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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. EBIT
Earnings Before Interest & 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
dividends / earnings
current assets / current liabilities

2. Social Styles
current assets / current liabilities
Tax Free Yield/(1 - Tax Bracket)
dividends / earnings
driving - expressive - amiable - analytical

3. The retention ratio
1 - the payout ratio
Earnings After Taxes
Net Income/Equity
Sales / Average Total Assets

4. financial life cycle
taxable interest - non-qual. divs - short-term cap. gains
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 Before Interest & Taxes
1 - the payout ratio

5. Debt Service Ratio
(Mortgage+Debt Repayment)/Net Income
Tax Deduction * marginal tax rate
EAT / Sales
Price Earnings Growth ratio; P/E divided by projected earnings growth

6. 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 - current liabilities
(current assets - inventory) / current liabilities
Earnings Before Interest & Taxes

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

8. Equivalent Tax Deduction
Tax Credit/marginal tax rate
Tax Free Yield/(1 - Tax Bracket)
Total Long-term Debt / Equity
Dollars of coupon interest per year/Bond's current market price

9. Assets to Equity ratio
Total Assets / Equity
Total Long-term Debt / Equity
dividends / earnings
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

10. Net After Tax Profit Margin
current assets - current liabilities
EAT / Sales
current assets / current liabilities
dividends / earnings

11. Liquidity Ratio
(1/T)(r1+r2+...+rT)
1 - the payout 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)

12. ROE (Return On Equity)
1 - the payout ratio
Net Income/Equity
Sources of Funds-Use of Funds or Money in- Money out
current assets / current liabilities

13. Types of Understanding Responses Associated With Active Listening
assets less liabilities - divided by the number of shares of common stock of a company
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
Total Assets / Equity

14. Holding Period Return
(current assets - inventory) / current liabilities
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(P1 + D - P0)/P0
Total Assets / Equity

15. Savings Ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Earnings After Taxes
Net Income/Equity
driving - expressive - amiable - analytical

16. CFP Ethical principles
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(cash + marketable securities) / current liabilities
Price/Earnings per share
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

17. Book Value (of company stock)
assets less liabilities - divided by the number of shares of common stock of a company
Tax Free Yield/(1 - Tax Bracket)
Total Return (1 - tax bracket)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

18. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
Tax Credit/marginal tax rate
(cash + marketable securities) / current liabilities
[(1+ NR) / (1 + CCL)] - 1
Tax Free Yield/(1 - Tax Bracket)

19. Major CFP Planning Areas
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(current assets - inventory) / current liabilities
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
[(1+ NR) / (1 + CCL)] - 1

20. After-tax Yield
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Dollars of coupon interest per year/Bond's current market price
Tax Free Yield/(1 - Tax Bracket)
g = ROE X b - where b is equal to the retention ratio

21. P/E ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
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
Price/Earnings per share

22. Asset Turnover Ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Sales / Average Total Assets
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

23. Types of Leading Responses
(1/T)(r1+r2+...+rT)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Explanatory - Interpretive - Reassuring - Suggestive
current assets - current liabilities

24. Solvency Ratio
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Price Earnings Growth ratio; P/E divided by projected earnings growth
EAT / Sales
Net Worth/Total Assets

25. Current Yield of a bond

26. After-tax Return
Total Return (1 - tax bracket)
P*(1+g)/(k-g) P=div per share divided by other div
(1/T)(r1+r2+...+rT)
Sources of Funds-Use of Funds or Money in- Money out

27. Cash Ratio
Tax Deduction * marginal tax rate
(cash + marketable securities) / current liabilities
1 - the payout ratio
Earnings After Taxes

28. Times Interest Earned
EBIT/I (Where I = Interest Expense)
1 - the payout ratio
Tax Deduction * 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

29. Net Cash Flow
dividends / earnings
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Sources of Funds-Use of Funds or Money in- Money out
1 - the payout ratio

30. financial planning pyramid
Sources of Funds-Use of Funds or Money in- Money out
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
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

31. 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
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)
Tax Free Yield/(1 - Tax Bracket)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

32. Sustainable Growth Rate
g = ROE X b - where b is equal to the retention 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)
(Mortgage+Debt Repayment)/Net Income

33. Working Capital
Tax Credit/marginal tax rate
current assets - current liabilities
Tax Free Yield/(1 - Tax Bracket)
Net Income/Equity

34. Net Investment Income
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Total Liabilities / Equity
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

35. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
EAT / Sales
Sales / Average Total Assets
Earnings After Taxes
(1/T)(r1+r2+...+rT)

36. Attributes of Effective Advisor communiations
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
Total Assets / Equity
(Mortgage+Debt Repayment)/Net Income

37. The payout ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Total Long-term Debt / Equity
dividends / earnings

38. PEG ratio
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(Mortgage+Debt Repayment)/Net Income
Net Income/Equity
Price Earnings Growth ratio; P/E divided by projected earnings growth

39. 'normal' ratio
Sales / Average Total Assets
(cash + marketable securities) / current liabilities
(Mortgage+Debt Repayment)/Net Income
P*(1+g)/(k-g) P=div per share divided by other div

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

41. aka Net Income
Explanatory - Interpretive - Reassuring - Suggestive
Earnings After Taxes
Total Return (1 - tax bracket)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

42. Current Ratio
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
Total Liabilities / Equity
Sources of Funds-Use of Funds or Money in- Money out

43. Equivalent Tax Credit
(P1 + D - P0)/P0
Total Long-term Debt / Equity
Tax Deduction * marginal tax rate
P*(1+g)/(k-g) P=div per share divided by other div

44. Total Debt to Equity ratio
Total Assets / Equity
Price/Earnings per share
Total Liabilities / Equity
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

45. Present value of a Bond
(1/T)(r1+r2+...+rT)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
assets less liabilities - divided by the number of shares of common stock of a company

46. Domains of a CFP
taxable interest - non-qual. divs - short-term cap. gains
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Price/Earnings per share
EBIT/I (Where I = Interest Expense)