Explain the general procedure used to calculate the federal estate tax due.
> What type of housing would you choose for yourself now, and why? Why might you choose to rent instead of buy?
> In addition to single-family homes, what other forms of housing are available in the United States? Briefly describe each of them.
> What are the advantages and disadvantages of leasing a car?
> Caleb and Eva Campbell are college students who opened their first joint checking account at the American Bank on September 14, 2015. They’ve just received their first bank statement for the period ending October 5, 2015. The statement
> Differentiate among conventional, insured, and guaranteed mortgage loans.
> Briefly describe the two basic types of mortgage loans. Which has the lowest initial rate of interest? What is negative amortization, and which type of mortgage can experience it? Discuss the advantages and disadvantages of each mortgage type.
> Describe the various sources of mortgage loans. What role might a mortgage broker play in obtaining mortgage financing?
> Describe the purchase transaction process, including shopping, negotiating price, and closing the deal on a car.
> Describe the steps involved in closing the purchase of a home.
> What information is normally included in a real estate sales contract? What is an earnest money deposit? What is a contingency clause?
> Why should you investigate mortgage loans and prequalify for a mortgage early in the home-buying process?
> Describe a real estate short sales transaction. What are the potential benefits and costs from the perspective of the homeowner?
> What role does a real estate agent play in the purchase of a house? What is the benefit of the MLS? How is the real estate agent compensated, and by whom?
> Describe some of the steps home buyers can take to improve the home-buying process and increase their overall satisfaction with their purchases.
> June Xu is a registered nurse who earns $3,250 per month after taxes. She has been reviewing her savings strategies and current banking arrangements to determine if she should make any changes. June has a regular checking account that charges her a flat
> Why is it advisable for the prospective home buyer to investigate property taxes?
> What are the most common guidelines used to determine the monthly mortgage payment one can afford?
> What are closing costs, and what items do they include? Who pays these costs, and when?
> What are mortgage points? How much would a home buyer have to pay if the lender wanted to charge 2.5 points on a $250,000 mortgage? When would this amount have to be paid? What effect do points have on the mortgage’s rate of interest?
> Briefly discuss how each of these purchase considerations would affect your choice of a car: a. Affordability b. Operating costs c. Gas, diesel, hybrid, or electric? d. New, used, or “nearly new”? e. Size, body style, and features f. Reliability and warr
> Briefly describe the key characteristics of each of the following forms of interest paying checking accounts: (a) NOW account, (b) MMDA, and (c) MMMF.
> Define and discuss (a) demand deposits, (b) time deposits, (c) interest-paying checking accounts.
> Distinguish between a checking account and a savings account.
> Would it be possible for an individual to have, say, six or seven checking and savings accounts at the same bank and still be fully protected under federal deposit insurance? Explain. Describe how it would be possible for a married couple to obtain as mu
> What role does the FDIC play in insuring financial institutions? What other federal insurance program exists? Explain.
> Kendra Thayer, who is single, goes to graduate school part-time and works as a waitress at the Backwater Grill in New York. During the past year (2014), her gross income was $18,700 in wages and tips. She has decided to prepare her own tax return because
> Briefly describe the basic operations of—and the products and services offered by—each of the following financial institutions: (a) commercial bank, (b) savings and loan association, (c) savings bank, (d) credit union, (e) stock brokerage firm, and (f) m
> Explain the effects that historically low interest rates have on borrowers, lenders, savers, and retirees.
> Briefly describe the basic features of each of the following savings vehicles: (a) CDs, (b) U.S. Treasury bills, (c) Series EE bonds, and (d) I savings bonds.
> What factors determine the amount of interest you will earn on a deposit account? Which combination provides the best return?
> Define and distinguish between the nominal (stated) rate of interest and the effective rate of interest. Explain why a savings and loan association that pays a nominal rate of 4.5 percent interest, compounded daily, actually pays an effective rate of 4.6
> In general, how much of your annual income should you save in the form of liquid reserves? What portion of your investment portfolio should you keep in savings and other short-term investment vehicles? Explain.
> Briefly describe each of these special types of checks:
> What type of information is found in the monthly bank statement, and how is it used? Explain the basic steps involved in reconciling an account.
> Describe the procedure used to stop payment on a check. Why might you wish to initiate this process?
> Is it possible to bounce a check because of insufficient funds when the checkbook ledger shows a balance available to cover it? Explain what happens when a check bounces. Can you obtain protection against overdrafts?
> Noah and Olivia Anderson are a married couple in their early 20s living in Dallas. Noah Anderson earned $73,000 in 2014 from his sales job. During the year, his employer withheld $9,172 for income tax purposes. In addition, the Andersons received interes
> At what age would you like to retire? Describe the type of lifestyle you envision—where you want to live, whether you want to work part-time, and so on. Discuss the steps you think you should take to realize this goal.
> Using a source like Barron’s, Forbes, Money, or Morningstar, along with any related Web sites, select five mutual funds—a growth fund, an index fund, a sector fund, an international fund, and a high-yield corporate bond fund—that you believe would make g
> Imagine that you’ve just inherited $40,000 from a rich uncle. Now you’re faced with the problem of deciding how to spend it. You could make a down payment on a condo—or better yet, on that BMW that you’ve always wanted; or you could spend your windfall m
> Using the resources available at your campus or public library, work the following problems. (Note: Show your work for all your calculations.) a. Select any two common stocks and then determine the dividend yield, EPS, and P/E ratio for each. b. Select
> The Morton Company recently reported net profits after taxes of $15.8 million. It has 2.5 million shares of common stock outstanding and pays preferred dividends of $1 million a year. The company’s stock currently trades at $60 per share. a. Compute the
> A company has total assets of $2.5 million, total liabilities of $1.8 million, and $200,000 worth of 8 percent preferred stock outstanding. What is the firm’s total book value? What would its book value per share be if the firm had 50,000 shares of commo
> An investor is thinking about buying some shares of Health Monitoring, Inc., at $75 a share. She expects the price of the stock to rise to $115 a share over the next three years. During that time, she also expects to receive annual dividends of $4 per sh
> Using the Web site for Yahoo! Finance (http://finance.yahoo.com), find the 52-week high and low for Coca-Cola’s common stock (symbol KO). What is the stock’s latest dividend yield? What was Coca-Cola’s most recent closing price, and at what P/E ratio was
> What are the key factors to consider when opening a checking account? Discuss the advantages and disadvantages of individual versus joint accounts.
> Using a resource like The Wall Street Journal or Barron’s (either in print or online), find the latest values for each of the following market averages and indexes, and indicate how each has performed over the past six months: a. DJIA b. Dow Jones Global
> How much profit (if any) would Max Adler make if he short-sold 300 shares of a stock at $100 a share and the price of the stock suddenly tumbled to $70?
> Mary Watson is 24 years old and single, lives in an apartment, and has no dependents. Last year she earned $45,000 as a sales assistant for Focused Business Analytics; $3,910 of her wages were withheld for federal income taxes. In addition, she had inter
> Does Social Security coverage relieve you of the need to do some retirement planning on your own?
> What are the most important sources of retirement income?
> Which type of contract (fixed or variable) might be most suitable for someone who wants a minimum amount of risk exposure?
> Which one of the annuity distribution procedures will result in the highest monthly benefit payment?
> Why does it pay to invest in no-load funds rather than load funds? Under what conditions might it make sense to invest in a load fund?
> If growth, income, and capital preservation are the primary objectives of mutual funds, why do we bother to categorize them by type?
> What are your legal rights and responsibilities when using EFTSs?
> Explain the difference between dirty (full) and clean bond prices? What is the significance of the difference in the prices for a bond buyer?
> Why is it important to have investment objectives when embarking on an investment program?
> Discuss the role of asset allocation in portfolio management.
> What’s the difference between an investment plan and a capital accumulation plan?
> Describe what is meant by a participating policy, and explain the role of policy dividends in these policies.
> Why might an investor buy securities on margin?
> What are some products and services that you, as an individual investor, can now obtain online?
> What are online brokers, and what kinds of investors are most likely to use them?
> What are the perils that most properties are insured for under various types of homeowner’s policies?
> What characteristics would be most important to you when choosing an insurance agent?
> Briefly describe (a) debit cards, (b) banking at ATMs, (c) preauthorized deposits and payments, (d) bank-by-phone accounts, and (e) online banking and bill-paying services.
> Why should the following types of life insurance contracts be avoided? (a) credit life insurance, (b) mortgage life insurance, (c) industrial life insurance (home service life insurance).
> When does it make more sense to pay cash for a big-ticket item than to borrow the money to finance the purchase?
> The monthly statement is a key feature of bank and retail credit cards. What does this statement typically disclose?
> Differentiate between tax evasion and tax avoidance.
> What are the advantages of using tax preparation software?
> Discuss the basics of the Blue Cross/Blue Shield plans.
> What are the two main sources of health insurance coverage in the United States?
> Discuss some benefits of life insurance in addition to protecting family members financially after the primary wage earner’s death.
> What does the loan-to-value ratio on a home represent? Is the down payment on a home related to its loan-to-value ratio? Explain.
> How can accurate records and control procedures be used to ensure the effectiveness of the personal financial planning process?
> Describe the features of an AMA, its advantages, and its disadvantages.
> Given your personal financial circumstances, if you were buying a car today, would you probably pay cash, lease, or finance it, and why? Which factors are most important to you in making this decision?
> Distinguish between fixed and variable expenses, and give examples of each.
> Give two reasons for holding liquid assets. Identify and briefly describe the popular types of liquid assets.
> What is an income and expense statement? What role does it serve in personal financial planning?
> What two factors determine the amount of federal withholding.
> What is the balance sheet equation? Explain when a family may be viewed as technically insolvent.
> Are consumption patterns related to quality of life? Explain.
> Why should health insurance planning be included in your personal financial plan?
> Eva Stone's luxurious home in Georgetown, a neighborhood in Washington, DC, was recently gutted in a fire. Her living and dining rooms were destroyed completely, and the damaged personal property had a replacement price of $27,000. The average age of the
> Explain how the composition of the principal and interest components of a fixed-rate mortgage change over the life of the mortgage. What are the implications of this change?
> What is cash management, and what are its major functions?
> Use Worksheet 9.2. Do you need disability income insurance? Calculate your need using Worksheet 9.2. Discuss how you’d go about purchasing this coverage. Worksheet 9.2: DISABILITY BENEFIT NEEDS Name(s) Date 1. Estimate current mon
> Isabella Harris has an overdraft protection line. Assume that her October 2015 statement showed a latest (new) balance of $862. If the line had a minimum monthly payment requirement of 5 percent of the latest balance (rounded to the nearest $5 figure), t
> Jim Grant plans to borrow $8,000 for five years. The loan will be repaid with a single payment after five years, and the interest on the loan will be computed using the simple interest method at an annual rate of 6 percent. How much will Jim have to pay
> Demonstrate the differences resulting from a $1,000 tax credit versus a $1,000 tax deduction for a single taxpayer in the 25 percent tax bracket with $40,000 of pre-tax income.
> Calculate your own debt safety ratio. What does it tell you about your current credit situation and your debt capacity? Does this information indicate a need to make any changes in your credit use patterns? If so, what steps should you take?
> Recommend three financial goals and related activities for someone in each of the following circumstances: a. A junior in college b. A 30-year-old computer programmer who plans to earn an MBA degree c. A couple in their 30s with two children, ages 3 and
> Describe your current status based on the personal financial planning life cycle shown in Exhibit 1.7. Fill out Worksheet 1.1, “Summary of Personal Financial Goals,” with goals reflecting your current situation and you
> How can using personal financial planning tools help you improve your financial situation? Describe changes you can make in at least three areas.
> Summarize important legislation affecting estate taxes, and briefly describe the impact on estate planning. Explain why getting rid of the estate tax doesn’t eliminate the need for estate planning.
> Use Worksheet 15.2. When Jacob Kohler died unmarried in 2015 he left an estate valued at $7,850,000. His trust directed distribution as follows: $20,000 to local hospital, $160,000 to his alma mater, and the remainder to his three adult children. Death-r
> Define and differentiate between the average tax rate and the marginal tax rate. How does a tax credit differ from an itemized deduction?
