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Interest Rate Risk in a Bond
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…
Underinsured Dwelling Penalty
Sam carries an H0-3 policy with $500,000 of coverage and a $2,000 deductible. It would cost $700,000 to rebuild Sam’s house. How much will his insurance company pay on a $200,000 claim related to a fire that started in Sam’s kitchen? $176,571 $178,571 $231,235 $198,000 CLICK TO REVEAL ANSWER Expand A is the answer. Frank…
Winners and Losers in the 2022 Inflation Reduction Act
Good to Know Laws enacted by those ladies and gentlemen we send to Congress are seldom a panacea for all. The 2022 Inflation Reduction Act certainly fits that mold, as will be evident as we summarize the winners and losers under the Act. But first, here’s a quick editorial note-as with all of our articles,…
Defining Basis Points
Course: Investment PlanningLesson 15: Fundamentals of Derivatives – Futures and Options Student Question: Can you please explain what Basis points are and how/why they are generally used? Instructor Response: There are 100 basis points in 1%. Basis points are merely a common method of measuring investment fees or returns. An exchanged traded fund may charge a…
Sale of Home by Surviving Spouse
April’s husband Jay died 5 years ago when their home was worth $600,000. Due to the soft real estate market, April kept the house until the housing market recovered. She finally sold the home this year for $950,000. What is the amount of April’s taxable gain or loss if she bought the home jointly with…
Protecting Public Trust with CFP Board Discipline
CFP® Certificants in the News Financial advisors, financial planners, and their employers have a vested interest in preserving, if not building upon, public trust in CFP® Certification. This article will focus on a specific interim suspension that, if anything, may initially err on the side of protecting public trust while ultimately providing a just result…
Social Security Retirement Benefits
Course: Insurance PlanningLesson 10: Social Security Student Question: This question (below) doesn’t quite make sense to me. Could you clarify why the correct answer is D? Robin Elizabeth qualifies for a retirement benefit of $250 and a spouse’s benefit of $400. At her full retirement age, she will receive which of the following? A) Both $250…
Tax Saving Strategies
Dan and Karen Burles have 2 children, Coy (age 12, student) and Roger (age 21, student). Dan and Karen own a security equipment sales and installation business, an LLC. Dan and Karen are in the highest income tax bracket. They have a portfolio with $130,000 of municipal bonds (annual income $5,200), $80,000 of corporate bonds…
CFP Board Pass Rates—July 2022 Exam
CFP® Certificants in the News This article will summarize pass rates, note consistency with prior exam results, and highlight demographics related to the July 2022 CFP Board exam. We begin with pass rates. Consistency First-time exam takers scored an average of 69%, compared to 67% (March 2022) and 62% (November 2021), and Repeat exam takers…