Blog
Do You Really Need a Calculator for the CFP Board Exam?
Good to Know We’re financial professionals, right? So let’s analyze the question posed in this article’s title. The CFP Board exam (the exam) consists of 170 questions. Anecdotally, the average exam has from 8 to 12 calculation questions which rank from moderately difficult to highly difficult. It’s been said (but not by us!) that studying…
Read More
Internal Rate of Return Calculation
Course: Fundamentals of Financial PlanningLesson 5b: Using the HP 10bII Calculator Student Question: In Example 2, the solution given has 6 years (including CF0) instead of 5. I believe the first year of Carl’s coin purchase should be CF0, but the fifth year – which includes a purchase and a sale – should be CF4.…
Read More
OASDI Disability Income Benefits
Which of the following statements concerning OASDI disability income benefits is correct? Disability is defined as the inability to perform all major duties of the insured’s own occupation. Unless specifically exempted, a waiting period of 12 months must be satisfied. If the disabled worker is also receiving workers compensation benefits, the full OASDI benefit is…
Read More
Making Sense of the Duty to Report Information to CFP Board
CFP® Certificants in the News Are CFP® Certificants obligated to report merely being charged with a felony or misdemeanor to CFP Board? How about being notified of a regulatory investigation or action? Read on to get the answers, based on CFP Board’s Duty to Report Information publication. Text in quotation marks is taken from this…
Read More
Daily Compounding
Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: Why is 360 used for compounded daily? Shouldn’t this be 365 days?? Instructor Response: 360 is used by most banks for two reasons:
Read More
Defining a Stock Spread
Which of the following combinations correctly describes a spread? A combination of a short sale and a purchase of a call for the same stock A combination of buying and selling calls on the same stock with different expiration dates and exercise prices A combination of a put and a call on the same stock…
Read More
Tax Tips for 2023
Good to Know If you saw twenty-two $100 bills lying on the sidewalk and could not determine who the money belonged to, would you scoop it up? If your answer to that question is yes, we have good news. That much or more in federal income tax savings for 2023 could be possible. Clients may…
Read More
Understanding the Relationship Between Coupon Rates and Duration
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: Can you explain #1 and #3? Instructor Response: Thank you for your question. This can become a bit convoluted. Let’s unpack the word “duration” first. Duration is nothing more…
Read More
Calculating Realized Compound Yield on a Bond
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? 11.05% 12.55% 13.00% 14.10% CLICK TO REVEAL ANSWER Expand A is the answer. One would anticipate a realized compound yield…
Read More