Student Question

Course: Insurance PlanningLesson 6: Commercial Property and Liability Insurance Student Question: Hi, The way I understand the example below is that since the cost, current value and depreciation are not relevant, it seemed to me that the building is only insured for 77.77% of its replacement value ($14,000,000/$18,000,000).  This would lead to the payout from…

Course: Investment PlanningLesson 13: Asset Allocation Student Question: Hello, Can you help me understand the difference between Kurtosis and Skewness?  I can’t quite piece it together. Thanks! Instructor Response: Great question, You’re right that as total capital in a pooled investment grows, the overall dollar amount of earnings can Entire books have been written on this…

Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: Hello, I am confused as to how to get the correct answer for number 4. Jackie invests her bonus at the beginning of this calendar year. If she earns 7% compounded monthly, what is the annual equivalent rate? Round your answer to two decimal places.…

Course: Investment PlanningLesson 8: Pooled Investments Student Question: Hello, One of the disadvantages of pooled investments is Dilution of earnings. Can you explain how? I would think that as the capital grows, the earnings will grow as well? Thanks! Instructor Response: Great question, You’re right that as total capital in a pooled investment grows, the…

Course: Retirement PlanningLesson 7: Income Distribution Planning for Qualified Plans Student Question: Hi- The lesson says: Annual distributions are required in years 1 – 9 if the participant died after his or her required beginning date. Any undistributed amount must then be distributed no later than December 31 of the tenth year following the year of…

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…