Student Question

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…

Course: Investment PlanningLesson 5: Fundamental Equity Analysis Student Question: How is a company’s book value different from the market cap? Instructor Response: Book value is an accounting concept generally based upon the acquisition costs of and the legally binding amounts of liabilities.  It is the amount of cash that would be left over if all…

Course: Insurance PlanningLesson 10: Social Security Student Question: This question (below) doesn’t quite make sense to me.  Could you clarify why the correct answer is D? Robin Elizabeth qualifies for a retirement benefit of $250 and a spouse’s benefit of $400. At her full retirement age, she will receive which of the following? A) Both $250…

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…