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Solving for Annual Equivalent Rate
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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Refinance Payment Calculation
Sharon refinanced her home mortgage to a 30-year fixed mortgage with biweekly payments. How much is each payment if she owed $150,000 at the time of the refinance and the interest rate is 6%? $415 $589 $691 $702 CLICK TO REVEAL ANSWER Expand A is the answer. Sharon pays her mortgage every two weeks which…
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Annuity Guaranty Pools
Good to Know We’ll address annuity protections in just a moment, but first let’s put a select few other financial protections into context. The Federal Deposit Insurance Corporation (FDIC) extends the full guarantee of the United States of America behind CDs and traditional banking products purchased from a Federally chartered U.S. bank-up to $250,000 per…
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Skewness versus Kurtosis
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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Using Jensen Performance Index
Based on the Jensen performance index, which fund should the investor continue to hold given the following information? Fund 1 Fund 2 Return on Portfolio 13% 17% Beta .95 1.02 Standard Deviation .18 .22 Risk free rate of return is 7% Market return is 15% Fund 1 Fund 2 Both Fund 1 and 2 Neither…
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CFP Board to host Technology Standard Webinar
CFP® Board Updates On April 17, 2024, the CFP Board will host the “Guide to CFP Board’s Technology Standard” webinar. The webinar will provide a comprehensive breakdown of the recently released “Guide to CFP Board’s Technology Standard. This guide is a resource to assist CFP® Professionals in complying with the “Duty When Selecting, Using and…
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Annual Return and Compounding
Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: My question relates to being able to clearly distinguish when the CFP Board exam will require an annual, or other period for the answer. Question 5(b) asks: “What is the rate of return on Investment 2 using daily compounding?” What is the annual rate…
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Who is an Investment Advisor?
Which of the following individuals need to register with the SEC under the Investment Advisers Act of 1940? Adam who retired last year from a big brokerage house but he recently started providing services to 12 clients who live in his neighborhood that he met while out golfing. Belinda who writes weekly investment articles for…
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The Myth of High Income Taxes on Social Security Income
Good to Know You and your clients are planning their after-tax retirement income. Your client is apprehensive about how much of their retirement income will be siphoned off by Federal income tax in retirement. For many, if not most, clients you have great news. The combination of Social Security income (SSI) tax breaks and standard…
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