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CFP: Certified Financial Planner

Subjects : certifications, cfp, business-skills

Instructions:

Answer 46 questions in 15 minutes.
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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. Assets to Equity ratio
Dollars of coupon interest per year/Bond's current market price
Explanatory - Interpretive - Reassuring - Suggestive
g = ROE X b - where b is equal to the retention ratio
Total Assets / Equity

2. aka Net Income
Price Earnings Growth ratio; P/E divided by projected earnings growth
Earnings After Taxes
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
EAT / Sales

3. Book Value (of company stock)
assets less liabilities - divided by the number of shares of common stock of a company
Earnings Before Interest & Taxes
Total Long-term Debt / Equity
Sources of Funds-Use of Funds or Money in- Money out

4. Types of Understanding Responses Associated With Active Listening
Sources of Funds-Use of Funds or Money in- Money out
Sales / Average Total Assets
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

5. Current Yield of a bond
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Explanatory - Interpretive - Reassuring - Suggestive
Dollars of coupon interest per year/Bond's current market price

6. Domains of a CFP
(Mortgage+Debt Repayment)/Net Income
[(1+ NR) / (1 + CCL)] - 1
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
EBIT/I (Where I = Interest Expense)

7. financial planning pyramid
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(current assets - inventory) / current liabilities

8. Total Debt to Equity ratio
Total Liabilities / Equity
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Tax Credit/marginal tax rate
Price Earnings Growth ratio; P/E divided by projected earnings growth

9. Times Interest Earned
Net Worth/Total Assets
EBIT/I (Where I = Interest Expense)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
dividends / earnings

10. Equivalent Tax Credit
taxable interest - non-qual. divs - short-term cap. gains
Tax Credit/marginal tax rate
Tax Deduction * marginal tax rate
EAT / Sales

11. The payout ratio
(cash + marketable securities) / current liabilities
(1/T)(r1+r2+...+rT)
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)
dividends / earnings

12. CFP Ethical principles
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
taxable interest - non-qual. divs - short-term cap. gains
dividends / earnings
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

13. The retention ratio
Tax Deduction * marginal tax rate
1 - the payout ratio
EBIT/I (Where I = Interest Expense)
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

14. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
driving - expressive - amiable - analytical
Net Worth/Total Assets
assets less liabilities - divided by the number of shares of common stock of a company
[(1+ NR) / (1 + CCL)] - 1

15. Net After Tax Profit Margin
(1/T)(r1+r2+...+rT)
Tax Free Yield/(1 - Tax Bracket)
EAT / Sales
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

16. Opportunities in Financial Planning
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
dividends / earnings
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 - inventory) / current liabilities

17. Sustainable Growth Rate
g = ROE X b - where b is equal to the retention ratio
current assets / current liabilities
Explanatory - Interpretive - Reassuring - Suggestive
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

18. Types of Leading Responses
Price Earnings Growth ratio; P/E divided by projected earnings growth
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Net Worth/Total Assets
Explanatory - Interpretive - Reassuring - Suggestive

19. After-tax Yield
Tax Free Yield/(1 - Tax Bracket)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(current assets - inventory) / current liabilities

20. PEG ratio
1 - the payout ratio
EAT / Sales
Price Earnings Growth ratio; P/E divided by projected earnings growth
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

21. 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)
Tax Free Yield/(1 - Tax Bracket)
dividends / earnings
Earnings After Taxes

22. Debt Service Ratio
(Mortgage+Debt Repayment)/Net Income
Tax Credit/marginal tax rate
(cash + marketable securities) / current liabilities
P*(1+g)/(k-g) P=div per share divided by other div

23. EBIT
EBIT/I (Where I = Interest Expense)
Earnings Before Interest & Taxes
current assets / current liabilities
taxable interest - non-qual. divs - short-term cap. gains

24. Holding Period Return
(P1 + D - P0)/P0
[(1+ NR) / (1 + CCL)] - 1
Dollars of coupon interest per year/Bond's current market price
EBIT/I (Where I = Interest Expense)

25. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
P*(1+g)/(k-g) P=div per share divided by other div
EAT / Sales
(1/T)(r1+r2+...+rT)
Tax Credit/marginal tax rate

26. P/E ratio
(current assets - inventory) / current liabilities
EAT / Sales
Price/Earnings per share
Total Liabilities / Equity

27. Current Ratio
Sources of Funds-Use of Funds or Money in- Money out
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
current assets / current liabilities
Earnings After Taxes

28. Net Cash Flow
Sources of Funds-Use of Funds or Money in- Money out
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)
taxable interest - non-qual. divs - short-term cap. gains

29. Major CFP Planning Areas
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(P1 + D - P0)/P0
g = ROE X b - where b is equal to the retention ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

30. Liquidity Ratio
1 - the payout ratio
driving - expressive - amiable - analytical
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(Mortgage+Debt Repayment)/Net Income

31. Cash Ratio
(cash + marketable securities) / current liabilities
Tax Deduction * marginal tax rate
Total Long-term Debt / Equity
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

32. Gross Investment income
taxable interest - non-qual. divs - short-term cap. gains
assets less liabilities - divided by the number of shares of common stock of a company
EAT / Sales
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

33. Quick Ratio (aka Acid test)
Total Liabilities / Equity
taxable interest - non-qual. divs - short-term cap. gains
(current assets - inventory) / current liabilities
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

34. Social Styles
driving - expressive - amiable - analytical
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Sales / Average Total Assets
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

35. Debt to Equity ratio
Total Long-term Debt / Equity
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

36. Asset Turnover Ratio
Explanatory - Interpretive - Reassuring - Suggestive
1 - the payout ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Sales / Average Total Assets

37. Present value of a Bond
Net Worth/Total Assets
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(P1 + D - P0)/P0
(1/T)(r1+r2+...+rT)

38. Equivalent Tax Deduction
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 Assets / Equity
Tax Credit/marginal tax rate

39. Solvency Ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
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
Net Worth/Total Assets

40. After-tax Return
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Total Return (1 - tax bracket)
1 - the payout 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

41. Working Capital
1 - the payout ratio
driving - expressive - amiable - analytical
Total Assets / Equity
current assets - current liabilities

42. ROE (Return On Equity)
Net Income/Equity
Price/Earnings per share
driving - expressive - amiable - analytical
Tax Free Yield/(1 - Tax Bracket)

43. Net Investment Income
taxable interest - non-qual. divs - short-term cap. gains
assets less liabilities - divided by the number of shares of common stock of a company
Earnings Before Interest & Taxes
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

44. Savings Ratio
Tax Deduction * marginal tax rate
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
(P1 + D - P0)/P0
g = ROE X b - where b is equal to the retention ratio

45. 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
Total Liabilities / Equity
Tax Credit/marginal tax rate
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

46. 'normal' ratio
(Mortgage+Debt Repayment)/Net Income
P*(1+g)/(k-g) P=div per share divided by other div
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

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CFP: Certified Financial Planner

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