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SEC Regulation Best Interest – Who is Protected and When?
Good to Know The Security and Exchange Commission’s Regulation Best Interest (Reg BI) is aimed squarely at protecting the best interests of retail investors. A common issue that arises is exactly when Reg BI applies. The short answer is that Reg BI applies when a retail customer receives and subsequently uses a recommendation from a…
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Custodial Accounts and Tax Deferral
Course: Fundamentals of Financial PlanningLesson 6: Educational Savings Techniques Student Question: Hi, I am referencing the “Key Information – Coordination with Tax Credits” section. When it says “custodial accounts do not provide income tax deferral,” is this to say that a donor will earn and pay income tax on money received that is then gifted to the beneficiary?Assuming the gift is less than $15,000 annually, there…
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Tightening the Money Supply
Which of the following is a monetary policy that will tighten the money supply? Sell government securities Lower the discount rate Decrease government spending Increase taxes CLICK TO REVEAL ANSWER Expand A is the answer. Selling government securities is a monetary policy that will tighten the money supply as the cash used to purchase the…
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July 2020 CFP Board Exam Moved to September
CFP® Board Updates On May 4, the CFP Board announced the July 2020 CFP Board Exam has been postponed to September. This was in response to the ongoing Covid-19 pandemic. The new pertinent dates are: Examination Period: September 22-29, 2020 Registration Opens: Already in Progress Registration Deadline: September 8, 2020 Early Bird Discount ($725 rate)…
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Risk Premium versus Intrinsic Value
Course: Investment PlanningLesson 5: Fundamental Equity Analysis Student Question: Hello Bruce, The first Review Exercise page in Lesson 5 – is Intrinsic Value the same as Risk Premium? Is that why we’re solving for P0 and not V (which is given)? The formula provided in the explanation confuses me. (question and answer from Review Exercise below) Review Exercise Question: Given the following information, what…
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Black-Scholes Option Valuation Model
All of the following are correct about the impact of an increase in the single variable under the Black-Scholes Option Valuation Model EXCEPT: Market price has a positive impact on put options. Strike price has a positive impact on put options. Expiration time has a positive impact on call options Stock volatility has a positive…
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The Unlikely Banker – IRS CARES for Business Owners
Good to Know THE TREASURY DEPARTMENT PROVIDES MORE THAN SBA LOANS FOR BUSINESS WORKING CAPITAL SBA loans and the Paycheck Protection Program dominated the business headlines over the last few months. But several less-heralded provisions of the CARES Act go beyond recent headlines to shore up cash flows of struggling businesses, too. How? Liberalization of…
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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 they can be used across state borders? Stephanie Instructor Response: Hi…
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Using Jensen Performance Index
Based on the Jensen performance index, which fund should the investor continue to hold given the following information? FUND 1 FUND 2 Return on Portfolio 13% 17% Beta .95 1.02 Standard Deviation .18 .22 Risk-free rate of return is 7% Market return is 15% Fund 1 Fund 2 Both Fund 1 and 2 Neither Fund 1 nor 2 CLICK…
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