Student Question

Course: Retirement PlanningLesson 9: Building Retirement Wealth by Maximizing Fringe Benefits Student Question: Is a Dependent Care Assistance Plan (DCAP) funded by an 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: 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: 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 a…

Course: Investment PlanningLesson 1: Key Principles of Investing Student Question: Can you help solve a practice question?  I looked through the textbook and my notes, and just couldn’t wrap my brain about how to solve the problem below.  The confusing part to me is that the fund was not sold, so there is no sales price,…

Course: Estate PlanningLesson 12: Valuation and Freeze Techniques to Reduce Estate Tax Liability Student Question: I’m not sure how gains are spread out over the course of the note if these are typically structured “as interest only with a balloon payment at the end”.  Here’s the language from the lesson: Instead of an outright sale, 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…

Course: Estate PlanningLesson 7: Transfer Taxation IV – Generation Skipping Transfers Student Question: Regarding example below, would the death of the father, Stephen, not move Andrew one step up making him only one generation below Mrs. Jones? Would this not remove the generation skipping transfer tax? EXAMPLE: Upon her death, Mrs. Jones left her estate…

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 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: Investment PlanningLesson 5: Fundamental Equity Analysis Student Question: After reading the following, I’m confused about the amount a participant is allowed to take out as a loan from a qualified plan. Would it be up to $50k of vested account balance or only up to $10k? Text states: As a general rule, a participant…