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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…
Taxable Income
A CFP® professional is reviewing a client’s Form 1040. Which of the following best describes how taxable income is calculated? Total income reduced by tax credits Adjusted gross income reduced by deductions Gross income reduced by exclusions Total income reduced by adjustments and credits CLICK TO REVEAL ANSWER Expand B is the answer. Taxable income =…
Cybersecurity Best Practices for CFP® Professionals
Good to Know In an increasingly digital advisory environment, cybersecurity is no longer an IT issue – it’s a core component of fiduciary duty. CFP® professionals are entrusted with clients’ most sensitive personal and financial data, and a breach of that trust can carry not only financial consequences, but reputational damage and potential regulatory scrutiny.…
Appropriate Emergency Fund
Course: Fundamentals of Financial PlanningLesson 3: Personal Financial Statements Student Question: Hi, Why is the answer to review question down below 22,500 (only 3 months of income needed)? I would have thought it would be 45,000 (six months of income needed). I thought six months would be needed since they (1) both did not have…
Tax Credits available by Adjusted Gross Income
Which of the following tax credits, if any, is available to a taxpayer regardless of adjusted gross income (AGI)? Earned Income Tax Credit Credit for the Elderly or Disabled Adoption Expense Credit Foreign Tax Credit CLICK TO REVEAL ANSWER Expand D is the answer. There is no AGI phase-out for the Foreign Tax Credit. It…
The Financial Implications of AI in Financial Planning
Good to Know As artificial intelligence continues to evolve, its impact on the financial planning profession is becoming impossible to ignore. From generative models that support document creation to machine learning algorithms that enhance risk analysis and portfolio construction, AI is not just a trend – it’s becoming a strategic advantage for firms and advisors…
American Depository Receipts
Course: Investment PlanningLesson 4: International Equity Securities Student Question: Hi, On the CFP board practice question (below), the correct answer was “4 only.” How come ADRs don’t eliminate currency risk? Aren’t they purchased and sold with US dollars? American depository receipts (ADRs) are used to Instructor Response: Hi Great question. I can see exactly why you…
Required Minimum Distributions
In 2026, James turns age 73. He owns the following retirement accounts: Traditional IRA: $480,000 Former employer’s 401(k): $320,000 Roth IRA: $150,000 James is retired and does not work for the employer sponsoring the 401(k). What is James’s minimum required distribution obligation for 2026? RMDs must be taken from the traditional IRA and the 401(k), but…
CFP Board’s Public Comment Period: Help Shape the Future of Professional Standards
CFP® Board Updates The CFP Board is again inviting professionals, educators, and the public to weigh in on proposed updates to the Standards of Professional Conduct. This public comment process is a cornerstone of the Board’s commitment to transparency, accountability, and the long‑term strength of the CFP® certification. The current round of feedback centers on…