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Calculating Realized Compound Yield on a Bond
An investor bought a bond at par that matures in 15 years. The bond pays an annual coupon of $130 and the reinvestment rate is 9%. What is the realized compound yield of this bond? 11.05% 12.55% 13.00% 14.10% CLICK TO REVEAL ANSWER Expand A is the answer. One would anticipate a realized compound yield…
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$1 million gift to Center for Financial Planning
CFP® Board Updates The CFP Board Center for Financial Planning seeks to create a more diverse and sustainable financial planning profession. The center addresses profession-wide challenges in the areas of diversity and workforce development by bringing together industry professionals, educators, firms, and experts to collaborate and conduct and publish research in these areas. On August…
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Current Ratio and Primary Residence
Course: Fundamentals of Financial PlanningLesson 3: Personal Financial Statements Student Question: Hi What role does the client’s primary residence play in the current ratio calculation? Is their outstanding mortgage loan amount considered a liability? Thank you Candace Instructor Response: Hi Candace, That’s a great question. The residence is not considered a liquid asset and is excluded from…
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Section 303 Redemption
A Sec. 303 redemption is most likely appropriate for which of the following estates? At Fred’s death, Fred owned all of his assets including the stock of a closely-held corporation in joint tenancy WROS with his wife. Before Gloria’s death, she transferred all of her assets including the stock in a closely-held corporation to an…
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Client Psychology
Good to Know Client decisions, including financial ones, may be driven more by psychology than just cold, hard, rational facts. The chart below identifies four powerful psychological influences. Client Psychology-Influences Values Fundamental personal beliefs Attitude The tendency to view an investment positively or negatively based on our beliefs and experience Bias A behavioral tendency Heuristic…
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Retirement Plan Required Minimum Distributions
Course: Retirement PlanningLesson 5: Leveraging Nonqualified Plans for Small Business and Not-For-Profit Employees and Owners Student Question: Hi TI’m trying to distinguish when the required minimum distribution amounts are at 72 years old, versus when they are 70 ½. IRA’s are now 72, correct? Is a 401k plan and a 403b 70 1/2? Thank you…
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Retirement Funding Calculation
Erika wants $50,000 a year in today’s dollars in retirement. She anticipates retiring in 10 years and living in retirement for 30 years. Erika can earn 7% on her investments and she expects inflation to average 4%. Approximately how much should Erika have saved by the day she retires to meet this goal? $913,000 $983,000…
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CFP Board Discipline—Learning from Others’ Mistakes
CFP® Certificants in the News This blog will emphasize recent CFP Board disciplinary trends and the avoidable mistakes made by certificants and candidates1 that can lead to unnecessarily severe discipline. Data for this blog is taken from a CFP Board News Release dated June 30, 2021, in which forty disciplinary actions were published. The topics…
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Equitable Distributions
Course: Income Tax PlanningLesson 15: Property Transactions Student Question: Hi This page explains how the basis for inherited property is affected for common-law states and community property states. How is it affected for equitable distribution states like Florida? Thank you Anibal Instructor Response: Great question Anibal! Only marital property is subject to equitable distribution in…
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