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Investment Risk on the CFP Board Exam: Part IV
Good to Know This is the final article of our four-article series on investment risk for the CFP Board exam. Here’s a reminder of the risk concepts we’ve covered so far in the series: Part I: When to trust the “mean” return, Part II: Using standard deviation to manage investment risk, and Part III: Skewness-Do…
Percentage of Completion Method
Course: Income Tax PlanningLesson 10: Recognition of Expenses, Losses, and Deductions Student Question: Hello- Question 5 (below) did not make sense to me. I started out by breaking down by year — 400,000/2,100,000*3,000,000 and so forth, but did not arrive at the correct answer. So then I tried adding up 3 year — 400+650+700/2100000*3,000,000. That…
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…
CFP Board Releases 2022 Ad Campaigns
CFP® Board Updates In their ongoing effort to grow the recognition of the CFP® Certification among both potential professionals and clients of professionals, the CFP Board has made some adjustments to their plan for digital advertising in 2022. Of particular interest, the board plans to devote nearly 16% of their advertising budget to digital streaming…
Fee-Only Planner Definition
Course: Fundamentals of Financial PlanningLesson 1: The Personal Financial Planning Process Student Question: Hello- I have a question on the example where it says a fee-only CFP Certificant cannot accept sales-related compensation such as commissions on the sale of life insurance products. Let’s say that a CFP Certificant recommended that the client go speak with…
Solving for Mortgage Payment
Shannon refinanced her home mortgage to a 30 year fixed mortgage with biweekly payments. How much is each payment if she owed $350,000 at the time of the refinance and the interest rate is 4.5%? $818 $881 $1,012 $1,229 CLICK TO REVEAL ANSWER Expand A is the answer. Shannon pays her mortgage every two weeks…
Investment Risk on the CFP Board Exam: Part III
Good to Know Question: Why should financial planners and advisors care about skewness? Answer: A negative skew can obscure excess downside risk in a portfolio. We discussed the mean (geometric average) return and standard deviation in our first two blogs. Now we’ll use those concepts to illustrate skewness in this, the third installment in our…
Premium Payments on Buy-Sell Agreements
Course: Insurance PlanningLesson 17: Business Uses of Life and Disability Insurance Student Question: Hello- I have a quick question regarding buy/sell agreement; not clear who would pay the premiums on disability and or life insurance on the principals and the key employees? Thanks Emerito Instructor Response: Hi Emerito, Great question. A buy-sell agreement relates to…
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…