Solving for Annual Equivalent Rate

Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: Hi- I am confused as to how to get the correct answer for number 4. Jackie invests her bonus at the beginning of this calendar year. If she earns 7% compounded monthly, what is the annual equivalent rate? Round your answer to two decimal places.…

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Income Taxation of Disability Payments

Erika wants $50,000 a year in today’s dollars in retirement. She anticipates retiring in 10 years and living in retirement for 30 years. Erika can earn 7% on her investments and she expects inflation to average 4%. Approximately how much should Erika have saved by the day she retires to meet this goal? $913,000 $983,000…

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Transfer of Interest in Property Held in Joint Tenancy

Gary Chapelle owns a duplex with his brother in joint tenancy with right of survivorship. Gary would like to pass his interest in the property to his son, Bill, and Gary has provided in his will that his interest in the duplex will pass to Bill. Which of the following statements concerning the transfer of…

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Annual Return and Compounding

Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: Hi- My question relates to being able to clearly distinguish when the CFP Board exam will require an annual, or other period for the answer. Question 5(b) asks: “What is the rate of return on Investment 2 using daily compounding?” What is the annual…

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Tax Saving Strategies

Dan and Karen Burles have 2 children, Coy (age 12, student) and Roger (age 21, student). Dan and Karen own a security equipment sales and installation business, an LLC. Dan and Karen are in the highest income tax bracket. They have a portfolio with $130,000 of municipal bonds (annual income $5,200), $80,000 of corporate bonds…

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Ratio Percentage Test

Which of the following statements concerning SEP and Keogh plans is not correct? A SEP must meet fewer reporting requirements than are imposed on a Keogh plan. A SEP is not considered by the IRS to be a qualified plan as is a Keogh plan. A SEP is similar to a defined-contribution plan; a Keogh…

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Black-Scholes Option Valuation Model

Frank carries an H0-3 policy with $400,000 of coverage and a $1,000 deductible. It would cost $600,000 to rebuild Frank’s house. How much will his insurance company pay on a $100,000 claim related to a fire that started in Frank’s kitchen? $79,000 $82,333 $83,333 $99,000 CLICK TO REVEAL ANSWER Expand B is the answer. Frank…

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Recent Surveys Indicate High Satisfaction Among CFP® Professionals

CFP® Board Updates A recent survey of CFP® Professionals indicates continued high satisfaction with their career choice as a financial planner.   In addition, the survey revealed CFP® Professionals continue to see positive impact in their career from having achieved the certification. A few of the key findings, which highlight just a small portion of the…

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Underinsured Dwelling

Frank carries an H0-3 policy with $400,000 of coverage and a $1,000 deductible. It would cost $600,000 to rebuild Frank’s house. How much will his insurance company pay on a $100,000 claim related to a fire that started in Frank’s kitchen? $79,000 $82,333 $83,333 $99,000 CLICK TO REVEAL ANSWER Expand B is the answer. Frank…

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Refinance Payment Calculation

Dale refinanced his home mortgage to a 30 year fixed mortgage with biweekly payments. How much is each payment if he owed $350,000 at the time of the refinance and the interest rate is 3%? $680 $771 $1,136 $1,242 CLICK TO REVEAL ANSWER Expand A is the answer. Brandon pays his mortgage every two weeks…

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