Posts by Dan Madden, CFP®
Internal Rate of Return Calculation
Course: Fundamentals of Financial PlanningLesson 5b: Using the HP 10bII Calculator Student Question: In Example 2, the solution given has 6 years (including CF0) instead of 5. I believe the first year of Carl’s coin purchase should be CF0, but the fifth year – which includes a purchase and a sale – should be CF4.…
Read MoreOASDI Disability Income Benefits
Which of the following statements concerning OASDI disability income benefits is correct? Disability is defined as the inability to perform all major duties of the insured’s own occupation. Unless specifically exempted, a waiting period of 12 months must be satisfied. If the disabled worker is also receiving workers compensation benefits, the full OASDI benefit is…
Read MoreDefining a Stock Spread
Which of the following combinations correctly describes a spread? A combination of a short sale and a purchase of a call for the same stock A combination of buying and selling calls on the same stock with different expiration dates and exercise prices A combination of a put and a call on the same stock…
Read MoreCalculating Realized Compound Yield on a Bond
An investor bought a bond at par that matures in 15 years. The bond pays an annual coupon of $130 and the reinvestment rate is 9%. What is the realized compound yield of this bond? 11.05% 12.55% 13.00% 14.10% CLICK TO REVEAL ANSWER Expand A is the answer. One would anticipate a realized compound yield…
Read MoreCFP Establishing Competency Standards Commission
CFP® Board Updates The CFP Board has announced they will be forming a Competency Standards Commission in 2023. The purpose of the commission will be to review and evaluate the CFP Board’s competency requirements for Education, Examination, Experience, and Continuing Education. The commission will be comprised of volunteers selected from financial services firms, educators, certification…
Read MoreCharacteristics of a Will
Which of the following statements concerning a Will are correct? (1) A will can be altered, amended, or completely rewritten at any time before a person’s death. (2) A will cannot be rewritten but can be amended at any time by a codicil. (3) A will must be signed by the maker and usually must…
Read MorePower of Attorney over Financial Affairs
Laura is concerned she will develop Alzheimer’s disease later in life similar to her mother. Which of the following documents should Laura execute to make sure her son is able to handle her financial affairs in the event she does develop Alzheimer’s disease? Durable springing power of attorney Nondurable springing power of attorney Durable nonspringing…
Read MoreAccounting for Inflation
Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: Good afternoon. Can you explain why we didn’t take inflation into consideration for the second calculation in the first problem? Dawn wants to have $25,000 in today’s dollars for a round-the-world cruise when she retires 11 years from now. She assumes she can earn…
Read MoreQualified Pension Plan Ratio Percentage Test
Assume that, of the 100 employees eligible for participation in G Company’s qualified pension plan, 20 are highly-compensated employees, and all 20 participate. What is the minimum number of G Company’s nonhighly-compensated employees that must participate in G Company’s qualified pension plan to meet the ratio percentage test? 20 50 56 70 CLICK TO REVEAL…
Read MoreCoverdell ESA versus 529
Course: Fundamentals of Financial PlanningLesson 7: Educational Aid and Funding Calculation Student Question: So is there ever any benefit to choosing a Coverdell ESA over a 529 Plan? It seems the big difference in the two is that the Coverdell has an AGI limit, so why would you just not always steer clients towards 529 Plans since…
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