Questions of the Week

Course 3: Investment PlanningLesson 15: Fundamentals of Derivatives – Futures and Options Student Question: Can you please explain what Basis points are and how/why they are generally used? Instructor Response: There are 100 basis points in 1%.  Basis points are merely a common method of measuring investment fees or returns.   An exchanged traded fund may charge…

Course 3: Investment PlanningLesson 1: Key Principles of Investing Student Question: I am having a difficult time conceptualizing Beta as a measure of only systematic risk AND as a measure of volatility relative to the broader market.  By way of illustration. Assume an individual equity has wild swings in value over a one year period…

Course: Estate PlanningLesson 9: Income Taxation of Trusts and Estates Student Question: Can you refer me to a comparison (or just write a few notes) on how a grantor trust differs from a revocable trust and how a non-grantor trust differs from an irrevocable trust? They seem synonymous respectively to each other. Thank you!  Instructor…

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:1-Lower coupon bonds are more sensitive to interest rates than high coupon bonds.2-There is inverse relationship between bond prices and change in interest rates.3-There is a positive relationship between coupon rates and duration.…

Course 1: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: Hello, in the question below, I am a little lost on why it is 9 years for N instead of 10?  Could you explain? In Year 1, Harvey assumed he would need the equivalent of $500,000 in Year 1 dollars to retire in…

Course 3: Investment PlanningLesson 1: Key Principles of Investing Student Question: I am having a difficult time conceptualizing Beta as a measure of only systematic risk AND as a measure of volatility relative to the broader market.  By way of illustration, assume an individual equity has wild swings in value over a one-year period (volatility)…

Course: Estate PlanningLesson 1: Property Ownership Student Question: In the example here of a completed gift, doesn’t Harry still have rights to the condo if it is a JTWROS? How is that considered a completed gift? Example Harry buys a condominium for $200,000. He wants his brother, Hank, to get the property when he dies,…

Course: Insurance PlanningLesson 8: Gift and Estate Valuation Student Question: Could you please clarify for me what the unused premium would be in term life insurance?  I don’t quite understand how you could not use the premium.  Thanks. Instructor Response: Certainly.   A lot of different terms in insurance, to be sure. Assume you pay $6,000…

Course: Retirement PlanningLesson 1: Using IRAs to Build and Distribute More Retirement Income Student Question: This page states that rental income is not included in the definition of earned income.  If the client is a professional real estate developer whose income is derived mainly from rental income, would they be able to contribute to an…

Course: Insurance PlanningLesson 17: Business Uses of Life Insurance 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.…