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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. Major CFP Planning Areas
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Explanatory - Interpretive - Reassuring - Suggestive
Earnings After Taxes

2. Liquidity Ratio
Earnings After Taxes
Price Earnings Growth ratio; P/E divided by projected earnings growth
(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

3. CFP Ethical principles
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Sources of Funds-Use of Funds or Money in- Money out
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Earnings After Taxes

4. 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
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)
Price Earnings Growth ratio; P/E divided by projected earnings growth

5. Debt Service Ratio
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
Dollars of coupon interest per year/Bond's current market price
Tax Credit/marginal tax rate

6. 'normal' 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
Tax Free Yield/(1 - Tax Bracket)
P*(1+g)/(k-g) P=div per share divided by other div

7. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
1 - the payout ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
[(1+ NR) / (1 + CCL)] - 1
Net Worth/Total Assets

8. P/E ratio
Price/Earnings per share
Explanatory - Interpretive - Reassuring - Suggestive
Earnings Before Interest & Taxes
Total Return (1 - tax bracket)

9. Current Ratio
Total Liabilities / Equity
Earnings Before Interest & Taxes
current assets / current liabilities
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

10. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
P*(1+g)/(k-g) P=div per share divided by other div
(1/T)(r1+r2+...+rT)
(P1 + D - P0)/P0
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

11. Social Styles
Total Liabilities / Equity
driving - expressive - amiable - analytical
EAT / Sales
1 - the payout ratio

12. Attributes of Effective Advisor communiations
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
1 - the payout ratio
taxable interest - non-qual. divs - short-term cap. gains

13. financial planning pyramid
Net Worth/Total Assets
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
current assets - current liabilities
Total Return (1 - tax bracket)

14. Sustainable Growth Rate
g = ROE X b - where b is equal to the retention ratio
Explanatory - Interpretive - Reassuring - Suggestive
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Sources of Funds-Use of Funds or Money in- Money out

15. The payout ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
dividends / earnings
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

16. Types of Leading Responses
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Explanatory - Interpretive - Reassuring - Suggestive
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

17. Assets to Equity ratio
(P1 + D - P0)/P0
(1/T)(r1+r2+...+rT)
Earnings Before Interest & Taxes
Total Assets / Equity

18. After-tax Return
Total Return (1 - tax bracket)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Tax Free Yield/(1 - Tax Bracket)
Net Worth/Total Assets

19. Net Investment Income
Total Return (1 - tax bracket)
Net Income/Equity
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Assets / Equity

20. ROE (Return On Equity)
Net Income/Equity
dividends / earnings
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Dollars of coupon interest per year/Bond's current market price

21. Domains of a CFP
Total Return (1 - tax bracket)
Tax Free Yield/(1 - Tax Bracket)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

22. Book Value (of company stock)
Net Worth/Total Assets
assets less liabilities - divided by the number of shares of common stock of a company
(1/T)(r1+r2+...+rT)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

23. Asset Turnover Ratio
Sales / Average Total Assets
(Mortgage+Debt Repayment)/Net Income
(current assets - inventory) / current liabilities
Net Worth/Total Assets

24. Opportunities in Financial Planning
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
(1/T)(r1+r2+...+rT)
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

25. Equivalent Tax Deduction
current assets / current liabilities
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Net Income/Equity
Tax Credit/marginal tax rate

26. The retention ratio
Tax Free Yield/(1 - Tax Bracket)
1 - the payout ratio
current assets / current liabilities
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

27. aka Net Income
Price/Earnings per share
Earnings After Taxes
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)
1 - the payout ratio

28. Total Debt to Equity ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Total Liabilities / Equity
P*(1+g)/(k-g) P=div per share divided by other div
current assets / current liabilities

29. Times Interest Earned
Explanatory - Interpretive - Reassuring - Suggestive
EBIT/I (Where I = Interest Expense)
Total Liabilities / Equity
Tax Deduction * marginal tax rate

30. Current Yield of a bond

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31. PEG ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
Total Return (1 - tax bracket)
(P1 + D - P0)/P0
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

32. Holding Period Return
assets less liabilities - divided by the number of shares of common stock of a company
(P1 + D - P0)/P0
P*(1+g)/(k-g) P=div per share divided by other div
[(1+ NR) / (1 + CCL)] - 1

33. Types of Understanding Responses Associated With Active Listening
Total Long-term Debt / Equity
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
P*(1+g)/(k-g) P=div per share divided by other div
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

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)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(P1 + D - P0)/P0
Net Worth/Total Assets

35. Quick Ratio (aka Acid test)
Sources of Funds-Use of Funds or Money in- Money out
(current assets - inventory) / current liabilities
EAT / Sales
Total Assets / Equity

36. Gross Investment income
taxable interest - non-qual. divs - short-term cap. gains
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
P*(1+g)/(k-g) P=div per share divided by other div

37. Equivalent Tax Credit
Tax Deduction * marginal tax rate
Total Long-term Debt / Equity
(P1 + D - P0)/P0
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

38. Solvency Ratio
Total Return (1 - tax bracket)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Net Worth/Total Assets
current assets / current liabilities

39. Net After Tax Profit Margin
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
Total Liabilities / Equity
Total Long-term Debt / Equity

40. Debt to Equity ratio
g = ROE X b - where b is equal to the retention ratio
Explanatory - Interpretive - Reassuring - Suggestive
Total Assets / Equity
Total Long-term Debt / Equity

41. Working Capital
Tax Credit/marginal tax rate
Price/Earnings per share
current assets - current liabilities
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

42. EBIT
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Long-term Debt / Equity
1 - the payout ratio
Earnings Before Interest & Taxes

43. Net Cash Flow
Earnings After Taxes
Sources of Funds-Use of Funds or Money in- Money out
EAT / Sales
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

44. Cash Ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(cash + marketable securities) / current liabilities
EBIT/I (Where I = Interest Expense)
Tax Free Yield/(1 - Tax Bracket)

45. After-tax Yield
Tax Credit/marginal tax rate
current assets - current liabilities
driving - expressive - amiable - analytical
Tax Free Yield/(1 - Tax Bracket)

46. Savings Ratio
EBIT/I (Where I = Interest Expense)
Dollars of coupon interest per year/Bond's current market price
Tax Deduction * marginal tax rate
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income