Posts by Dan Madden, CFP®
Power Exercisable with Consent of Another – Include in Estate?
Course: Estate Planning Lesson 6: Transfer Taxation III Student Question: For “Power exercisable with consent of another”, can you explain why the assets WOULD be included in John’s estate? Since he has power to appoint property, wouldn’t that be adverse to Betty and her ability to enjoy the property? The example is below. EXAMPLE Albert…
Read MorePractice Question: Bond Compound Yield
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 MoreStandard Deviation
Big Blue Company stock has an average return of 7% and a standard deviation of 3%. What percentage of the time should an investor in Big Blue Company expect to earn 4% or more? A.34% 68% 84% 95% CLICK TO REVEAL ANSWER Expand C is the answer. Big Blue Company will earn between 4% and…
Read MoreCorporate Dividend Exclusion
Course: Investment Planning Lesson 3: Equity Securities Student Question: I don’t quite understand the corporate dividend exclusion. A corporation can exclude 70% of dividends from a different company when they own less than 20%. I don’t understand what happens when they own more than 20%. Also, is there a rule preventing companies from investing in…
Read MoreSystematic Risk
Which of the following statements concerning systematic risk is correct? It can be greatly reduced by owning a diversified portfolio of common stocks. It covers those types of risks that cause all securities to move together in a systematic manner. Business risk, such as a strike at an individual firm, is considered systematic risk. It…
Read MoreCFP Board Webinar: Roadmap to the New Code of Ethics and Standards of Conduct
As we are all aware, the new Code of Ethics and Standards of Conduct become effective on October 1, 2019. Many CFP® Professionals and those working towards the certification are anxious about what exactly will be changing. In response, the CFP Board will be hosting a webinar dedicated to distilling the essential information about the…
Read MoreCall Features of Bonds
Which of the following statements concerning the call feature of a bond is not correct? If it is freely callable, the issuer may retire the bond at any time. If it is noncallable, the issuer may retire the bond prematurely by repurchasing it. If the bond carries a deferred call, the issuer may not retire…
Read MoreTaxable Income to the Employee
An employee is currently in receipt of taxable income in which of the following circumstances? The employer makes an irrevocable, formally funded promise to pay the employee $300 per month for life, beginning at age 65, provided the employee does not terminate service prior to age 65. The employer makes an unsecured promise to pay…
Read MoreAppropriate Buy-Sell Agreement
Peter and his father Ryan each own 20% and 80% respectively in the RP Partnership. The partnership generates enough income for both partners to be able to afford the life insurance premiums or for the business to be able to pay the life insurance premiums. Which of the following is correct if Peter and Ryan…
Read MoreRegulation Best Interest Rule and the CFP Board
On June 5, 2019, The Securities and Exchange commission adopted the Regulation Best Interest Rule, along with other rulemakings and interpretations. These actions were designed to enhance the quality and transparency retail investors’ relationships with advisors. Concurrently, the CFP Board has made changes to the CFP Board Code of Ethics and Standards, which become effective…
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