Describe and discuss each of the techniques used in estate planning.
> Use future or present value techniques to solve the following problems. a. Starting with $15,000, how much will you have in 10 years if you can earn 6 percent on your money? If you can earn only 4 percent? b. If you inherited $45,000 today and invested a
> Assume that you graduated from college with a major in marketing and took a job with a large consumer products company. After three years, you are laid off when the company downsizes. Describe the steps you’d take to “repackage” yourself for another fiel
> Alice Reynolds and Tricia Bostwick, both freshman and friends at a major university, are interested in going into a health sciences career. While they're not just interested in the money they can make, they do want to have a sense of the compensation in
> Summarize current and projected trends in the economy with regard to GDP growth, unemployment, and inflation. How should you use this information to make personal financial and career planning decisions?
> Ben Saunders and Ashley Tinsdale are planning to get married in six months. Both are 30 years old have been out of college for several years. Ben uses three credit cards and has a bank account balance of $7,500 while Ashely only uses one credit card and
> What is a standard of living? What factors affect the quality of life?
> In the late 1980s, Carsten Richter, from Germany, migrated to the United States, where he is now a citizen. A man of many talents and deep foresight, he has built a large fleet of oceangoing oil tankers during his stay in the United States. Now a wealthy
> Terry and Evelyn Becker are a married couple in their mid-20s. Terry has a good start as an electrical engineer and Evelyn works as a sales representative. Since their marriage four years ago, Terry and Evelyn have been living comfortably. Their income h
> Is it possible to have a cash deficit on an income and expense statement? If so, how?
> Explain what cash basis means in this statement: “An income and expense statement should be prepared on a cash basis.” How and where are credit purchases shown when statements are prepared on a cash basis?
> Explain two ways in which net worth could increase (or decrease) from one period to the next.
> When might you use future value? Present value? Give specific examples.
> What is compounding? Explain the rule of 72.
> Why is it important to use time value of money concepts in setting personal financial goals?
> Why is it important to analyze actual budget surpluses or deficits at the end of each month?
> The Gonzales family has prepared their annual cash budget for 2016. They have divided it into 12 monthly budgets. Although only 1 monthly budget balances, they have managed to balance the overall budget for the year. What remedies are available to the Go
> Describe the cash budget and its three parts. How does a budget deficit differ from a budget surplus?
> Describe some of the areas or items you would consider when evaluating your balance sheet and income and expense statement. Cite several ratios that could help in this effort.
> Maria Sepulveda is 57 years old and has been widowed for 13 years. Never remarried, she has worked full-time since her husband died 13 years ago—in addition to raising her two children, the youngest of whom is now finishing college. After being forced to
> What are the two types of personal financial statements? What is a budget, and how does it differ from personal financial statements? What role do these reports play in a financial plan?
> Discuss the need for career planning throughout the life cycle and its relationship to financial planning. What are some of your own personal career goals?
> All people who have equivalent formal education earn similar incomes.” Do you agree or disagree with this statement? Explain your position.
> What is inflation, and why should it be a concern in financial planning?
> What are the stages of an economic cycle? Explain their significance for your personal finances.
> Discuss the following statement: “The interactions among government, business, and consumers determine the environment in which personal financial plans must be made.”
> What is a professional financial planner? Does it make any difference whether the financial planner earns money from commissions made on products sold as opposed to the fees he or she charges?
> Discuss briefly how the following situations affect personal financial planning: a. Being part of a dual-income couple b. Major life changes, such as marriage or divorce c. Death of a spouse
> There’s no sense in worrying about retirement until you reach middle age.” Discuss this point of view.
> Describe employee benefit and tax planning. How do they fit into the financial planning framework?
> Linda Calloway and Meredith Perdue are neighbors in Charleston. Linda works as a software engineer for Progressive Apps Corporation, while Sherry works as an executive for Industrial Container Company. Both are married, have two children, and are well pa
> Chad Jackson’s investments over the past several years have not lived up to his full return expectations. He is not particularly concerned, however, because his return is only about 2 percentage points below his expectations. Do you have any advice for C
> Discuss the relationship of life-cycle considerations to personal financial planning. What are some factors to consider when revising financial plans to reflect changes in the life cycle?
> What types of financial planning concerns does a complete set of financial plans cover?
> Distinguish between long-term, intermediate, and short-term financial goals. Give examples of each.
> Explain why it is important to set realistically attainable financial goals. Select one of your personal financial goals and develop a brief financial plan for achieving it.
> Explain why financial plans must be psychologically as well as economically sound. What is the best way to resolve money disputes in a relationship?
> What is the role of money in setting financial goals? What is the relationship of money to utility?
> Discuss the various forms in which wealth can be accumulated.
> What is average propensity to consume? Is it possible for two people with very different incomes to have the same average propensity to consume? Why?
> Describe the balance sheet, its components, and how you would use it in personal financial planning. Differentiate between investments and real and personal property.
> Nichole Whiting is the director of a major charitable organization in Charlotte, North Carolina. A single mother of one young child, she earns what could best be described as a modest income. Because charitable organizations aren’t known for their genero
> Define and differentiate between joint tenancy and tenancy by the entirety. Discuss the advantages and disadvantages of joint ownership. How does tenancy in common differ from joint tenancy?
> Describe briefly the importance of these documents in estate planning: (a) power of attorney, (b) living will, (c) durable power of attorney for health care, and (d) ethical will.
> What is meant by the probate process? Who is an executor, and what is the executor’s role in estate settlement?
> Explain these terms: (a) intestacy, (b) testator, (c) codicil, (d) letter of last instructions.
> How can changes in the provisions of a will be made legally? In what four ways can a will be revoked?
> Describe the basic clauses normally included in a will and the requirements regarding who may make a valid will.
> What is a will? Why is it important? Describe the consequences of dying intestate.
> Briefly describe the steps involved in the estate planning process.
> Explain the general nature of the federal estate tax. How does the unified tax credit affect the amount of estate tax owed? What is the portability concept?
> Damon Bellamy has worked in the management services division of Niche Consultants for the past five years. He currently earns an annual salary of about $120,000. At 33, he’s still a bachelor and has accumulated about $100,000 in savings over the past few
> Discuss the reasons estate planners cite for making lifetime gifts. How can gift giving be used to reduce estate shrinkage?
> What is a gift, and when is a gift made? Describe the following terms as they relate to the federal gift taxes: (a) annual exclusion, (b) gift splitting, (c) charitable deduction, and (d) marital deduction.
> Explain each of these terms: (a) grantor, (b) trustee, (c) beneficiary, (d) pour-over will, testamentary trust, and (f) irrevocable life insurance trust.
> What is a living (inter vivos) trust? Distinguish between a revocable living trust and in irrevocable living trust.
> What is the right of survivorship? What is community property and how does it differ from joint tenancy with regard to the right of survivorship?
> Discuss the importance and goals of estate planning. Explain why estates often break up. Distinguish between the probate estate and the gross estate.
> Under which procedure will you become fully vested most quickly—cliff or graded vesting?
> Which basic features of employer-sponsored pension plans should you be familiar with?
> What is the earnings test, and how does it affect Social Security retirement benefits?
> Natasha Cormier is a 28-year-old management trainee at a large chemical company. She is single, has an annual salary of $34,000 (placing her in the 15 percent tax bracket), and her monthly expenditures come to approximately $1,500. During the past year o
> What benefits are provided under the Social Security Act, and who is covered?
> How do income needs fit into the retirement planning process?
> Identify and briefly discuss the three biggest mistakes people tend to make when setting up retirement programs.
> How do variable annuity returns generally compare to mutual fund returns? Can you explain why there would be any difference in returns?
> What is a fixed-rate annuity, and how does it differ from a variable annuity?
> What is an annuity? Briefly explain how an annuity works and how it differs from a life insurance policy.
> Under what circumstances would it make sense to convert your traditional IRA to a Roth IRA?
> Describe and differentiate between Keogh plans and individual retirement arrangements. What’s the difference between a nondeductible IRA and a Roth IRA?
> Briefly describe the tax provisions of 401(k) plans and Keogh plans.
> Why is it important to evaluate and become familiar with the pension plans and retirement benefits offered by your employer?
> A couple in their early 30s, Rodney and Carly Madsen recently inherited $90,000 from a relative. Charles earns a comfortable income as a sales manager for System Analytics, Inc., and Carly does equally well as an attorney with a major law firm. Because t
> What is the difference between a profit-sharing plan and a salary reduction, or 401(k), plan?
> Discuss the relationship of retirement planning to financial planning. Do investment and tax planning have a role in retirement planning?
> What’s an international fund, and how does it differ from a global fund?
> What’s the difference between a growth fund and a balanced fund?
> Briefly describe a back-end load, a low load, and a hidden load. How can you tell what kind of fees and charges a mutual fund has?
> What is a 12b-1 fund? Can such a fund operate as a no-load fund?
> What’s the difference between a load fund and a no-load fund?
> What types of ETFs are available to investors?
> What’s the difference between an open-end mutual fund and an ETF?
> Briefly describe the basic structure and investment considerations associated with a REIT. What are the three basic types of REITs?
> Russ Alonzo is 42 years old, single, and works as a designer for a major architectural firm. He is well paid and over time has built up a sizable portfolio of investments. He considers himself an aggressive investor and, because he has no dependents to w
> Describe how the following securities allow investors to participate in the real estate market. a. Stock in real estate–related companies b. Real estate limited partnerships (LPs) or limited liability companies (LLCs)
> Describe the major categories of income property, and explain the advantages and disadvantages of investing in income property. How can a single-family home be used to generate income?
> Why is speculating in raw land considered a high-risk venture?
> Define and briefly discuss the role of each of these factors in evaluating a proposed real estate investment: a. Cash flow and taxes b. Appreciation in value c. Use of leverage
> How important is general market in affecting the price performance of mutual funds?
> Who are the key players in a typical mutual fund organization?
> Describe how to evaluate the attractiveness of investing in an index-based ETF.
> Which would you rather have: $100 in dividend income or $100 in capital gains distribution? $100 in realized capital gains or $100 in unrealized capital gains?
> Identify three potential sources of return to mutual fund investors, and briefly discuss how each could affect total return to shareholders.
> Briefly describe the steps in the mutual fund selection process.
> Like many married couples, Damian and Brandi Woodson are trying their best to save for two important investment objectives: (1) an education fund to put their two children through college; and (2) a retirement nest egg for themselves. They want to have s
> What are the most common reasons for buying mutual funds?
> What are automatic reinvestment plans, and how do they differ from automatic investment plans?
> What are fund families? What advantages do these families offer investors?
> What’s an asset allocation fund? How do these funds differ from other types of mutual funds?
> What is a mutual fund? Why are diversification and professional management so important to mutual funds?
> Briefly discuss some of the different types of common stock. Which types would be most appealing to you, and why?
