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Refinance Payment Calculation

By Dan Madden, CFP®

Dale refinanced his home mortgage to a 30 year fixed mortgage with biweekly payments. How much is each payment if he owed $350,000 at the time of the refinance and the interest rate is 3%? $680 $771 $1,136 $1,242 CLICK TO REVEAL ANSWER Expand A is the answer. Brandon pays his mortgage every two weeks…

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Are You Protecting Your Money From Identity Thieves?

By Bruce Starks, CPA, CFP®

Good to Know Anyone with assets, an income stream, or a good credit score can be exposed to identity theft. But before going deeper, let’s dispel a few myths-identify theft happens not only to the wealthy but also to the poor, not only to seniors but also to the young, and not only to financial…

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Skewness versus Kurtosis

By Bruce Starks, CPA, CFP®

Course: Investment PlanningLesson 13: Asset Allocation Student Question: Can you help me understand the difference between Kurtosis and Skewness?  I can’t quite piece it together. Instructor Response: Entire books have been written on this topic but the following summary should get the points for you on the CFP® Board exam when these topics are tested. …

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Donating Appropriate Stock

By Dan Madden, CFP®

Darryl Owens will report an AGI of $100,000 for this year on his federal income tax return. Darryl would like to make a gift to the local hospital of some stock. He would like to donate the stock that will provide the greatest income tax deduction for this year. Which of the following stocks should…

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The Psychology of Financial Planning

By Bruce Starks, CPA, CFP®

CFP® Certificants in the News Rational clients seem to make irrational financial decisions to the puzzlement and frustration of financial advisors. Why? One school of thought blames our emotions for our financial miscues.  Regrettably, we are not always self-aware of the power wielded by our sub-conscious emotions in the following behaviors and more: The buy-high/sell-low…

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Solving for Annual Equivalent Rate

By Dan Madden, CFP®

Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: I am confused as to how to get the correct answer for number 4. Jackie invests her bonus at the beginning of this calendar year. If she earns 7% compounded monthly, what is the annual equivalent rate? Round your answer to two decimal places. I…

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Basis on Sale of Gifted Stock

By Dan Madden, CFP®

Tom gave his son, David, a birthday present of Big M stock with a fair market value of $50,000. Tom paid gift tax of $11,700 as Tom had previously given David earlier this year a cash gift equal to the annual gift tax exclusion amount. Tom’s adjusted basis in the stock on the date of…

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Prepare for the CFP Board Exam

By Bruce Starks, CPA, CFP®

CFP® Certificants in the News You’re completing or have just completed the coursework required to take the CFP Board exam (the exam). Now what? Here are the potential next steps for you: Respect the exam’s breadth and depth, Budget your study time, Register for the exam, Use CFP Board resources, and Take a review course.…

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Interest Rate Risk in a Bond

By Bruce Starks, CPA, CFP®

Course: Investment PlanningLesson 10: Fixed Income Securities Analysis Student Question: I’m not clear why holders of long-term bonds are subject to interest rate risk. If a 20-year bond is purchased at par with a coupon rate of 6.25% ($62.50/year), it seems to me that the investor would still receive $62.50 a year regardless of interest rate changes. What…

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