Questions of the Week

Course: Investment PlanningLesson 10: Fixed Income Securities Student Question: I am trying to wrap my head around this. From the explanation the duration seems the point where half of the payback has happened. Is that a decent way of thinking about it? Instructor Response: Close.  Duration is the weighted-average time it takes to receive the…

Course: Retirement PlanningLesson 2: Qualified Plan Advantages and Disadvantages for Employees and Business Owners Student Question: I have a few questions regarding tort liability. Instructor Response: Good questions here.  See below for my response to each.

Course: Investment PlanningLesson 13: Asset Allocation Student Question: In the attached concept question, wouldn’t Option (1) – a correlation coefficient of 0 – be the most diversified since there is no correlation? A correlation of -.25 would indicate a slight negative correlation. Instructor Response: Good to hear from you again!  Hope all is going well.…

Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: Does the like kind 1031 exchange defer taxes if I exchange two properties for one like-kind property? For example, I am selling an investment house and with the proceedings I am purchasing two like-kind investment houses. Instructor Response: Absolutely.  So long as you are…

Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: My question relates to being able to clearly distinguish when the CFP Board exam will require an annual, or other period for the answer. Question 5(b) asks: “What is the rate of return on Investment 2 using daily compounding?” What is the annual rate…

Course: Insurance PlanningLesson 10: Social Security Student Question: When it comes to social security widower’s benefit’s, is the widow eligible to take his/her SS benefit early (age 62) and then switch over to the deceased spouse’s full benefit at 67? Or would the widow only be eligible for one of the two benefits? Instructor Response:…

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…

Course: Investment PlanningLesson 13: Asset Allocation Student Question: Can you help me understand the difference between Kurtosis and Skewness?  I can’t quite piece it together. Instructor Response: Entire books have been written on this topic but the following summary should get the points for you on the CFP® Board exam when these topics are tested. …

Course: Fundamentals of Financial PlanningLesson 2: Economic Concepts and Consumer Protection Laws Student Question: In this thought, it says that CPI only reflects price and does not account for quality of product. However, if the quality diminishes, then the amount needed to meet the same demand increases which then increases the supply needed to meet…

Course: Retirement PlanningLesson 5: Leveraging Nonqualified Plans for Small Business and Not-For-Profit Employees and Owners Student Question: Hello , I am having trouble understanding how Shared Coverage is implemented. Could you help me understand with an example?   Also, could you explain the Waiver of Premium benefits in simple words. Shared Coverage: “For couples where…