Student Question

Course: Insurance Planning Lesson 17: Business Uses of Life Insurance Student Question: Do buy sell agreements accounts for projected growth of the company?  Do the life insurance benefits increase over time to account for projected growth, or perhaps can they invest and grow conservatively to keep up with inflation (or COLA on the plan)? Thanks,…

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: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: 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. I…

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.  Can…

Course: Retirement PlanningLesson 9: Building Retirement Wealth by Maximizing Fringe Benefits   Student Question: Is a Dependent Care Assistance Plan (DCAP) funded by a 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 Planning Lesson 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: Insurance PlanningLesson 10: Fundamentals of Social Security and Medicare  Student Question: Hi, Under the ‘late enrollment penalty’ link, there is a example given by Medicare.  It states that there is a 20% penalty because 30 months had lapsed, or at least 2 12-month periods post initial enrollment had lapsed.  The date given for initial…

Course: Insurance PlanningLesson 15: Income Taxation of Life Insurance Student Question: Hello, Can you help me better understand the difference between policy basis in a normal policy and policy basis on a modified endowment contract. From the Coursework: But for MEC purposes, the basis is increased by any portion of loans that were considered taxable…

Course: Investment PlanningLesson 5: Fundamental Equity Analysis Student Question: Hello, What is the difference between Stock options and Restricted stock plan or phantom stock?  Seems confusing. Instructor Response: Hi, Onward and Upward,

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: Hi Certainly.   A lot of different terms in insurance, to be sure. Assume you pay…