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CFP® Practice Question: Mortgage Refinance
Brandon refinanced his home mortgage to a 30-year fixed mortgage with biweekly payments. How much is each payment if he owed $250,000 at the time of the refinance and the interest rate is 5%? $619 $671 $1,336 $1,342 CLICK TO REVEAL ANSWER A is the answer. Brandon pays his mortgage every two weeks, which means…
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Beta as a Measure of Risk
Course: Investment Planning Lesson 1: Key Principles of Investing Student Question: Hi Dan- I don’t understand why this statement is true: “Beta is a measure of systematic, non-diversifiable risk.” I thought Beta was a measure ofrelative volatility? This is from a Board-Related Question in “Measures of Investment Risk” in “Principles of Investing”. Craig Instructor Response:…
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CFP® Practice Question: Net Worth Increase
During the year, Michelle paid down her car loan by $5,000 and her school loan by $3,000. She also contributed $5,000 cash from her checking account to an IRA. Michelle’s investment account grew by $10,000 during the year. How much did Michelle’s net worth increase for the year? $8,000 $13,000 $18,000 $23,000 CLICK TO REVEAL…
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The 20% Qualified Business Income Deduction – Congress Denies the Deduction to Certain Successful Business Owners
In Part 1 of this 4-part series, we introduced the extraordinary power of the Qualified Business Income (QBI) deduction to slash your business owner client’s taxes by as much as 20%. We ended Part 1 with a heads-up that restrictions apply. We’ll take a close look at a key restriction in this article – Part…
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Saving Taxes for Shareholders – Buy/Sell Agreements: Stock Redemption vs Cross Purchase
Course: Insurance Planning Lesson: 17 – Business Uses of Life and Disability Insurance Student Question: Under the Stock Redemption Method – how is basis treated specifically to stock remaining outstanding (not Treasury stock) and how does this compare to the Cross Purchase Method? Is basis treated the same – do both methods provide the same…
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CFP® Practice Question: Bankruptcy Discharges
Chuck lost his job last year when his company moved their factory overseas. Chuck has been unable to find another job and had to file for a Chapter 7 bankruptcy. Which of the following debts can be discharged in the bankruptcy? $10,000 of rent he owes his landlord $20,000 of taxes he owes the IRS…
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Identifying Skip and Non-Skip persons.
Course: Estate Planning Lesson 7: Transfer Taxation IV – Generation Skipping Transfers Student Question: Wouldn’t Ellen be a non-skip person since Jane is deceased and she bumps up the ladder one step to be just one generation behind?? (See question below in which Ellen is identified as a skip person.) Question 1: The following chart shows the…
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CFP® Practice Question: Investment Advisors Act of 1940
Which of the following individuals need to register with the SEC under the Investment Advisers Act of 1940? Adam, who retired last year from a big brokerage house but he recently started providing services to 12 clients who live in his neighborhood that he met while out golfing. Belinda, who writes weekly investment articles for…
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Good to Know: Claiming Dependents – Waste of Time or Great Way to Save on Income Taxes?
We lost the deduction for personal and dependency exemptions starting in 2018 under the Tax Cuts and Job Act. With the loss of the deduction, many taxpayers rightly ask, “Should I even bother documenting and claiming my dependents on my tax return?” That a reasonable question and the answer is… YES for many taxpayers. Claiming…
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