Blog

Refinance Payment Calculation

By Dan Madden, CFP®

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 which…

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CFP BOARD ACHIEVES RECORD GROWTH of CFP PROFESSIONALS

By Bruce Starks, CPA, CFP®

CFP® Certificants in the News Despite the specter of the pandemic, the number of CFP® Professionals grew in 2020 to 87,726. We will rely upon selected excerpts from CFP Board Reports Impressive 2020 Growth to summarize the growth and increasing diversification of CFP® Professionals. Increasing Diversity According to CFP Board CEO Kevin Keller, “The increase in…

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Complying with the Practice Standards

By Bruce Starks, CPA, CFP®

Course: Fundamentals of Financial PlanningLesson 1: The Personal Financial Planning Process Student Question: Good evening.  In Practice Standard B-3 (shown below), is the “reasonable basis” why advisors have client agreements stating what services are provided? Practice Standard B-3 The Practice Standards set forth in the Financial Planning Process – a CFP® professional must comply with…

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Reversion Tax

By Dan Madden, CFP®

Lucky Star Corp has been extremely lucky with their defined benefit plan as it is currently overfunded. Management decided to terminate the plan while they are overfunded and share the excess with the employees. What amount of reversion tax will Lucky Star Corp have to pay upon termination? 0% 10% 20% 50% CLICK TO REVEAL…

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Last Minute COVID-19 and Tax Extenders Bill

By Bruce Starks, CPA, CFP®

Good to Know President Trump signed the COVID-19 and Tax Extenders Bill into law on December 27, 2020. This blog will focus upon the following key provisions: Pandemic Relief CARES Act Extensions and Pandemic Provisions Tax Provisions Disaster Tax Relief Tax Extenders Pandemic Relief The bill provides a refundable tax credit in the amount of…

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Understanding the Relationship Between Coupon Rates and Duration

By Bruce Starks, CPA, CFP®

Course: Investment PlanningLesson 9: Fixed Income Securities Student Question: There is a question regarding duration that I continue to struggle with. Which of the following are true: Lower coupon bonds are more sensitive to interest rates than high coupon bonds. There is inverse relationship between bond prices and change in interest rates. There is a positive relationship between…

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Solving for Bond Yield

By Dan Madden, CFP®

An investor bought a bond at par that matures in 10 years. The bond pays an annual coupon of $110 and the reinvestment rate is 7%. What is the realized compound yield of this bond? 7.23% 8.01% 9.67% 14.10% CLICK TO REVEAL ANSWER Expand C is the answer. One would anticipate a realized compound yield…

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CFP Board Relaunches Financial Planning Website

By Dan Madden, CFP®

CFP Board Updates Based on feedback from consumer research and user testing, the CFP Board has revamped and now relaunched the financial planning website – letsmakeaplan.org. The goal of the new website is to provide content that enables the consumer to gain a better understanding of the importance of financial planning and then how to…

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Calculating Rate of Return

By Dan Madden, CFP®

Course: Investment PlanningLesson 1: Key Principles of Investing Student Question: Hey Dan, Hope you are doing well. Can you help solve a practice question?  I looked through the textbook and my notes and just couldn’t wrap my brain about how to solve the problem below.  The confusing part to me is that the fund was not…

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