Explain the time value of money concept

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1. A person with a $1 million investment portfolio approaches a planner for assistance. After several meetings the planner has concluded that the investor has unreasonable expectations and will not be a desirable client. However, the investor has offered to pay $4,000 to have an investment plan developed and may even pay a continuing investment management fee. How should the planner handle this case?

2. Is there a difference in the mechanics that is used for collecting qualitative as opposed to quantitative data?

3. Explain the time value of money (TVM) concept. Why is TVM an important tool in the financial planner's tool kit?

4. Contrast the future value of a fixed sum concept with the future value of an annuity concept. Give examples of situations where they are used by the financial planner.

5. Contrast nominal interest rate with effective interest rate. Which one should be used in making financial decisions?

6. Comment on the following statement: "One of the most valuable concepts in financial planning is the internal rate of return."

Reference no: EM131412551

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