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ADRs and Exchange Rate
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…
Practice Question: Correlation between International Stocks and T-Bills
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…
Inflation in the Service Sector
Course: Fundamentals of Financial Planning Lesson 2: Economic Concepts and Consumer Protection Laws Student Question: I was really hoping I could get some sort of expanded reasoning on the below statement if possible, please. I am having a hard time wrapping my head around this for some reason. I tried to Google this and look…
Practice Question: What is a 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…
Good to Know: 50,000 Reasons to Care About the Restricted Claim Strategy for Social Security Spousal Benefits
Good to Know This blog builds upon the foundation we established for Spousal Social Security Retirement benefits in our last blog. To summarize our last blog, the spouse of a covered worker who claims retirement benefits at his or her full retirement age is entitled to a retirement benefit of the greater of their own…
Maximum Loss on a Short/Long Put
Course: Investment Planning Lesson 15: Fundamentals of Derivatives – Futures and Options Student Question: So, if the max loss on a short put is the strike price less the premium, and the breakeven point is also the strike price minus the premium, does that mean the max loss is breaking even? And does the same…
Practice Question: Sharpe vs Treynor Index
Which of the following statements are correct about Fund 1 and 2 given the following information? Fund 1 Fund 2 Return on portfolio 13% 17% Beta .95 1.02 Standard deviation .18 .22 Risk free rate of return is 7% Market return is 15% (1) Fund 1 was more efficient under the Sharpe performance index (2)…
CFP® Certificants in the News: Rick’s Story
CFP® Certificant in the News People Helping People It was the way I was raised – you help people out who need help. That is why I got into this business as a financial planner. It is meaningful to me to help people make changes in their lives.” –Rick Fingerman, CFP® When a cancer diagnosis…
Self-Employment Deduction Calculation
Course: Income Tax Planning Lesson 7: Arriving at Adjusted Gross Income Student Question: Dan, can you help me with the below question? While I know a self-employed person can reduce AGI by 50%, I still couldn’t seem to come up with an answer that matched any of the choices. QUESTION Scott is a self-employed financial…