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Refinance Payment Calculation

By Dan Madden, CFP®

Evan refinanced his home mortgage to a 30-year fixed mortgage with monthly payments. How much is each payment if he owed $250,000 at the time of the refinance and the interest rate is 7%? $891 $1,211 $1,459 $1,663 CLICK TO REVEAL ANSWER Expand D is the answer. Evan pays his mortgage every month which means…

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CFP Board Research Reveals Millenials’ Top Life Goal

By Dan Madden, CFP®

CFP® Board Updates A recent research report by the CFP Board shows “Financial Independence” is the #1 priority of millennials. The survey found 46% of individuals born between 1981 and 1996 cite financial independence or stability is their top life goal. Travel, a healthy and long retirement, career fulfillment, and developing lasting relationships were other…

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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:1-Lower coupon bonds are more sensitive to interest rates than high coupon bonds.2-There is inverse relationship between bond prices and change in interest rates.3-There is a positive relationship between coupon rates…

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Calculating Realized Compound Yield on a Bond

By Dan Madden, CFP®

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? 10.21% 11.48% 13.00% 14.10% CLICK TO REVEAL ANSWER Expand A is the answer. One would anticipate a realized compound yield…

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National Debt: Fiscal Tsunami or Ripple?

By Bruce Starks, CPA, CFP®

Good to Know This blog article is the first in a three-part series, including: Federal agency perspectives, Private sector perspectives, and Summary comparison. “The growing [national] debt could create additional challenges for federal fiscal management, which could in turn cause challenges for American households and individuals, too. These potential challenges include: Risks to economic growth…

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Social Security Retirement Benefits

By Bruce Starks, CPA, CFP®

Course: Insurance PlanningLesson 10: Social Security Student Question: This question (below) doesn’t quite make sense to me.  Could you clarify why the correct answer is D? Robin Elizabeth qualifies for a retirement benefit of $250 and a spouse’s benefit of $400. At her full retirement age, she will receive which of the following? Instructor Response: Great…

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Tax Saving Strategies

By Dan Madden, CFP®

Dan and Karen Burles have 2 children, Coy (age 12, student) and Roger (age 21, student). Dan and Karen own a security equipment sales and installation business, an LLC. Dan and Karen are in the highest income tax bracket. They have a portfolio with $130,000 of municipal bonds (annual income $5,200), $80,000 of corporate bonds…

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What You Should Know About CFP Board Discipline

By Bruce Starks, CPA, CFP®

CFP® Certificants in the News CFP Board publishes disciplinary actions that include public censure, suspension, and even permanent revocation of the right to use the CFP® mark. We’ll identify two recent disciplinary actions taken by CFP Board and then make observations. Public Censure Paul, a CFP® certificant from New York, “entered into a Letter of…

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No Additional Cost Services Exclusion

By Bruce Starks, CPA, CFP®

Course: Income Tax PlanningLesson 6: Employer-Sponsored Total Income Exclusions Student Question: For “No Additional Cost Services” provided by an employer, which are excluded from employee income, there is the requirement that no significant costs are incurred.  How is “significant” cost determined? Significant sounds subjective. Is there a general rule for determining what is considered significant?…

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