided by the number of shares of common stock of a company
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

4. Equivalent Tax Credit
Tax Deduction * marginal tax rate
current assets - current liabilities
Net Worth/Total Assets
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

5. Debt Service Ratio
Explanatory - Interpretive - Reassuring - Suggestive
(P1 + D - P0)/P0
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)
(Mortgage+Debt Repayment)/Net Income

6. Cash Ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Long-term Debt / Equity
Tax Free Yield/(1 - Tax Bracket)
(cash + marketable securities) / current liabilities

7. PEG ratio
EAT / Sales
dividends / earnings
Price Earnings Growth ratio; P/E divided by projected earnings growth
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

8. ROE (Return On Equity)
Net Income/Equity
current assets / current liabilities
Dollars of coupon interest per year/Bond's current market price
Total Long-term Debt / Equity

9. Current Yield of a bond

10. 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
Explanatory - Interpretive - Reassuring - Suggestive
driving - expressive - amiable - analytical
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

11. Net After Tax Profit Margin
EAT / Sales
Total Long-term Debt / Equity
Total Return (1 - tax bracket)
assets less liabilities - divided by the number of shares of common stock of a company

12. P/E ratio
Tax Deduction * marginal tax rate
current assets / current liabilities
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Price/Earnings per share

13. Gross Investment income
[(1+ NR) / (1 + CCL)] - 1
dividends / earnings
Earnings Before Interest & Taxes
taxable interest - non-qual. divs - short-term cap. gains

14. financial planning pyramid
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(current assets - inventory) / current liabilities
Total Long-term Debt / Equity
(1/T)(r1+r2+...+rT)

15. Attributes of Effective Advisor communiations
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Earnings After Taxes
Net Worth/Total Assets
Total Assets / Equity

16. Sustainable Growth Rate
Sales / Average Total Assets
g = ROE X b - where b is equal to the retention ratio
Net Income/Equity
driving - expressive - amiable - analytical

17. Types of Understanding Responses Associated With Active Listening
Price Earnings Growth ratio; P/E divided by projected earnings growth
Price/Earnings per share
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

18. Savings Ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
(cash + marketable securities) / current liabilities
Net Income/Equity

19. Net Investment Income
Total Assets / Equity
assets less liabilities - divided by the number of shares of common stock of a company
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
P*(1+g)/(k-g) P=div per share divided by other div

20. After-tax Yield
Tax Free Yield/(1 - Tax Bracket)
driving - expressive - amiable - analytical
Dollars of coupon interest per year/Bond's current market price
current assets - current liabilities

21. Current Ratio
(1/T)(r1+r2+...+rT)
Earnings Before Interest & Taxes
current assets / current liabilities
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

22. Assets to Equity ratio
(P1 + D - P0)/P0
Price/Earnings per share
Total Assets / Equity
1 - the payout ratio

23. Holding Period Return
Total Return (1 - tax bracket)
(P1 + D - P0)/P0
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Net Worth/Total Assets

24. Total Debt to Equity ratio
Tax Free Yield/(1 - Tax Bracket)
Net Income/Equity
Tax Credit/marginal tax rate
Total Liabilities / Equity

25. Net Cash Flow
Sources of Funds-Use of Funds or Money in- Money out
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Tax Credit/marginal tax rate
Earnings Before Interest & Taxes

26. After-tax Return
P*(1+g)/(k-g) P=div per share divided by other div
Dollars of coupon interest per year/Bond's current market price
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 Return (1 - tax bracket)

27. The retention ratio
Dollars of coupon interest per year/Bond's current market price
Net Income/Equity
1 - the payout ratio
current assets / current liabilities

28. The payout ratio
Earnings Before Interest & Taxes
dividends / earnings
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
current assets / current liabilities

29. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Earnings After Taxes
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(1/T)(r1+r2+...+rT)

30. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
current assets - current liabilities
[(1+ NR) / (1 + CCL)] - 1
Total Liabilities / Equity
EBIT/I (Where I = Interest Expense)

31. Times Interest Earned
current assets / current liabilities
Earnings Before Interest & Taxes
(current assets - inventory) / current liabilities
EBIT/I (Where I = Interest Expense)

32. Working Capital
EAT / Sales
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
current assets - current liabilities
Earnings After Taxes

33. Types of Leading Responses
Tax Free Yield/(1 - Tax Bracket)
Explanatory - Interpretive - Reassuring - Suggestive
(cash + marketable securities) / current liabilities
assets less liabilities - divided by the number of shares of common stock of a company

34. 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)
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)
(current assets - inventory) / current liabilities

35. Asset Turnover Ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
g = ROE X b - where b is equal to the retention ratio
Tax Deduction * marginal tax rate
Sales / Average Total Assets

36. EBIT
EBIT/I (Where I = Interest Expense)
taxable interest - non-qual. divs - short-term cap. gains
Earnings Before Interest & Taxes
EAT / Sales

37. 'normal' ratio
1 - the payout ratio
P*(1+g)/(k-g) P=div per share divided by other div
(P1 + D - P0)/P0
assets less liabilities - divided by the number of shares of common stock of a company

38. Debt to Equity ratio
Net Worth/Total Assets
Total Long-term Debt / 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
current assets - current liabilities

39. Book Value (of company stock)
Earnings Before Interest & Taxes
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
assets less liabilities - divided by the number of shares of common stock of a company
(current assets - inventory) / current liabilities

40. Solvency Ratio
assets less liabilities - divided by the number of shares of common stock of a company
Total Long-term Debt / Equity
Tax Free Yield/(1 - Tax Bracket)
Net Worth/Total Assets

41. aka Net Income
current assets - current liabilities
Earnings After Taxes
EAT / Sales
g = ROE X b - where b is equal to the retention ratio

42. Social Styles
g = ROE X b - where b is equal to the retention ratio
Tax Free Yield/(1 - Tax Bracket)
assets less liabilities - divided by the number of shares of common stock of a company
driving - expressive - amiable - analytical

43. Major CFP Planning Areas
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
assets less liabilities - divided by the number of shares of common stock of a company
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Sources of Funds-Use of Funds or Money in- Money out

44. Opportunities in Financial Planning
current assets / current liabilities
P*(1+g)/(k-g) P=div per share divided by other div
Total Assets / 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

45. Present value of a Bond
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(current assets - inventory) / current liabilities
Tax Deduction * marginal tax rate
Sales / Average Total Assets

46. Equivalent Tax Deduction
Net Worth/Total Assets
current assets / current liabilities
Tax Credit/marginal tax rate
g = ROE X b - where b is equal to the retention ratio