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Book Value versus Market Cap
Course: Investment PlanningLesson 5: Fundamental Equity Analysis Student Question: Hi, How is a company’s book value different from the market cap? Thanks, Anibal Instructor Response: Hi Anibal,Book value is an accounting concept generally based upon the acquisition costs of and the legally binding amounts of liabilities. It is the amount of cash that would be…
Taxation on Resale of Property
George Sloan sold farmland valued at $200,000 to his son Frank. Frank paid $40,000 at closing and signed an installment obligation for the remainder of the purchase price to be paid over ten years at 10% interest on the outstanding balance. If Frank sells the property to a second purchaser for $210,000 cash 20 months…
CFP Board’s Code and Standards vs. SEC’s Reg BI
CFP® Certificants in the News CFP Board published “What You Need to Know About CFP Board’s Code and Standards and Reg BI” on August 17, 2020; we will address the following questions with direct quotes from CFP Board’s publication: Does Reg BI apply to CFP® Certificants? How do the standards of conduct differ? How do…
Capital Versus Security Market Line
Course: Investment PlanningLesson 13: Asset Allocation Student Question: Hi, Could you help me better understand the difference between the capital market line (CML) and security market line (SML)? I can’t seem to fully grasp the difference. Thanks, Meg Instructor Response: Hi Meg, First, let’s take a full step back for perspective. The SML and CML…
Characteristics of a Will
Which of the following statements concerning a Will are correct? A will can be altered, amended, or completely rewritten at any time before a person’s death. A will cannot be rewritten but can be amended at any time by a codicil. A will must be signed by the maker and usually must be witnessed by…
SEP IRA Contribution Limits
Course: Retirement PlanningLesson 5: Leveraging Nonqualified Plans for Small Business and Not-For-Profit Employees and Owners Student Question: Hello! I am wondering why on this page it says the contribution to a SEP IRA is the lesser of 25% covered compensation or $57,000 (2020), but then it says the combined contribution for SEP IRA and qualified…
Identifying an Appropriate Power of Attorney
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…
Net Earnings from Self-Employment Calculation
Course: Retirement PlanningLesson 2: Qualified Plan Advantages and Disadvantages for Employees and Business Owners Student Question: Hi- On the Contribution base example, it states, “Net earnings from self-employment (NESE:) $140,000 x .9235 = $129,290”. Where did the .9235 come from? I’m sure it was in a previous lesson, I just can’t remember. Thanks, Meg Instructor Response: Hi Megan, Good question! This factor is part of the Internal…
Rental Property Like-Kind Exchange
William found someone to buy his rental property in Maine. Which of the following properties William would like to purchase as rental property would allow him to complete a Like-Kind Exchange? A golf course rental property in Arizona that William identified 30 days after selling his Maine property A beach rental house at the Cape…