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Test your basic knowledge |
CFP: Certified Financial Planner
Start Test
Study First
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. Debt Service Ratio
Tax Deduction * marginal tax rate
(Mortgage+Debt Repayment)/Net Income
Tax Free Yield/(1 - Tax Bracket)
current assets - current liabilities
2. Types of Leading Responses
assets less liabilities - divided by the number of shares of common stock of a company
Explanatory - Interpretive - Reassuring - Suggestive
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Net Income/Equity
3. Net Investment Income
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Price/Earnings per share
Earnings After Taxes
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
4. ROE (Return On Equity)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
g = ROE X b - where b is equal to the retention ratio
Net Income/Equity
Total Assets / Equity
5. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
Total Assets / Equity
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
[(1+ NR) / (1 + CCL)] - 1
Total Return (1 - tax bracket)
6. Liquidity Ratio
assets less liabilities - divided by the number of shares of common stock of a company
(1/T)(r1+r2+...+rT)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
current assets / current liabilities
7. Sustainable Growth Rate
assets less liabilities - divided by the number of shares of common stock of a company
Tax Credit/marginal tax rate
g = ROE X b - where b is equal to the retention ratio
Total Long-term Debt / Equity
8. Cash Ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Tax Deduction * marginal tax rate
(cash + marketable securities) / current liabilities
current assets - current liabilities
9. financial planning pyramid
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
g = ROE X b - where b is equal to the retention ratio
dividends / earnings
10. Social Styles
driving - expressive - amiable - analytical
[(1+ NR) / (1 + CCL)] - 1
Earnings Before Interest & Taxes
Earnings After Taxes
11. EBIT
Net Worth/Total Assets
Earnings Before Interest & Taxes
EAT / Sales
(cash + marketable securities) / current liabilities
12. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Earnings Before Interest & Taxes
(1/T)(r1+r2+...+rT)
Total Return (1 - tax bracket)
Price/Earnings per share
13. Types of Understanding Responses Associated With Active Listening
(cash + marketable securities) / current liabilities
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
current assets / current liabilities
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
14. PEG ratio
(1/T)(r1+r2+...+rT)
Sales / Average Total Assets
Price Earnings Growth ratio; P/E divided by projected earnings growth
Total Return (1 - tax bracket)
15. Current Ratio
current assets / current liabilities
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)
EBIT/I (Where I = Interest Expense)
Dollars of coupon interest per year/Bond's current market price
16. Gross Investment income
taxable interest - non-qual. divs - short-term cap. gains
Explanatory - Interpretive - Reassuring - Suggestive
Sales / Average Total Assets
Earnings Before Interest & Taxes
17. 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
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Liabilities / Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
18. Attributes of Effective Advisor communiations
(P1 + D - P0)/P0
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Total Assets / Equity
Explanatory - Interpretive - Reassuring - Suggestive
19. After-tax Return
Total Return (1 - tax bracket)
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
assets less liabilities - divided by the number of shares of common stock of a company
20. Book Value (of company stock)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
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
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
21. Solvency 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
Net Worth/Total Assets
Total Liabilities / Equity
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
22. Assets to Equity ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Assets / Equity
Dollars of coupon interest per year/Bond's current market price
Net Income/Equity
23. Debt to Equity ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Total Long-term Debt / Equity
24. Equivalent Tax Deduction
Tax Credit/marginal tax rate
current assets / current liabilities
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(current assets - inventory) / current liabilities
25. financial life cycle
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
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
26. Holding Period 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
Sources of Funds-Use of Funds or Money in- Money out
Earnings After Taxes
(P1 + D - P0)/P0
27. 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
Explanatory - Interpretive - Reassuring - Suggestive
EAT / Sales
current assets / current liabilities
28. Net Cash Flow
Sources of Funds-Use of Funds or Money in- Money out
1 - the payout ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
g = ROE X b - where b is equal to the retention ratio
29. Quick Ratio (aka Acid test)
(Mortgage+Debt Repayment)/Net Income
(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
current assets / current liabilities
30. Working Capital
g = ROE X b - where b is equal to the retention ratio
current assets - current liabilities
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Total Assets / Equity
31. P/E ratio
Price/Earnings per share
Total Return (1 - tax bracket)
dividends / earnings
Tax Deduction * marginal tax rate
32. The retention ratio
(current assets - inventory) / current liabilities
1 - the payout ratio
(1/T)(r1+r2+...+rT)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
33. After-tax Yield
taxable interest - non-qual. divs - short-term cap. gains
EBIT/I (Where I = Interest Expense)
Tax Free Yield/(1 - Tax Bracket)
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
34. Times Interest Earned
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
EAT / Sales
EBIT/I (Where I = Interest Expense)
Net Worth/Total Assets
35. Net After Tax Profit Margin
Tax Deduction * marginal tax rate
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
EAT / Sales
Net Income/Equity
36. Major CFP Planning Areas
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
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
g = ROE X b - where b is equal to the retention ratio
37. Equivalent Tax Credit
Tax Deduction * marginal tax rate
(1/T)(r1+r2+...+rT)
Dollars of coupon interest per year/Bond's current market price
Total Assets / Equity
38. CFP Ethical principles
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(current assets - inventory) / current liabilities
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Earnings After Taxes
39. Savings Ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Tax Credit/marginal tax rate
1 - the payout ratio
current assets / current liabilities
40. The payout ratio
EAT / Sales
Price Earnings Growth ratio; P/E divided by projected earnings growth
dividends / earnings
Price/Earnings per share
41. Asset Turnover 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
Explanatory - Interpretive - Reassuring - Suggestive
Total Return (1 - tax bracket)
Sales / Average Total Assets
42. Current Yield of a bond
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43. 'normal' ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Sales / Average Total Assets
P*(1+g)/(k-g) P=div per share divided by other div
(1/T)(r1+r2+...+rT)
44. aka Net Income
Price/Earnings per share
Earnings After Taxes
Explanatory - Interpretive - Reassuring - Suggestive
EBIT/I (Where I = Interest Expense)
45. Total Debt to Equity ratio
Sales / Average Total Assets
Sources of Funds-Use of Funds or Money in- Money out
Total Liabilities / Equity
Earnings After Taxes
46. Present value of a Bond
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
Total Long-term Debt / Equity
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)