Questions of the Week

Course: Investment PlanningLesson 1: Key Principles of Investing Student Question: Hey Dan, Hope you are doing well. Can you help solve a practice question?  I looked through the textbook and my notes and just couldn’t wrap my brain about how to solve the problem below.  The confusing part to me is that the fund was not…

Course: Investment PlanningLesson 14: Evaluation Portfolio Performance Student Question: Hello – I’m a little confused about the example (below) discussing an heirloom of only sentimental value. Why would this be titled at all for a will, especially since an earlier lecture said items of no value would pass through the will as the situation does…

Course: Investment PlanningLesson 14: Evaluation Portfolio Performance Student Question: Hello, In calculating Information Ratio, why do we need the denominator to be Standard Deviation of the difference in portfolio and index returns?  This is unlike the Sharpe Ratio, where the denominator is Standard Deviation of the Portfolio. Doesn’t the Standard Deviation of the Portfolio indicate…

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

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…

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…

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…

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…

Course: Retirement PlanningLesson 5: Leveraging Nonqualified Plans for Small Business and Not-For-Profit Employees and Owners Student Question: Hi- I’m trying to distinguish when the required minimum distribution amounts are at 72 years old versus when they are 70½.  IRAs are now 72, correct?  Is a 401k Plan and a 403b Plan at 70½? Thanks Tiffany Instructor…

Course: Insurance PlanningLesson 17: Business Uses of Life and Disability Insurance Student Question: Hope you’re well and keeping safe. I do have a quick question regarding buy/sell agreement; not clear who would pay the premiums on disability and/or life insurance on the principals and the key employees? Thanks Emerito Instructor Response: Hi Emerito, Great question.  A buy-sell…