Student Question

Course: Fundamentals of Financial PlanningLesson 5b: Using the HP 10b-II Calculator Student Question: For number 2 (below), should there be a CF of zero for Company B year one? It appears the explanation skips this cash flow. Bobby is investigating the cost of an alarm system for his home, which he thinks he will own for three years. Company A will charge him an…

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 am I missing? Michael…

Course: Estate PlanningLesson 3: Understanding Trusts and Trust Documents Student Question: Perhaps a slightly mundane question, but here we go: It had been my understanding that property in a trust was held and owned by the trust itself, as a separate legal entity. However, several times in this course there has been reference to the trustee having ownership of the property. Is there…

Course: Insurance Planning Lesson 12: Types of Life Insurance Student Question: Could you help clarify the term “unused premiums” as it relates to term life insurance? I guess I don’t see how you could have a premium not used in term life. Thanks! Michael Instructor Response: Michael, Assume you pay $6,000 in annual prepaid premiums on January 1, 2020, for coverage for…

Course: Estate Planning Lesson 9: Income Taxation of Trusts and Estates Student Question: Hi Bruce When a Trust has an income accumulation year, must the Trust pay taxes on that accumulation of DNI in the year of accumulation? If so, why do that – why would a Trust hold income at the confiscatory Trust income tax rates? If not, how many years can a…

Course: Income Tax Planning Lesson 10: Recognition of Expenses, Losses, and Deductions Student Question: Question 5 (below) did not make sense to me. I started out by breaking down by year – 400,000/2,100,000*3,000,000 and so forth, but did not arrive at the correct answer. So then I tried adding up 3 year – 400+650+700/2100000*3,000,000. That…

Course: Estate Planning Lesson 5: Transfer Taxation II – Lifetime Transfers Student Question: Hi Bruce, I’m reading about the “expanded Annual Exclusion Amount of $155,000.” Just so I’m clear, is this an expansion from the “regular” $15,000 Annual Exclusion Amount? And what is it for? Thanks! Kevin Instructor Response: Hi Kevin, You are correct. The…

Course: Estate Planning Lesson 10: Application of Estate Planning Concepts Student Question: HI Bruce- Can you help clarify for me seemingly contradictory information in the two sentences below regarding “disinheriting children”? The first sentence seems to imply that the surviving spouse could disinherit children. However, the second sentence states that QTIPs are often used to…

Course: Insurance Planning Lesson 6: Commercial Property and Liability Insurance Student Question: Can you please provide an example of contingent business interruption and extra expense insurance? Laura Instructor Response: Hi Laura, Good question. Here’s how contingent business interruption insurance might apply. You own a nationwide chain of jewelry stores that specialize in gold/palladium alloys. Your…

Course: Insurance Planning Lesson 10: Social Security 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 within the family receiving…