Student Question

Course: Income Tax PlanningLesson 8: Arriving at Taxable Income Student Question: Hi, If a client has a $250k mortgage on a home worth $500k and they refinance to take equity out of their home, say $100k. Then they use that $100k to purchase a vacation home worth $300k (so they now have $450k in mortgage…

Course: Investment PlanningLesson 9: Fixed Income Securities Student Question: Hi, Just a question about Corporate Bond Funds.  Gathering my information from the book, it seems they are “debt notes” insured to keep the company going.  If they are not repaid the person who accepted the “bonds” can sometimes take assets in the company, like equipment…

Course: Retirement PlanningLesson 5: Leveraging Nonqualifed Plans for Small Businesses and Not-For-Profit Employees and Owners Student Question: I’ve seen the phrase “plan formula can be integrated with social security” many times, but I don’t really know what this means. Can you explain how that works or is it beyond the scope of what we need…

Course: Retirement PlanningLesson 7: Income Distribution Planning for Qualified Plans Student Question: In the discussion as to whether a lump-sum distribution would be appropriate instead of periodic or annuity payments, one of the issues in making that decision is “The Size of the Distribution.” I’m not really understanding what is meant by this statement, “The…

Course: Estate PlanningLesson 11: Charitable Gifting Techniques Student Question: Why would a stamp collection donated to the Salvation Army NOT be deductible at FMV? Thanks for your time! Instructor Response: Hi, Great question here.   A stamp collection is tangible personal property, the deduction depends on whether the charity’s use of the property is related to its…

Course: Insurance Planning Lesson 17: Business Uses of Life Insurance Student Question: Does the maximum family benefit apply to a husband and wife that are both fully insured if the combined total between the two exceeds the maximum family limit?   If I understand correctly, the maximum family limit only applies if there are beneficiaries…

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…