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Interest Rate Risk

By Dan Madden, CFP®

Which of the following correctly describes interest rate risk? Interest payments will have less purchasing power in the future. Bond prices decrease as interest rates increase. Interest payments may not be paid if the issuer goes bankrupt. The bond may be called because interest rates have decreased. CLICK TO REVEAL ANSWER Expand B is the…

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The Fiduciary Duty of Loyalty in CFP Board’s New Code of Ethics and Standards of Conduct

By Bruce Starks, CPA, CFP®

CFP® Certificant in the News Here’s the big news for CFP® certificants: Effective October 1, 2019, a fiduciary duty is owed to clients in more circumstances than under the previous CFP Board requirements. Fiduciary duty is the very foundation upon which a great deal of the new Code and Standards rests. A CFP® certificant is…

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Maxing Out Defined Benefit Plans

By Dan Madden, CFP®

Course: Retirement Planning Lesson 8: Fitting Deferred Compensation into the Retirement Plan Student Question: Curious as to why the net result is $525,000.00 and not $500,000.00. Wouldn’t 100% of her current year compensation be $500,000.00? Is it just that the Board decided to max out the limits of the DBP and the NQEBP so that’s…

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Odd Lot Theory

By Dan Madden, CFP®

Which of the following tells the investor that the Odd Lot Theory indicates a bull market? The ratio of odd lot purchases to sales is constant. Odd lot sales exceed odd lot purchases. The ratio of odd lot purchases to sales reaches the resistance point. Odd lot purchases exceed odd lot sales. CLICK TO REVEAL…

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When Should You Claim Social Security Retirement Benefits?

By Bruce Starks, CPA, CFP®

Good to Know When will our universe stop expanding? What age should you claim Social Security Retirement benefits? For too many of us, these two questions are equally confounding. The author cannot help you with astronomical riddles but can illuminate some of the key factors that should inform your claiming age decision. This is the…

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SIPC Reimbursement

By Dan Madden, CFP®

Course: Investment Planning Lesson 2: Securities Markets and the Fed Student Question: The coursework states that the SIPC will pay claims up to $500,000, but in Example 2, they only gave Bruce $350,000. Why is that? Thanks. Wesley Example 2 Bruce had $400,000 in cash and $100,000 in securities in his brokerage account. His broker/dealer…

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CFP® Certificants in the News: Dangerous Misconceptions About A CFP® Certificant’s Duty to Disclose Material Conflicts of Interest

By Bruce Starks, CPA, CFP®

CFP® Certificant in the News In our last blog, we illuminated CFP Board’s expectation that a certificant either avoid OR disclose and manage material conflicts of interest. That’s a simple instruction, right?  Maybe or maybe not.  It’s easy to confuse “material conflict of interest” as only sales-related compensation such as upfront commissions, deferred sales charges,…

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ADRs and Exchange Rate

By Bruce Starks, CPA, CFP®

Course: Investment Planning Lesson 4: International Equity Securities Student Question: Is it not true that ADRs eliminate currency risk because transactions are done in USD? Lafe   Instructor Response: Great question Lafe. ADRs do not guarantee exchange rates; they merely exchange foreign currency to US$ as a convenience to ADR investors. Changes in the exchange rate…

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Practice Question: Correlation between International Stocks and T-Bills

By Dan Madden, CFP®

What is the correlation in returns between international stocks and Treasury bills? Low Moderate High Perfectly negative CLICK TO REVEAL ANSWER A is the answer. The correlation in returns between international stocks and Treasury bills is typically slightly negative (slightly below zero), meaning the correlation in returns is low and often they will move in…

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