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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. ROE (Return On Equity)
current assets / current liabilities
driving - expressive - amiable - analytical
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)

2. Working Capital
current assets - current liabilities
taxable interest - non-qual. divs - short-term cap. gains
Net Worth/Total Assets
(1/T)(r1+r2+...+rT)

3. Net After Tax Profit Margin
Sources of Funds-Use of Funds or Money in- Money out
current assets - current liabilities
EAT / Sales
Total Return (1 - tax bracket)

4. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Sales / Average Total Assets
Price Earnings Growth ratio; P/E divided by projected earnings growth
[(1+ NR) / (1 + CCL)] - 1

5. Present value of a Bond
Price/Earnings per share
Dollars of coupon interest per year/Bond's current market price
(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. Asset Turnover Ratio
Net Income/Equity
Sales / Average Total Assets
taxable interest - non-qual. divs - short-term cap. gains
Total Assets / Equity

7. Debt to Equity ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Long-term Debt / Equity
(current assets - inventory) / current liabilities
Tax Credit/marginal tax rate

8. Equivalent Tax Credit
Tax Deduction * marginal tax rate
assets less liabilities - divided by the number of shares of common stock of a company
P*(1+g)/(k-g) P=div per share divided by other div
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

9. Opportunities in Financial Planning
g = ROE X b - where b is equal to the retention ratio
current assets - current liabilities
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

10. Holding Period Return
Total Assets / Equity
(P1 + D - P0)/P0
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Earnings After Taxes

11. Liquidity Ratio
(Mortgage+Debt Repayment)/Net Income
EAT / Sales
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Total Return (1 - tax bracket)

12. Gross Investment income
Net Income/Equity
Earnings Before Interest & Taxes
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

13. Solvency Ratio
Net Worth/Total Assets
taxable interest - non-qual. divs - short-term cap. gains
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Total Liabilities / Equity

14. Book Value (of company stock)
Tax Credit/marginal tax rate
current assets - current liabilities
assets less liabilities - divided by the number of shares of common stock of a company
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

15. Total Debt to Equity ratio
EAT / Sales
Total Liabilities / 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)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

16. Quick Ratio (aka Acid test)
1 - the payout ratio
Net Worth/Total Assets
(current assets - inventory) / current liabilities
Dollars of coupon interest per year/Bond's current market price

17. Types of Leading Responses
driving - expressive - amiable - analytical
Total Return (1 - tax bracket)
Explanatory - Interpretive - Reassuring - Suggestive
dividends / earnings

18. 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)
driving - expressive - amiable - analytical
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
assets less liabilities - divided by the number of shares of common stock of a company

19. Equivalent Tax Deduction
Tax Credit/marginal tax rate
Total Return (1 - tax bracket)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
driving - expressive - amiable - analytical

20. Times Interest Earned
Tax Deduction * marginal tax rate
Explanatory - Interpretive - Reassuring - Suggestive
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
EBIT/I (Where I = Interest Expense)

21. Attributes of Effective Advisor communiations
Tax Credit/marginal tax rate
(current assets - inventory) / current liabilities
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
P*(1+g)/(k-g) P=div per share divided by other div

22. Current Yield of a bond

23. EBIT
driving - expressive - amiable - analytical
Earnings Before Interest & Taxes
Tax Credit/marginal tax rate
assets less liabilities - divided by the number of shares of common stock of a company

24. 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
(1/T)(r1+r2+...+rT)
Total Return (1 - tax bracket)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

25. Net Investment Income
(cash + marketable securities) / current liabilities
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
current assets - current liabilities
Total Assets / Equity

26. Assets to Equity ratio
Total Assets / Equity
1 - the payout ratio
EBIT/I (Where I = Interest Expense)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

27. Debt Service Ratio
Explanatory - Interpretive - Reassuring - Suggestive
taxable interest - non-qual. divs - short-term cap. gains
(Mortgage+Debt Repayment)/Net Income
assets less liabilities - divided by the number of shares of common stock of a company

28. The payout ratio
dividends / earnings
(cash + marketable securities) / current liabilities
Total Liabilities / Equity
(current assets - inventory) / current liabilities

29. 'normal' ratio
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Tax Deduction * marginal tax rate
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

30. After-tax Yield
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Tax Free Yield/(1 - Tax Bracket)
(1/T)(r1+r2+...+rT)
(current assets - inventory) / current liabilities

31. Current Ratio
Total Long-term Debt / Equity
Sources of Funds-Use of Funds or Money in- Money out
current assets / current liabilities
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

32. Net Cash Flow
(1/T)(r1+r2+...+rT)
(Mortgage+Debt Repayment)/Net Income
Sources of Funds-Use of Funds or Money in- Money out
Earnings After Taxes

33. CFP Ethical principles
Earnings After Taxes
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Long-term Debt / Equity
P*(1+g)/(k-g) P=div per share divided by other div

34. Types of Understanding Responses Associated With Active Listening
Total Liabilities / Equity
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
1 - the payout ratio
Total Assets / Equity

35. Domains of a CFP
Total Liabilities / Equity
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
P*(1+g)/(k-g) P=div per share divided by other div
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

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

37. P/E ratio
Price/Earnings per share
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
g = ROE X b - where b is equal to the retention ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth

38. Sustainable Growth Rate
Sources of Funds-Use of Funds or Money in- Money out
Earnings Before Interest & Taxes
current assets / current liabilities
g = ROE X b - where b is equal to the retention ratio

39. Social Styles
Tax Free Yield/(1 - Tax Bracket)
g = ROE X b - where b is equal to the retention ratio
driving - expressive - amiable - analytical
Tax Deduction * marginal tax rate

40. financial planning pyramid
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
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
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

41. Cash Ratio
current assets - current liabilities
P*(1+g)/(k-g) P=div per share divided by other div
(cash + marketable securities) / current liabilities
(P1 + D - P0)/P0

42. PEG ratio
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Price Earnings Growth ratio; P/E divided by projected earnings growth
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
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
dividends / earnings
Dollars of coupon interest per year/Bond's current market price
Earnings Before Interest & Taxes

44. After-tax Return
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 Credit/marginal tax rate
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)

45. aka Net Income
g = ROE X b - where b is equal to the retention ratio
Earnings After Taxes
driving - expressive - amiable - analytical
Price Earnings Growth ratio; P/E divided by projected earnings growth

46. The retention ratio
Total Assets / Equity
assets less liabilities - divided by the number of shares of common stock of a company
Total Liabilities / Equity
1 - the payout ratio