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Correlation of a Portfolio
An investor owns two mutual funds. Fund A has an expected return of 8% and a standard deviation of 10%; Fund B has an expected return of 12% and a standard deviation of 20%. The correlation between the funds is 0.4. Which of the following statements is most accurate? Combining the two funds will not…
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The Impact of ESG and Sustainable Finance on Financial Planning: How CFP® Professionals Can Lead
Good to Know As investors increasingly seek to align portfolios with personal values, Environmental, Social, and Governance (ESG) factors have moved from niche interest to mainstream consideration in financial planning. For CFP® professionals, meeting this demand isn’t just a matter of offering ESG‑labeled products – it’s about guiding clients through meaningful choices while upholding fiduciary…
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Clarifying Tort Liability
Course: Retirement PlanningLesson 2: Qualified Plan Advantages and Disadvantages for Employees and Business Owners Student Question: I have a few questions regarding tort liability. Instructor Response: Good questions here. See below for my response to each.
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Maximum Employee Contribution to 401(k)
A participant age 52 wants to contribute the maximum elective deferral to her 401(k) plan in 2025. What is the maximum employee contribution, including any catch-up? $23,000 $24,000 $30,500 $34,500 CLICK TO REVEAL ANSWER Expand C is the answer. For 2025, the 401(k) elective deferral limit is $23,000 plus a $7,500 catch-up for those age…
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CFP Board Enhances Continuing Education Requirements: New Ethics Module Effective 2026
CFP® Board Updates In a move that reflects its ongoing commitment to public trust and professional accountability, the CFP Board recently announced updates to its Continuing Education (CE) requirements, including the launch of a new ethics module that will take effect in 2026. These changes are designed to ensure that CFP® professionals stay aligned with…
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Correlation Coefficient and Diversification
Course: Investment PlanningLesson 13: Asset Allocation Student Question: In the attached concept question, wouldn’t Option (1) – a correlation coefficient of 0 – be the most diversified since there is no correlation? A correlation of -.25 would indicate a slight negative correlation. Instructor Response: Good to hear from you again! Hope all is going well.…
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Determining Gross Income
In 2025, Jordan, a single taxpayer, has $80,000 in wages, $3,000 of qualified dividends, and $2,000 of tax-exempt municipal bond interest. What is Jordan’s gross income? $80,000 $83,000 $85,000 $82,000 CLICK TO REVEAL ANSWER Expand B is the answer. Gross income includes wages and taxable dividends but excludes tax-exempt municipal bond interest. $80,000 + $3,000 =…
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Navigating Retirement Income Planning in a Volatile Interest Rate Environment
Good to Know After several years of aggressive rate hikes, interest rates have now stabilized – but the future remains uncertain. With inflation cooling, market volatility persisting, and rate cuts likely on the horizon, CFP® professionals face a complex landscape when helping clients structure reliable retirement income strategies. The Current Landscape Based on the CFP…
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Like-Kind Exchange of Multiple Properties
Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: Does the like kind 1031 exchange defer taxes if I exchange two properties for one like-kind property? For example, I am selling an investment house and with the proceedings I am purchasing two like-kind investment houses. Instructor Response: Absolutely. So long as you are…
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