Questions of the Week

Course: Fundamentals of Financial PlanningLesson 3: Personal Financial Statements Student Question: What role does the client’s primary residence play in the current ratio calculation? Is their outstanding mortgage loan amount considered a liability? Instructor Response: That’s a great question.  The residence is not considered a liquid asset and is excluded from “assets” for the current ratio.  Only debt…

Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: I am attempting to understand when to use PV or FV in the second step of the multi-step problems…the payment calculations. I understand that we will need to first calculate the required capital for the financial goal (Ex: retirement or college) and that would…

Course: Investment PlanningLesson 9: Fixed Income Securities Student Question: There is a question regarding duration that I continue to struggle with.Which of the following are true: Can you explain #1 and #3? Instructor Response: Thank you for your question.  This can become a bit convoluted. Let’s unpack the word “duration” first.  Duration is nothing more than…

Course: Retirement PlanningLesson 9: Building Retirement Wealth by Maximizing Fringe Benefits Student Question: Is a Dependent Care Assistance Plan (DCAP) funded by an Flexible Spending Account the same thing as a Dependent Care FSA?  If not, could you provide some additional info as to how the two would work together (could an individual utilize both…

Course: Fundamentals of Financial PlanningLesson 5b: Using the HP 10bII Calculator Student Question: In Example 2, the solution given has 6 years (including CF0) instead of 5. I believe the first year of Carl’s coin purchase should be CF0, but the fifth year – which includes a purchase and a sale – should be CF4.…

Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: Why is 360 used for compounded daily? Shouldn’t this be 365 days?? Instructor Response: 360 is used by most banks for two reasons:

Course: Investment PlanningLesson 9: Fixed Income Securities Student Question: There is a question regarding duration that I continue to struggle with. Which of the following are true: Can you explain #1 and #3? Instructor Response: Thank you for your question.  This can become a bit convoluted. Let’s unpack the word “duration” first.  Duration is nothing more…

Course: Income Tax PlanningLesson 15: Property Transactions Student Question: 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? Instructor Response: Only marital property is subject to equitable distribution in most common law property states. The purpose…

Course: Investment PlanningLesson 5: Fundamental Equity Analysis Student Question: Hi, How is a company’s book value different from the market cap? Instructor Response: 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 left over if…

Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: Good afternoon.  Can you explain why we didn’t take inflation into consideration for the second calculation in the first problem? Dawn wants to have $25,000 in today’s dollars for a round-the-world cruise when she retires 11 years from now. She assumes she can earn…