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Book Value versus Market Cap
Course: Investment PlanningLesson 5: Fundamental Equity Analysis Student Question: Hi, How is a company’s book value different from the market cap? Instructor Response: Book value is an accounting concept generally based upon the acquisition costs of and the legally binding amounts of liabilities. It is the amount of cash that would be left over if…
Power of Attorney over Financial Affairs
Laura is concerned she will develop Alzheimer’s disease later in life similar to her mother. Which of the following documents should Laura execute to make sure her son is able to handle her financial affairs in the event she does develop Alzheimer’s disease? Durable springing power of attorney Nondurable springing power of attorney Durable nonspringing…
Does Recommending Cryptocurrency Violate CFP Board Rules?
CFP® Certificants in the News You’re a CFP® Professional with an investment advisory practice and you just advised a client to purchase cryptocurrency assets (CRAs). Did you just violate the ethical standards? Should you expect a communication from the Disciplinary and Ethics Commission? Here’s the seemingly equivocal answer-maybe yes and maybe no. This article will…
Accounting for Inflation
Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: Good afternoon. Can you explain why we didn’t take inflation into consideration for the second calculation in the first problem? Dawn wants to have $25,000 in today’s dollars for a round-the-world cruise when she retires 11 years from now. She assumes she can earn…
Qualified Pension Plan Ratio Percentage Test
Assume that, of the 100 employees eligible for participation in G Company’s qualified pension plan, 20 are highly-compensated employees, and all 20 participate. What is the minimum number of G Company’s nonhighly-compensated employees that must participate in G Company’s qualified pension plan to meet the ratio percentage test? 20 50 56 70 CLICK TO REVEAL…
How to Avoid a Killer IRA Mistake
Good to Know Choosing the wrong IRA type is an all-to-common client mistake that can be difficult and expensive to correct. Financial professionals can help clients avoid that mistake by fully informing their clients of the key factors to consider. There tend to be two schools of thought to avoid-in the author’s opinion-when choosing between…
Coverdell ESA versus 529
Course: Fundamentals of Financial PlanningLesson 7: Educational Aid and Funding Calculation Student Question: So is there ever any benefit to choosing a Coverdell ESA over a 529 Plan? It seems the big difference in the two is that the Coverdell has an AGI limit, so why would you just not always steer clients towards 529 Plans since…
Solving for Bond Yield
An investor bought a bond at par that matures in 10 years. The bond pays an annual coupon of $110 and the reinvestment rate is 7%. What is the realized compound yield of this bond? 7.23% 8.01% 9.67% 14.10% CLICK TO REVEAL ANSWER Expand C is the answer. One would anticipate a realized compound yield…
REMONDER: New “Per Capita” Fee for CFP Board Exam Takers Begins January 1
CFP® Board Updates NOTE: THIS IS A REPEAT OF LAST MONTH’S BLOG. WE WANT TO BE SURE EVERYONE IS AWARE OF THE NEW REQUIREMENT Students of our CFP Certification Education Programs are aware, but this may serve as a reminder, the CFP Board will begin charging the $195 “Per Capita” fee on January 1, 2023.…