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CFP® Practice Question: CFP Board’s Practice Standards

By Keir

If a financial planner is unable to obtain all the relevant quantitative information and documents from the client needed to make recommendations, which of the following actions by the planner is acceptable under the CFP Board’s Practice Standards? (1)  The planner may terminate the engagement. (2) The planner may limit the scope of the engagement.…

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Student Question of the Week: Insurance Contribution by Equal Shares

By Dan Madden, CFP®

Student Question from Natalie PCourse:  Insurance Planning Student Question: Hello! I am looking at question #2 that discusses the “contribution by equal shares” rule. However, I do not understand how they are getting the answer. 10% of $120,000 is $12,000 (not $25,000). Can you please explain? Thanks! Question 2 Three companies insure Josh’s $250,000 house. Insurer…

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CFP® Practice Question: How To Analyze A Buyout Offer

By Keir

Mary and Penny were equal partners in the ownership of a gift shop but after several disagreements, have decided to terminate the partnership. Mary offers to purchase Penny’s interest by paying either $20,000 today or $35,000 five years from today. If Penny’s opportunity cost is 12% annually, which of the following options should Penny choose?…

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Student Question of the Week: QTIP Marital Trust

By Dan Madden, CFP®

Student Question from Greg CCourse:  Estate Tax Planning Student Question: Dan, The assets in a QTIP trust are automatically included in the surviving spouse’s estate, correct? Thanks, Greg Instructor Response: Hi Greg! Terminal interests are NOT normally included in the beneficiary’s estate. However, the IRS makes a special exception to “Qualify” (hence, QTIP for “Qualified” instead…

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Student Question of the Week: Coinsurance and Replacement Cost

By Dan Madden, CFP®

Student: Question from Stacey CCourse:  Insurance Student Question: Review Question #5 (shown below) deals with Coinsurance. In the answers, it shows the coinsurance equation to be [(the insured amount/(.80 x replacement cost)] x AMOUNT INSURED.  Is it “amount insured” or “replacement cost of loss” because those amounts are different. Please provide clarification. Thanks. Question 5: Jill…

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CFP® Practice Question: What Would You Do if Laid Off?

By Keir

THIS QUESTION BROUGHT TO YOU BY: KEIR EDUCATION RESOURCES To learn more about Keir’s CFP Board Exam review materials and classes, select the program you’re registered in below: Practice Question: Bob, age 47, has worked for XYZ Company the past 12 years.  XYZ Company has lost a major contract and must begin downsizing immediately.  Bob was…

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Student Question of the Week: Buy-Sell Agreements – Funds for the Deceased’s Family

By Dan Madden, CFP®

Student Question from JohnathonCourse:  Income Tax Planning Student Question: Good Afternoon: I am confused by the answer for the question below. It indicates that one of the correct responses is that the family members of the deceased will receive cash from the life insurance policies. The way I understand the Buy-Sell Agreement process is that the…

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CFP® Practice Question: Calculating Education Expenses

By Keir

THIS QUESTION BROUGHT TO YOU BY: KEIR EDUCATION RESOURCES To learn more about Keir’s CFP Board Exam review materials and classes, select the program you’re registered in below: Practice Question: Tammy wants to set aside a sum of money today that will be sufficient to pay for 4 years of college tuition.  The 4 tuition payments…

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CFP® Practice Question: Calculating Mortgage Payments

By Keir

THIS QUESTION BROUGHT TO YOU BY: KEIR EDUCATION RESOURCES To learn more about Keir’s CFP Board Exam review materials and classes, select the program you’re registered in below: Colin Farrell has a gross annual income of $48,000.  The current interest rate for 30-year mortgages is 7%.  The house that Colin is considering has property taxes of…

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