All Related Questions of Personal Finance

Q: Thomas can invest $10,000 by purchasing a 1-

Thomas can invest $10,000 by purchasing a 1-year T-bill for $9,275, or he can place the $10,000 in a 12-month CD paying 8%. Which investment will provide a higher return? In addition to return, what e...

Q: Troy paid $9,600 for a T-bill with

Troy paid $9,600 for a T-bill with a face value of $10,000. What is Troy’s return if he holds the T-bill to maturity?

Q: Bart is a college student who has never invested his funds.

Bart is a college student who has never invested his funds. He has saved $1,000 and has decided to invest it in a money market fund with an expected return of 2.0%. Bart will need the money in one yea...

Q: What is a NOW account? How is it different from a

What is a NOW account? How is it different from a regular checking account? How does a savings account compare with a NOW account?

Q: What terms does a financial institution specify for certificates of deposit?

What terms does a financial institution specify for certificates of deposit? Why are rates on CDs higher than those on savings accounts? What factor would most affect your choice of maturity date on a...

Q: How does a money market deposit account (MMDA) differ from

How does a money market deposit account (MMDA) differ from a NOW account? When might a depositor use an MMDA?

Q: On June 1, Mia deposited $4,000 in an

On June 1, Mia deposited $4,000 in an MMDA that pays 5% interest. On October 31, Mia invested $2,000 in a three-month CD that pays 6%. At the end of the year, how much interest will Mia have earned, a...

Q: What is liquidity? How is your personal cash flow statement used

What is liquidity? How is your personal cash flow statement used to help manage your liquidity? How does money management relate to the cash flow statement?

Q: Jill placed $10,000 in a 90-day CD

Jill placed $10,000 in a 90-day CD that offered an annualized return of 4%. How much interest will she earn on this CD?

Q: Jason is in his mid-50s and was raised by parents

Jason is in his mid-50s and was raised by parents of the Depression era. As a result, he is very risk adverse. He recently came into a very large amount of money, and he wants to put it where it will...

Q: Compare the return and liquidity of the various money market investments.

Compare the return and liquidity of the various money market investments. Give specific examples.

Q: What are the three types of risk that affect money market investments

What are the three types of risk that affect money market investments?

Q: Generally compare the money market investments described in this chapter in terms

Generally compare the money market investments described in this chapter in terms of their vulnerability to credit risk, interest rate risk, and liquidity risk. Provide some examples of specific secur...

Q: What steps should you take to determine the best allocation of your

What steps should you take to determine the best allocation of your money market investments? What factors should you consider in determining your allocation?

Q: Why is it important to have sufficient liquidity during a weak economy

Why is it important to have sufficient liquidity during a weak economy?

Q: Name some ways an individual might handle a cash flow deficiency.

Name some ways an individual might handle a cash flow deficiency. Which way would be preferable? Why?

Q: What two factors affect the return on short-term investments?

What two factors affect the return on short-term investments? What investments should you consider to achieve liquidity and an adequate return?

Q: Why do individuals use checking accounts? What is the disadvantage of

Why do individuals use checking accounts? What is the disadvantage of having funds in a checking account? Explain overdraft protection and stop payment orders. Are all bank fee structures the same?

Q: How does a debit card transaction differ from writing a check?

How does a debit card transaction differ from writing a check?

Q: How will overdraft protection affect bounced checks? Should you take advantage

How will overdraft protection affect bounced checks? Should you take advantage of this feature if your bank offers overdraft protection?

Q: What are Treasury securities? What is a T-bill?

What are Treasury securities? What is a T-bill? How is it denominated? How do you earn a return on a T-bill? How is the return calculated?

Q: How does your individual tolerance for risk impact money management?

How does your individual tolerance for risk impact money management?

Q: Explain why you should not invest in the stock market if you

Explain why you should not invest in the stock market if you expect to need the funds in the near future. Are stocks liquid?

Q: Explain the risks of using a credit card for your liquidity needs

Explain the risks of using a credit card for your liquidity needs.

Q: What are money market funds (MMFs)? What types of securities

What are money market funds (MMFs)? What types of securities do they invest in? What is commercial paper? Are MMFs risky investments? Are MMFs liquid?

Q: What is an asset management account? Discuss the advantages of such

What is an asset management account? Discuss the advantages of such an account as well as its requirements.

Q: What is an automatic transfer? How can this tool help you

What is an automatic transfer? How can this tool help you save money?

Q: Compare the interest rates offered on T-bills and CDs.

Compare the interest rates offered on T-bills and CDs. Which type of investment is more liquid? Why?

Q: What is a disadvantage of maintaining a very high level of liquidity

What is a disadvantage of maintaining a very high level of liquidity?

Q: Assume that your monthly expenses will not change over the next three

Assume that your monthly expenses will not change over the next three years, but you expect that the economy will be much weaker in about a year. Explain why you may need more liquidity even if your e...

Q: Explain why maintaining more liquidity during a weak economy is costly.

Explain why maintaining more liquidity during a weak economy is costly.

Q: Define money management. How does it differ from long-term

Define money management. How does it differ from long-term investment or long-term borrowing decisions?

Q: Recall from Chapter 2 that the Sampsons currently have about $300

Recall from Chapter 2 that the Sampsons currently have about $300 in cash and $1,700 in their checking account. This amount should be enough to cover upcoming bills. The Sampsons have just started sav...

Q: Recall from Chapter 2 that the Sampsons currently have about $300

Recall from Chapter 2 that the Sampsons currently have about $300 in cash and $1,700 in their checking account. This amount should be enough to cover upcoming bills. The Sampsons have just started sav...

Q: Rita is the office manager of a three-doctor practice.

Rita is the office manager of a three-doctor practice. Her brother, Juan, a recent college graduate, recently started working for a large insurance company that specializes in health insurance. In att...

Q: Explain the three types of credit. Under what conditions might a

Explain the three types of credit. Under what conditions might a consumer find each type useful?

Q: What are the advantages and disadvantages of using credit?

What are the advantages and disadvantages of using credit?

Q: Explain how a weak credit report can affect you.

Explain how a weak credit report can affect you.

Q: How often should you review your credit report from each of the

How often should you review your credit report from each of the three major credit bureaus? Why is this review beneficial?

Q: Name and explain at least three tactics used by identity thieves to

Name and explain at least three tactics used by identity thieves to obtain information.

Q: Discuss steps you can take to safeguard your personal information.

Discuss steps you can take to safeguard your personal information.

Q: Theft. What steps should you take if you become a victim

Theft. What steps should you take if you become a victim of identity theft?

Q: How did the Credit Card Accountability, Responsibility, and Disclosure Act

How did the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 change credit card access to students under the age of 21? Why was this change deemed necessary?

Q: What is your credit history? How does it impact your ability

What is your credit history? How does it impact your ability to borrow money?

Q: Explain how closing a credit card account can negatively impact your credit

Explain how closing a credit card account can negatively impact your credit score.

Q: Explain the advantages and disadvantages of using a credit counseling organization.

Explain the advantages and disadvantages of using a credit counseling organization.

Q: What are some factors to consider when using social media with respect

What are some factors to consider when using social media with respect to identity theft?

Q: The Equal Credit Opportunity Act prohibits creditors from denying credit for what

The Equal Credit Opportunity Act prohibits creditors from denying credit for what reasons? If you are denied credit, do you have the right to know the reason for the denial?

Q: How do utilities extend credit, and how can this credit help

How do utilities extend credit, and how can this credit help you establish a credit history?

Q: Name the three major credit bureaus. How do they score your

Name the three major credit bureaus. How do they score your credit rating? Will all three major credit bureaus always produce the same credit score?

Q: What are the six major areas of information that may be included

What are the six major areas of information that may be included on your credit report?

Q: What factors determine your credit score, and how are these factors

What factors determine your credit score, and how are these factors weighted by FICO?

Q: How does a Vantage Score differ from a FICO score?

How does a Vantage Score differ from a FICO score?

Q: How can you improve your credit score, and how long can

How can you improve your credit score, and how long can it take to erase a poor credit history

Q: What constitutes identity theft?

What constitutes identity theft?

Q: Is identity theft only perpetrated to acquire money, goods, or

Is identity theft only perpetrated to acquire money, goods, or services?

Q: Aside from the financial losses, what other negative impacts might a

Aside from the financial losses, what other negative impacts might a victim of identity theft encounter?

Q: Can identity theft occur through legitimate access to your personal information?

Can identity theft occur through legitimate access to your personal information? Explain.

Q: How will the new EMV technology help reduce identify theft?

How will the new EMV technology help reduce identify theft?

Q: The $2,000 credit card balance that the Sampsons are

The $2,000 credit card balance that the Sampsons are carrying, on which they are currently making the minimum payment due, has a credit limit of $10,000. The Sampsons have just received a letter from...

Q: The $2,000 credit card balance that the Sampsons are

The $2,000 credit card balance that the Sampsons are carrying, on which they are currently making the minimum payment due, has a credit limit of $10,000. The Sampsons have just received a letter from...

Q: What are three advantages of using a credit card? Can you

What are three advantages of using a credit card? Can you think of any disadvantages?

Q: What information will you need to supply when applying for credit?

What information will you need to supply when applying for credit? What kinds of attributes are creditors looking for? Do you need to have all these attributes to get credit?

Q: Describe the differences between a credit card like MasterCard or Visa and

Describe the differences between a credit card like MasterCard or Visa and a retail (or proprietary) card. How do credit and retail cards generate revenue? What is the biggest disadvantage of a propri...

Q: Discuss how credit cards offer incentives to use the cards. How

Discuss how credit cards offer incentives to use the cards. How else might credit card companies reward cardholders with excellent credit ratings?

Q: What is a grace period? How can you use it to

What is a grace period? How can you use it to your advantage?

Q: What is a cash advance? How are they commonly obtained?

What is a cash advance? How are they commonly obtained? Discuss interest rates and grace periods with regard to cash advances.

Q: How does the interest rate affect your credit payments? What is

How does the interest rate affect your credit payments? What is meant by simple interest? What is the annual percentage rate (APR), and when is it used?

Q: List some items that appear on the credit card statement. What

List some items that appear on the credit card statement. What accounts for the difference between your previous balance and your new balance?

Q: What should you consider when comparing credit cards?

What should you consider when comparing credit cards?

Q: List five tips for using credit cards wisely.

List five tips for using credit cards wisely.

Q: Why is paying your credit card balance in full so important?

Why is paying your credit card balance in full so important? What should you do if you can’t avoid credit card debt? Explain.

Q: What are the three methods used by financial institutions to calculate finance

What are the three methods used by financial institutions to calculate finance charges on outstanding credit card balances? Briefly describe how interest is computed under each method.

Q: Explain how you can impose your own limits on credit card spending

Explain how you can impose your own limits on credit card spending.

Q: Describe some of the key provisions of the Credit CARD Act.

Describe some of the key provisions of the Credit CARD Act.

Q: Describe the role of the Consumer Financial Protection Bureau.

Describe the role of the Consumer Financial Protection Bureau.

Q: How does a secured credit card differ from a standard credit card

How does a secured credit card differ from a standard credit card? Under what circumstances would you need a secured credit card?

Q: What is overlimit protection? Explain why consumers should use this feature

What is overlimit protection? Explain why consumers should use this feature sparingly.

Q: Explain how the Credit CARD Act changed the way credit card issuers

Explain how the Credit CARD Act changed the way credit card issuers assess late fees.

Q: Explain why getting a cash advance on your credit card is a

Explain why getting a cash advance on your credit card is a costly source of funds.

Q: Why should you review your credit card statement before paying the bill

Why should you review your credit card statement before paying the bill? What steps should you take if you discover an error?

Q: What is a credit limit? How can you increase your credit

What is a credit limit? How can you increase your credit limit?

Q: How might you eliminate the annual fees that are charged by some

How might you eliminate the annual fees that are charged by some credit cards?

Q: When is a finance charge applied to credit purchases? What is

When is a finance charge applied to credit purchases? What is the common range of interest rates on credit cards?

Q: Should you view credit cards as a source of funds? Why

Should you view credit cards as a source of funds? Why or why not? Why should you self-impose a tight credit limit?

Q: What credit management decisions should be included in your financial plan?

What credit management decisions should be included in your financial plan?

Q: Discuss some ways that charging large amounts on your credit cards might

Discuss some ways that charging large amounts on your credit cards might affect your overall financial planning.

Q: Propose possible solutions to reduce an excessive credit card balance.

Propose possible solutions to reduce an excessive credit card balance.

Q: What is a prepaid credit card? How does it differ from

What is a prepaid credit card? How does it differ from a secured credit card?

Q: List some typical incentives credit cards issuers offer to encourage you to

List some typical incentives credit cards issuers offer to encourage you to use their card.

Q: What credit restrictions apply to persons under age 21?

What credit restrictions apply to persons under age 21?

Q: Claire has invested $10,000 in an 18-month

Claire has invested $10,000 in an 18-month CD that pays 6.25%. How much interest will Claire receive at maturity?

Q: Dave has $20,000 excess cash to invest. He

Dave has $20,000 excess cash to invest. He can purchase a $20,000 T-bill for $19,400 or two $10,000 T-bills for $9,600 each. Which will give him the better return?

Q: Lauren purchased a $40,000 T-bill for $

Lauren purchased a $40,000 T-bill for $38,400. A few months later, Lauren sold the T-bill for $39,000. What was Lauren’s return on the T-bill?

Q: Brenda purchased a $30,000, 90-day T

Brenda purchased a $30,000, 90-day T-bill for $29,550. What will Brenda’s return be when the T-bill matures? What will her annualized rate be?

Q: Jason wants to open a checking account with a $100 deposit

Jason wants to open a checking account with a $100 deposit. Jason believes he will write 15 checks per month and use other banks’ ATMs 8 times a month. He will not be able to maintai...

Q: Julie wants to open a bank account with $75. Julie

Julie wants to open a bank account with $75. Julie estimates that she will write 20 checks per month and use her ATM card at the home bank. She will maintain a $200 balance. Which bank should Julie ch...

Q: Veronica plans to open a checking account with her $1,

Veronica plans to open a checking account with her $1,200 tax refund check. She believes she can maintain a $500 minimum balance. Also, she estimates that she will write 10 checks per month and will u...

Q: Randy, a student, has $500 to deposit in a

Randy, a student, has $500 to deposit in a new checking account, but Randy knows he will not be able to maintain a minimum balance. He will not use an ATM card, but will write a large number of checks...

Q: Paul has an account at St. Jerome Bank. He does

Paul has an account at St. Jerome Bank. He does not track his checking account balance in a checkbook register. Yesterday evening, he placed two checks in the mail for $156.66 and $238.94. Paul access...

Q: Name some special services that banks provide. How might you make

Name some special services that banks provide. How might you make use of them?

Q: Casey has $1,000 to invest in a certificate of

Casey has $1,000 to invest in a certificate of deposit. Her local bank offers her 2.5% on a 12-month FDIC-insured CD. A nonfinancial institution offers her 5.2% on a 12-month CD. What is the risk pre...

Q: Mike, a recent college graduate, opened a checking account with

Mike, a recent college graduate, opened a checking account with a local bank. He asked numerous questions before deciding on this bank, including inquiring about checking account fees and annual credi...

Q: What is a risk-free rate? Give an example of

What is a risk-free rate? Give an example of an investment with a risk-free rate. Why is there no risk?

Q: What is a risk premium? Who might take advantage of it

What is a risk premium? Who might take advantage of it?

Q: List and describe the four main types of nondepository financial institutions.

List and describe the four main types of nondepository financial institutions.

Q: Where do financial institutions obtain funds for making loans? How are

Where do financial institutions obtain funds for making loans? How are the interest rates for loans determined? Are the interest rates the same for all borrowers? Why or why not?

Q: What effect would a general change in current interest rates have on

What effect would a general change in current interest rates have on you as a depositor or borrower?

Q: In considering investments with different degrees of risk, what two factors

In considering investments with different degrees of risk, what two factors will influence an investor’s decision? What is an appropriate investment for an individual who needs funds in a short period...

Q: What is the term structure of interest rates? Why is this

What is the term structure of interest rates? Why is this concept important to an investor?

Q: What is monetary policy? What organization controls monetary policy in the

What is monetary policy? What organization controls monetary policy in the United States?

Q: Briefly discuss conditions that can cause a shift in the demand for

Briefly discuss conditions that can cause a shift in the demand for funds and a change in the interest rate.

Q: Explain why a weak economy may cause the risk premium to rise

Explain why a weak economy may cause the risk premium to rise.

Q: Why is a high-risk premium an advantage for the investor

Why is a high-risk premium an advantage for the investor? Why is a low-risk premium an advantage for an investor?

Q: Why is it important to reconcile your account balance every month?

Why is it important to reconcile your account balance every month?

Q: What is check float? How has check float changed due to

What is check float? How has check float changed due to electronic banking?

Q: What is the difference between a cashier’s check and a money order

What is the difference between a cashier’s check and a money order?

Q: List the advantages of paying your bills online.

List the advantages of paying your bills online.

Q: What is the risk premium of Metallica Financial Company’s 2-year

What is the risk premium of Metallica Financial Company’s 2-year interest rate of 12% given your local FDIC-insured bank only offers a 5% return for 2-year CDs? Why is Metallica offering a higher inte...

Q: What is a financial conglomerate? List some services financial conglomerates provide

What is a financial conglomerate? List some services financial conglomerates provide. Give some examples of financial conglomerates.

Q: List and describe some of the banking services offered by financial institutions

List and describe some of the banking services offered by financial institutions.

Q: When would you use a traveler’s check? What are the advantages

When would you use a traveler’s check? What are the advantages of using traveler’s checks?

Q: Describe and compare the three types of depository institutions.

Describe and compare the three types of depository institutions.

Q: Why do some investors pursue higher-risk investments when their income

Why do some investors pursue higher-risk investments when their income falls during economic downturns? What is wrong with this strategy?

Q: What is the difference between a debit card and a credit card

What is the difference between a debit card and a credit card?

Q: Steve just received his first paycheck and wants to open a checking

Steve just received his first paycheck and wants to open a checking account. There are five banks in his hometown. What factors should Steve consider when choosing a bank?

Q: When making banking decisions, why should you be concerned about current

When making banking decisions, why should you be concerned about current interest rates?

Q: How is the risk premium calculated?

How is the risk premium calculated?

Q: What is the likely impact of increased government borrowing on market rates

What is the likely impact of increased government borrowing on market rates of interest?

Q: Recall that the Sampsons have resolved to save a total of $

Recall that the Sampsons have resolved to save a total of $800 per month. Dave and Sharon notice that their local bank offers the certificates of deposit listed in the following table; they now need t...

Q: Mary’s last bank statement showed an ending balance of $168.

Mary’s last bank statement showed an ending balance of $168.51. This month, she deposited $600.00 in her account and withdrew a total of $239.00. Furthermore, Mary wrote a total of five checks, two of...

Q: Recall that the Sampsons have resolved to save a total of $

Recall that the Sampsons have resolved to save a total of $800 per month. Dave and Sharon notice that their local bank offers the certificates of deposit listed in the following table; they now need t...

Q: Recall that the Sampsons have resolved to save a total of $

Recall that the Sampsons have resolved to save a total of $800 per month. Dave and Sharon notice that their local bank offers the certificates of deposit listed in the following table; they now need t...

Q: Teresa has just opened a NOW account that pays 3.5

Teresa has just opened a NOW account that pays 3.5% interest. If she maintains a minimum balance of $500 for the next 12 months, how much interest will she earn?

Q: Lisa is depositing $2,500 in a six month CD

Lisa is depositing $2,500 in a six month CD that pays 4.25% interest. How much interest will she accrue if she holds the CD until maturity?

Q: Travis has invested $3,000 in a three month CD

Travis has invested $3,000 in a three month CD at 4%. How much will Travis have when the CD matures?

Q: What is the opportunity cost of having excessive amounts of liquid funds

What is the opportunity cost of having excessive amounts of liquid funds?

Q: Alys makes $450 per week. How much will be withheld

Alys makes $450 per week. How much will be withheld from her weekly check for Social Security tax? Medicare tax? Total FICA taxes?

Q: Why is it important to track your spending before creating a budget

Why is it important to track your spending before creating a budget?

Q: List one reason why the time value of money is an important

List one reason why the time value of money is an important concept.

Q: What is the formula for determining the future value of a single

What is the formula for determining the future value of a single sum when using the future value interest factor table? What information must be known to find the correct future value interest factor?...

Q: What is discounting?

What is discounting?

Q: In questions a through d, indicate whether you would use the

In questions a through d, indicate whether you would use the table for determining the future value of a single sum (FVIF), the present value of a single sum (PVIF), the future value of an annuity (FV...

Q: What formula is used to determine the present value of an annuity

What formula is used to determine the present value of an annuity? What does the present value of an annuity indicate?

Q: How would you modify the FVA equation to determine how much you

How would you modify the FVA equation to determine how much you would need to save each month to have a specific amount at a specific time in the future?

Q: Jordan sold a stock that he held for 11 months at a

Jordan sold a stock that he held for 11 months at a capital gain of $10,000. He is in the 25% marginal tax bracket. What taxes will he pay on this gain?

Q: At the beginning of the year, Arianne had a net worth

At the beginning of the year, Arianne had a net worth of $5,000. During the year she set aside $100 per month from her paycheck for savings and borrowed $500 from her cousin that she must pay back in...

Q: What is gross income? List some types of income that are

What is gross income? List some types of income that are included in gross income. What are some types of payments that you might receive that would not be included in gross income?

Q: Jarrod (from Problem 7) has an old TV worth about

Jarrod (from Problem 7) has an old TV worth about $100. Jarrod’s other assets total about $150. What is Jarrod’s debt-to-asset ratio? What does this indicate about Jarrod’s financial position? Data f...

Q: What are capital gains? When is a capital gain considered short

What are capital gains? When is a capital gain considered short term? When is it considered long term? Why is this distinction important?

Q: Which of the following would be included in gross income?

Which of the following would be included in gross income? Salary Prizes Business income Tips Veteran’s benefits Welfare benefits Alimony Dividend income Child support Interest income

Q: Distinguish between interest income and dividend income. Does their treatment differ

Distinguish between interest income and dividend income. Does their treatment differ for tax purposes?

Q: Are your total medical expenses deductible? Explain.

Are your total medical expenses deductible? Explain.

Q: Define compounding. How is it used in financial planning?

Define compounding. How is it used in financial planning?

Q: Do investors in a low tax bracket or a high tax bracket

Do investors in a low tax bracket or a high tax bracket benefit to a greater degree from the long-term capital gains tax? Explain.

Q: Which form must be filed with the IRS for itemized deductions?

Which form must be filed with the IRS for itemized deductions?

Q: What is the purpose of income tax? Who administers the federal

What is the purpose of income tax? Who administers the federal tax system?

Q: Anna has just received a gift of $500 for her graduation

Anna has just received a gift of $500 for her graduation, which increased her net worth by $500. If she uses the money to purchase a tablet computer, how will her net worth be affected? If she invests...

Q: How did the Affordable Care Act of 2010 affect tax filing?

How did the Affordable Care Act of 2010 affect tax filing?

Q: In the past, the federal government has implemented tax relief initiatives

In the past, the federal government has implemented tax relief initiatives for various reasons. List some recent examples of targeted tax relief.

Q: How are same-sex couples treated for tax purposes?

How are same-sex couples treated for tax purposes?

Q: What is liquidity? What two factors are considered in managing liquidity

What is liquidity? What two factors are considered in managing liquidity? How are they used?

Q: What is an earned income credit? Explain why this credit is

What is an earned income credit? Explain why this credit is sometimes called a negative income tax.

Q: How are FICA taxes for self-employed individuals handled?

How are FICA taxes for self-employed individuals handled?

Q: What is a standard deduction? What is the standard deduction based 

What is a standard deduction? What is the standard deduction based on?

Q: What two methods can be used to calculate future values?

What two methods can be used to calculate future values?

Q: How is taxable income calculated?

How is taxable income calculated?

Q: What is a marginal tax bracket? Why is it important?

What is a marginal tax bracket? Why is it important?

Q: Julia brings home $1,600 per month after taxes.

Julia brings home $1,600 per month after taxes. Julia’s rent is $350 per month, her utilities are $100 per month, and her car payment is $250 per month. Julia is currently paying $200 per month to her...

Q: What is the difference between a tax deduction and a tax credit

What is the difference between a tax deduction and a tax credit? Which is more valuable?

Q: List some common types of tax credits

List some common types of tax credits

Q: Dave and Sharon Sampson want to determine their taxes for the current

Dave and Sharon Sampson want to determine their taxes for the current year. Dave will earn $48,000 this year, while Sharon’s earnings from her part-time job will be $12,000. Neither Dave nor Sharon co...

Q: Dave and Sharon Sampson want to determine their taxes for the current

Dave and Sharon Sampson want to determine their taxes for the current year. Dave will earn $48,000 this year, while Sharon’s earnings from her part-time job will be $12,000. Neither...

Q: Ryan and Nicole have the following assets: Fair

Ryan and Nicole have the following assets: Fair Market Value Home……………………..$85,000 Cars…………………….……22,000 Furniture…………………..14,000 Stocks……………………….1...

Q: What factors influence income? Why is an accurate estimate of expenses

What factors influence income? Why is an accurate estimate of expenses important in budget planning? How do tax laws affect the budgeting process?

Q: Ryan and Nicole (from Problem 9) have the following liabilities

Ryan and Nicole (from Problem 9) have the following liabilities: / What are their current liabilities? What are their long-term liabilities? What is their net worth?

Q: The purpose of this exercise is to introduce you to one of

The purpose of this exercise is to introduce you to one of the online tools that are available to help with budgeting and financial planning. Go to http://www.mint.com, and review the information avai...

Q: Cheryl wants to have $2,000 in spending money to

Cheryl wants to have $2,000 in spending money to take on a trip to Disney World in three years. How much must she deposit now in a savings account that pays 5% per year to have the money she needs in...

Q: How is your net worth calculated? Why is it important?

How is your net worth calculated? Why is it important?

Q: Amy and Vince want to save $7,000 so that

Amy and Vince want to save $7,000 so that they can take a trip to Europe in four years. How much must they save each month to have the money they need if they can get 8% per year, compounded monthly,...

Q: Jasmine has been saving for the past five years for a European

Jasmine has been saving for the past five years for a European vacation. Her vacation account currently has $5,000, and she is ready to book her trip. If she takes the vacation, what impact will it ha...

Q: What are the three elements of planning to protect your assets?

What are the three elements of planning to protect your assets? Define each element.

Q: Based on the information in Problems 9 and 10, what is

Based on the information in Problems 9 and 10, what is Ryan and Nicole’s liquidity ratio? What is their debt-to-asset ratio? Comment on each ratio. Data from Problem 9: Ryan and Nicole have the fol...

Q: How does each element of financial planning affect your cash flows?

How does each element of financial planning affect your cash flows?

Q: Jason and Mia are in their early 20s and have been married

Jason and Mia are in their early 20s and have been married for three years. They are eager to purchase their first house, but they do not have sufficient money for a down payment. Mia’s Uncle Chris ha...

Q: What are the six steps in developing a financial plan?

What are the six steps in developing a financial plan?

Q: Tracy is single and had an adjusted gross income of $37

Tracy is single and had an adjusted gross income of $37,000 in 2015. Tracy also has the following items: Unreimbursed medical expenses…………$3,000 State income tax…………………………………..1,850 Interest expense...

Q: How do your financial goals fit into your financial plan? Why

How do your financial goals fit into your financial plan? Why should goals be realistic? What are three time frames for goals? Give an example of a goal for each time frame.

Q: Emma’s adjusted gross income is $24,200. She has

Emma’s adjusted gross income is $24,200. She has $1,800 in unreimbursed medical expenses. How much in medical expenses can Emma claim as an itemized deduction?

Q: Juan would like to give his newly born grandson a gift of

Juan would like to give his newly born grandson a gift of $10,000 on his 18th birthday. Juan can earn 7% annual interest on a certificate of deposit. How much must he deposit now to achieve his goal?...

Q: Julia (from problem 1) is considering trading in her car

Julia (from problem 1) is considering trading in her car for a new one. Her new car payment will be $325 per month, and her insurance cost will increase by $60 per month. Julia determines that her oth...

Q: Brian makes $27,000 per year. How much can

Brian makes $27,000 per year. How much can he expect to contribute to FICA taxes in 2015? How much will his employer contribute?

Q: Name some factors that might affect your current financial position.

Name some factors that might affect your current financial position.

Q: Dawn’s adjusted gross income is $16,700. Dawn has

Dawn’s adjusted gross income is $16,700. Dawn has $1,800 in unreimbursed medical expenses. How much can Dawn claim as an itemized deduction?

Q: Jill has decided to save 50% of her income for retirement

Jill has decided to save 50% of her income for retirement. Her father told her she needed to set a different goal. Why do you think he gave her this advice?

Q: Jauna made $178,400 in salary during 2015. How

Jauna made $178,400 in salary during 2015. How much were her FICA withholdings for that year?

Q: Once your financial plan has been implemented, what is the next

Once your financial plan has been implemented, what is the next step? Why is it important?

Q: The IRS tax code allows for the deduction of expenses incurred in

The IRS tax code allows for the deduction of expenses incurred in traveling to a job interview. Sean, Erica, and their two children have used this deduction to fund their vacations for the last eight...

Q: Why might you need to revise your financial plan?

Why might you need to revise your financial plan?

Q: Daniel has a marginal tax rate of 25%. He suddenly realizes

Daniel has a marginal tax rate of 25%. He suddenly realizes that he neglected to include a $1,000 tax deduction. How will this oversight affect his taxes?

Q: List some information available on the Internet that might be useful for

List some information available on the Internet that might be useful for financial planning. Describe one way you might use some of this information for financial planning purposes.

Q: Dave and Sharon Sampson are 30 years old and have two children

Dave and Sharon Sampson are 30 years old and have two children, who are five and six years old. Since marrying seven years ago, the Sampsons have relied on Dave’s salary,...

Q: Winners of the Georgia Lotto drawing are given the choice of receiving

Winners of the Georgia Lotto drawing are given the choice of receiving the winning amount divided equally over 20 years or as a lump-sum cash option amount. The cash option amount is determined by dis...

Q: If Daniel (from problem 12) had forgotten a $1

If Daniel (from problem 12) had forgotten a $1,000 tax credit (instead of a $1,000 tax deduction), how would his taxes be affected?

Q: What is an opportunity cost? What might be some of the

What is an opportunity cost? What might be some of the opportunity costs of spending $10 each week on the lottery?

Q: Assume that you have established a plan to achieve a particular level

Assume that you have established a plan to achieve a particular level of wealth in three years, but the economic conditions suddenly cause both your existing income and the value of your existing asse...

Q: Using the information in problem 14, if Tracy’s standard deduction is

Using the information in problem 14, if Tracy’s standard deduction is $6,300 and her exemption is $4,000, what is her taxable income?

Q: During a weak economy jobs are scarce, so some individuals may

During a weak economy jobs are scarce, so some individuals may consider starting their own businesses. What is the disadvantage of this idea during a weak economy?

Q: Margo is in the 39.6% marginal tax bracket.

Margo is in the 39.6% marginal tax bracket. What is her tax liability on dividend income of $6,000?

Q: How can peer pressure impact your spending habits?

How can peer pressure impact your spending habits?

Q: Nick and Nora are married and have three children in college.

Nick and Nora are married and have three children in college. They have an adjusted gross income of $47,400. If their standard deduction is $12,600, itemized deductions are $14,200, and they get an ex...

Q: Explain why it is important to select the right university or college

Explain why it is important to select the right university or college.

Q: Name three classifications of assets. Briefly define and give examples of

Name three classifications of assets. Briefly define and give examples of each.

Q: Using the information in problem 10, if Nick and Nora’s itemized

Using the information in problem 10, if Nick and Nora’s itemized deductions increase by $2,000, how will their taxable income be affected?

Q: How can an understanding of personal finance benefit you?

How can an understanding of personal finance benefit you?

Q: What are bonds? What are stocks? What are mutual funds

What are bonds? What are stocks? What are mutual funds? Describe how each of these provides a return on your investment.

Q: When does your net worth increase? Will the purchase of additional

When does your net worth increase? Will the purchase of additional assets always increase your net worth? Why or why not?

Q: Michelle is attending college and has a part-time job.

Michelle is attending college and has a part-time job. Once she finishes college, Michelle would like to relocate to a metropolitan area. She wants to build her savings so that she will have a “nest e...

Q: What is the liquidity ratio? What does it indicate? How

What is the liquidity ratio? What does it indicate? How is the debt-to-asset ratio calculated? What does a high debt ratio indicate? How is your savings rate determined? What does it indicate?

Q: Explain in logical terms why values of assets such as homes and

Explain in logical terms why values of assets such as homes and stocks may decline during a weak economy.

Q: Explain in logical terms why a weak economy can cause the net

Explain in logical terms why a weak economy can cause the net worth of individuals to decline.

Q: Explain how credit card usage can impact your spending habits.

Explain how credit card usage can impact your spending habits.

Q: Jason’s car was just stolen, and the police informed him that

Jason’s car was just stolen, and the police informed him that they will probably be unable to recover it. His insurance will not cover the theft. Jason has a net worth of $3,000, all of which is easil...

Q: Jeremey wants to increase his net worth. What advice would you

Jeremey wants to increase his net worth. What advice would you give him?

Q: What is a budget? What is the purpose of a budget

What is a budget? What is the purpose of a budget? How can a budget help when you are anticipating cash shortages or a cash surplus?

Q: How do you assess the accuracy of your budget? How can

How do you assess the accuracy of your budget? How can finding forecasting errors improve your budget?

Q: How are unexpected expenses and liquidity related?

How are unexpected expenses and liquidity related?

Q: Stephen is in a 15% marginal tax bracket. In 2015

Stephen is in a 15% marginal tax bracket. In 2015, he sold stock that he had held for nine months for a gain of $1,900. How much tax must he pay on this capital gain? How much would the tax be if he h...

Q: How does your choice of career impact your financial plan?

How does your choice of career impact your financial plan?

Q: Describe two ways real estate might provide a return on an investment

Describe two ways real estate might provide a return on an investment.

Q: What are liabilities? Define current liabilities and long-term liabilities

What are liabilities? Define current liabilities and long-term liabilities.

Q: How does a personal balance sheet help you track your net worth

How does a personal balance sheet help you track your net worth?

Q: What three financial characteristics can be monitored by analyzing your personal balance

What three financial characteristics can be monitored by analyzing your personal balance sheet?

Q: Justin’s stock portfolio increased in value during the year, and the

Justin’s stock portfolio increased in value during the year, and the balance on his mortgage declined. What happened to his net worth over the course of the year?

Q: Lena has just become eligible to participate in her company’s retirement plan

Lena has just become eligible to participate in her company’s retirement plan. Her company does not match contributions, but the plan does average an annual return of 12%. Lena is 40 and plans to work...

Q: Heather purchased a new car for $18,000 three years

Heather purchased a new car for $18,000 three years ago and listed the new car as an asset with a value of $18,000 on her personal balance sheet. She was able to borrow the entire $18,000 to purchase...

Q: What are two factors that impact your cash inflows?

What are two factors that impact your cash inflows?

Q: What two personal financial statements are most important to personal financial planning

What two personal financial statements are most important to personal financial planning?

Q: Define cash inflows and cash outflows and identify some sources of each

Define cash inflows and cash outflows and identify some sources of each. How are net cash flows determined?

Q: Ricardo wants a career where he can help people. He also

Ricardo wants a career where he can help people. He also wants to travel and see the world. He is thinking about becoming a personal care aide. What advice would you give him?

Q: Identify some factors that affect cash inflows.

Identify some factors that affect cash inflows.

Q: What are the six key components of a financial plan?

What are the six key components of a financial plan?

Q: List your monthly cash outflows. Will everyone have similar cash outflows

List your monthly cash outflows. Will everyone have similar cash outflows?

Q: Describe the process of creating an annual budget.

Describe the process of creating an annual budget.

Q: Suppose you want to change your budget to increase your savings.

Suppose you want to change your budget to increase your savings. What could you do?

Q: How do you think people who do not create a budget may

How do you think people who do not create a budget may deal with cash deficiencies? How can this affect their personal relationships?

Q: ABC Stacey would like to have $1 million available to her

ABC Stacey would like to have $1 million available to her at retirement. Her investments have an average annual return of 11%. If she makes contributions of $300 per month, will she reach her goal whe...

Q: What is a personal balance sheet?

What is a personal balance sheet?

Q: Angela analyzes her personal budget and decides that she can reduce her

Angela analyzes her personal budget and decides that she can reduce her recreational spending by $50 per month. How much will that increase her annual savings? What will her annual savings be now?

Q: If Angela is saving $350 per month, what is her

If Angela is saving $350 per month, what is her savings rate (i.e., savings as a percentage of disposable income)?

Q: Matt is self-employed as a carpenter. He made $

Matt is self-employed as a carpenter. He made $42,000 after expenses in 2015. How much did he contribute to FICA taxes?

Q: Jarrod is a college student. All of Jarrod’s disposable income is

Jarrod is a college student. All of Jarrod’s disposable income is used to pay his college-related expenses. Although he has no liabilities (Jarrod is on a scholarship), he does have a credit card that...

Q: Angela earns $2,170 per month before taxes in her

Angela earns $2,170 per month before taxes in her full-time job and $900 before taxes in her part-time job. About $650 per month is needed to pay taxes. What is Angela’s disposable income? Why is it i...

Q: Angela (from problem 1) inspects her checkbook and her credit

Angela (from problem 1) inspects her checkbook and her credit card bills and determines that she has the following monthly expenses: Rent………..……………….….$500 Internet……………………………30 Electricity………………………....

Q: Stuart is in the 25% tax bracket. Recently, he

Stuart is in the 25% tax bracket. Recently, he sold stock that he had held longer than a year for a gain of $20,000. How much tax will Stuart pay on this gain?

Q: Angela makes a budget based on her personal cash flow statement.

Angela makes a budget based on her personal cash flow statement. In two months, she must pay $375 for tags and taxes on her car. How will this payment affect her net cash flow for that month? Suggest...

Q: From the information in Problems 1 through 3, how much can

From the information in Problems 1 through 3, how much can Angela expect to save in the next 12 months? Data from Problem 1: Angela earns $2,170 per month before taxes in her full-time job and $900...

Q: The Sampsons realize that the first step toward achieving their financial

The Sampsons realize that the first step toward achieving their financial goals is to create a budget capturing their monthly cash inflows and outflows. Dave and Sharon’s combined in...

Q: Jesse has just learned that she won $1 million in her

Jesse has just learned that she won $1 million in her state lottery. She has the choice of receiving a lump-sum payment of $312,950 or $50,000 per year for the next 20 years. Jesse can invest the lump...

Q: The Sampsons realize that the first step toward achieving their financial goals

The Sampsons realize that the first step toward achieving their financial goals is to create a budget capturing their monthly cash inflows and outflows. Dave and Sharon’s combined income is now about...

Q: The Sampsons realize that the first step toward achieving their financial goals

The Sampsons realize that the first step toward achieving their financial goals is to create a budget capturing their monthly cash inflows and outflows. Dave and Sharon’s combined in...

Q: Define personal financial planning. What types of decisions are involved in

Define personal financial planning. What types of decisions are involved in a personal financial plan?

Q: The Sampsons realize that the first step toward achieving their financial

The Sampsons realize that the first step toward achieving their financial goals is to create a budget capturing their monthly cash inflows and outflows. Dave and Sharon’s combined income is now about...

Q: Kirk can take his $1,000 income tax refund and

Kirk can take his $1,000 income tax refund and invest it in a 36-month certificate of deposit at 7%, compounded monthly, or he can use the money to purchase a home entertainment system and put $30 a m...

Q: Cindy and Jack have always practiced good financial habits, in particular

Cindy and Jack have always practiced good financial habits, in particular, developing and living by a budget. They are currently in the market to purchase a new car and have budgeted $300 per month fo...

Q: Twins Jessica and Joshua, both 25, graduated from college and

Twins Jessica and Joshua, both 25, graduated from college and began working in the family restaurant business. The first year, Jessica began putting $2,000 per year in an individual retirement account...

Q: Describe some instances when determining the present value of an amount is

Describe some instances when determining the present value of an amount is useful.

Q: In determining the future value of an annuity to be invested monthly

In determining the future value of an annuity to be invested monthly over a five-year period, what number of periods should you use?

Q: Lakesha recently found out that her credit card balance was compounded daily

Lakesha recently found out that her credit card balance was compounded daily rather than monthly. How will this compounding frequency impact the outstanding debt she owes on her credit card?

Q: Jerry would like to save the same amount every month until he

Jerry would like to save the same amount every month until he turns 40. Which time value concept should he use to compute the value of his savings at that time?

Q: Jen spends $10 per week on lottery tickets. If she

Jen spends $10 per week on lottery tickets. If she takes the same amount that she spends on lottery tickets and invests it each week for the next five years at 10%, compounded weekly, how much will sh...

Q: Winston will receive $100,000 on his 25th birthday.

Winston will receive $100,000 on his 25th birthday. Which time value of money concept would you use to compute the value of his future inheritance?

Q: Why do most people need access to financing at some point in

Why do most people need access to financing at some point in their life?

Q: Jim accepted a $3,000 loan from his Uncle Kurt

Jim accepted a $3,000 loan from his Uncle Kurt. Uncle Kurt agreed to defer payments for two years until after Jim graduates from college. How much will Jim owe in two years if his uncle charges him 6%...

Q: Elizabeth borrowed $1,000 from her credit union. She

Elizabeth borrowed $1,000 from her credit union. She has to make only one payment at the end of the loan. How much will she owe at the end of the year if the credit union charges her 5% interest?

Q: Kyle has $1,000 in cash received for high school

Kyle has $1,000 in cash received for high school graduation gifts from various relatives. He wants to invest it in a certificate of deposit (CD) so that he will have a down payment on a car when he gr...

Q: What is the time value of money? How is it related

What is the time value of money? How is it related to opportunity costs?

Q: Sandra wants to deposit $100 each year for her son.

Sandra wants to deposit $100 each year for her son. If she places it in a savings account that pays 5% per year, what amount will be in the account in 20 years?

Q: Luis wants to know how much he will have available to spend

Luis wants to know how much he will have available to spend on his trip to Belize in three years if he deposits $3,000 today at an annual interest rate of 9%.

Q: How much will you have in 36 months if you invest $

How much will you have in 36 months if you invest $75 a month at 10% annual interest?

Q: Emily and Paul are married and filed a joint return for 2015

Emily and Paul are married and filed a joint return for 2015. The standard deduction for their filing status is $12,600. They have the following itemized deductions: Medical bills above the 10% limit...

Q: DeMarcus wants to retire with $1 million in savings by the

DeMarcus wants to retire with $1 million in savings by the time he turns 60. He is currently 18 years old. How much will he need to save each year, assuming he can get a 12% annual return on his inves...

Q: Recall that Dave and Sharon Sampson established a plan to save $

Recall that Dave and Sharon Sampson established a plan to save $300 per month (or $3,600 per year) for their children’s education. Their oldest child is six years old and will begin college in 12 year...

Q: What is the primary objective of investing? What else must be

What is the primary objective of investing? What else must be considered? What potential investment vehicles are available?

Q: Recall that Dave and Sharon Sampson established a plan to save $

Recall that Dave and Sharon Sampson established a plan to save $300 per month (or $3,600 per year) for their children’s education. Their oldest child is six years old and will begin college in 12 year...

Q: Recall that Dave and Sharon Sampson established a plan to save $

Recall that Dave and Sharon Sampson established a plan to save $300 per month (or $3,600 per year) for their children’s education. Their oldest child is six years old and will begin...

Q: Recall that Dave and Sharon Sampson established a plan to save $

Recall that Dave and Sharon Sampson established a plan to save $300 per month (or $3,600 per year) for their children’s education. Their oldest child is six years old and will begin...

Q: Your childhood friend, Brad Brooks, has asked you to

Your childhood friend, Brad Brooks, has asked you to help him gain control of his personal finances. Single and 30 years old, Brad is employed as a salesperson for a technology company. His annual sal...

Q: To what types of cash flows is the time value of money

To what types of cash flows is the time value of money concept most commonly applied?

Q: Your childhood friend, Brad Brooks, has asked you to

Your childhood friend, Brad Brooks, has asked you to help him gain control of his personal finances. Single and 30 years old, Brad is employed as a salesperson for a technology company. His annual sa...

Q: Your childhood friend, Brad Brooks, has asked you to help

Your childhood friend, Brad Brooks, has asked you to help him gain control of his personal finances. Single and 30 years old, Brad is employed as a salesperson for a technology company. His annual sal...

Q: Your childhood friend, Brad Brooks, has asked you to help

Your childhood friend, Brad Brooks, has asked you to help him gain control of his personal finances. Single and 30 years old, Brad is employed as a salesperson for a technology company. His annual sal...

Q: How is adjusted gross income determined?

How is adjusted gross income determined?

Q: Sandy and Phil have recently married and are both in their early

Sandy and Phil have recently married and are both in their early 20s. In establishing their financial goals, they determine that their three long-term goals are to purchase a home, to provide their ch...

Q: Mia has $3,000 in assets, a finance company

Mia has $3,000 in assets, a finance company loan for $500, and an outstanding credit card balance of $135. Mia’s monthly cash inflows are $2,000, and she has monthly expenses of $1,650. What is Mia’s...

Q: What are itemized deductions? How do itemized deductions relate to standard

What are itemized deductions? How do itemized deductions relate to standard deductions? Provide some examples of itemized deductions.

Q: What is an exemption? How many exemptions may a taxpayer claim

What is an exemption? How many exemptions may a taxpayer claim?

Q: List some of the primary features of the American Taxpayers Relief Act

List some of the primary features of the American Taxpayers Relief Act of 2012.

Q: What is a Coverdell Savings Account? List some expenses that can

What is a Coverdell Savings Account? List some expenses that can be paid with Coverdell funds.

Q: What is a Section 529 College Savings Plan? What are the

What is a Section 529 College Savings Plan? What are the income limits for parents who desire to take advantage of this plan?

Q: What is an annuity?

What is an annuity?

Q: Why is it important to understand the tax consequences of your financial

Why is it important to understand the tax consequences of your financial decisions?

Q: What are FICA taxes? Describe the two portions of FICA and

What are FICA taxes? Describe the two portions of FICA and explain what they pay for. Who pays FICA?

Q: Who typically files Form 1040EZ? Which tax form do most other

Who typically files Form 1040EZ? Which tax form do most other individual taxpayers file?

Q: What are the five filing statuses? Briefly describe how your filing

What are the five filing statuses? Briefly describe how your filing status is determined. What parts of the tax form are affected by your filing status?

Q: List the information provided in corporate bond quotations.

List the information provided in corporate bond quotations.

Q: Recall that the Sampsons have a goal of saving about $300

Recall that the Sampsons have a goal of saving about $300 per month ($3,600 per year) for their children’s college education. They want to estimate how this money would grow over tim...

Q: Joel (from Problem 1) is in the 25%

Joel (from Problem 1) is in the 25% tax bracket. What amount of taxes will he pay on his capital gain if he held the stock for less than a year? Data from Problem 1: Joel purchased 100 shares of st...

Q: Emma bought a stock a year ago for $53 per share

Emma bought a stock a year ago for $53 per share. She received no dividends on the stock and sold the stock today for $38 per share. What is Emma’s return on the stock?

Q: Tammy has $3,500 that she wants to invest in

Tammy has $3,500 that she wants to invest in stock. She believes she can earn a 12% annual return. What would be the value of Tammy’s investment in 10 years if she is able to achieve her goal?

Q: Dawn decides to invest $2,000 each year in stock

Dawn decides to invest $2,000 each year in stock at the end of each of the next five years. She believes she can earn a 9% return over that time period. How much will Dawn’s investment be worth at the...

Q: Floyd wants to invest the $15,000 he received from

Floyd wants to invest the $15,000 he received from his grandfather’s estate. He wants to use the money to finance his education when he pursues his doctorate in five years. What amount will he have in...

Q: Morris will start investing $1,500 a year in stocks

Morris will start investing $1,500 a year in stocks. He feels he can average a 12% return. If he follows this plan, how much will he accumulate in 5 years? In 10 years? In 20 years?

Q: Vera is an 85­year­old widow and retiree from

Vera is an 85­year­old widow and retiree from a large corporation. Her former employer recently changed the health care coverage for retirees to an HMO. Vera is having difficulty with her knees and ha...

Q: What is a high deductible health plan? How is this type

What is a high deductible health plan? How is this type of plan related to an HSA?

Q: What is Medigap insurance?

What is Medigap insurance?

Q: What is the purpose of disability income insurance? Why might younger

What is the purpose of disability income insurance? Why might younger individuals consider purchasing disability insurance?

Q: The Sampsons have one remaining insurance need: life insurance. They

The Sampsons have one remaining insurance need: life insurance. They have decided to purchase term life insurance. They want a life insurance policy that will provide for the family in the event of Da...

Q: Dave and Sharon Sampson are assessing the amount of health insurance and

Dave and Sharon Sampson are assessing the amount of health insurance and disability income insurance they have. The Sampsons’ health insurance is provided by a health maintenance organization (HMO)....

Q: Dave and Sharon Sampson are assessing the amount of health insurance and

Dave and Sharon Sampson are assessing the amount of health insurance and disability income insurance they have. The Sampsons’ health insurance is provided by a health maintenance organization (HMO)....

Q: Dave and Sharon Sampson are assessing the amount of health insurance and

Dave and Sharon Sampson are assessing the amount of health insurance and disability income insurance they have. The Sampsons’ health insurance is provided by a health maintenance organization (HMO)....

Q: What is your first task when considering buying a home? Why

What is your first task when considering buying a home? Why is this step important? How can a real estate broker help you?

Q: What should you consider when determining an affordable down payment and monthly

What should you consider when determining an affordable down payment and monthly mortgage payments?

Q: How do price, convenience of the location, and maintenance affect

How do price, convenience of the location, and maintenance affect your home buying decisions?

Q: Why do insurance costs and taxes vary among homes?

Why do insurance costs and taxes vary among homes?

Q: What is the main factor in determining a home’s resale value?

What is the main factor in determining a home’s resale value? How can you predict a home’s resale value? Who pays commissions when a home is sold?

Q: Once you have reduced your list of three or four homes down

Once you have reduced your list of three or four homes down to one home, what is your next step? Should you offer the price the seller is asking? Describe how you would conduct a market analysis of th...

Q: Why does the value of a home depend on the demand for

Why does the value of a home depend on the demand for homes? What factors influence the demand for homes?

Q: What is term insurance? What factors determine the premium for term

What is term insurance? What factors determine the premium for term insurance? What is decreasing-term insurance?

Q: How do lenders protect their interest in a home? Describe two

How do lenders protect their interest in a home? Describe two governmentbacked home loan programs.

Q: What are closing costs? List and briefly describe the different closing

What are closing costs? List and briefly describe the different closing costs you might incur when applying for a mortgage.

Q: Describe the characteristics of a fixed-rate mortgage. Why do

Describe the characteristics of a fixed-rate mortgage. Why do certain homeowners prefer a fixed-rate mortgage to an adjustable-rate mortgage?

Q: List the three things that determine the amount of the monthly mortgage

List the three things that determine the amount of the monthly mortgage payment. Explain how each affects the payment.

Q: Discuss the characteristics of an adjustable-rate mortgage. What influences

Discuss the characteristics of an adjustable-rate mortgage. What influences your choice of a fixed- or adjustable-rate mortgage?

Q: What are the costs of renting a home?

What are the costs of renting a home?

Q: Describe some of the costs of buying a home. Are there

Describe some of the costs of buying a home. Are there potential tax savings associated with buying a home?

Q: Describe the features of graduated payment and balloon payment mortgages.

Describe the features of graduated payment and balloon payment mortgages.

Q: What is mortgage refinancing? Are there any disadvantages to refinancing?

What is mortgage refinancing? Are there any disadvantages to refinancing?

Q: Explain how a weak economy affects the values of homes.

Explain how a weak economy affects the values of homes.

Q: Briefly describe some of the term insurance options

Briefly describe some of the term insurance options

Q: What is private mortgage insurance? How does it impact the cost

What is private mortgage insurance? How does it impact the cost of your mortgage?

Q: What are some of the risks associated with buying a home?

What are some of the risks associated with buying a home?

Q: What is a Qualified Mortgage?

What is a Qualified Mortgage?

Q: What is a home inspection? Why is it important for you

What is a home inspection? Why is it important for you to have a home inspected before purchase?

Q: What is an FHA loan? How does the FHA or VA

What is an FHA loan? How does the FHA or VA help lower-income individuals buy homes?

Q: What is an escrow account? How do escrow accounts help protect

What is an escrow account? How do escrow accounts help protect the lender?

Q: What is a balloon payment mortgage? When is this type of

What is a balloon payment mortgage? When is this type of mortgage useful?

Q: When performing an economic analysis of stocks, what economic factors are

When performing an economic analysis of stocks, what economic factors are most closely watched?

Q: What factors should you consider when selecting which stockbroker to use?

What factors should you consider when selecting which stockbroker to use?

Q: Why should young people have investments in stocks as part of their

Why should young people have investments in stocks as part of their portfolio?

Q: What is whole life insurance? What benefit does it provide that

What is whole life insurance? What benefit does it provide that term life insurance does not?

Q: What do the terms round lot and odd lot mean in stock

What do the terms round lot and odd lot mean in stock transactions?

Q: As the next step in reviewing their finances, the Sampsons are

As the next step in reviewing their finances, the Sampsons are assessing their insurance needs related to their vehicles and home. They indicated the amount of money they spend on insurance on their p...

Q: As the next step in reviewing their finances, the Sampsons are

As the next step in reviewing their finances, the Sampsons are assessing their insurance needs related to their vehicles and home. They indicated the amount of money they spend on insurance on their p...

Q: When the Sampsons purchased a home, they obtained a 30-

When the Sampsons purchased a home, they obtained a 30-year mortgage with a fixed interest rate of 8.6%. Their monthly mortgage payment (excluding property taxes and insurance) is about $700 per month...

Q: A PPO uses a discount on charge arrangement. Marie incurred total

A PPO uses a discount on charge arrangement. Marie incurred total charges by a hospital of $20,000, and the percentage paid to the provider is 70%. Marie’s contract with the PPO specifies her co­pay a...

Q: Pete’s health insurance policy specifies that he should pay 30% of

Pete’s health insurance policy specifies that he should pay 30% of expenses associated with a long-term illness, and he has a stop loss provision of $35,000 in his policy. If Pete incurs expenses of $...

Q: Christine’s total monthly expenses typically amount to $1,800.

Christine’s total monthly expenses typically amount to $1,800. About $50 of these expenses are work related. Christine’s employer provides disability insurance coverage of $500 per month. How much ind...

Q: Susan recently quit working for a local firm and has yet to

Susan recently quit working for a local firm and has yet to find a new job. She knows she can maintain her health insurance from her old employer due to COBRA. How much will it likely cost her for hea...

Q: Tracy is borrowing $8,000 on a six-year

Tracy is borrowing $8,000 on a six-year, 11%, add-on interest loan. What will Tracy’s monthly payments be?

Q: Mary and Marty are interested in obtaining a home equity line of

Mary and Marty are interested in obtaining a home equity line of credit. They purchased their house five years ago for $125,000, and it now has a market value of $156,000. Originally, Mary and Marty p...

Q: Describe the nonforfeiture and loan clauses of whole life insurance policies.

Describe the nonforfeiture and loan clauses of whole life insurance policies.

Q: Refer to question 8. What will Mary and Marty’s credit limit

Refer to question 8. What will Mary and Marty’s credit limit be if the bank uses the market value of equity to determine their credit limit and will loan 70% of the equity? Data from Question 8: Mar...

Q: Noel has a 15% marginal tax rate. If he pays

Noel has a 15% marginal tax rate. If he pays $1,400 in interest on a home equity loan in the first year, what are his tax savings?

Q: What are some viable alternatives to payday loans?

What are some viable alternatives to payday loans?

Q: List some possible sources of personal loans. What precautions should be

List some possible sources of personal loans. What precautions should be taken with loans from family members or friends?

Q: What does it mean if a loan is amortized? What do

What does it mean if a loan is amortized? What do the loan payments represent?

Q: What information must borrowers supply to lenders in the loan application process

What information must borrowers supply to lenders in the loan application process? Why is this information important to lenders?

Q: What information is included in a loan contract? How is the

What information is included in a loan contract? How is the amount of the loan determined?

Q: Explain how collateral works. Do all loans have collateral? What

Explain how collateral works. Do all loans have collateral? What is the relationship between collateral and interest rates?

Q: Explain the difference between a 10% rate charged on a payday

Explain the difference between a 10% rate charged on a payday loan and a 10% rate charged by a bank on a personal loan.

Q: What are your responsibilities if you cosign a loan? What are

What are your responsibilities if you cosign a loan? What are the potential consequences of failing to live up to your responsibilities as a cosigner?

Q: Why is the premium paid for whole life higher than the premium

Why is the premium paid for whole life higher than the premium for term life? What alternative approach to purchasing life insurance might provide the same benefits as whole life?

Q: What is the purpose of the annual percentage rate measurement? Could

What is the purpose of the annual percentage rate measurement? Could lenders with the same interest rates report different APRs?

Q: What is simple interest? What information is needed to compute it

What is simple interest? What information is needed to compute it? What information is contained in a loan repayment schedule?

Q: Why are loan payments under the simple interest method usually lower than

Why are loan payments under the simple interest method usually lower than loan payments under the add-on interest method?

Q: List the steps in buying a car. What financial criteria should

List the steps in buying a car. What financial criteria should be considered? Discuss each briefly.

Q: Why is purchasing a new car online not as efficient as buying

Why is purchasing a new car online not as efficient as buying a new car at a dealership?

Q: Describe some techniques that car salespeople might use in negotiating the price

Describe some techniques that car salespeople might use in negotiating the price of the car. What should you be aware of at “nohaggle” dealerships?

Q: What are the advantages and disadvantages of leasing a car? Give

What are the advantages and disadvantages of leasing a car? Give some advice for someone considering leasing.

Q: Who extends student loans? What are the characteristics of student

Who extends student loans? What are the characteristics of student loans?

Q: What is home equity? Describe how home equity loans work.

What is home equity? Describe how home equity loans work.

Q: Discuss the two ways financial institutions might define equity to set credit

Discuss the two ways financial institutions might define equity to set credit limits. What happens if you default on a home equity loan?

Q: What is universal life insurance? How does it differ from term

What is universal life insurance? How does it differ from term life and whole life?

Q: How are interest rates calculated for the two types of home equity

How are interest rates calculated for the two types of home equity loans? Why do borrowers prefer home equity loans to other loans?

Q: Why may a weak economy cause the limit on your home equity

Why may a weak economy cause the limit on your home equity line of credit to decline? Why may a strong economy cause the limit on your home equity line of credit to rise?

Q: What is peer-to-peer lending? What are the

What is peer-to-peer lending? What are the advantages of a peer-to-peer loan?

Q: Explain the advantages and disadvantages of buying a new car instead of

Explain the advantages and disadvantages of buying a new car instead of a used car.

Q: What type of information is contained in the Buyers Guide?

What type of information is contained in the Buyers Guide?

Q: What are payday loans? Why should you avoid payday loans as

What are payday loans? Why should you avoid payday loans as a source of funds?

Q: The Sampsons have been carrying a balance of about $2,

The Sampsons have been carrying a balance of about $2,000 on their credit card. They have been paying the minimum amount due and have been using any excess net cash flows to implement their new saving...

Q: The Sampsons have been carrying a balance of about $2,

The Sampsons have been carrying a balance of about $2,000 on their credit card. They have been paying the minimum amount due and have been using any excess net cash flows to implement their new saving...

Q: What information will you need to supply when applying for credit?

What information will you need to supply when applying for credit? What kinds of attributes are creditors looking for? Do you need to have all these attributes to get credit?

Q: You just borrowed $7,500 and are charged a simple

You just borrowed $7,500 and are charged a simple interest rate of 8%. How much interest do you pay each year?

Q: What is variable life insurance? What are the advantages and disadvantages

What is variable life insurance? What are the advantages and disadvantages of variable life policies? How can individuals avoid the high fees of variable life insurance?

Q: Jarrod has narrowed his choice to two credit cards that may meet

Jarrod has narrowed his choice to two credit cards that may meet his needs. Card A has an APR of 21%. Card B has an APR of 14% but also charges a $25 annual fee. Jarrod will not pay off his balance ea...

Q: Eileen is a college student who consistently uses her credit card as

Eileen is a college student who consistently uses her credit card as a source of funds. She has maxed out her credit card at the $6,000 limit. Eileen does not plan on increasing her credit card balanc...

Q: If Beth had taken the same loan as an add-on

If Beth had taken the same loan as an add-on interest loan, how would her payments differ? Why is there a difference?

Q: Sharon is considering the purchase of a car. After making the

Sharon is considering the purchase of a car. After making the down payment, she will finance $15,500. Sharon is offered three maturities. On a four-year loan, Sharon will pay $371.17 per month. On a f...

Q: Refer to question 5. If Sharon had been able to afford

Refer to question 5. If Sharon had been able to afford the four-year loan, how much interest would she have saved compared to the five-year loan? Data from Question 5: Sharon is considering the purc...

Q: Bill wants to purchase a new car for $45,000

Bill wants to purchase a new car for $45,000. Bill has no savings, so he needs to finance the entire purchase amount. With no down payment, the interest rate on the loan is 13%, and the maturity of th...

Q: John and Cheryl just borrowed $30,000 on a home

John and Cheryl just borrowed $30,000 on a home equity line of credit. The interest rate for the loan is 6.75% for the entire year, and they took out the loan on May 1. John and Cheryl are in the 28%...

Q: Fritz and Helga work for a local manufacturing company. Since their

Fritz and Helga work for a local manufacturing company. Since their marriage five years ago they have been working extensive overtime, including Sundays and holidays. Fritz and Helga have established...

Q: Beth has just borrowed $5,000 on a four-

Beth has just borrowed $5,000 on a four-year loan at 8% simple interest. Complete the amortization table at the bottom of the page for the first five months of the loan.

Q: What should be the first step in financing a purchase of a

What should be the first step in financing a purchase of a car? Aside from the interest rate, what two factors will have the largest impact on the size of your monthly payment?

Q: Describe the income method to determine the amount of life insurance needed

Describe the income method to determine the amount of life insurance needed. What is the disadvantage of this method?

Q: How can borrowers enjoy tax savings by using a home equity

How can borrowers enjoy tax savings by using a home equity loan? How are these tax savings computed?

Q: How does a prepayment penalty impact your decision to pay a loan

How does a prepayment penalty impact your decision to pay a loan off early?

Q: Explain when you might use a deferment on student loans. What

Explain when you might use a deferment on student loans. What are the disadvantages of deferring student loans?

Q: What does the personal loan process involve?

What does the personal loan process involve?

Q: How does the maturity of a loan affect the monthly payments?

How does the maturity of a loan affect the monthly payments? What should you consider when selecting the maturity?

Q: How are payments calculated under the add-on interest method?

How are payments calculated under the add-on interest method?

Q: What credit restrictions apply to persons under age 21?

What credit restrictions apply to persons under age 21?

Q: Brad Brooks is pleased with your assistance in preparing his personal financial

Brad Brooks is pleased with your assistance in preparing his personal financial statements and your suggestions for improving his personal financial situation. He has called you for additional guidanc...

Q: Brad Brooks is pleased with your assistance in preparing his personal financial

Brad Brooks is pleased with your assistance in preparing his personal financial statements and your suggestions for improving his personal financial situation. He has called you for additional guidanc...

Q: Brad Brooks is pleased with your assistance in preparing his personal financial

Brad Brooks is pleased with your assistance in preparing his personal financial statements and your suggestions for improving his personal financial situation. He has called you for additional guidanc...

Q: What are some of the risks associated with investing in real estate

What are some of the risks associated with investing in real estate?

Q: Discuss why life insurance needs should not be based on a family’s

Discuss why life insurance needs should not be based on a family’s dreams for the future.

Q: Brad Brooks is pleased with your assistance in preparing his personal financial

Brad Brooks is pleased with your assistance in preparing his personal financial statements and your suggestions for improving his personal financial situation. He has called you for additional guidanc...

Q: Describe the differences between a credit card like MasterCard or Visa and

Describe the differences between a credit card like MasterCard or Visa and a retail (or proprietary) card. How do credit and retail cards generate revenue? What is the biggest disadvantage of a propri...

Q: Discuss how credit cards offer incentives to use the cards. How

Discuss how credit cards offer incentives to use the cards. How else might credit card companies reward cardholders with excellent credit ratings?

Q: What is a grace period? How can you use it to

What is a grace period? How can you use it to your advantage?

Q: What is a cash advance? How are they commonly obtained?

What is a cash advance? How are they commonly obtained? Discuss interest rates and grace periods with regard to cash advances.

Q: How does the interest rate affect your credit payments? What is

How does the interest rate affect your credit payments? What is meant by simple interest? What is the annual percentage rate (APR), and when is it used?

Q: List some items that appear on the credit card statement. What

List some items that appear on the credit card statement. What accounts for the difference between your previous balance and your new balance?

Q: What should you consider when comparing credit cards?

What should you consider when comparing credit cards?

Q: List five tips for using credit cards wisely.

List five tips for using credit cards wisely.

Q: Why is paying your credit card balance in full so important?

Why is paying your credit card balance in full so important? What should you do if you can’t avoid credit card debt? Explain.

Q: Describe the budget method to determine the amount of life insurance needed

Describe the budget method to determine the amount of life insurance needed. What elements must be considered in making this calculation?

Q: What are the three methods used by financial institutions to calculate finance

What are the three methods used by financial institutions to calculate finance charges on outstanding credit card balances? Briefly describe how interest is computed under each method.

Q: Explain how you can impose your own limits on credit card spending

Explain how you can impose your own limits on credit card spending.

Q: Describe some of the key provisions of the Credit CARD Act.

Describe some of the key provisions of the Credit CARD Act.

Q: Describe the role of the Consumer Financial Protection Bureau.

Describe the role of the Consumer Financial Protection Bureau.

Q: How does a secured credit card differ from a standard credit card

How does a secured credit card differ from a standard credit card? Under what circumstances would you need a secured credit card?

Q: What is overlimit protection? Explain why consumers should use this feature

What is overlimit protection? Explain why consumers should use this feature sparingly.

Q: Explain how the Credit CARD Act changed the way credit card issuers

Explain how the Credit CARD Act changed the way credit card issuers assess late fees.

Q: Explain why getting a cash advance on your credit card is a

Explain why getting a cash advance on your credit card is a costly source of funds.

Q: Why should you review your credit card statement before paying the bill

Why should you review your credit card statement before paying the bill? What steps should you take if you discover an error?

Q: What are three advantages of using a credit card? Can you

What are three advantages of using a credit card? Can you think of any disadvantages?

Q: List and briefly discuss the factors that affect an individual’s life insurance

List and briefly discuss the factors that affect an individual’s life insurance premium.

Q: Chrissy currently has a credit card that charges 15% interest.

Chrissy currently has a credit card that charges 15% interest. She usually carries a balance of about $500. What will her total annual interest be with her current card?

Q: Margie has had a tough month. First, she had dental

Margie has had a tough month. First, she had dental work that cost $700. Next, she had her car transmission rebuilt, which cost $1,400. She put both of these unexpected expenses on her credit card. If...

Q: Troy has a credit card that charges 18% on outstanding balances

Troy has a credit card that charges 18% on outstanding balances and on cash advances. The closing date on the credit card is the first of each month. Last month Troy left a balance on his credit card...

Q: Eileen (from question 7) wants a car that costs $

Eileen (from question 7) wants a car that costs $12,000. How long would it have taken Eileen to save for the outright purchase of the car if she did not have any credit card debt and used the interest...

Q: Chen recently graduated from college and accepted a job in a new

Chen recently graduated from college and accepted a job in a new city. Furnishing his apartment has proved more costly than he anticipated. To enable him to make purchases, he applied for and received...

Q: Paul’s credit card closes on the 3rd of the month, and

Paul’s credit card closes on the 3rd of the month, and his payment is due on the 30th. If Paul purchases a stereo for $300 on June 12th, how many interest-free days will he have? When will he have to...

Q: What is a credit limit? How can you increase your credit

What is a credit limit? How can you increase your credit limit?

Q: How might you eliminate the annual fees that are charged by some

How might you eliminate the annual fees that are charged by some credit cards?

Q: When is a finance charge applied to credit purchases? What is

When is a finance charge applied to credit purchases? What is the common range of interest rates on credit cards?

Q: Should you view credit cards as a source of funds? Why

Should you view credit cards as a source of funds? Why or why not? Why should you self-impose a tight credit limit?

Q: Explain how use of the Internet can expedite the purchase of life

Explain how use of the Internet can expedite the purchase of life insurance. Why do many customers prefer this method?

Q: What credit management decisions should be included in your financial plan?

What credit management decisions should be included in your financial plan?

Q: Discuss some ways that charging large amounts on your credit cards might

Discuss some ways that charging large amounts on your credit cards might affect your overall financial planning.

Q: Propose possible solutions to reduce an excessive credit card balance.

Propose possible solutions to reduce an excessive credit card balance.

Q: What is a prepaid credit card? How does it differ from

What is a prepaid credit card? How does it differ from a secured credit card?

Q: List some typical incentives credit cards issuers offer to encourage you to

List some typical incentives credit cards issuers offer to encourage you to use their card.

Q: Jack needs to borrow $1,000 for one year.

Jack needs to borrow $1,000 for one year. Bank South will give him the loan at 9%. SunCoast Bank will give him the loan at 7% with a $50 loan origination fee. First National will give him the loan at...

Q: Assume that the Sampsons have paid off their credit card debt and

Assume that the Sampsons have paid off their credit card debt and have also achieved their goal of saving $5,000 that they will use as a down payment on a new car. (They have also been saving an addit...

Q: List the criteria you should use when selecting a home.

List the criteria you should use when selecting a home.

Q: Why is the reputation of the school system in the area of

Why is the reputation of the school system in the area of the home you are buying important?

Q: Insurance. Justin’s new FHA mortgage is for $131,500

Insurance. Justin’s new FHA mortgage is for $131,500. How much will his overall mortgage increase with an upfront fee of 1.5%? How much will his total mortgage be with the upfront PMI fee added? Will...

Q: What are settlement options? Which option should you choose?

What are settlement options? Which option should you choose?

Q: Dorothy and Matt are ready to purchase their first home. Their

Dorothy and Matt are ready to purchase their first home. Their current monthly cash inflows are $4,900, and their current monthly cash outflows are $3,650. Their rent makes up $650 of their cash flows...

Q: Larry and Laurie have found a home and made a $125

Larry and Laurie have found a home and made a $125,000 offer that has been accepted. They make a down payment of 10%. Their bank charges a loan origination fee of 1% of the loan and points of 1.5% (bo...

Q: Lloyd and Jean are considering purchasing a home requiring a $75

Lloyd and Jean are considering purchasing a home requiring a $75,000 mortgage. The payment on a 30-year mortgage for this amount is $498.97. The payment for a 15-year maturity is $674.12. What is the...

Q: This month you made a mortgage payment of $700, of

This month you made a mortgage payment of $700, of which $600 was an interest payment and $100 a payment of the loan principal. You are in the 25% marginal tax bracket. What are the tax savings as a r...

Q: Teresa rents her apartment for $650 per month, utilities not

Teresa rents her apartment for $650 per month, utilities not included. When she moved in, she paid a $700 security deposit using money from her savings account that was paying 3% interest. Her renter’...

Q: Matt has found a condominium in an area where he would enjoy

Matt has found a condominium in an area where he would enjoy living. He would need a $5,000 down payment from his savings and would have to pay closing costs of $2,500 to purchase the condo. His month...

Q: Matt (from problem 7) paid mortgage interest of $4

Matt (from problem 7) paid mortgage interest of $4,330 during his first year in the condo. His property taxes were $600, and his homeowner’s insurance was $460. If Matt is in a 25% marginal tax rate b...

Q: If the cost of refinancing their house is $3,860

If the cost of refinancing their house is $3,860, how long would Doug and Lynn (from problem 9) have to remain in their home to recover the cost? (Ignore any interest on the savings in answering this...

Q: Paul wants to purchase his own home. He currently lives in

Paul wants to purchase his own home. He currently lives in an apartment, and his rent is being paid by his parents. Paul’s parents have informed him that they would not pay his mortgage payments. Paul...

Q: What is risk? What is risk management? How does insurance

What is risk? What is risk management? How does insurance fit into risk management?

Q: What is the interest payments option? How does it differ from

What is the interest payments option? How does it differ from the installment payments option?

Q: What is the responsibility of the insurance company that sells you a

What is the responsibility of the insurance company that sells you a policy? What is the relationship between insurance company claims and premiums paid by policyholders?

Q: What is the role of insurance underwriters? What is the role

What is the role of insurance underwriters? What is the role of insurance agents? Describe the two different types of insurance agents.

Q: Describe the two components of liability coverage in an auto insurance policy

Describe the two components of liability coverage in an auto insurance policy.

Q: What do policy limits of 25/50/25 mean?

What do policy limits of 25/50/25 mean? Do you think the minimum amounts of liability insurance required by your state are suitable for all drivers? Explain your answer

Q: Describe the two types of financial responsibility laws most states have.

Describe the two types of financial responsibility laws most states have. Are these laws always effective?

Q: How does medical payments coverage under an auto insurance policy work?

How does medical payments coverage under an auto insurance policy work? Why is medical payments coverage valuable even if you have a good health insurance plan?

Q: Describe collision and comprehensive coverage. Is this type of coverage required

Describe collision and comprehensive coverage. Is this type of coverage required by most states? Who may require this type of coverage?

Q: List and briefly discuss factors that will affect your auto insurance premium

List and briefly discuss factors that will affect your auto insurance premium.

Q: What is the intent of no-fault insurance? How does

What is the intent of no-fault insurance? How does no-fault insurance generally work? What is a disadvantage of no-fault insurance?

Q: What steps should you take if you are in a car accident

What steps should you take if you are in a car accident?

Q: Why do some people postpone buying life insurance even when they need

Why do some people postpone buying life insurance even when they need it?

Q: What is homeowner’s insurance? How the premiums are normally paid?

What is homeowner’s insurance? How the premiums are normally paid?

Q: List and briefly describe the four packages of homeowner’s insurance that focus

List and briefly describe the four packages of homeowner’s insurance that focus on insurance for the home

Q: Is personal property typically insured under a homeowner’s insurance policy? If

Is personal property typically insured under a homeowner’s insurance policy? If so, are there limits to the coverage of personal property? What is a home inventory?

Q: List and briefly describe some of the factors that affect homeowner’s insurance

List and briefly describe some of the factors that affect homeowner’s insurance premiums.

Q: What are some steps you could take to reduce your homeowner’s insurance

What are some steps you could take to reduce your homeowner’s insurance premium?

Q: Describe the steps you would take to file a claim on your

Describe the steps you would take to file a claim on your homeowner’s insurance

Q: How renter’s insurance is different from homeowner’s insurance? Who should consider

How renter’s insurance is different from homeowner’s insurance? Who should consider purchasing renter’s insurance? Briefly describe some of the provisions of a renter’s insurance policy.

Q: What is the purpose of an umbrella personal liability policy? Who

What is the purpose of an umbrella personal liability policy? Who might need one?

Q: List some ways you can reduce risk and limit your overall exposure

List some ways you can reduce risk and limit your overall exposure to loss.

Q: Why do some people choose to accept risk rather than purchase insurance

Why do some people choose to accept risk rather than purchase insurance? Why is this mind-set problematic?

Q: What is group term life insurance? What are the advantages of

What is group term life insurance? What are the advantages of group term life insurance?

Q: Why does your geographic location impact the cost of homeowner’s insurance?

Why does your geographic location impact the cost of homeowner’s insurance? Why does it impact the cost of your automobile insurance?

Q: How does your credit history impact your insurance costs?

How does your credit history impact your insurance costs?

Q: Why is it important to carefully review the types of perils covered

Why is it important to carefully review the types of perils covered by your homeowner’s insurance policy? What are some common perils that are not covered by many homeowner’s policies?

Q: You teach Personal Finance at a local community college. The state

You teach Personal Finance at a local community college. The state in which you teach requires proof of liability insurance to renew your license plates. During the discussion of this topic in class,...

Q: What is the purpose of insurance? What is meant by the

What is the purpose of insurance? What is meant by the term liability? How can individuals benefit from insurance?

Q: What is a call feature on a bond? How will a

What is a call feature on a bond? How will a call feature affect investor interest in purchasing the bond?

Q: What is a convertible bond? How does a bond’s convertibility feature

What is a convertible bond? How does a bond’s convertibility feature affect its return?

Q: What is a bond’s yield to maturity? How does the price

What is a bond’s yield to maturity? How does the price paid for a bond affect its yield to maturity?

Q: Discuss how bonds are sold on the secondary market.

Discuss how bonds are sold on the secondary market.

Q: What are Treasury bonds? Describe their key characteristics.

What are Treasury bonds? Describe their key characteristics.

Q: What are some factors that make estimating life insurance needs difficult?

What are some factors that make estimating life insurance needs difficult?

Q: What are municipal bonds? Why are they issued? Are all

What are municipal bonds? Why are they issued? Are all municipal bonds free from default risk? What characteristic makes municipal bonds especially attractive to high-income investors?

Q: What are federal agency bonds? Compare and contrast the three most

What are federal agency bonds? Compare and contrast the three most common federal agency bonds

Q: What are corporate bonds? Are corporate bonds subject to default risk

What are corporate bonds? Are corporate bonds subject to default risk? What are junk bonds? Why would investors purchase junk bonds?

Q: When an investor sells a bond in the secondary market before the

When an investor sells a bond in the secondary market before the bond reaches maturity, what determines the return on the bond? How do interest rate movements affect bond returns in general?

Q: Discuss the effect of taxes on bond returns.

Discuss the effect of taxes on bond returns.

Q: Discuss default risk as it relates to bonds. How may investors

Discuss default risk as it relates to bonds. How may investors use risk ratings? What is the relationship between the risk rating and the risk premium? How do economic conditions affect default risk?...

Q: What is the risk to investors on bonds that have a call

What is the risk to investors on bonds that have a call feature?

Q: What is interest rate risk? How does a rise in interest

What is interest rate risk? How does a rise in interest rates affect a bond’s price?

Q: What is a bond? What is a bond’s par value?

What is a bond? What is a bond’s par value? What are coupon payments, and how often are they normally paid? What happens when investors buy a bond below par value? When should you consider investing i...

Q: Doug and Lynn bought their home three years ago. They have

Doug and Lynn bought their home three years ago. They have a mortgage payment of $601.69. Interest rates have recently fallen, and they can lower their mortgage payments to $491.31 if they refinance....

Q: What is a conversion option? What are the benefits of having

What is a conversion option? What are the benefits of having this option?

Q: Paul (from problem 11) will be able to save $

Paul (from problem 11) will be able to save $400 per month (which can be used for mortgage payments) for the indefinite future. If Paul finances the remaining cost of the home (after making the $20,00...

Q: Denise and Kenny are ready to make an offer on an 1

Denise and Kenny are ready to make an offer on an 1,800-square-foot home that is priced at $135,000. They investigate other homes on lots of similar size and find the following information: A 2,400-...

Q: When the Sampsons purchased a home, they obtained a 30-

When the Sampsons purchased a home, they obtained a 30-year mortgage with a fixed interest rate of 8.6%. Their monthly mortgage payment (excluding property taxes and insurance) is about $700 per month...

Q: What is a personal property floater? What is the difference between

What is a personal property floater? What is the difference between scheduled and unscheduled floaters?

Q: How can you determine the financial strength of an insurance company?

How can you determine the financial strength of an insurance company? Why is this important to you as a consumer?

Q: Why is it important to keep a detailed inventory of your household

Why is it important to keep a detailed inventory of your household possessions outside your home?

Q: What is a “cash value” homeowner’s policy? What is

What is a “cash value” homeowner’s policy? What is a “replacement cost” homeowner’s policy?

Q: Nancy is a widow with two teenage children. Nancy’s gross income

Nancy is a widow with two teenage children. Nancy’s gross income is $3,000 per month, and taxes take about 30% of her income. Using the income method, Nancy calculates she will need to purchase about...

Q: Nancy’s employer provides her with two times her annual gross salary in

Nancy’s employer provides her with two times her annual gross salary in life insurance. How much additional insurance should Nancy purchase based on the information in the previous problem?

Q: What is private health insurance? Briefly describe some types of private

What is private health insurance? Briefly describe some types of private health insurance coverage.

Q: What should your first priority of investing be? What is the

What should your first priority of investing be? What is the disadvantage of investments that satisfy that priority?

Q: What is the purpose of life insurance? Do you think everyone

What is the purpose of life insurance? Do you think everyone needs life insurance? Explain.

Q: Who offers health insurance? Do employers offer health insurance?

Who offers health insurance? Do employers offer health insurance?

Q: Compare and contrast private health care fee for service plans and managed

Compare and contrast private health care fee for service plans and managed health care plans.

Q: Describe how an HMO works. What are the advantages and disadvantages

Describe how an HMO works. What are the advantages and disadvantages of this type of health care coverage?

Q: What questions should you ask when considering an HMO or PPO?

What questions should you ask when considering an HMO or PPO?

Q: What is a preferred provider organization (PPO)? How does it

What is a preferred provider organization (PPO)? How does it operate?

Q: Compare and contrast the discount on charge arrangement and the per diem

Compare and contrast the discount on charge arrangement and the per diem arrangement associated with PPOs.

Q: Briefly describe two federal regulations intended to ensure that individuals can maintain

Briefly describe two federal regulations intended to ensure that individuals can maintain continuous health care coverage if their employment status changes

Q: What is a flexible spending account? Why do some individuals allocate

What is a flexible spending account? Why do some individuals allocate a minimal amount to this account?

Q: What is Medicare? Describe Parts A and B of Medicare.

What is Medicare? Describe Parts A and B of Medicare.

Q: Briefly describe the provisions of the Medicare Prescription Act

Briefly describe the provisions of the Medicare Prescription Act

Q: Recall that one of the Sampsons’ goals is to invest for their

Recall that one of the Sampsons’ goals is to invest for their children’s future college education. To become more educated investors, they have been reviewing analyst and brokerage firm recommendation...

Q: What is Medicaid? How do individuals qualify for Medicaid?

What is Medicaid? How do individuals qualify for Medicaid?

Q: What is the purpose of long-term care insurance? What

What is the purpose of long-term care insurance? What factors influence long-term care insurance premiums? What factors should be considered when purchasing long-term care insurance?

Q: What are some other types of health insurance that might be offered

What are some other types of health insurance that might be offered by an employer?

Q: Briefly describe some of the sources of disability income insurance.

Briefly describe some of the sources of disability income insurance.

Q: Briefly describe some of the provisions of disability income insurance.

Briefly describe some of the provisions of disability income insurance.

Q: Briefly describe some of the significant features of the Affordable Care Act

Briefly describe some of the significant features of the Affordable Care Act.

Q: What is a health savings account, or HSA? Why is

What is a health savings account, or HSA? Why is this account often preferable to a flexible spending account?

Q: What types of services are typically covered by vision insurance? Why

What types of services are typically covered by vision insurance? Why should some individuals consider buying a separate vision insurance policy?

Q: How did the PPACA change the way insurance companies treat persons with

How did the PPACA change the way insurance companies treat persons with preexisting conditions?

Q: How are health insurance and disability insurance related to your wealth?

How are health insurance and disability insurance related to your wealth?

Q: Recall that one of the Sampsons’ goals is to invest for their

Recall that one of the Sampsons’ goals is to invest for their children’s future college education. To become more educated investors, they have been reviewing analyst and brokerage firm recommendation...

Q: How do individuals benefit from having health insurance? Why has health

How do individuals benefit from having health insurance? Why has health insurance received a lot of attention recently?

Q: Why is it important to evaluate the financial condition of a life

Why is it important to evaluate the financial condition of a life insurance company?

Q: What is mortgage life insurance? Is mortgage life insurance a good

What is mortgage life insurance? Is mortgage life insurance a good buy? Why or why not?

Q: What is a lump-sum settlement? What kind of beneficiary

What is a lump-sum settlement? What kind of beneficiary would benefit the most from this option?

Q: What is an installment payments settlement? When would an insured individual

What is an installment payments settlement? When would an insured individual choose this option?

Q: What is a beneficiary? Why is it important to periodically review

What is a beneficiary? Why is it important to periodically review your beneficiaries?

Q: What are living benefits? When might a policyholder use this option

What are living benefits? When might a policyholder use this option?

Q: The Sampsons have one remaining insurance need: life insurance. They

The Sampsons have one remaining insurance need: life insurance. They have decided to purchase term life insurance. They want a life insurance policy that will provide for the family in the event of Da...

Q: The Sampsons have one remaining insurance need: life insurance. They

The Sampsons have one remaining insurance need: life insurance. They have decided to purchase term life insurance. They want a life insurance policy that will provide for the family in the event of Da...

Q: How much would Joel (from problem 1) save in taxes

How much would Joel (from problem 1) save in taxes if he held the stock for more than a year, assuming he sold it for the same amount? Data from Problem 1: Joel purchased 100 shares of stock for $20...

Q: Bob purchased stock in a new social media company for $40

Bob purchased stock in a new social media company for $40 per share shortly after the stock’s IPO. The stock had been heavily publicized on the Internet. Over the next three years, the stock price dec...

Q: Thomas purchased 400 shares of stock A for $23 a share

Thomas purchased 400 shares of stock A for $23 a share and sold them more than a year later for $20 per share. He purchased 500 shares of stock B for $40 per share and sold them for $53 per share afte...

Q: What is the dollar amount of Joel’s return (see problem 1

What is the dollar amount of Joel’s return (see problem 1)? Data from Problem 1: Joel purchased 100 shares of stock for $20 per share. During the year, he received dividend checks amounting to $150....

Q: Distinguish between the primary and secondary stock markets. Why does the

Distinguish between the primary and secondary stock markets. Why does the price of a stock change each day in the secondary market?

Q: What are dividends? Do all firms pay them?

What are dividends? Do all firms pay them?

Q: Classify and describe the two types of investors. What are day

Classify and describe the two types of investors. What are day traders?

Q: How do shareholders earn returns from investing in stocks? How is

How do shareholders earn returns from investing in stocks? How is the market value of a firm determined? What determines the market price of a stock?

Q: What type of firm typically pays dividends? What are growth stocks

What type of firm typically pays dividends? What are growth stocks? What are income stocks?

Q: Discuss the differences between common stock and preferred stock.

Discuss the differences between common stock and preferred stock.

Q: What are bonds? How do bonds provide a return to investors

What are bonds? How do bonds provide a return to investors?

Q: How do mutual funds operate? Who manages mutual funds? How

How do mutual funds operate? Who manages mutual funds? How are coupon or dividend payments handled by the mutual fund? Can investors incur capital losses with mutual funds?

Q: In what geographic areas is the price of land relatively high?

In what geographic areas is the price of land relatively high? What components make up the return from investing in real estate?

Q: What is the formula for estimating returns on dividend-paying stocks

What is the formula for estimating returns on dividend-paying stocks? Describe each element of the formula. How do you calculate the dollar amount of your returns?

Q: What is the difference in tax rates on long-term versus

What is the difference in tax rates on long-term versus short-term capital gains?

Q: How can investments in stock increase your wealth? How would you

How can investments in stock increase your wealth? How would you calculate the value of a stock investment of a single sum over time? How would you calculate the value of a stock investment of a speci...

Q: Describe how economic conditions might affect certain investments.

Describe how economic conditions might affect certain investments.

Q: Define the risk of an investment. What types of firms are

Define the risk of an investment. What types of firms are particularly risky?

Q: Why do investors measure risk? Describe the two common measures of

Why do investors measure risk? Describe the two common measures of risk.

Q: What is the return-risk trade-off? What types

What is the return-risk trade-off? What types of stock investments are particularly tempting for stock investors? What other factors must individual investors consider before making this type of inves...

Q: Describe the return-risk trade-offs among bonds, mutual

Describe the return-risk trade-offs among bonds, mutual funds, and real estate investments.

Q: How can you limit your risk through diversification?

How can you limit your risk through diversification?

Q: Describe common investment mistakes made by individuals.

Describe common investment mistakes made by individuals.

Q: How is investing related to liquidity? Give some examples of liquid

How is investing related to liquidity? Give some examples of liquid investments.

Q: What is an exchange traded fund? How does it differ from

What is an exchange traded fund? How does it differ from a mutual fund?

Q: What is a growth stock? What is an income stock?

What is a growth stock? What is an income stock? Why would investors prefer one type over the other?

Q: What is an IPO? What are the risks associated with buying

What is an IPO? What are the risks associated with buying IPOs?

Q: How is investing related to your personal financial goals?

How is investing related to your personal financial goals?

Q: How does your personal tolerance for risk impact your investment decisions?

How does your personal tolerance for risk impact your investment decisions?

Q: What are stocks? How are stocks beneficial to corporations? Why

What are stocks? How are stocks beneficial to corporations? Why do investors invest in stocks?

Q: Describe a typical stock transaction at the New York Stock Exchange (

Describe a typical stock transaction at the New York Stock Exchange (NYSE). What are floor traders? What are specialists? What other exchanges trade stocks in a similar manner to the NYSE?

Q: What are electronic communications networks (ECNs)? How are ECNs used

What are electronic communications networks (ECNs)? How are ECNs used?

Q: How is the market for a stock created? How do brokerage

How is the market for a stock created? How do brokerage firms expedite this process? Compare the two types of brokerage services.

Q: What are some advantages of using online brokerage services? Describe how

What are some advantages of using online brokerage services? Describe how an investor would set up and use an online brokerage account.

Q: What information must you provide when placing an order to buy or

What information must you provide when placing an order to buy or sell stock? What is a ticker symbol, and why is it important?

Q: Discuss the differences between a market order, a limit order,

Discuss the differences between a market order, a limit order, and a stop order.

Q: What is buying a stock on margin? What may happen if

What is buying a stock on margin? What may happen if the value of the stock bought on margin declines? What are the advantages to investors and brokerage firms when stocks are bought on margin?

Q: Why is it necessary to analyze a firm? What is an

Why is it necessary to analyze a firm? What is an annual report? What information does it contain to aid the analysis?

Q: Recall that the Sampsons have a goal of saving about $300

Recall that the Sampsons have a goal of saving about $300 per month ($3,600 per year) for their children’s college education. They want to estimate how this money would grow over time if they invest i...

Q: List the characteristics of a firm that investors analyze by using the

List the characteristics of a firm that investors analyze by using the balance sheet and the income statement.

Q: Why may the top managers of a firm be tempted to use

Why may the top managers of a firm be tempted to use misleading estimates of revenues and expenses? How may managers be able to boost the reported earnings of their firm?

Q: Explain how economic growth is measured. How does economic growth affect

Explain how economic growth is measured. How does economic growth affect stock prices? What are some popular indicators of economic growth? How does the government’s fiscal policy affect economic grow...

Q: How do interest rates affect economic growth? Why do interest rates

How do interest rates affect economic growth? Why do interest rates affect some stock prices more than others? Which federal agency influences interest rates?

Q: What is inflation? How is inflation measured? How does inflation

What is inflation? How is inflation measured? How does inflation affect stock prices?

Q: Why is an industry analysis of stocks important? List some sources

Why is an industry analysis of stocks important? List some sources of information about firms and their industry.

Q: What is a short sale? When would this strategy be used

What is a short sale? When would this strategy be used?

Q: How can another country’s economic conditions affect a U.S.

How can another country’s economic conditions affect a U.S. firm and therefore its stock price?

Q: What is the OTC? What is the role of a market

What is the OTC? What is the role of a market maker?

Q: What determines stock price? How do investors use this information to

What determines stock price? How do investors use this information to make buy or sell decisions?

Q: Recall that the Sampsons have a goal of saving about $300

Recall that the Sampsons have a goal of saving about $300 per month ($3,600 per year) for their children’s college education. They want to estimate how this money would grow over time if they invest i...

Q: What is technical analysis? What is fundamental analysis?

What is technical analysis? What is fundamental analysis?

Q: What are some limitations of stock analysis?

What are some limitations of stock analysis?

Q: The top managers of a publicly traded manufacturing company are reviewing the

The top managers of a publicly traded manufacturing company are reviewing the projected fourth quarter financial results in late November. Based on the projected sales, the company will fall short of...

Q: What are stock exchanges? How do they facilitate the trading of

What are stock exchanges? How do they facilitate the trading of stocks?

Q: Assume that the Sampsons have paid off their credit card debt and

Assume that the Sampsons have paid off their credit card debt and have also achieved their goal of saving $5,000 that they will use as a down payment on a new car. (They have also been saving an addit...

Q: Assume that the Sampsons have paid off their credit card debt and

Assume that the Sampsons have paid off their credit card debt and have also achieved their goal of saving $5,000 that they will use as a down payment on a new car. (They have also been saving an addit...

Q: Explain how stronger economic conditions affect the values of homes.

Explain how stronger economic conditions affect the values of homes.

Q: What are the two financial components you must consider before purchasing a

What are the two financial components you must consider before purchasing a home? Why should you consider them?

Q: What is an amortization table? What does each mortgage payment represent

What is an amortization table? What does each mortgage payment represent?

Q: Brad Brooks listened to your advice about reducing the use of his

Brad Brooks listened to your advice about reducing the use of his smartphone (which saves him $250 per month) and reducing his entertainment expenses by $200 per month. He still rents the condo for $1...

Q: Recall that the Sampsons have a goal of saving about $300

Recall that the Sampsons have a goal of saving about $300 per month ($3,600 per year) for their children’s college education. They want to estimate how this money would grow over time if they invest i...

Q: Brad tells you about his plans to upgrade his auto insurance.

Brad tells you about his plans to upgrade his auto insurance. Specifically, he would like to add several types of coverage to his policy, such as uninsured motorist coverage and rental car coverage. R...

Q: Brad tells you about his plans to upgrade his auto insurance.

Brad tells you about his plans to upgrade his auto insurance. Specifically, he would like to add several types of coverage to his policy, such as uninsured motorist coverage and rental car coverage. R...

Q: Brad tells you about his plans to upgrade his auto insurance.

Brad tells you about his plans to upgrade his auto insurance. Specifically, he would like to add several types of coverage to his policy, such as uninsured motorist coverage and rental car coverage. R...

Q: Marty and Mary have jobs and contribute to the household expenses according

Marty and Mary have jobs and contribute to the household expenses according to their income. Marty contributes 75% of the expenses, and Mary contributes 25%. Currently, their household expenses are $3...

Q: Considering the information in the previous problem, how much life insurance

Considering the information in the previous problem, how much life insurance should they purchase for Mary?

Q: Bart is a college student. Because his plan is to get

Bart is a college student. Because his plan is to get a job immediately after graduation, he determines that he will need about $250,000 in life insurance to provide for his future wife and children (...

Q: Shortly after Steve graduated from college, he considered a whole life

Shortly after Steve graduated from college, he considered a whole life insurance policy that would provide $10,000 in life insurance protection and accumulate a cash value of twice his current annual...

Q: Peter is married and has two children. He wants to be

Peter is married and has two children. He wants to be sure that he has sufficient life insurance to take care of his family if he dies. Peter’s wife is a homemaker but attends college part-time pursui...

Q: Jenna purchased a 5-acre parcel of land for $28

Jenna purchased a 5-acre parcel of land for $28,000 and sold it two years later for $41,000. What was her return on that investment?

Q: Joel purchased 100 shares of stock for $20 per share.

Joel purchased 100 shares of stock for $20 per share. During the year, he received dividend checks amounting to $150. Joel recently sold the stock for $32 per share. What was Joel’s return on the stoc...

Q: Next on the Sampsons’ financial planning checklist is saving for retirement.

Next on the Sampsons’ financial planning checklist is saving for retirement. Dave’s employer offers a 401(k) plan, but Dave has not participated in it up to this point. Now he wants to seriously consi...

Q: With your help, Dave and Sharon Sampson have now established a

With your help, Dave and Sharon Sampson have now established a financial plan. Among their key financial planning decisions were the following: • Budgeting. They decided to revise their budget to mak...

Q: With your help, Dave and Sharon Sampson have now established a

With your help, Dave and Sharon Sampson have now established a financial plan. Among their key financial planning decisions were the following: • Budgeting. They decided to revise their budget to mak...

Q: With your help, Dave and Sharon Sampson have now established a

With your help, Dave and Sharon Sampson have now established a financial plan. Among their key financial planning decisions were the following: • Budgeting. They decided to revise their budget to mak...

Q: What is a standard family trust? Give an illustration.

What is a standard family trust? Give an illustration.

Q: How do gifts fit into estate planning?

How do gifts fit into estate planning?

Q: What is a living will? What are its implications for estate

What is a living will? What are its implications for estate planning?

Q: What is a power of attorney?

What is a power of attorney?

Q: What is a durable power of attorney for health care? Why

What is a durable power of attorney for health care? Why is it needed even if you have a living will?

Q: How should estate plan documents be maintained?

How should estate plan documents be maintained?

Q: What is an executor? Why is it important to name an

What is an executor? Why is it important to name an executor in your will?

Q: How can you use annual gifts to reduce the tax burden on

How can you use annual gifts to reduce the tax burden on your heirs?

Q: Lisa has an estate worth $3.21 million and three

Lisa has an estate worth $3.21 million and three children who will receive her assets on her death. Should she create a will give that her estate is worth less than the $5.43 million threshold that is...

Q: In the nineteenth century, people traveled the country selling tonics that

In the nineteenth century, people traveled the country selling tonics that were guaranteed to cure all the ailments of humankind. In the twenty-first century, the “snake oil salesmen” have been replac...

Q: What is an estate? What is estate planning? What is

What is an estate? What is estate planning? What is the main goal of estate planning?

Q: What is a will? Why is a will important? What

What is a will? Why is a will important? What happens if a person dies without a will?

Q: List the requirements for a valid will

List the requirements for a valid will

Q: Describe two common types of wills.

Describe two common types of wills.

Q: List and briefly discuss the key components of a will.

List and briefly discuss the key components of a will.

Q: When would you change your will? How can your will be

When would you change your will? How can your will be changed?

Q: What is probate? Describe the probate process.

What is probate? Describe the probate process.

Q: Discuss estate taxes. When is an estate subject to and not

Discuss estate taxes. When is an estate subject to and not subject to estate taxes? What is the top federal estate tax rate? What other taxes may be levied against an estate?

Q: Why is it important to calculate the value of your estate periodically

Why is it important to calculate the value of your estate periodically?

Q: What is a trust? What is the difference between a living

What is a trust? What is the difference between a living trust and a testamentary trust?

Q: What is a revocable living trust? How can a revocable living

What is a revocable living trust? How can a revocable living trust be used to help your estate? How does a revocable living trust affect estate taxes?

Q: Jill just inherited $7 million from her grandfather in 2015.

Jill just inherited $7 million from her grandfather in 2015. How much of the inheritance is subject to estate tax?

Q: Beyond the will, what does estate planning involve?

Beyond the will, what does estate planning involve?

Q: What is an irrevocable living trust?

What is an irrevocable living trust?

Q: How can contributions to charitable organizations help in estate planning?

How can contributions to charitable organizations help in estate planning?

Q: What is a beneficiary? Why is it important to be specific

What is a beneficiary? Why is it important to be specific with regard to beneficiaries and assets in your will?

Q: Referring to the previous question, what other factors should Miguel consider

Referring to the previous question, what other factors should Miguel consider with regard to his retirement goal? What recommendation would you give Miguel regarding his goal? Data from Question 5:...

Q: Judy (from problem 1) is also considering investing the $

Judy (from problem 1) is also considering investing the $12,500 in a certificate of deposit (CD). She is guaranteed a return of 4% on a four-year CD. How much would Judy earn from the CD? Which of the...

Q: Discuss how managing liquidity fits into your financial plan. What is

Discuss how managing liquidity fits into your financial plan. What is the liquidity trade-off?

Q: Describe some advantages and disadvantages of using personal financing to achieve your

Describe some advantages and disadvantages of using personal financing to achieve your financial goals. What is the personal financing trade-off?

Q: Describe some advantages and disadvantages of using personal financing to achieve your

Describe some advantages and disadvantages of using personal financing to achieve your financial goals. What is the personal financing trade-off?

Q: Discuss some methods for maintaining and protecting your wealth. What is

Discuss some methods for maintaining and protecting your wealth. What is the insurance trade-off?

Q: What do you think happens to your budget when your financial position

What do you think happens to your budget when your financial position changes?

Q: You have a $7,000 balance on your car loan

You have a $7,000 balance on your car loan at 11% interest. Your favorite aunt has just left you $10,000 in her will. You can put the money in a money market account at your bank and pay off your car...

Q: You have some extra cash in your budget that you wish to

You have some extra cash in your budget that you wish to invest. You have narrowed your choices to a single stock, Treasury bonds, or stock mutual funds. What characteristics of each investment altern...

Q: How does purchasing sufficient health insurance and disability insurance help protect and

How does purchasing sufficient health insurance and disability insurance help protect and maintain your wealth?

Q: Why is it important to track your expenditures for a few months

Why is it important to track your expenditures for a few months? How does this practice impact your budget?

Q: Why is it important to keep financial records stored in a safe

Why is it important to keep financial records stored in a safe location? List some important documents that you should keep in a safe place.

Q: How does budgeting fit into your financial plan? How is your

How does budgeting fit into your financial plan? How is your financial plan affected by your spending? What is the budgeting trade-off?

Q: Explain why having very specific goals is important for financial planning.

Explain why having very specific goals is important for financial planning.

Q: Why is it important to integrate the components of your financial plan

Why is it important to integrate the components of your financial plan?

Q: How does time affect your financial plan?

How does time affect your financial plan?

Q: In the previous question, you decide to pay off the car

In the previous question, you decide to pay off the car loan and invest the difference. Now you no longer have a $350 per month car payment. Suggest some ways you might use these additional funds.

Q: How does purchasing car insurance and homeowner’s insurance help protect and maintain

How does purchasing car insurance and homeowner’s insurance help protect and maintain your wealth?

Q: How does life insurance protect your wealth? Who needs life insurance

How does life insurance protect your wealth? Who needs life insurance?

Q: Explain how excessive spending can prevent effective financial planning.

Explain how excessive spending can prevent effective financial planning.

Q: Judy pays off her car loan and now must decide how she

Judy pays off her car loan and now must decide how she wants to invest the extra $3,648 per year that she budgeted for car payments. She decides to invest this additional amount in her employer-sponso...

Q: Judy believes that another benefit of investing the extra $3,

Judy believes that another benefit of investing the extra $3,648 in her employer sponsored retirement plan is the tax savings. Judy is in a 25% marginal tax bracket. How much will investing in this ma...

Q: Miguel, a recent 22-year-old college graduate,

Miguel, a recent 22-year-old college graduate, wants to retire a millionaire. How much will he need to set aside annually to achieve his goal, assuming he plans to retire at age 67 and he can earn an...

Q: Judy has just received $12,500 as an inheritance from

Judy has just received $12,500 as an inheritance from her uncle and is considering ways to use the money. Judy’s car is one-year-old, and her monthly payment is $304. She owes 48 more payments. The am...

Q: Dave and Sharon want to make sure that their family is properly

Dave and Sharon want to make sure that their family is properly cared for in the event of their death. They recently purchased term life insurance and want to make sure that the funds are allocated to...

Q: Brad tells you that he has revised his retirement plans. He

Brad tells you that he has revised his retirement plans. He has set an even more ambitious goal of retiring in 20 years instead of the original goal of 30 years. His goal is to save $500,000 by that t...

Q: Brad tells you that he has revised his retirement plans. He

Brad tells you that he has revised his retirement plans. He has set an even more ambitious goal of retiring in 20 years instead of the original goal of 30 years. His goal is to save $500,000 by that t...

Q: Brad tells you that he has revised his retirement plans. He

Brad tells you that he has revised his retirement plans. He has set an even more ambitious goal of retiring in 20 years instead of the original goal of 30 years. His goal is to save $500,000 by that t...

Q: Brad tells you that he has revised his retirement plans. He

Brad tells you that he has revised his retirement plans. He has set an even more ambitious goal of retiring in 20 years instead of the original goal of 30 years. His goal is to save $500,000 by that t...

Q: Dave and Sharon want to make sure that their family is properly

Dave and Sharon want to make sure that their family is properly cared for in the event of their death. They recently purchased term life insurance and want to make sure that the funds are allocated to...

Q: Dave and Sharon want to make sure that their family is properly

Dave and Sharon want to make sure that their family is properly cared for in the event of their death. They recently purchased term life insurance and want to make sure that the funds are allocated to...

Q: Next on the Sampsons’ financial planning checklist is saving for retirement.

Next on the Sampsons’ financial planning checklist is saving for retirement. Dave’s employer offers a 401(k) plan, but Dave has not participated in it up to this po...

Q: What is a profit sharing plan? What are the contribution limits

What is a profit sharing plan? What are the contribution limits for profit sharing plans?

Q: What is the main advantage of retirement planning?

What is the main advantage of retirement planning?

Q: Next on the Sampsons’ financial planning checklist is saving for retirement.

Next on the Sampsons’ financial planning checklist is saving for retirement. Dave’s employer offers a 401(k) plan, but Dave has not participated in it up to this point. Now he wants to seriously consi...

Q: Next on the Sampsons’ financial planning checklist is saving for retirement.

Next on the Sampsons’ financial planning checklist is saving for retirement. Dave’s employer offers a 401(k) plan, but Dave has not participated in it up to this point. Now he wants to seriously consi...

Q: Paul has $10,000 that he wishes to invest in

Paul has $10,000 that he wishes to invest in bonds. He can purchase Treasury bonds with a coupon rate of 7% or municipal bonds with a coupon rate of 5.5%. Paul lives in a state with no state income ta...

Q: Carlos purchased 100 shares of stock in Company Alpha for $21

Carlos purchased 100 shares of stock in Company Alpha for $21 a share. He recently sold a call on the stock for $1.50 a share with a strike price of $40. The stock has since increased in price to $42...

Q: Chris purchased a call option on a stock for $200.

Chris purchased a call option on a stock for $200. The option gives him the right to purchase the stock at $30 per share until May 1. On May 1, the price of the stock is $28 per share. What is Chris’s...

Q: How much will Marie have in her retirement account in 10 years

How much will Marie have in her retirement account in 10 years if her contribution is $7,000 per year and the annual return on the account is 6%? How much of this amount represents interest?

Q: Tilly would like to invest $2,500 in before-

Tilly would like to invest $2,500 in before-tax income each year in a retirement account or in stock investments outside the retirement account. Tilly likes the stock investments outside the retiremen...

Q: In need of extra cash, Troy and Lilly decide to withdraw

In need of extra cash, Troy and Lilly decide to withdraw $8,000 from their traditional IRA. They are both 40 years old. They are in a 25% marginal tax bracket. What will be the tax consequences of thi...

Q: Lisa and Mark married at age 22. Each year until their

Lisa and Mark married at age 22. Each year until their 30th birthdays, they put $4,000 into their traditional IRAs. By age 30, they had bought a home and started a family. Although they continued to m...

Q: Nancy and Al have been planning their retirement since they married in

Nancy and Al have been planning their retirement since they married in their early 20s. In their mid-40s and with two children in college, they are finding it harder to save and fear they will fall sh...

Q: Bonnie paid $9,500 for corporate bonds that have a

Bonnie paid $9,500 for corporate bonds that have a par value of $10,000 and a coupon rate of 9%, payable annually. Bonnie received her first interest payment after holding the bonds for 11 months and...

Q: Katie paid $9,400 for a Ginnie Mae bond with

Katie paid $9,400 for a Ginnie Mae bond with a par value of $10,000 and a coupon rate of 6.5%. Two years later, after having received the annual interest payments on the bond, Katie sold the bond for...

Q: Timothy has an opportunity to buy a $1,000 par

Timothy has an opportunity to buy a $1,000 par value municipal bond with a coupon rate of 7% and a maturity of five years. The bond pays interest annually. If Timothy requires a return of 8%, what sho...

Q: Mia wants to invest in Treasury bonds that have a par value

Mia wants to invest in Treasury bonds that have a par value of $20,000 and a coupon rate of 4.5%. The bonds have a 10-year maturity, and Mia requires a 6% return. How much should Mia pay for her bonds...

Q: Emma is considering purchasing bonds with a par value of $10

Emma is considering purchasing bonds with a par value of $10,000. The bonds have an annual coupon rate of 8% and six years to maturity. The bonds are priced at $9,550. If Emma requires a 10% return, s...

Q: Mark has a Treasury bond with a par value of $30

Mark has a Treasury bond with a par value of $30,000 and a coupon rate of 6%. The bond has 15 years to maturity. Mark needs to sell the bond and new bonds are currently carrying coupon rates of 8%. At...

Q: What if Mark’s Treasury bond in the previous problem had a coupon

What if Mark’s Treasury bond in the previous problem had a coupon rate of 9% and new bonds still had interest rates of 8%? For what price should Mark sell the bond in this situation?

Q: John is a relatively conservative investor. He has recently come into

John is a relatively conservative investor. He has recently come into a large inheritance and wishes to invest the money where he can get a good return, but not worry about losing his principal. His b...

Q: In the past, some mutual funds often engaged in a practice

In the past, some mutual funds often engaged in a practice called “after-hours trading” that allowed some of their larger shareholders to reap profits or avoid losses in a manner not available to all...

Q: Rena purchased 200 shares of a no-load stock mutual fund

Rena purchased 200 shares of a no-load stock mutual fund. During the year she received $3 per share in dividend distributions, $200 in long-term capital gain distributions, and capital gains of $1,100...

Q: Ronnie owns 600 shares of a stock mutual fund. This year

Ronnie owns 600 shares of a stock mutual fund. This year he received dividend distributions of 60 stock mutual fund shares ($40 per share) and long-term capital gain distributions of 45 stock mutual f...

Q: Describe the three ways a mutual fund can generate returns for investors

Describe the three ways a mutual fund can generate returns for investors.

Q: Is a stock mutual fund’s past performance necessarily an indicator of future

Is a stock mutual fund’s past performance necessarily an indicator of future performance? What type of risk affects all stock mutual funds? Describe the trade-off between the expected return and risk...

Q: Discuss return and risk as they relate to bond mutual funds.

Discuss return and risk as they relate to bond mutual funds. What type of risk are all bond funds subject to? What other risk is associated with some bond funds? Describe the trade-off between risk an...

Q: What should investors consider when deciding whether to purchase shares of a

What should investors consider when deciding whether to purchase shares of a mutual fund? What characteristics of a mutual fund should be considered? Briefly discuss each characteristic.

Q: What is a prospectus? How does an investor obtain one?

What is a prospectus? How does an investor obtain one? What information does a prospectus provide?

Q: Where can an investor find price quotations for closed-end and

Where can an investor find price quotations for closed-end and open-end funds? What information will be provided in a quotation for open-end funds? What information will be provided in a quotation for...

Q: Explain how Lipper indexes are used.

Explain how Lipper indexes are used.

Q: Discuss diversification among mutual funds. Describe some strategies that make diversification

Discuss diversification among mutual funds. Describe some strategies that make diversification more effective. What is a mutual fund supermarket?

Q: What is a fund family? What are the benefits of using

What is a fund family? What are the benefits of using a fund family?

Q: What is a life-cycle fund? What are the advantages

What is a life-cycle fund? What are the advantages of this type of mutual fund?

Q: What are international bond funds? What specific type of risk do

What are international bond funds? What specific type of risk do these funds have that domestic bond funds do not have?

Q: What factors do you need to consider when deciding whether to add

What factors do you need to consider when deciding whether to add mutual fund investing to your financial plan?

Q: What are mutual funds? What two broad categories of mutual funds

What are mutual funds? What two broad categories of mutual funds exist, and how are they different? Do investors select the securities the mutual fund invests in?

Q: List three reasons for investing in mutual funds.

List three reasons for investing in mutual funds.

Q: What is a mutual fund’s net asset value (NAV)? How

What is a mutual fund’s net asset value (NAV)? How is the NAV calculated and reported?

Q: What is an open-end mutual fund? What types of

What is an open-end mutual fund? What types of companies usually manage open-end funds? Describe how these funds work on a day-to-day basis.

Q: What is a closed-end fund? Describe how closed-

What is a closed-end fund? Describe how closed-end funds function.

Q: What is the difference between no-load and load mutual funds

What is the difference between no-load and load mutual funds? How do loads affect a fund’s return? Why do some investors purchase load funds? How does an investor purchase a no-load fund?

Q: What kinds of expenses do mutual funds incur? How are expense

What kinds of expenses do mutual funds incur? How are expense ratios calculated? Why should investors pay attention to expense ratios?

Q: Describe the three components of the expense ratio. How can a

Describe the three components of the expense ratio. How can a no-load fund compensate brokers?

Q: List and briefly describe the different types of stock mutual funds.

List and briefly describe the different types of stock mutual funds.

Q: Why do investors invest in index funds? Discuss the popularity of

Why do investors invest in index funds? Discuss the popularity of index fund investment as it relates to expenses. What tax advantage do index funds offer relative to other types of mutual funds?

Q: List and briefly describe the types of bond mutual funds.

List and briefly describe the types of bond mutual funds.

Q: Why are some U.S. investors attracted to international and

Why are some U.S. investors attracted to international and global bond funds? What risk is associated with these funds that investors are not subject to when investing strictly in U.S. bond funds? Dis...

Q: As a result of watching a financial news network on cable,

As a result of watching a financial news network on cable, reading articles in some business magazines, and listening to a coworker tell how her portfolio doubled in value in six months, Brad is now c...

Q: As a result of watching a financial news network on cable,

As a result of watching a financial news network on cable, reading articles in some business magazines, and listening to a coworker tell how her portfolio doubled in value in six months, Brad is now c...

Q: As a result of watching a financial news network on cable,

As a result of watching a financial news network on cable, reading articles in some business magazines, and listening to a coworker tell how her portfolio doubled in value in six months, Brad is now c...

Q: As a result of watching a financial news network on cable,

As a result of watching a financial news network on cable, reading articles in some business magazines, and listening to a coworker tell how her portfolio doubled in value in six months, Brad is now c...

Q: As a result of watching a financial news network on cable,

As a result of watching a financial news network on cable, reading articles in some business magazines, and listening to a coworker tell how her portfolio doubled in value in six months, Brad is now c...

Q: As a result of watching a financial news network on cable,

As a result of watching a financial news network on cable, reading articles in some business magazines, and listening to a coworker tell how her portfolio doubled in value in six months, Brad is now c...

Q: Mike has decided that it is time he put his money to

Mike has decided that it is time he put his money to work for him. He has accumulated a substantial nest egg in a savings account at a local bank, but he realizes that with less than 3% interest he wi...

Q: Why is it important to diversify your financial holdings across financial assets

Why is it important to diversify your financial holdings across financial assets? How does asset allocation enable you to accomplish diversification?

Q: What factors influence a portfolio’s risk? Explain.

What factors influence a portfolio’s risk? Explain.

Q: Describe two strategies for diversifying a stock portfolio.

Describe two strategies for diversifying a stock portfolio.

Q: How can allocating some of your assets to bonds reduce the level

How can allocating some of your assets to bonds reduce the level of risk in your portfolio?

Q: What are real estate investment trusts (REITs)? How are they

What are real estate investment trusts (REITs)? How are they classified? What are some attractive characteristics of REITs? How can REITs help diversify a portfolio?

Q: Explain how your tolerance for risk when investing may have changed by

Explain how your tolerance for risk when investing may have changed by the time you retire, and why.

Q: What is a call option? How does it work?

What is a call option? How does it work?

Q: What is a put option? How does it work?

What is a put option? How does it work?

Q: “There is a right way and a wrong way to use

“There is a right way and a wrong way to use stock options in asset allocation.” Evaluate this statement.

Q: Discuss the role that your stage in life plays in the asset

Discuss the role that your stage in life plays in the asset allocation decision.

Q: How does your risk tolerance affect the asset allocation decision?

How does your risk tolerance affect the asset allocation decision?

Q: How might your expectations of economic conditions influence your asset allocation?

How might your expectations of economic conditions influence your asset allocation? What is the problem with this strategy?

Q: What is meant by correlations among investments? How does correlation impact

What is meant by correlations among investments? How does correlation impact portfolio risk?

Q: Assume that 11 months ago you purchased stock in XYZ Company for

Assume that 11 months ago you purchased stock in XYZ Company for $50 a share. The stock price is now $72 a share but you would like to wait another month before selling the stock in order to pay a low...

Q: What is a covered call strategy?

What is a covered call strategy?

Q: Explain how mutual funds can help you conduct affordable asset allocation.

Explain how mutual funds can help you conduct affordable asset allocation.

Q: Over the last month, the Sampsons have been struggling with how

Over the last month, the Sampsons have been struggling with how to invest their savings to support their children’s college education. They previously considered stocks and bonds and are now seriously...

Q: Over the last month, the Sampsons have been struggling with how

Over the last month, the Sampsons have been struggling with how to invest their savings to support their children’s college education. They previously considered stocks and bonds and are now seriously...

Q: Over the last month, the Sampsons have been struggling with how

Over the last month, the Sampsons have been struggling with how to invest their savings to support their children’s college education. They previously considered stocks and bonds and are now seriously...

Q: What is a portfolio? How does a diverse portfolio help reduce

What is a portfolio? How does a diverse portfolio help reduce risk?

Q: What is a stock option? Why is it important for an

What is a stock option? Why is it important for an investor to understand how stock options function?

Q: Why can asset allocation be expensive? How can you reduce the

Why can asset allocation be expensive? How can you reduce the costs?

Q: How is a gain or loss calculated from the trading of call

How is a gain or loss calculated from the trading of call options?

Q: Why would a global recession possibly limit the potential benefits from international

Why would a global recession possibly limit the potential benefits from international diversification?

Q: Explain how economic conditions in the United States influence economies of other

Explain how economic conditions in the United States influence economies of other countries.

Q: Juana wants to add another asset to her portfolio. She is

Juana wants to add another asset to her portfolio. She is trying to decide between two assets that have correlations with her portfolio of +.65 and -.12 respectively. Which asset will provide the grea...

Q: The Sampsons are considering investing in bonds as a way of saving

The Sampsons are considering investing in bonds as a way of saving for their children’s college education. They learn that there are bonds with maturities between 12 and 16 years from now, which is ex...

Q: The Sampsons are considering investing in bonds as a way of saving

The Sampsons are considering investing in bonds as a way of saving for their children’s college education. They learn that there are bonds with maturities between 12 and 16 years fro...

Q: The Sampsons are considering investing in bonds as a way of saving

The Sampsons are considering investing in bonds as a way of saving for their children’s college education. They learn that there are bonds with maturities between 12 and 16 years from now, which is ex...

Q: The Sampsons are considering investing in bonds as a way of saving

The Sampsons are considering investing in bonds as a way of saving for their children’s college education. They learn that there are bonds with maturities between 12 and 16 years from now, which is ex...

Q: Compare and contrast a traditional IRA with a Roth IRA. Discuss

Compare and contrast a traditional IRA with a Roth IRA. Discuss the advantages of each. What factors will affect your choice of IRAs?

Q: What is an annuity? What is the difference between a fixed

What is an annuity? What is the difference between a fixed annuity and a variable annuity? What is the main disadvantage of annuities?

Q: Why are retirement accounts more beneficial than other investments that could be

Why are retirement accounts more beneficial than other investments that could be used for retirement? Describe an effective strategy for retirement planning.

Q: When estimating the future value of a retirement investment, what factors

When estimating the future value of a retirement investment, what factors will affect the amount of funds available to you at retirement? Explain.

Q: When estimating the future value of a set of annual investments,

When estimating the future value of a set of annual investments, what factors will affect the amount of funds available to you at retirement?

Q: Explain the tax benefits of investing within a retirement account versus investing

Explain the tax benefits of investing within a retirement account versus investing outside a retirement account.

Q: Why is it important to begin retirement planning while you are young

Why is it important to begin retirement planning while you are young?

Q: How does your retirement age impact the amount of Social Security benefits

How does your retirement age impact the amount of Social Security benefits you will receive?

Q: What is an employer match? Why is it important to take

What is an employer match? Why is it important to take advantage of an employer match?

Q: What factors should you consider when deciding how to invest in your

What factors should you consider when deciding how to invest in your defined-contribution retirement fund?

Q: How does Social Security fit into retirement planning? How does an

How does Social Security fit into retirement planning? How does an individual qualify for Social Security benefits? When do you receive benefits?

Q: How are the retirement benefits under Social Security calculated? Describe some

How are the retirement benefits under Social Security calculated? Describe some factors that affect the amount of your benefits.

Q: Discuss some of the concerns about the future of Social Security.

Discuss some of the concerns about the future of Social Security.

Q: Describe how employer-sponsored retirement plans work in general.

Describe how employer-sponsored retirement plans work in general.

Q: What is a defined-benefit plan? What is vesting?

What is a defined-benefit plan? What is vesting? What does it mean to be fully vested?

Q: What is a defined- contribution plan? Why are many employers

What is a defined- contribution plan? Why are many employers switching to this type of plan? List some of the benefits a defined-contribution plan offers to employees.

Q: Briefly discuss the key retirement planning decisions an individual must make.

Briefly discuss the key retirement planning decisions an individual must make.

Q: Discuss the general characteristics of a 401(k) plan.

Discuss the general characteristics of a 401(k) plan. What is a 403(b) plan?

Q: Compare and contrast a Simplified Employee Pension (SEP) plan and

Compare and contrast a Simplified Employee Pension (SEP) plan and a Savings Incentive Match Plan for Employees (SIMPLE).

Q: Discuss profit-sharing and employee stock ownership plans (ESOPs).

Discuss profit-sharing and employee stock ownership plans (ESOPs).

Q: Discuss the choices an employee has to manage a retirement account on

Discuss the choices an employee has to manage a retirement account on leaving an employer.

Q: Briefly describe two popular retirement plans for self-employed individuals.

Briefly describe two popular retirement plans for self-employed individuals.

Q: Cedrick works for an employer that has a profit sharing retirement system

Cedrick works for an employer that has a profit sharing retirement system. Assuming Cedrick made $133,000 last year, what is the maximum amount his employer can contribute to his retirement account?

Q: How much would Barry (from problem 1) have at retirement

How much would Barry (from problem 1) have at retirement if he had started this plan at age 25? Data from Problem 1: Barry has just become eligible for his employer-sponsored retirement plan. Barry...

Q: Thomas earns $45,000 per year. What retirement plan

Thomas earns $45,000 per year. What retirement plan should Thomas consider under the following circumstances? a. He works for a large private firm. b. He works at a university. c. He owns a small...

Q: Lloyd and his wife, Jean, have no retirement plan at

Lloyd and his wife, Jean, have no retirement plan at work, but they contribute $4,000 each year to a traditional IRA. They are in a 25% marginal tax bracket. What tax savings will they realize for the...

Q: Ezra works for a firm that offers a 100% match up

Ezra works for a firm that offers a 100% match up to 4% of his salary on retirement contributions. How much will Ezra accumulate in 20 years if he contributes 4% of his salary of $100,000 per year ass...

Q: The Sampsons have been evaluating methods for investing money that will ultimately

The Sampsons have been evaluating methods for investing money that will ultimately be used to support their children’s college education. They have concluded that a mutual fund is better suited to the...

Q: The Sampsons have been evaluating methods for investing money that will ultimately

The Sampsons have been evaluating methods for investing money that will ultimately be used to support their children’s college education. They have concluded that a mutual fund is better suited to the...

Q: The Sampsons have been evaluating methods for investing money that will ultimately

The Sampsons have been evaluating methods for investing money that will ultimately be used to support their children’s college education. They have concluded that a mutual fund is better suited to the...

Q: With your help, Dave and Sharon Sampson have now established a

With your help, Dave and Sharon Sampson have now established a financial plan. Among their key financial planning decisions were the following: • Budgeting. They decided to revise their budget to mak...

Q: If Hope (from problem 1) had invested the same amount

If Hope (from problem 1) had invested the same amount of money in a no-load fund with the same price per share, how many shares could she have purchased? Data from Problem 1: Hope invested $9,...

Q: Mark owns a mutual fund with a NAV of $45.

Mark owns a mutual fund with a NAV of $45.00 per share and expenses of $1.45 per share. What is the expense ratio for Mark’s mutual fund?  

Q: Hope (from problem 1) later sells her shares in the

Hope (from problem 1) later sells her shares in the mutual fund for $37 per share. What would her return be in problems 1 and 2? Data from Problem 1: Hope invested $9,000 in a mutual fund...

Q: Hunter invested $7,000 in shares of a load mutual

Hunter invested $7,000 in shares of a load mutual fund. The load of the fund is 7%. When Hunter purchased the shares, the NAV per share was $70. A year later, Hunter sold the shares at a NAV of $68...

Q: Hope invested $9,000 in a mutual fund when the

Hope invested $9,000 in a mutual fund when the price per share was $30. The fund has a load fee of $300. How many shares did she purchase?

Q: Teresa purchased a call option on a stock for $250.

Teresa purchased a call option on a stock for $250. The option allows her to purchase the stock for $40 per share if she exercises the option by December 31. On December 15, the stock rises to $60 per...

Q: Maryanne paid $300 for a call option on a stock.

Maryanne paid $300 for a call option on a stock. The option gives her the right to buy the stock for $27 per share until March 1. On February 15, the stock price rises to $32 per share, and Maryanne e...

Q: Barry has just become eligible for his employer-sponsored retirement plan

Barry has just become eligible for his employer-sponsored retirement plan. Barry is 35 and plans to retire at 65. Barry calculates that he can contribute $3,600 per year to his plan. Barry’s employer...

Q: How much would Barry have if he could earn a 10%

How much would Barry have if he could earn a 10% return on his investment beginning at age 35?

Q: Assuming an 8% return, how much would Barry have if

Assuming an 8% return, how much would Barry have if he could invest an additional $1,000 per year that his employer would match beginning at age 35?

Q: Ricky and Sharon married at age 22, started a family,

Ricky and Sharon married at age 22, started a family, and bought a house. At age 30, they began making a contribution of $4,000 to a traditional IRA. They continued making these contributions annually...

Q: 1. Based on Mackenzie’s experiences, what benefits and drawbacks are

1. Based on Mackenzie’s experiences, what benefits and drawbacks are associated with online car buying? 2. What additional actions might Mackenzie consider before buying a motor vehicle? 3. What ac...

Q: 1. Using Your Personal Financial Plan Sheet 22, compare the

1. Using Your Personal Financial Plan Sheet 22, compare the advantages and the disadvantages of renting a home or apartment versus the purchase of a home. 2. Jamie Lee and Ross are estimating that the...

Q: What can individuals do to reduce health care costs?

What can individuals do to reduce health care costs?

Q: What are the reasons for rising health care expenditures?

What are the reasons for rising health care expenditures?

Q: What are various groups doing to curb the high costs of health

What are various groups doing to curb the high costs of health care?

Q: What are the four methods of determining life insurance needs?

What are the four methods of determining life insurance needs?

Q: For each of the following statements, indicate your response by writing

For each of the following statements, indicate your response by writing “T” or “F”. a. Life insurance is one of the least important and inexpensive purchases. b. A beneficiary is a person named to re...

Q: What is life insurance? What is its purpose?

What is life insurance? What is its purpose?

Q: For each of the following statements, indicate your response by writing

For each of the following statements, indicate your response by writing “T” or “F”. a. Stock life insurance companies generally sell participating (or par) policies. b. Mutual life insurance compani...

Q: What are the five forms of term insurance?

What are the five forms of term insurance?

Q: What are the four forms of whole life insurance?

What are the four forms of whole life insurance?

Q: What are the two types of insurance companies?

What are the two types of insurance companies?

Q: Newlyweds Jamie Lee and Ross have had several milestones in the past

Newlyweds Jamie Lee and Ross have had several milestones in the past year. They are newlyweds, recently purchased their first home and now have twins on the way! Jamie Lee and Ross have to seriously...

Q: Define the following types of life insurance policies. a.

Define the following types of life insurance policies. a. Group life insurance b. Credit life insurance c. Endowment life insurance

Q: What factors do you consider in choosing an insurance agent?

What factors do you consider in choosing an insurance agent?

Q: What are the four most common settlement options?

What are the four most common settlement options?

Q: What are the key provisions in a life insurance policy?

What are the key provisions in a life insurance policy?

Q: What is a rider?

What is a rider?

Q: What are the various riders in a life insurance policy?

What are the various riders in a life insurance policy?

Q: Match the following terms with the appropriate definition: Endowment

Match the following terms with the appropriate definition: Endowment a. A person named to receive the benefits from an insurance policy. Beneficiary b. Provides coverage for a specific period of...

Q: As a general rule, are annuities advisable for people in poor

As a general rule, are annuities advisable for people in poor health? Why or why not?

Q: What are fixed and variable annuities?

What are fixed and variable annuities?

Q: What is an annuity?

What is an annuity?

Q: Jamie Lee and Ross, happy newlyweds with a new home and

Jamie Lee and Ross, happy newlyweds with a new home and twins on the way, are anxiously awaiting their new bundles of joy. Ross was a little nervous, and understandably so, as he quietly wondered if...

Q: What is the difference between an immediate and a deferred annuity?

What is the difference between an immediate and a deferred annuity?

Q: How can you obtain the money needed to begin investing?

How can you obtain the money needed to begin investing?

Q: In your own words, describe the time value of money concept

In your own words, describe the time value of money concept and how it affects your investment program.

Q: What factors should you consider when performing a financial checkup?

What factors should you consider when performing a financial checkup?

Q: Why are safety and risk two sides of the same coin?

Why are safety and risk two sides of the same coin?

Q: How do income, growth, and liquidity affect the choice of

How do income, growth, and liquidity affect the choice of an investment?

Q: In your own words, describe each of the four components of

In your own words, describe each of the four components of the risk factor.

Q: Assume you must choose an investment that will help you obtain your

Assume you must choose an investment that will help you obtain your investment goals. Rank the following investments from 1 (low) to 5 (high) and then justify your choice for your investment portfoli...

Q: Why should investors be concerned with asset allocation and the time their

Why should investors be concerned with asset allocation and the time their investments have to work for them?

Q: Why should you monitor the value of your investment?

Why should you monitor the value of your investment?

Q: Visit the Social Security Administration’s Web page to determine your approximate monthly

Visit the Social Security Administration’s Web page to determine your approximate monthly Social Security disability benefits should you become disabled in the current year. Or call your Social Secur...

Q: What are the risks involved when investing in state and local securities

What are the risks involved when investing in state and local securities?

Q: Using the formula presented in this section, calculate the taxable equivalent

Using the formula presented in this section, calculate the taxable equivalent yields for the following tax-exempt bonds.

Q: Explain the difference between a general obligation bond and a revenue bond

Explain the difference between a general obligation bond and a revenue bond.

Q: What is the difference between a Treasury bill, a Treasury note

What is the difference between a Treasury bill, a Treasury note, a Treasury bond, and TIPS?

Q: List the three reasons investors purchase corporate bonds.

List the three reasons investors purchase corporate bonds.

Q: Calculate the annual interest and the semiannual interest payment for corporate bond

Calculate the annual interest and the semiannual interest payment for corporate bond issues with a face value of $1,000.

Q: In your own words, describe why corporations sell corporate bonds.

In your own words, describe why corporations sell corporate bonds.

Q: What type of information about bonds is available on the Internet?

What type of information about bonds is available on the Internet?

Q: Explain what the following bond ratings mean for investors. Aaa

Explain what the following bond ratings mean for investors. Aaa BBB CC

Q: Calculate the current price for the following bonds.

Calculate the current price for the following bonds.

Q: How does your age affect the type of investments you choose to

How does your age affect the type of investments you choose to obtain your financial goals?

Q: You estimate that you can save $3,450 by selling

You estimate that you can save $3,450 by selling your home yourself rather than using a real estate agent. What would be the future value of that amount if invested for five years at 3 percent?

Q: Most home insurance policies cover jewelry for $1,000 and

Most home insurance policies cover jewelry for $1,000 and silverware for $2,500 unless items are covered with additional insurance. If $4,500 worth of jewelry and $6,000 worth of silverware were stol...

Q: What amount would a person with actual cash value (ACV)

What amount would a person with actual cash value (ACV) coverage receive for two-year-old furniture destroyed by a fire? The furniture would cost $2,000 to replace today and had an estimated life of f...

Q: The Tucker family has health insurance coverage that pays 80 percent of

The Tucker family has health insurance coverage that pays 80 percent of out-of-hospital expenses after a $500 deductible per person. If one family member has doctor and prescription medication expense...

Q: As of 2012, per capita spending on health care in the

As of 2012, per capita spending on health care in the United States was about $9,000. If this amount increased by 7 percent a year, what would be the amount of per capita spending for health care in...

Q: Becky’s comprehensive major medical health insurance plan at work has a deductible

Becky’s comprehensive major medical health insurance plan at work has a deductible of $750. The policy pays 85 percent of any amount above the deductible. While on a hiking trip, she contracted a rare...

Q: Georgia has a take-home pay of $600 a week

Georgia has a take-home pay of $600 a week. Her disability insurance coverage replaces 70 percent of her earnings after a four-week waiting period. What amount would she receive in disability benefit...

Q: Ronald Roth started his new job as Controller with Aerosystems today.

Ronald Roth started his new job as Controller with Aerosystems today. Carol, the employee benefits clerk, has given Ronald a packet that contains information on the company’s health insurance options....

Q: Ronald Roth started his new job as Controller with Aerosystems today.

Ronald Roth started his new job as Controller with Aerosystems today. Carol, the employee benefits clerk, has given Ronald a packet that contains information on the company’s health insurance options....

Q: Ronald Roth started his new job as Controller with Aerosystems today.

Ronald Roth started his new job as Controller with Aerosystems today. Carol, the employee benefits clerk, has given Ronald a packet that contains information on the company’s health insurance options....

Q: Pam is 31 and recently divorced, with children ages 3 and

Pam is 31 and recently divorced, with children ages 3 and 6. She earns $40,000 a year as a secretary. Her employer provides her with basic health insurance coverage. She receives child support from...

Q: In 2005, Joelle spent $5,000 on her health

In 2005, Joelle spent $5,000 on her health care. If this amount increased by 6 percent per year, what would be the amount Joelle spent in 2015 for the same health care? (Hint: Use the Time Value of...

Q: You are a wage earner in a “typical family,” with

You are a wage earner in a “typical family,” with $40,000 gross annual income. Use the easy method to determine how much insurance you should carry.

Q: Using the "nonworking" spouse method, what should be the

Using the "nonworking" spouse method, what should be the life insurance needs for a family whose youngest child is 5 years old?

Q: Sophia purchased a variable annuity contract with a $25,

Sophia purchased a variable annuity contract with a $25,000 purchase payment. Surrender charges being with 7 percent in the first year, and decline by 1 percent each year. In addition, Sophia can w...

Q: You and your spouse are in good health and have reasonably secure

You and your spouse are in good health and have reasonably secure careers. Each of you makes about $40,000 annually. You own a home with an $80,000 mortgage, and you owe $15,000 on car loans, $5,000...

Q: Shaan and Anita are married and have two children, ages 4

Shaan and Anita are married and have two children, ages 4 and 7. Anita is a “nonworking” spouse who devotes all of her time to household activities. Estimate how much life insurance Shaan and Anita...

Q: Obtain premium rates for $50,000 whole life, universal

Obtain premium rates for $50,000 whole life, universal life, and term life policies from local insurance agents. Compare the cost and provisions of these policies.

Q: Use Exhibit 10-1 to find the average number of additional

Use Exhibit 10-1 to find the average number of additional years a 25-year-old male and female were expected to live, based on the statistics gathered by the U.S. government as of 2009.

Q: Based on the following data, would you recommend buying or renting

Based on the following data, would you recommend buying or renting? / Assume an after-tax savings interest rate of 6 percent and a tax rate of 28 percent.

Q: When renting, various move-in costs will be encountered.

When renting, various move-in costs will be encountered. Estimate the following amounts: First month rent $ _______________ Security deposit $ _______________ Security deposit for utilities...

Q: What do you consider to be an “ethical” health care

What do you consider to be an “ethical” health care system? Explain your answer.

Q: Many locations require that renters be paid interest on their security deposits

Many locations require that renters be paid interest on their security deposits. If you have a security deposit of $1,800, how much would you expect a year at 3 percent?

Q: Condominiums usually require a monthly fee for various services. At $

Condominiums usually require a monthly fee for various services. At $235 a month, how much would a homeowner pay over a 10-year period for living in this housing facility?

Q: Ben and Carla Covington plan to buy a condominium. They will

Ben and Carla Covington plan to buy a condominium. They will obtain a $220,000, 30-year mortgage, at 5 percent. Their annual property taxes are expected to be $1,800. Property insurance is $480 a year...

Q: Estimate the affordable monthly mortgage payment, the affordable mortgage amount,

Estimate the affordable monthly mortgage payment, the affordable mortgage amount, and the affordable home purchase price for the following situation Monthly gross income, $2,950 Down payment to b...

Q: Based on Exhibit 7–7, what would be the monthly

Based on Exhibit 7–7, what would be the monthly mortgage payments for each of the following situations? a. A $160,000,15-year loan at 6.5 percent. b. A $215,000, 30-year loan at 5 percent. c. A $1...

Q: Which mortgage would result in higher total payments? (LO 7

Which mortgage would result in higher total payments? (LO 7.3) Mortgage A: $985 a month for 30 years Mortgage B: $780 a month for 5 years and $1,056 for 25 years

Q: If an adjustable-rate 30-year mortgage for $120

If an adjustable-rate 30-year mortgage for $120,000 starts at 4.0 percent and increases to 5.5 percent, what is the amount of increase of the monthly payment?

Q: Kelly and Tim Jarowski plan to refinance their mortgage to obtain a

Kelly and Tim Jarowski plan to refinance their mortgage to obtain a lower interest rate. They will reduce their mortgage payments by $56 a month. Their closing costs for refinancing will be $1,670. Ho...

Q: In an attempt to have funds for a down payment in five

In an attempt to have funds for a down payment in five years, James Dupont plans to save $3,800 a year for the next five years. With an interest rate of 4 percent, what amount will James have availab...

Q: Based on Exhibit 7–9 , if you were buying a

Based on Exhibit 7–9 , if you were buying a home, what would be the approximate total closing costs (excluding the down payment)? As an alternative, obtain actual figures for the closing items by cont...

Q: What is the relationship between health insurance coverage and other aspects of

What is the relationship between health insurance coverage and other aspects of financial planning?

Q: In 1994, you purchased a $1,000 corporate bond

In 1994, you purchased a $1,000 corporate bond issued by Boeing. At the time, the interest rate for the bond was 6 percent. Today, comparable bonds are paying 4.30 percent. a. What is the approxima...

Q: Assume you are 45 years old, want to retire in 20

Assume you are 45 years old, want to retire in 20 years, and currently have an investment portfolio valued at $240,000 invested in technology stocks. After talking with a financial advisor, you feel...

Q: Five years ago, you purchased a $1,000 corporate

Five years ago, you purchased a $1,000 corporate bond issued by General Electric. The interest rate for the bond was 4 percent. Today comparable bonds are paying 5 percent. a. What is the approxim...

Q: In the preceding example, assuming their insurance rates remain the same

In the preceding example, assuming their insurance rates remain the same, how many years will it take Dave and Ellen to earn back in discounts the cost of the deadbolts? The cost of the smoke detector...

Q: An online buying club offers a membership for $300, for

An online buying club offers a membership for $300, for which you will receive a 10 percent discount on all brand-name items you purchase. How much would you have to buy to cover the cost of the membe...

Q: John Walters is comparing the cost of credit to the cash price

John Walters is comparing the cost of credit to the cash price of an item. If John makes an $80 down payment and pays $35 a month for 24 months, how much more will that amount be than the cash price o...

Q: Calculate the unit price of each of the following items:

Calculate the unit price of each of the following items: a. Motor oil—2.5 quarts for $1.95 (cents/quart) b. Cereal—15 ounces for $2.17 (cents/ounce) c. Canned fruit—13 ounces for 89 cents (cents/ounce...

Q: A service contract for a video projection system costs $70 a

A service contract for a video projection system costs $70 a year. You expect to use the system for five years. Instead of buying the service contract, what would be the future value of these annual a...

Q: A work-at-home opportunity is available in which you

A work-at-home opportunity is available in which you will receive 3 percent of the sales for customers you refer to the company. The cost of your “franchise fee” is $600. How much would your customers...

Q: What would be the net present value of a microwave oven that

What would be the net present value of a microwave oven that costs $159 and will save you $68 a year in time and food away from home? Assume an average return on your savings of 4 percent for five yea...

Q: When using the research-based approach for purchasing described in this

When using the research-based approach for purchasing described in this chapter, which actions do you believe are overlooked by most shoppers?

Q: If a person saves $62 a month by using coupons and

If a person saves $62 a month by using coupons and doing comparison shopping, (a) what is the amount for a year? (b) What would be the future value of this annual amount over 10 years, assuming an in...

Q: Based on financial and opportunity costs, which of the following do

Based on financial and opportunity costs, which of the following do you believe would be the wiser purchase? Vehicle 1: A three-year-old car with 45,000 miles, costing $16,700 and requiring $1,385 of...

Q: Based on the following data, prepare a financial comparison of buying

Based on the following data, prepare a financial comparison of buying and leasing a motor vehicle with a $24,000 cash price: Down payment (to finance vehicle), $4,000 Monthly loan payment, $560...

Q: Based on the data provided here, calculate the items requested:

Based on the data provided here, calculate the items requested: (LO 6.2) Annual depreciation, $2,500 Annual mileage, 13,200 Current year’s loan interest, $650 Miles per gallon, 24 Insurance, $680...

Q: Based on the following, calculate the costs of buying versus leasing

Based on the following, calculate the costs of buying versus leasing a motor vehicle. (LO 6.2) Purchase Costs Down payment: $1,500 Loan payment: $450 for 48 months Estimated value at end of...

Q: A class-action suit against a utility company resulted in a

A class-action suit against a utility company resulted in a settlement of $1.4 million for 62,000 customers. If the legal fees, which must be paid from the settlement, are $300,000, what amount will e...

Q: Shelly’s variable annuity has a mortality and expense risk charge at an

Shelly’s variable annuity has a mortality and expense risk charge at an annual rate of 1.25 percent of account value. Her account value during the year is $50,000. What was Shelly’s mortality and ex...

Q: Your variable annuity charges administrative fees at an annual rate of 0

Your variable annuity charges administrative fees at an annual rate of 0.15 percent of account value. Your average account value during the year is $200,000. What is the administrative fee for the y...

Q: Mark and Parveen are the parents of three young children. Mark

Mark and Parveen are the parents of three young children. Mark is a store manager in a local supermarket. His gross salary is $75,000 per year. Parveen is a full time stay-at-home mom. Use the eas...

Q: You are a dual income, childless family. You and your

You are a dual income, childless family. You and your spouse have the following debts (total): mortgage, $200,000; auto loan, $10,000; credit card balance, $4,000; and other debts of $10,000. Furthe...

Q: What are potential concerns associated with obtaining furniture, appliances, and

What are potential concerns associated with obtaining furniture, appliances, and other items from a rent-to-own business?

Q: Using the "nonworking" spouse method, what should be the

Using the "nonworking" spouse method, what should be the life insurance needs for a family whose youngest child is ten years old?

Q: 1. A common advantage associated with home ownership is a

1. A common advantage associated with home ownership is a. financial benefits. b. ease of mobility. c. limited financial risks. d. low initial costs. 2. Most real estate professionals believe that th...

Q: 1. Legal responsibility for the financial cost of another person’s losses

1. Legal responsibility for the financial cost of another person’s losses or injuries is called a. negligence. b. liability. c. property damage liability. d. comprehensive coverage. 2. Renter’s prope...

Q: 1. Health insurance plans can be purchased through a.

1. Health insurance plans can be purchased through a. group health insurance b. individual health insurance c. COBRA d. All of the above 2. Which type of health insurance pays part or all of the surg...

Q: 1. One of the following is not a method of estimating

1. One of the following is not a method of estimating your life insurance requirements. a. DINK b. Family need c. Hard d. Easy 2. Which life insurance provision allows you not to forfeit all accrued...

Q: 1. Which of the following investments would have the greatest potential

1. Which of the following investments would have the greatest potential for safety? a. Government bonds b. Stocks c. Commodities d. Options 2. Which of the following statements is false? a. Asset all...

Q: 1. A(n) __________ warranty covers most repairs of

1. A(n) __________ warranty covers most repairs of a product. a. limited b. implied c. full d. express 2. The highest prices for used cars are usually at a a. new-car dealer. b. used-car dealer. c...

Q: 1. Several financial benefits are associated with renting your place of

1. Several financial benefits are associated with renting your place of residence. 2. A lease is mainly designed to protect the rights of the landlord. 3. Cooperative housing involves the purchase of...

Q: 1. In today's world, you cannot get insurance for just

1. In today's world, you cannot get insurance for just about anything. 2. Homeowner’s insurance covers the cost of living elsewhere while your home is being repaired from a fire. 3. The special form...

Q: 1. Health insurance includes both medical expense insurance and disability income

1. Health insurance includes both medical expense insurance and disability income insurance. 2. Hospital expense insurance pays part or all of hospital bills for room, board, and other charges. 3. Dre...

Q: 1. How could the Bowmans benefit from buying a home that

1. How could the Bowmans benefit from buying a home that needed improvements? 2. How might Beth Young have found out when mortgage rates were at a level that would make refinancing her condominium mor...

Q: What is a “certified preowned” vehicle? What are the

What is a “certified preowned” vehicle? What are the benefits and drawbacks of this type of purchase?

Q: 1. A beneficiary is a person named to receive the benefits

1. A beneficiary is a person named to receive the benefits from an insurance company. 2. There is a rule of thumb that a good target is life insurance totaling nine to ten times your annual income. 3...

Q: 1. A good rule of thumb is to limit credit purchases

1. A good rule of thumb is to limit credit purchases to 35 percent of your net (after tax) income. 2. An emergency fund is an amount of money that can be obtained quickly in case of immediate needs....

Q: Write true and false for the follwing 1. A purchasing

Write true and false for the follwing 1. A purchasing decision starts with gathering information. 2. Consumer information from business organizations is usually the most objective type of data availab...

Q: While fraud usually involves deceptions against consumers, what are some “

While fraud usually involves deceptions against consumers, what are some “frauds” that consumers commit against business?

Q: What actions would you recommend to a person who was considering buying

What actions would you recommend to a person who was considering buying a home that needed several improvements?

Q: Describe how knowledge of current interest rates would help you better plan

Describe how knowledge of current interest rates would help you better plan when obtaining a mortgage.

Q: Prepare a list of actions to take when selling a home.

Prepare a list of actions to take when selling a home.

Q: Should employers be required to provide employees some type of health insurance

Should employers be required to provide employees some type of health insurance coverage even if it is a group plan, with each employee paying his or her full premium?

Q: Larry and Liz are a young couple both working full time and

Larry and Liz are a young couple both working full time and earning about $70,000 a year. They recently purchased a house and took out a large mortgage. Since both of them work, they own two cars an...

Q: You are considering two different corporate bonds. One is rated AAA

You are considering two different corporate bonds. One is rated AAA by Standard & Poor’s and pays 4.5 percent annual interest. The other bond is rated B by Standard & Poor’s and pays 6.2 percent ann...

Q: Is it ethical to spend more than you make month after month

Is it ethical to spend more than you make month after month? What repercussions could you encounter if you overspend on a regular basis?

Q: Explain the following statement: The potential return on any investment should

Explain the following statement: The potential return on any investment should be directly related to the risk the investor assumes.

Q: We Rent, So Why Do We Need Insurance? 1

We Rent, So Why Do We Need Insurance? 1. Why is it important for people who rent to have insurance? 2. Does the building owner’s property insurance ever cover the tenant’s personal property? 3. What i...

Q: Assume that you are choosing an investment for your retired parents.

Assume that you are choosing an investment for your retired parents. Would you choose a bond issued by the federal government, a state or local government, or a corporation? Justify your answer.

Q: After performing a financial checkup, you realize that you have too

After performing a financial checkup, you realize that you have too much credit card debt. What steps can you take to reduce the amount of money you owe on your credit cards?

Q: Analyze the four methods of determining life insurance requirements. Which method

Analyze the four methods of determining life insurance requirements. Which method is best and why?

Q: Visit a few websites of companies such as Metropolitan Life, New

Visit a few websites of companies such as Metropolitan Life, New York Life, Transamerica Life, Lincoln Benefit Life, or others of your choice. Then summarize the various types of insurance coverage av...

Q: Assume you are 30-years old, single, and just

Assume you are 30-years old, single, and just beginning to invest. How can you balance, safety, risk, and growth when choosing investments. Which component do you consider the most important?

Q: Review the settlement options on your family’s life insurance policies, and

Review the settlement options on your family’s life insurance policies, and discuss with your family which option would be the best choice for them at this time.

Q: Is it legal or ethical for an insurance agent to suggest a

Is it legal or ethical for an insurance agent to suggest a variable life insurance policy to an 80-year-old man? Explain your answer.

Q: In what circumstances would a $1,000 corporate bond be

In what circumstances would a $1,000 corporate bond be worth more than $1,000? In what circumstances would the corporate bond be worth less than $1,000?

Q: In what situations can comparing prices help in purchasing decisions?

In what situations can comparing prices help in purchasing decisions?

Q: How does a service contract differ from a warranty?

How does a service contract differ from a warranty?

Q: 1. Do you think Kathy’s father was planning wisely for the

1. Do you think Kathy’s father was planning wisely for the welfare of his family? Can you suggest ways in which this family could have cut monthly expenses and thus set aside some money for more insu...

Q: What types of brands are commonly available to consumers?

What types of brands are commonly available to consumers?

Q: Match the following descriptions with the warranties listed here. Write your

Match the following descriptions with the warranties listed here. Write your answer in the space provided. (a) express warranty: (b) service contact: (c) limited warranty: (d) implied warranty:...

Q: When might leasing a motor vehicle be appropriate?

When might leasing a motor vehicle be appropriate?

Q: What maintenance activities could increase the life of your vehicle?

What maintenance activities could increase the life of your vehicle?

Q: The following abbreviations appeared in an ad for selling used cars.

The following abbreviations appeared in an ad for selling used cars. Interpret these abbreviations. 1. AC 2. ABS 3. pwr mrrs 4. P/S

Q: What are the major sources of consumer information?

What are the major sources of consumer information?

Q: What actions are appropriate when buying a used car?

What actions are appropriate when buying a used car?

Q: How can most consumer complaints be resolved?

How can most consumer complaints be resolved?

Q: How does arbitration differ from mediation?

How does arbitration differ from mediation?

Q: What are common causes of consumer problems and complaints?

What are common causes of consumer problems and complaints?

Q: 1. What type of policy would you suggest for Jeff and

1. What type of policy would you suggest for Jeff and Ann? Why? 2. In your opinion do Jeff and Ann need additional insurance? Why or why not?

Q: Describe situations in which you might use the services of a lawyer

Describe situations in which you might use the services of a lawyer.

Q: In what types of situations would small claims court and class-

In what types of situations would small claims court and class-action suits be helpful?

Q: For the following situations, identify the legal action that would be

For the following situations, identify the legal action that would be most appropriate to take. (a) LEGAL AID SOCIETY (b) SMALL CLAIMS COURT (c) ARBITRATION (d) CLASS ACTION SUIT

Q: For the following situations, would you recommend that the person rent

For the following situations, would you recommend that the person rent or buy their housing? (Circle your answer) A person who desires to reduce income taxes paid A person who expects to be transferr...

Q: What are the main benefits and drawbacks of renting a place of

What are the main benefits and drawbacks of renting a place of residence?

Q: Which components of a lease are likely to be most negotiable?

Which components of a lease are likely to be most negotiable?

Q: What guidelines can be used to determine the amount to spend for

What guidelines can be used to determine the amount to spend for a home purchase?

Q: How can the quality of a school system benefit even homeowners in

How can the quality of a school system benefit even homeowners in a community who do not have school-age children?

Q: What are the advantages and disadvantages of owning a home?

What are the advantages and disadvantages of owning a home?

Q: How do changing interest rates affect the amount of mortgage a person

How do changing interest rates affect the amount of mortgage a person can afford?

Q: A Lesson From The Past 1. According to Mary Goldberg

A Lesson From The Past 1. According to Mary Goldberg, the chance to invest in New World Explorations was “too good to pass up,” and she lost $10,000. Why do you think so many people are taken by get-...

Q: Under what conditions might an adjustable-rate mortgage be appropriate?

Under what conditions might an adjustable-rate mortgage be appropriate?

Q: What are the main sources of money for a down payment?

What are the main sources of money for a down payment?

Q: What factors affect a person’s ability to qualify for a mortgage?

What factors affect a person’s ability to qualify for a mortgage?

Q: For the following situations, select the type of home financing action

For the following situations, select the type of home financing action that would be most appropriate: a. FIXED-RATE b. REFINANCE c. HOME EQUITY LOAN d. VA MORTGAGE e. REVERSE MORTGAGE

Q: What actions are recommended when planning to sell your home?

What actions are recommended when planning to sell your home?

Q: What factors affect the selling price of a home?

What factors affect the selling price of a home?

Q: What should you consider when deciding whether to sell your home on

What should you consider when deciding whether to sell your home on your own or use the services of a real estate agent?

Q: What are the four methods of managing risks? Give an example

What are the four methods of managing risks? Give an example for each.

Q: List the four steps in planning for your insurance program.

List the four steps in planning for your insurance program.

Q: Give an example of each kind of risk—personal, property

Give an example of each kind of risk—personal, property, and liability.

Q: Surprise! Jamie Lee and Ross were stunned to find that their

Surprise! Jamie Lee and Ross were stunned to find that their family of two has grown to a family of five! They were expecting twins until they found out the day they were born that they were actuall...

Q: What are the three types of risk? Give an example for

What are the three types of risk? Give an example for each.

Q: List at least four personal property items that are not covered by

List at least four personal property items that are not covered by a homeowner’s insurance policy.

Q: Define the following terms: a. Umbrella policy

Define the following terms: a. Umbrella policy b. Medical payments coverage c. Endorsement

Q: Identify the choice that best completes the statement or answers the question

Identify the choice that best completes the statement or answers the question: a. The personal liability portion of a homeowner’s insurance policy protects the insured against financial loss when his...

Q: Define the following terms: a. Homeowner’s Insurance b

Define the following terms: a. Homeowner’s Insurance b. Household inventory c. Personal property floater d. Renter’s insurance

Q: List the five factors that affect home insurance costs.

List the five factors that affect home insurance costs.

Q: What are the two methods insurance companies use in settling claims?

What are the two methods insurance companies use in settling claims?

Q: In the space provided, write “T” if you believe

In the space provided, write “T” if you believe the statement is true, “F” if the statement is false. a. Today most insurance policies automatically increase coverage as construction costs rise. b....

Q: What is no-fault insurance? What is its purpose?

What is no-fault insurance? What is its purpose?

Q: List at least three other kinds of automobile insurance that are available

List at least three other kinds of automobile insurance that are available to you.

Q: 1. Describe the stage in the adult life cycle (Exhibit

1. Describe the stage in the adult life cycle (Exhibit 1-1) that Jamie Lee and Ross are experiencing right now. What are some of the financial activities that they should be participating in at this...

Q: List the three main types of bodily injury coverage.

List the three main types of bodily injury coverage.

Q: In the space provided, write “T” if statement is

In the space provided, write “T” if statement is true, “F” if it is false. a. Financial responsibility law requires drivers to prove that they can pay for damage or injury caused by an automobile acci...

Q: What are the two ways by which you can reduce your vehicle

What are the two ways by which you can reduce your vehicle insurance costs?

Q: List the five factors that determine driver classification.

List the five factors that determine driver classification.

Q: In the space provided, write “A” if you agree

In the space provided, write “A” if you agree with the statement, “D” if you disagree. a. Motor vehicle insurance is not cheap. b. The average household spends less than $500 for motor vehicle insuran...

Q: What are three ways of purchasing health insurance?

What are three ways of purchasing health insurance?

Q: For each of the following statements, circle “T” for

For each of the following statements, circle “T” for true or “F” for false. a. Health insurance is available only as a benefit from an employer. b. You can continue your health insurance even if y...

Q: What is health insurance?

What is health insurance?

Q: What three types of coverage are included in the basic health insurance

What three types of coverage are included in the basic health insurance?

Q: What benefits are provided by a. Hospital expense coverage?

What benefits are provided by a. Hospital expense coverage? b. Surgical expenses coverage? c. Physician expense coverage?

Q: 1. Jamie Lee is considering a used vehicle, but cannot

1. Jamie Lee is considering a used vehicle, but cannot decide where to begin her search. Using Your Personal Financial Plan Sheets #19, name the sources available to Jamie Lee for a used car purchase...

Q: Match the following terms with an appropriate statement. /

Match the following terms with an appropriate statement. /

Q: What basic features should be included in your health insurance plan?

What basic features should be included in your health insurance plan?

Q: As you decide which health insurance plan to buy, what trade

As you decide which health insurance plan to buy, what trade-offs would you consider?

Q: Match the following terms with an appropriate statement. reimbursement

Match the following terms with an appropriate statement. reimbursement a. A policy that will cover only a fixed amount or a expense. Indemnity b. A policy that pays you back for actual expenses. in...

Q: What health care services are not covered by Medicare?

What health care services are not covered by Medicare?

Q: What are the six sources of private health plans?

What are the six sources of private health plans?

Q: Match the following terms with an appropriate statement. Blue Cross

Match the following terms with an appropriate statement. Blue Cross a. A medical assistance program offered to certain low-income individuals and families. Blue Shield b. Combines features of both HM...

Q: What is the purpose of disability income insurance?

What is the purpose of disability income insurance?

Q: What are the four sources of disability income?

What are the four sources of disability income?

Q: Match the following terms with an appropriate statement. waiting or

Match the following terms with an appropriate statement. waiting or elimination period a. A specified period during which benefits are paid. duration of benefits b. A plan that guarantees coverage as...

Q: Jane and Bill Collins have total take-home pay of $

Jane and Bill Collins have total take-home pay of $4,500 a month. Their monthly expenses total $3,400. Calculate the minimum amount this couple needs to establish an emergency fund.

Q: Dave and Ellen are newly married and living in their first house

Dave and Ellen are newly married and living in their first house. The yearly premium on their homeowners insurance policy is $450 for the coverage they need. Their insurance company offers a 5 percent...

Q: Stephanie was involved in a car accident and rushed to the emergency

Stephanie was involved in a car accident and rushed to the emergency room. She received stitches for a facial wound and treatment for a broken finger. Under Stephanie’s PPO plan, emergency room care...

Q: Shaan and Anita currently insure their cars with separate companies, paying

Shaan and Anita currently insure their cars with separate companies, paying $650 and $575 a year. If they insure both cars with the same company, they would save 10 percent on the annual premiums....

Q: Determine the current yield on a corporate bond investment that has a

Determine the current yield on a corporate bond investment that has a face value of $1,000, pays 4.60 percent, and has a current price of $950.

Q: Use the information in the Figure It Out! Box earlier in

Use the information in the Figure It Out! Box earlier in this chapter to complete the following table.

Q: Based on the following information, construct a graph that illustrates price

Based on the following information, construct a graph that illustrates price movement for a Washington Utilities bond fund.

Q: Assume you are in the 28 percent tax bracket and purchase a

Assume you are in the 28 percent tax bracket and purchase a 3.50 percent municipal bond. Use the formula presented in this chapter to calculate the taxable equivalent yield for this investment.

Q: Assume you are in the 35 percent tax bracket and purchase a

Assume you are in the 35 percent tax bracket and purchase a 3.75 percent municipal bond. Use the formula presented in this chapter to calculate the taxable equivalent yield for this investment.

Q: Assume that three years ago you purchased a corporate bond that pays

Assume that three years ago you purchased a corporate bond that pays 5.8 percent. The purchase price was $1,000. What is the annual dollar amount of interest that you receive from your bond investme...

Q: Twelve months ago, you purchased 10-year Treasury notes with

Twelve months ago, you purchased 10-year Treasury notes with a face value of $1,000. The interest rate is 2.90 percent. What is the annual dollar amount of interest you will receive each year?

Q: A health insurance policy pays 65 percent of physical therapy cost after

A health insurance policy pays 65 percent of physical therapy cost after a $200 deductible. In contrast, an HMO charges $15 per visit for physical therapy. How much would a person save with the HMO if...

Q: Assume that you purchased a $1,000 convertible corporate bond

Assume that you purchased a $1,000 convertible corporate bond. Also assume the bond can be converted to 38.4615 shares of the firm’s stock. What is the dollar value that the stock must reach before...

Q: What would it cost an insurance company to replace a family’s personal

What would it cost an insurance company to replace a family’s personal property that originally cost $25,000? The replacement costs for the items have increased 15 percent.

Q: If Carissa Dalton has a $130,000 home insured for

If Carissa Dalton has a $130,000 home insured for $100,000, based on the 80 percent coinsurance provision, how much would the insurance company pay on a $5,000 claim?

Q: For each of the following situations, what amount would the insurance

For each of the following situations, what amount would the insurance company pay? a. Wind damage of $835; the insured has a $500 deductible. b. Theft of a stereo system worth $1,150; the insured has...

Q: Becky Fenton has 25/50/10 automobile insurance coverage.

Becky Fenton has 25/50/10 automobile insurance coverage. If two other people are awarded $35,000 each for injuries in an auto accident in which the insured was judged at fault, how much of this judgme...

Q: Kurt Simmons has 50/100/15 auto insurance coverage.

Kurt Simmons has 50/100/15 auto insurance coverage. One evening he lost control of his vehicle hitting a parked car and damaging a store front along the street. Damage to the parked car was $5,400 and...

Q: Karen and Mike currently insure their cars with separate companies paying $

Karen and Mike currently insure their cars with separate companies paying $700 and $900 a year. If they insure both cars with the same company, they would save 10 percent on the annual premiums. What...

Q: When Carolina's house burned down, she lost household items worth a

When Carolina's house burned down, she lost household items worth a total of $50,000. Her house was insured for $160,000 and her homeowners' policy provided coverage for personal belongings up to 55 p...

Q: 1. What is the benefit to Jamie Lee and Ross investing

1. What is the benefit to Jamie Lee and Ross investing in a company’s IPO? Will they be guaranteed a large return from this investment? At this life stage, would you recommend that Jamie Lee and Ros...

Q: In your own words, describe how an investment in common stock

In your own words, describe how an investment in common stock could help you obtain your investment goals.

Q: What are four major sources of retirement income?

What are four major sources of retirement income?

Q: : What are the two basic types of employer pension plans?

What are the two basic types of employer pension plans?

Q: What are the most popular personal retirement plans?

What are the most popular personal retirement plans?

Q: What is the major difference between a regular IRA and a Roth

What is the major difference between a regular IRA and a Roth IRA?

Q: 1. A mutual fund in which new shares are issued and

1. A mutual fund in which new shares are issued and redeemed by the investment company at the request of investors is called a (n) ____________ fund. a. closed end b. open-end c. load d. no-load 2....

Q: 1. The first step in retirement planning is to a

1. The first step in retirement planning is to a. estimate your spending needs. b. estimate the inflation rate. c. evaluate your planned retirement income. d. analyze your current assets and liabiliti...

Q: 1. Who elects a corporation’s board of directors? a

1. Who elects a corporation’s board of directors? a. Preferred stockholders b. Common stockholders c. The corporation’s top executives d. The corporation’s employees 2. A stock split a. always guaran...

Q: 1. The major reasons why investors purchase mutual funds are professional

1. The major reasons why investors purchase mutual funds are professional management and diversification. 2. Shares in a closed-end mutual fund are issued by the investment company only when the fund...

Q: 1. You can’t predict exactly how much money you’ll need when

1. You can’t predict exactly how much money you’ll need when you retire 2. Social Security is an important source of retirement income for most Americans. 3. A defined-contribution plan does not guara...

Q: 1. Corporations sell common stock to finance their business start-

1. Corporations sell common stock to finance their business start-up costs and help pay for expansion and their ongoing business activities. 2. A corporation must pay dividends to stockholders. 3. Th...

Q: Explain the relationship between earnings per share, projected earnings, and

Explain the relationship between earnings per share, projected earnings, and the market price for a share of stock.

Q: What is the difference between the dividend yield and total return calculations

What is the difference between the dividend yield and total return calculations that were described in this chapter?

Q: Choose either the Invesco Charter (symbol CHTRX) mutual fund or

Choose either the Invesco Charter (symbol CHTRX) mutual fund or the Fidelity Fifty (symbol FFTYX) mutual fund. Then describe how each of the following sources of information could help you evaluate o...

Q: Prepare a chart that describes the similarities among the long-term

Prepare a chart that describes the similarities among the long-term and short-term investment strategies described in this chapter.

Q: Assume that one year ago, you bought 120 shares of a

Assume that one year ago, you bought 120 shares of a mutual fund for $33 a share, you received a $0.60 per-share capital gain distribution during the past 12 months, and the market value of the fund i...

Q: Over a four-year period, LaKeisha Thompson purchased shares in

Over a four-year period, LaKeisha Thompson purchased shares in the Oakmark I Fund. Using the following information, answer the questions that follow. You may want to review the concept of dollar cos...

Q: The Western Capital Growth mutual fund has Total assets: $

The Western Capital Growth mutual fund has Total assets: $750,000,000 Total liabilities: $7,200,000 Total number of shares: 24,000,000 What is the fund’s net asset value (NAV)?

Q: Sarah and James Hernandez purchased 140 shares of Macy's stock at $

Sarah and James Hernandez purchased 140 shares of Macy's stock at $57 a share. One year later, they sold the stock for $61 a share. They paid a broker $8 commission when they purchased the stock and...

Q: Wanda Sotheby purchased 120 shares of Home Depot stock at $82

Wanda Sotheby purchased 120 shares of Home Depot stock at $82 a share. One year later, she sold the stock for $74 a share. She paid her broker a $34 commission when she purchased the stock and a $39...

Q: 1. It has been suggested by Jamie Lee and Ross’ professional

1. It has been suggested by Jamie Lee and Ross’ professional investment counselor to perform a financial check-up as the first step in investing in mutual funds, even though they are investing $50,000...

Q: Ruby is 25 and has a good job at a biotechnology company

Ruby is 25 and has a good job at a biotechnology company. She currently has $10,000 in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at an annual rate of 8 perc...

Q: Michelle Townsend owns stock in National Computers. Based on information in

Michelle Townsend owns stock in National Computers. Based on information in its annual report, National Computers has reported after-tax earnings of $9,700,000 and has issued 7,000,000 shares of comm...

Q: Analysts that follow JP Morgan Chase, one of the nation’s largest

Analysts that follow JP Morgan Chase, one of the nation’s largest providers of financial services, estimate that the corporation’s earnings per share will increase from $5.56 in the current year to $6...

Q: The Yamaha Aggressive Growth fund has a 1.83 percent expense

The Yamaha Aggressive Growth fund has a 1.83 percent expense ratio. a. If you invest $55,000 in this fund, what is the dollar amount of fees that you would pay this year? b. Based on the information...

Q: Jason Mathews purchased 300 shares of the Hodge & Mattox Energy fund

Jason Mathews purchased 300 shares of the Hodge & Mattox Energy fund. Each share cost $14.15. Fifteen months later, he decided to sell his shares when the share value reached $17.10. a. What is th...

Q: Three years ago, James Matheson bought 200 shares of a mutual

Three years ago, James Matheson bought 200 shares of a mutual fund for $23 a share. During the three-year period, he received total income dividends of $0.92 per share. He also received total capita...

Q: For four years, Marty Campbell invested $4,000 each

For four years, Marty Campbell invested $4,000 each year in Harley Davidson. The stock was selling for $36 in 2011, $45 in 2012, $52 in 2013, and $70 in 2014. a. What is Marty’s total investment in Ha...

Q: Bob Orleans invested $3,000 and borrowed $3,

Bob Orleans invested $3,000 and borrowed $3,000 to purchase shares in Verizon Communications. At the time of his investment, Verizon was selling for $45 a share. a. If Bob paid a $30 commission, how...

Q: After researching Valero Energy common stock, Sandra Pearson is convinced the

After researching Valero Energy common stock, Sandra Pearson is convinced the stock is overpriced. She contacts her account executive and arranges to sell short 300 shares of Valero Energy. At the t...

Q: Why do corporations split their stock? Is a stock split good

Why do corporations split their stock? Is a stock split good or bad for investors?

Q: Starting Early: Retirement and Estate Planning Jamie Lee and Ross

Starting Early: Retirement and Estate Planning Jamie Lee and Ross now in their fifties, have plenty of time on their hands now that the triplets are away at college. They both realized that time has j...

Q: From an investor’s viewpoint, what is the difference between common stock

From an investor’s viewpoint, what is the difference between common stock and preferred stock?

Q: Why do corporations sell stock? Why do investors purchase stock?

Why do corporations sell stock? Why do investors purchase stock?

Q: Describe how each of the following sources of information could help you

Describe how each of the following sources of information could help you evaluate a stock investment.

Q: What is the difference between a prospectus and an annual report?

What is the difference between a prospectus and an annual report?

Q: Explain the relationship between earnings and a stock’s market value.

Explain the relationship between earnings and a stock’s market value.

Q: : Write the formula for the following stock calculations, and then

Write the formula for the following stock calculations, and then describe how this formula could help you make a decision to buy or sell a stock. //

Q: What is the difference between the primary market and the secondary market

What is the difference between the primary market and the secondary market? What is an initial public offering (IPO)?

Q: Explain the important characteristics of each of the following types of stock

Explain the important characteristics of each of the following types of stock transaction orders. Market order Limit order Stop-loss order

Q: Describe each of the following investment techniques. Buy and hold

Describe each of the following investment techniques. Buy and hold Dollar-cost averaging Direct investment Dividend reinvestment Margin Selling short Options

Q: Closed end, exchange-traded, or open ended mutual funds

Closed end, exchange-traded, or open ended mutual funds are available today. Describe the differences between each type of fund.

Q: Research Information Available from Value Line 1. What other investment

Research Information Available from Value Line 1. What other investment information would you need to evaluate Disney common stock? Where would you obtain this information? 2. Assuming you purchased...

Q: What is an expense ratio? Why is it important?

What is an expense ratio? Why is it important?

Q: How important is the investment objective as stated in a mutual fund’s

How important is the investment objective as stated in a mutual fund’s prospectus?

Q: What expenses are likely to increase during retirement?

What expenses are likely to increase during retirement?

Q: How can choosing the right fund help you save for retirement?

How can choosing the right fund help you save for retirement?

Q: Describe how each of the following sources of investment information could help

Describe how each of the following sources of investment information could help evaluate a mutual fund investment.

Q: In your own words, describe the difference between a managed fund

In your own words, describe the difference between a managed fund and an index fund. Which one do you think could help you achieve your investment goals?

Q: In the table below indicate how each of the key terms affects

In the table below indicate how each of the key terms affects a mutual fund investment and how each would be taxed.

Q: What options can be used to purchase shares in or withdraw money

What options can be used to purchase shares in or withdraw money from an open-end mutual fund?

Q: What might you do if your expenses during retirement are higher than

What might you do if your expenses during retirement are higher than you expected?

Q: What is estate planning?

What is estate planning?

Q: Research Information Available from Morningstar 1. What other investment information

Research Information Available from Morningstar 1. What other investment information would you need to evaluate this fund? Where would you obtain this information? 2. Assuming you purchased shares i...

Q: What are the two stages in planning your estate?

What are the two stages in planning your estate?

Q: List some important documents you will need to collect and organize.

List some important documents you will need to collect and organize.

Q: What is a will?

What is a will?

Q: What are the four basic types of wills?

What are the four basic types of wills?

Q: What are responsibilities of an executor?

What are responsibilities of an executor?

Q: Why should you name a guardian?

Why should you name a guardian?

Q: What is the difference between a revocable and an irrevocable trust?

What is the difference between a revocable and an irrevocable trust?

Q: What are the four major types of trusts?

What are the four major types of trusts?

Q: What are the four major types of taxes to consider in estate

What are the four major types of taxes to consider in estate planning?

Q: For many investors, mutual funds have become the investment of choice

For many investors, mutual funds have become the investment of choice. In your own words, describe why investors purchase mutual funds.

Q: 1. In the past, many workers chose to stay with

1. In the past, many workers chose to stay with their employer until retirement. What was the major reason for employees’ loyalty? 2. How did Maureen amass $1.4 million for retirement, while Therese...

Q: Prepare a written report of personal information that would be helpful to

Prepare a written report of personal information that would be helpful to you and your heirs. Be sure to include the location of family records, your military service file, and other important papers...

Q: How will your spending patterns change during your retirement years? Compare

How will your spending patterns change during your retirement years? Compare your spending patterns with those shown in Exhibit 14-2.

Q: Prepare a list of questions you could use to interview an account

Prepare a list of questions you could use to interview an account executive about career opportunities in the field of finance and investments.

Q: In September, the board of directors of Chaparral Steel approved a

In September, the board of directors of Chaparral Steel approved a 2-for-1 stock split. After the split, how many shares of Chaparral Steel stock will an investor have if she or he owned 400 shares b...

Q: As part of his 401(k) retirement plan at work

As part of his 401(k) retirement plan at work, Ken Lowery invests 5 percent of his salary each month in the Capital Investments Lifecycle fund. At the end of this year, Ken’s 401(k) account has a dol...

Q: When Jill Thompson received a large settlement from an automobile accident,

When Jill Thompson received a large settlement from an automobile accident, she chose to invest $146,000 in the Vanguard 500 Index fund. This fund has an expense ratio of 0.17 percent. What is the a...

Q: Currently, Boeing pays an annual dividend of $2.92

Currently, Boeing pays an annual dividend of $2.92. If the stock is selling for $128, what is the dividend yield?

Q: Ford Motor Company has a 1.35 beta. If the

Ford Motor Company has a 1.35 beta. If the overall stock market increases by 6 percent, how much will Ford Motor Company change?

Q: Casper Energy Exploration reports that the corporation’s assets are valued at $

Casper Energy Exploration reports that the corporation’s assets are valued at $185,000,000, its liabilities are $80,000,000, and it has issued 6,000,000 shares of stock. What is the book value for a...

Q: Jan Throng invested $31,000 in the Invesco Charter Mutual

Jan Throng invested $31,000 in the Invesco Charter Mutual Fund. The fund charges a 5.50 percent commission when shares are purchased. Calculate the amount of commission Jan must pay.

Q: Obtain a mutual fund prospectus to determine the options you can use

Obtain a mutual fund prospectus to determine the options you can use to purchase and redeem shares. a. Which of the purchase options would appeal to you? Why? b. Assuming that you are now retireme...

Q: As Bart Brownlee approached retirement, he decided the time had come

As Bart Brownlee approached retirement, he decided the time had come to invest some of his nest egg in a conservative fund. He chose the Franklin Utilities fund. If he invests $46,000 and the fund c...

Q: During one three-month period, Matt Roundtop’s mutual fund grew

During one three-month period, Matt Roundtop’s mutual fund grew by $6,000. If he withdraws 35 percent of the growth, how much will he receive?

Q: Betty and James Holloway invested $71,000 in the Financial

Betty and James Holloway invested $71,000 in the Financial Vision Social Responsibility fund. The management fee for this fund is 0.60 percent of the total asset value. Calculate the management fee...

Q: The date death for a widow was 2014. If the estate

The date death for a widow was 2014. If the estate was valued at $7.5 million and the estate was taxed at 40 percent, what was the heir's tax liability?

Q: Joe and Rachel are both retired. Married for 55 years,

Joe and Rachel are both retired. Married for 55 years, they have amassed an estate worth $4.4 million. The couple had no trusts or other type of tax-sheltered assets. If Joe or Rachel dies in 2014, h...

Q: Shelly's assets include money in the checking and saving accounts, investments

Shelly's assets include money in the checking and saving accounts, investments in stocks and mutual funds, and personal property such as furniture, appliances, an automobile, a coin collection, and je...

Q: In 2014, Joshua gave $14,000 worth of Microsoft

In 2014, Joshua gave $14,000 worth of Microsoft stock to his son. In 2015, the Microsoft shares are worth $23,000. What is the total amount removed from Joshua’s estate in 2015?

Q: In 2014, Joshua gave $14,000 worth of Microsoft

In 2014, Joshua gave $14,000 worth of Microsoft stock to his son. In 2015, the Microsoft shares are worth $23,000. What will be the gift tax in 2015?

Q: In 2014, you gave a $12,000 gift to

In 2014, you gave a $12,000 gift to a friend. What is the gift tax?

Q: Barry and his wife Mary have accumulated over $3.5

Barry and his wife Mary have accumulated over $3.5 million during their 50 years of marriage. They have three children and five grandchildren. How much money can they gift to their children in 2014...

Q: Assume your employer offers you the opportunity to participate in the company’s

Assume your employer offers you the opportunity to participate in the company’s 401(k) retirement plan. a. Would you participate in the company’s retirement plan? Justify your answer. b. Assume y...

Q: Barry and his wife Mary have accumulated over $3.5

Barry and his wife Mary have accumulated over $3.5 million during their 50 years of marriage. They have three children and five grandchildren. How much money can Barry and Mary gift to their grandch...

Q: Barry and his wife Mary have accumulated over $3.5

Barry and his wife Mary have accumulated over $3.5 million during their 50 years of marriage. They have three children and five grandchildren. What is the total of estate removed from Barry and Mary's...

Q: Prepare your net worth statement using the Assets - Liabilities = Net

Prepare your net worth statement using the Assets - Liabilities = Net worth equation.

Q: Ted Riley owns a 2012 Lexus worth $40,000.

Ted Riley owns a 2012 Lexus worth $40,000. He owns a home worth $275,000. He has a checking account with $800 in it and a savings account with $1,900 in it. He has a mutual fund worth $110,000. His...

Q: Calculate approximately how much money an older (65+) household with

Calculate approximately how much money an older (65+) household with an annual income of $45,000 spends on housing each year.

Q: Using Exhibit 14-2, calculate approximately how much money the

Using Exhibit 14-2, calculate approximately how much money the older household from Problem 4 spends on medical care.

Q: Gene and Dixie, husband and wife (ages 35 and 32

Gene and Dixie, husband and wife (ages 35 and 32), both work. They have an adjusted gross income of $50,000 in 2014, and they are filing a joint income tax return. Both have an employer-provided retir...

Q: You have $100,000 in your retirement fund that is

You have $100,000 in your retirement fund that is earning 5.5 percent per year, compounded quarterly. How many dollars in withdrawals per month would reduce this nest egg to zero in 20 years? How ma...

Q: In 2014, Joshua gave $14,000 worth of Microsoft

In 2014, Joshua gave $14,000 worth of Microsoft stock to his son. In 2015, the Microsoft shares are worth $23,000. What was the gift tax in 2014?

Q: Jamie and Peter Dawson own 220 shares of Duke Energy common stock

Jamie and Peter Dawson own 220 shares of Duke Energy common stock. Duke Energy's quarterly dividend is $0.28 per share. What is the amount of the dividend check the Dawson couple will receive for th...

Q: This chapter explored a number of different classifications or types of mutual

This chapter explored a number of different classifications or types of mutual funds. a. Based on your age and current financial situation, which type of mutual fund seems appropriate for your inves...

Q: During the four quarters for 2015, the Browns received two quarterly

During the four quarters for 2015, the Browns received two quarterly dividend payments of $0.18, one quarterly payment of $0.20, and one quarterly payment of $0.22. If they owned 300 shares of stock,...

Q: Jim Johansen noticed that a corporation he is considering investing in is

Jim Johansen noticed that a corporation he is considering investing in is about to pay a quarterly dividend. The record date is Thursday, March 15. In order for Jim to receive this quarterly dividen...

Q: Mary Canfield purchased shares in the New Dimensions Global Growth fund

Mary Canfield purchased shares in the New Dimensions Global Growth fund. This fund doesn’t charge a front-end load, but it does charge a contingent deferred sales load of 4 percent for any withdrawal...

Q: The value of Mike Jackson’s shares in the New Frontiers Technology fund

The value of Mike Jackson’s shares in the New Frontiers Technology fund is $11,400. The management fee for this particular fund is 0.80 percent of the total asset value. Calculate the management fee...

Q: In your own words, describe the difference between an investor and

In your own words, describe the difference between an investor and a speculator.

Q: What is the net asset value (NAV) for a mutual

What is the net asset value (NAV) for a mutual fund that has assets totaling $730 million, liabilities totaling $10 million, and 24 million shares outstanding?

Q: In the table below, indicate the typical charges for each type

In the table below, indicate the typical charges for each type of mutual fund fee and when the fee is assessed. Fee…………………………………………………… Typical Charge Load fund…………………………………………. No load fund…………………………...

Q: How would you purchase a closed-end fund? An exchange

How would you purchase a closed-end fund? An exchange-traded fund?

Q: What are the three assets you should review on a regular basis

What are the three assets you should review on a regular basis during retirement?

Q: What expenses are likely to decrease during retirement?

What expenses are likely to decrease during retirement?

Q: Throughout this book, we will present a continuing narrative about Harry

Throughout this book, we will present a continuing narrative about Harry and Belinda Johnson. Following is a brief description of the lives of this couple. Harry is 28 years old and graduated five yea...

Q: Victor and Maria Hernandez Victor and Maria, both in their

Victor and Maria Hernandez Victor and Maria, both in their late 30s, have two children: John, age 13, and Joseph, age 15. Victor has had a long sales career with a retail appliance store. Maria works...

Q: How should assets and liabilities be valued for the balance sheet,

How should assets and liabilities be valued for the balance sheet, and why?

Q: Distinguish between fixed and variable expenses, and give two examples of

Distinguish between fixed and variable expenses, and give two examples of each

Q: Give five examples of income that must be included in income reported

Give five examples of income that must be included in income reported to the Internal Revenue Service.

Q: How are long-term and short-term capital gains treated

How are long-term and short-term capital gains treated differently for income tax purposes?

Q: Give five examples of income that is excluded from IRS reporting.

Give five examples of income that is excluded from IRS reporting.

Q: List three examples of adjustments to income.

List three examples of adjustments to income.

Q: Distinguish between a standard deduction and a personal exemption.

Distinguish between a standard deduction and a personal exemption.

Q: What advice on filing a Form 1040X can you offer someone who

What advice on filing a Form 1040X can you offer someone who did not file a federal income tax return last year or in any one of the past three years?

Q: List five examples of tax credits.

List five examples of tax credits.

Q: Explain why opening a checking account and a money market account are

Explain why opening a checking account and a money market account are appropriate actions for most people, and tell how each will be used.

Q: Julia Price Thinks About Financial Statements, Tools, and Budgets

Julia Price Thinks About Financial Statements, Tools, and Budgets Julia graduated over six years ago in aeronautical engineering and changed job once. Her income is more than sufficient for her needs....

Q: Summarize what happens when you write a check.

Summarize what happens when you write a check.

Q: Distinguish between a money market account and a money market mutual fund

Distinguish between a money market account and a money market mutual fund account.

Q: Explain the benefits and drawbacks of certificates of deposit.

Explain the benefits and drawbacks of certificates of deposit.

Q: Distinguish among the continuous debt method, debt-to-income

Distinguish among the continuous debt method, debt-to-income, debt payments-to-disposable income, and debt-to-income methods for setting your debt limit

Q: What are the borrower’s feelings when he/she has a limit

What are the borrower’s feelings when he/she has a limit of debt of 11 to 14 percent of disposable personal income compared to a debt limit of 15 to 18 percent? (Hint: See Table 6-1....

Q: Summarize the effects of increasing debt payments from 10 percent to 15

Summarize the effects of increasing debt payments from 10 percent to 15 percent on a budget. (Hint: See the Run the Numbers worksheet.) Worksheet:

Q: What is the best thought on the list of keeping student loan

What is the best thought on the list of keeping student loan debt under control?

Q: Define opportunity cost and give an example of how opportunity costs might

Define opportunity cost and give an example of how opportunity costs might affect your financial decision making.

Q: Explain and give an example of how marginal utility and marginal cost

Explain and give an example of how marginal utility and marginal cost makes some financial decisions easier.

Q: Describe and give an example of how your marginal income tax rate

Describe and give an example of how your marginal income tax rate can affect financial decision making.

Q: A Couple Creates an Educational Savings Plan Stanley Marsh and Wendy

A Couple Creates an Educational Savings Plan Stanley Marsh and Wendy Testaburger of South Park, Colorado, have two young children. They both work and earn a substantial income, over $100,000 annually....

Q: Explain how to compare salary and living costs in different cities.

Explain how to compare salary and living costs in different cities.

Q: Give two career advancement tips.

Give two career advancement tips.

Q: Offer suggestions on correctly assembling a résumé and what style formats are

Offer suggestions on correctly assembling a résumé and what style formats are available.

Q: Give examples of how to identify specific job opportunities.

Give examples of how to identify specific job opportunities.

Q: Give three suggestions on how to succeed in an interview.

Give three suggestions on how to succeed in an interview.

Q: List some advantages of keeping good financial records.

List some advantages of keeping good financial records.

Q: Name three financial records that might be best kept in a safe

Name three financial records that might be best kept in a safe-deposit box or in an envelope at a safe place like at work.

Q: Distinguish between two major types of tax-sheltered investment returns

Distinguish between two major types of tax-sheltered investment returns

Q: Explain how to reduce income taxes via your employer, and name

Explain how to reduce income taxes via your employer, and name three employer sponsored plans to do so.

Q: Summarize the differences between a traditional individual retirement account (IRA)

Summarize the differences between a traditional individual retirement account (IRA) and a Roth IRA.

Q: Several years have gone by since Harry and Belinda graduated from college

Several years have gone by since Harry and Belinda graduated from college and started their working careers. They both earn good salaries. They believe that they are paying too much in federal income...

Q: Identify three strategies to avoid overpayment of income taxes, and summarize

Identify three strategies to avoid overpayment of income taxes, and summarize the essence of each.

Q: Explain why correctly owning assets is important to the personal finances of

Explain why correctly owning assets is important to the personal finances of people, especially couples.

Q: Differentiate between ownership via joint tenancy with right of survivorship and tenancy

Differentiate between ownership via joint tenancy with right of survivorship and tenancy in common.

Q: Distinguish among the credit terms: prescreened, invitation-to-

Distinguish among the credit terms: prescreened, invitation-to-apply, and preapproved.

Q: What is a credit history, and what role do credit bureaus

What is a credit history, and what role do credit bureaus play in the development of it?

Q: Name three steps to help establish a good credit history.

Name three steps to help establish a good credit history.

Q: Summarize how to fix errors in your credit report, and explain

Summarize how to fix errors in your credit report, and explain why some people add a consumer statement to their report.

Q: What are the two common questions about money?

What are the two common questions about money?

Q: Explain the difference between simple interest and compound interest, and describe

Explain the difference between simple interest and compound interest, and describe why that difference is critical.

Q: Use Table 1-1 to calculate the future value of

Use Table 1-1 to calculate the future value of (a) $2,000 at 5 percent for four years, (b) $4,500 at 9 percent for eight years, and (c) $10,000 at 6 percent for ten years. Table 1-1:

Q: Julia does well financially because she earns a good salary as an

Julia does well financially because she earns a good salary as an engineer, is somewhat frugal, and is making the maximum contribution to her employer-sponsored retirement plan. After reading about wa...

Q: Summarize what you know about Bitcoin.

Summarize what you know about Bitcoin.

Q: Distinguish among credit cards, debit cards, and stored-value

Distinguish among credit cards, debit cards, and stored-value cards.

Q: List the steps you should take if you find an error in

List the steps you should take if you find an error in your monthly statement regarding an electronic transaction.

Q: Summarize the rules that apply if you lose your ATM or debit

Summarize the rules that apply if you lose your ATM or debit card and it is used without your authorization.

Q: Identify four signs of over indebtedness.

Identify four signs of over indebtedness.

Q: List the major provisions of the Fair Debt Collection Practices Act.

List the major provisions of the Fair Debt Collection Practices Act.

Q: What services are provided by a credit counseling agency, and how

What services are provided by a credit counseling agency, and how might a debt management plan work to provide relief for someone who is having debt problems?

Q: Distinguish between Chapter 7 and Chapter 13 bankruptcy, and explain who

Distinguish between Chapter 7 and Chapter 13 bankruptcy, and explain who might be forced to use Chapter 13 rather than Chapter 7.

Q: What is a flexible spending account and what do pretax dollars have

What is a flexible spending account and what do pretax dollars have to do with it?

Q: Summarize the benefits of participating in a high-deductible health care

Summarize the benefits of participating in a high-deductible health care plan at work.

Q: Kate Beckett and her two children, Austin and Alexandra, moved

Kate Beckett and her two children, Austin and Alexandra, moved into the home of her new husband, Richard Castle, in New York City. Kate is a novelist, and her husband is a police detective. The family...

Q: Create a math example of why many employees participate in a tax

Create a math example of why many employees participate in a tax-sheltered employee benefit plan, such as an HSA or 401(k) plan

Q: List two ways you can maximize the benefits from a tax-

List two ways you can maximize the benefits from a tax-sheltered retirement program.

Q: Name different ways to handle budget variances.

Name different ways to handle budget variances.

Q: Explain why setting financial goals is an important step in budgeting.

Explain why setting financial goals is an important step in budgeting.

Q: What are budget estimates? Offer some suggestions on how to go

What are budget estimates? Offer some suggestions on how to go about making budget estimates for various types of expenses.

Q: How might one go about revising budget estimates to create a balanced

How might one go about revising budget estimates to create a balanced budget?

Q: Explain what a cash-flow calendar accomplishes. Name three techniques

Explain what a cash-flow calendar accomplishes. Name three techniques to control spending.

Q: Explain why it is difficult for many people in relationships to talk

Explain why it is difficult for many people in relationships to talk about money matters.

Q: Identify three ways you might more effectively communicate about money matters.

Identify three ways you might more effectively communicate about money matters.

Q: How does a professional financial planner differ from a local lawyer or

How does a professional financial planner differ from a local lawyer or insurance person in your community?

Q: In January, Harry and Belinda Johnson had $10,660

In January, Harry and Belinda Johnson had $10,660 in monetary assets (see page 109): $1,100 in cash on hand; $1,200 in a statement savings account at First Credit Union earning 1.0 percent interest; $...

Q: What are the four different ways financial planners may be compensated?

What are the four different ways financial planners may be compensated?

Q: Describe two professional certification programs for financial planners.

Describe two professional certification programs for financial planners.

Q: Find the tax liabilities based on the taxable income of the

Find the tax liabilities based on the taxable income of the following people: (a) married couple, $92,225; (b) married couple, $74,170; (c) single person, $27, 880; (d) single person, $56,060. (Hint...

Q: Jared Goff, of Los Angeles, determined the following tax information

Jared Goff, of Los Angeles, determined the following tax information: gross salary, $160,000; interest earned, $2,000; IRA contribution, $5,000; personal exemption, $4,050; and itemized deductions, $8...

Q: Carson Wentz, of Philadelphia, determined the following tax information:

Carson Wentz, of Philadelphia, determined the following tax information: salary, $144,000; interest earned, $2,000; qualified retirement plan contribution, $6,000; personal exemption, $4,050; itemized...

Q: Review Figure 4-1 on page 117 and comment on the

Review Figure 4-1 on page 117 and comment on the logic of how different segments of Victoria Bassett’s income is taxed. Figure 4-1:

Q: Fast The Hernandez family is experiencing some financial pressures, even though

Fast The Hernandez family is experiencing some financial pressures, even though the couple has a combined income of $85,000. Also, their eldest son, Joseph, will start college in only three years. Mar...

Q: Julia’s six-figure salary has allowed her to build up a

Julia’s six-figure salary has allowed her to build up a considerable cash reserve of over $20,000. She initially had basic checking and savings accounts. She also has a credit card with her bank that...

Q: Asset Management Kwaku Addo, a licensed physical therapist from Topeka,

Asset Management Kwaku Addo, a licensed physical therapist from Topeka, Kansas, earns $4,200 per month take-home pay and has the funds directly deposited in his checking account. He spends only about...

Q: Throughout this book, we will present a continuing narrative about Victor

Throughout this book, we will present a continuing narrative about Victor and Maria Hernandez. Following is a brief description of the lives of this couple. Victor and Maria, both in their late 30s, h...

Q: Harry and Belinda have a substantial annual joint income—more than

Harry and Belinda have a substantial annual joint income—more than $125,000, in fact. Nevertheless, they expect to experience some cash-flow deficits during the months of November an...

Q: Victor and Maria have always enjoyed a close relationship with Maria’s niece

Victor and Maria have always enjoyed a close relationship with Maria’s niece Teresa, who graduated from college with a pharmacy degree. Teresa recently asked Maria for some assistance with her finance...

Q: Julia has been thinking about the purchase of a boat. As

Julia has been thinking about the purchase of a boat. As a teenager, she was an avid water skier at her parents’ summer home. Now that she has moved away, she wants to renew her hobby at a lake nearby...

Q: Jacob Marchese of Vancouver, Washington, is the credit manager for

Jacob Marchese of Vancouver, Washington, is the credit manager for a regional chain of department stores. He has been asked to join a panel of community members and make a ten-minute speech to graduat...

Q: Julia has recently undergone a severe career crisis. After nearly ten

Julia has recently undergone a severe career crisis. After nearly ten years as a professional engineer, her position was phased out by her company due to a loss of government contracts, and she has be...

Q: Megan Berry, a freshman horticulture major at the University of Minnesota

Megan Berry, a freshman horticulture major at the University of Minnesota, has some financial questions for the next three years of school and beyond. Answers to these questions can be obtained by usi...

Q: Using the present and future value tables in Appendix A, the

Using the present and future value tables in Appendix A, the appropriate calculations on the Garman/Forgue companion website, or a financial calculator, calculate the following: (a) The amount a perso...

Q: Using the Rule of 72, calculate how quickly $1,

Using the Rule of 72, calculate how quickly $1,000 will double to $2,000 at interest rates of 2 percent, 4 percent, 6 percent, 8 percent, and 10 percent.

Q: Tyler Winkle’s employer in Pittsburgh makes a matching contribution of $2

Tyler Winkle’s employer in Pittsburgh makes a matching contribution of $2,000 a year to his 401(k) retirement account at work. If the dollar amount of the employer’s contribution increases 4 percent a...

Q: Review the financial statements of Victor and Maria Hernandez (Table 3

Review the financial statements of Victor and Maria Hernandez (Table 3-2 and Table 3-3) and the financial ratios on page 87 and respond to the following questions: (a) How would you interpret their i...

Q: Survey two relatives or friends and ask about their decision-making

Survey two relatives or friends and ask about their decision-making process when they most recently bought a vehicle. Find out if they thought about the opportunity costs when making the purchase. Als...

Q: Cody Sebastian, of Lubbock, Texas, earns $60,

Cody Sebastian, of Lubbock, Texas, earns $60,000 a year. He pays 30 percent of his gross income in federal, state, and local taxes. He has fixed expenses in addition to taxes of $1,800 per month and v...

Q: Leyia and Larry Hartley of Columbus, Ohio have decided to start

Leyia and Larry Hartley of Columbus, Ohio have decided to start a family next year, so they are looking over their budget (illustrated in Table 3-5 as the “young married coupleâ...

Q: What would be the tax liability for a single taxpayer who has

What would be the tax liability for a single taxpayer who has a gross income of $50,050?

Q: What would be the marginal tax rate for a single person who

What would be the marginal tax rate for a single person who has a taxable income of (a) $31 ,560, (b) $58,150, (c) $66,450, and (d) $100,580? (Hint: Use Table 4-2.) Table 4-2:

Q: Invest Now or Later? Twins Natalie and Kaitlyn are both age

Invest Now or Later? Twins Natalie and Kaitlyn are both age 27. They both live in Warren, Ohio. Beginning at age 27, Natalie invests $2,000 per year for ten years and then never sets aside another pen...

Q: Isabel Lopez, from Lewiston, Idaho, is age 19,

Isabel Lopez, from Lewiston, Idaho, is age 19, and she recently received an inheritance of $50,000 from her grandmother’s estate. She plans to use the money for the down payment on a...

Q: You want to create a college fund for a child who is

You want to create a college fund for a child who is now 3 years old. The fund should grow to $60,000 in 15 years. If an investment available to you will yield 6 percent per year, how much must you in...

Q: You plan to retire in 40 years. To provide for your

You plan to retire in 40 years. To provide for your retirement, you initiate a savings program of $4,000 per year yielding 7 percent. What will be the value of the retirement fund after 40 years? (Hi...

Q: List three interviewing tips for new college graduates looking for employment when

List three interviewing tips for new college graduates looking for employment when in many parts of the country a growing job market exists.

Q: Where is the United States in the economic cycle now, and

Where is the United States in the economic cycle now, and where does it seem to be heading? List some indicators that suggest in which direction it may move.

Q: Samantha Beliveau of Ames, Iowa, is a senior in college

Samantha Beliveau of Ames, Iowa, is a senior in college, majoring in nutrition. She anticipates getting married a year or so after graduation. Samantha has only one elective course remaining and is go...

Q: What are some common mistakes that people make in personal finance?

What are some common mistakes that people make in personal finance? Name two that might be the worst, and why?

Q: Thinking about some common mistakes that people make in job interviews,

Thinking about some common mistakes that people make in job interviews, which three are the worst? Make a short list of things people should do to improve success in an interview.

Q: What would you do if you inherited $3,000 from

What would you do if you inherited $3,000 from an aunt? Identify three options.

Q: People regularly make decisions in career planning that have trade-offs

People regularly make decisions in career planning that have trade-offs. Identify some benefits and costs people are faced with as well as two lifestyle trade-offs.

Q: During slow economic times, the federal government’s budgeting priority often is

During slow economic times, the federal government’s budgeting priority often is to borrow so it can spend more money than it takes in. What happens to families that try that, and why?

Q: What is the biggest budget-related mistake that you have made

What is the biggest budget-related mistake that you have made? What would you do differently now?

Q: What are two of your most important personal values? Give an

What are two of your most important personal values? Give an example of how each of those values might influence your financial plans.

Q: College students often have little income and many expenses. Does this

College students often have little income and many expenses. Does this reduce or increase the importance of completing a cash-flow statement on a monthly basis? Why or why not?

Q: Of the financial ratios described in this chapter, which two might

Of the financial ratios described in this chapter, which two might be most revealing for the typical college student?

Q: Do you have a budget or spending plan? Why or why

Do you have a budget or spending plan? Why or why not? What do you think are the two major reasons why people do not make formal written budgets?

Q: You have been asked to give a brief speech on how to

You have been asked to give a brief speech on how to achieve financial success and financial security. Use the five steps in the financial planning process and the building blocks to achieving financi...

Q: What can a person try to do to genuinely control spending to

What can a person try to do to genuinely control spending to better achieve financial success?

Q: Many college students choose not to file a federal income tax return

Many college students choose not to file a federal income tax return, assuming that the income taxes withheld by employers “probably” will cover their tax liability. Is such an assumption correct? Wha...

Q: Some college students earn money that is paid to them in cash

Some college students earn money that is paid to them in cash and then do not include this as income when they file their tax returns. What are the pros and cons of this practice?

Q: Name three tax credits that a college student might take advantage of

Name three tax credits that a college student might take advantage of while still in school or during the first few years after graduation.

Q: Identify three strategies to reduce income tax liability that you may take

Identify three strategies to reduce income tax liability that you may take advantage of in the future.

Q: List two examples of checking account transactions that result in assessment of

List two examples of checking account transactions that result in assessment of fees that are avoidable?

Q: You know someone who recently had $90 in overdraft fees for

You know someone who recently had $90 in overdraft fees for two small debit card transactions. Explain to him why such high fees resulted from such small transactions and the relative benefits of havi...

Q: When would you recommend using an individual account, a joint tenancy

When would you recommend using an individual account, a joint tenancy with right of survivorship account, and a tenancy by the entirety account for your monetary assets?

Q: Many people desire protection from the possibility of overdrawing their checking account

Many people desire protection from the possibility of overdrawing their checking account. Banks make it easy by allowing you to opt into overdraft protection. Explain how this and other overdraft prot...

Q: When might it be appropriate for you to save via a certificate

When might it be appropriate for you to save via a certificate of deposit versus a money market account?

Q: Harry has started out fine in his career as his responsibilities have

Harry has started out fine in his career as his responsibilities have increased since he began working there about five years ago. Belinda recently attended a conference for those in her stock brokera...

Q: Lost/Stolen Debit Cards. What should you do if your

Lost/Stolen Debit Cards. What should you do if your ATM or debit card is lost or stolen? Why?

Q: Have you ever had a disagreement with a friend or family member

Have you ever had a disagreement with a friend or family member over a money issue? How might you communicate differently now?

Q: What aspects of your financial life make you creditworthy? What aspects

What aspects of your financial life make you creditworthy? What aspects might make it difficult for you to obtain credit?

Q: How might students judge whether they are taking on too high a

How might students judge whether they are taking on too high a level of student loan debt?

Q: Use the information on pages 185, 186 and 187 to discuss

Use the information on pages 185, 186 and 187 to discuss how best to deal with student loan debt Page No. 185, 186,187:

Q: Is it too easy for college students to get credit cards?

Is it too easy for college students to get credit cards? Who do you know who has gotten into financial difficulty because of overuse of credit cards, and what happened?

Q: Now that you have read the chapter on the importance of personal

Now that you have read the chapter on the importance of personal finance, what do you recommend to Jing Wáng in the case at the beginning of the chapter regarding: Participating in her employer’s 401...

Q: Now that you have read the chapter on financial planning, what

Now that you have read the chapter on financial planning, what do you recommend to Austin Patterson for his talk with Emily on the subject of financial planning regarding: 1. Setting financial goals?...

Q: Now that you have read the chapter on managing income taxes,

Now that you have read the chapter on managing income taxes, what advice can you offer Ace and Florence in the case at the beginning of the chapter regarding: 1. Using tax credits to help pay for Ace’...

Q: Now that you have read the chapter on managing checking and savings

Now that you have read the chapter on managing checking and savings accounts, what would you recommend to Nathan Rosenberg and Avigai Abramovitz in the case at the beginning of the chapter regarding:...

Q: Victor is somewhat satisfied with his sales career and has always wondered

Victor is somewhat satisfied with his sales career and has always wondered about a career as a teacher in a public school. He would have to take a year off work to go back to college to obtain his tea...

Q: Now that you have read the chapter on the importance of career

Now that you have read the chapter on the importance of career planning, what do you recommend to Nicole Linkletter in the case at the beginning of the chapter regarding: 1. Clarifying her values and...

Q: Now that you have read this chapter on building and maintaining good

Now that you have read this chapter on building and maintaining good credit, what would you recommend to Julia Grace regarding: 1. How might Julia go about establishing a debt limit? 2. What two or th...

Q: What is career planning and why is it important?

What is career planning and why is it important?

Q: How do your values and interests impact your life-style trade

How do your values and interests impact your life-style trade-offs in career planning?

Q: What can be done to enhance your abilities, experiences and education

What can be done to enhance your abilities, experiences and education without working in a job situation?

Q: Is the gig economy, freelancing, or entrepreneurship for you?

Is the gig economy, freelancing, or entrepreneurship for you? Why or why not?

Q: Distinguish between a progressive and a regressive tax.

Distinguish between a progressive and a regressive tax.

Q: What is a marginal tax bracket, and how does it impact

What is a marginal tax bracket, and how does it impact taxpayers making tax advantaged contributions to their retirement plans?

Q: Explain why some taxpayers have an effective marginal tax rate as high

Explain why some taxpayers have an effective marginal tax rate as high as 40 percent.

Q: Identify the primary goals of monetary asset management.

Identify the primary goals of monetary asset management.

Q: After completing his associate of arts degree four months ago from a

After completing his associate of arts degree four months ago from a community college in Oklahoma City, Oklahoma, Juan Ramirez has answered more than three dozen advertisements and interviewed three...

Q: Explain the circumstances when it would be appropriate to have funds in

Explain the circumstances when it would be appropriate to have funds in a checking account.

Q: Give three examples of depository institutions where one could open a checking

Give three examples of depository institutions where one could open a checking account.

Q: Summarize your insurance protections when you have funds on deposit in a

Summarize your insurance protections when you have funds on deposit in a depository institution as opposed to other financial services providers.

Q: Explain the five fundamental steps in the financial planning process.

Explain the five fundamental steps in the financial planning process.

Q: Distinguish among financial success, financial security, and financial happiness

Distinguish among financial success, financial security, and financial happiness

Q: Summarize what you will accomplish studying personal finance.

Summarize what you will accomplish studying personal finance.

Q: What are the building blocks to achieving financial success?

What are the building blocks to achieving financial success?

Q: Summarize the content in Figure 3-1, the overview of

Summarize the content in Figure 3-1, the overview of effective personal financial planning. Figure 3-1:

Q: What is the biggest financial worry of most individuals, and what

What is the biggest financial worry of most individuals, and what can they do about it?

Q: Summarize how financial goals follow from one’s values.

Summarize how financial goals follow from one’s values.

Q: The Financial Statements of Harry and Belinda Johnson Suggest Budgeting Problems

The Financial Statements of Harry and Belinda Johnson Suggest Budgeting Problems Harry has worked at a medium-size interior design firm for five years and earns a salary of $4,080 per month. He also r...

Q: Distinguish between the APR (annual percentage rate) and the finance

Distinguish between the APR (annual percentage rate) and the finance charge on a debt.

Q: What is identity theft?

What is identity theft?

Q: Summarize the phases of the business cycle.

Summarize the phases of the business cycle.

Q: Describe two statistics that help predict the future direction of the economy

Describe two statistics that help predict the future direction of the economy

Q: Give an example of how inflation affects income and consumption.

Give an example of how inflation affects income and consumption.

Q: Is college worth the cost? Why or why not?

Is college worth the cost? Why or why not?

Q: How does one put a market value on an employee benefit?

How does one put a market value on an employee benefit?

Q: Give some examples of legal employment rights.

Give some examples of legal employment rights.

Q: Define the balance sheet and give two examples of how to increase

Define the balance sheet and give two examples of how to increase one’s net worth.

Q: Define the cash-flow statement and explain what it does.

Define the cash-flow statement and explain what it does.

Q: Maria Hernandez was reviewing her recent bank credit card account statement when

Maria Hernandez was reviewing her recent bank credit card account statement when she found two charges that she and Victor could not have made. The charges were for rental of a hotel room and purchase...

Q: Do you know anyone who has estimated his or her retirement savings

Do you know anyone who has estimated his or her retirement savings goal in today’s dollars? Offer two reasons why many people do not perform those calculations. Offer two reasons why it would be smart...

Q: Distinguish among the three types of hazards.

Distinguish among the three types of hazards.

Q: Why is the principle of indemnity so important to insurance sellers?

Why is the principle of indemnity so important to insurance sellers?

Q: Summarize how to use deductibles, coinsurance, hazard reduction, and

Summarize how to use deductibles, coinsurance, hazard reduction, and loss reduction to lower the cost of insurance.

Q: Summarize how companies select among insurance applicants.

Summarize how companies select among insurance applicants.

Q: Differentiate between independent agents and exclusive agents.

Differentiate between independent agents and exclusive agents.

Q: Explain how managed care has reduced the cost of health care in

Explain how managed care has reduced the cost of health care in America.

Q: Summarize how an employer’s group health care plan provides coverage to employees

Summarize how an employer’s group health care plan provides coverage to employees.

Q: Distinguish between a traditional health insurance plan and a health maintenance organizations

Distinguish between a traditional health insurance plan and a health maintenance organizations (HMO).

Q: What is a high-deductible health insurance plan and how does

What is a high-deductible health insurance plan and how does it work with a health savings account (HSA).

Q: Distinguish between the government health program called Medicare and Medicaid.

Distinguish between the government health program called Medicare and Medicaid.

Q: What are your thoughts on this comment? “Younger workers today

What are your thoughts on this comment? “Younger workers today face some serious challenges in deciding where to invest their retirement funds.”

Q: Distinguish between term life insurance and cash-value life insurance.

Distinguish between term life insurance and cash-value life insurance.

Q: Explain why the premiums for term insurance are always so much lower

Explain why the premiums for term insurance are always so much lower than those of cash-value life insurance.

Q: Describe the benefit of buying guaranteed renewable term insurance.

Describe the benefit of buying guaranteed renewable term insurance.

Q: Explain why the amount of “insurance” declines over time under

Explain why the amount of “insurance” declines over time under a cash-value life insurance policy.

Q: Distinguish between cash-value life insurance with a fixed return and

Distinguish between cash-value life insurance with a fixed return and with a variable return.

Q: Comment on how investing differs for both short and long-term

Comment on how investing differs for both short and long-term investments.

Q: Distinguish between the terms income stocks and growth stocks.

Distinguish between the terms income stocks and growth stocks.

Q: Define beta and explain what it means.

Define beta and explain what it means.

Q: What is fundamental analysis and why is it popular?

What is fundamental analysis and why is it popular?

Q: Choose three measures of corporate earnings that you might use when selecting

Choose three measures of corporate earnings that you might use when selecting a stock in which to invest and say why you like them.

Q: Of all the mistakes that people make when planning for retirement,

Of all the mistakes that people make when planning for retirement, which one might be likely to negatively affect your retirement planning the most? Give reasons why.

Q: What are the five steps in figuring a potential rate of return

What are the five steps in figuring a potential rate of return to invest in a stock?

Q: Distinguish between a managed mutual fund and an unmanaged mutual fund.

Distinguish between a managed mutual fund and an unmanaged mutual fund.

Q: Distinguish among mutual funds with an income objective, growth objective,

Distinguish among mutual funds with an income objective, growth objective, and growth and income objective.

Q: Explain why investors like index mutual funds and exchange traded funds.

Explain why investors like index mutual funds and exchange traded funds.

Q: Summarize how depreciation is used to reduce the taxable income from a

Summarize how depreciation is used to reduce the taxable income from a real estate investment.

Q: Briefly explain how the interest paid on the mortgage of a real

Briefly explain how the interest paid on the mortgage of a real estate investment reduces one’s income taxes.

Q: Summarize the special income tax regulations on renting out vacation homes.

Summarize the special income tax regulations on renting out vacation homes.

Q: List the steps in the process of estimating your retirement savings goal

List the steps in the process of estimating your retirement savings goal in today’s dollars.

Q: In the text example, what can Erik do to save more

In the text example, what can Erik do to save more for his retirement?

Q: What is a sales finance company and how does it work?

What is a sales finance company and how does it work?

Q: Identify topics that you would cover in your letter of last instructions

Identify topics that you would cover in your letter of last instructions.

Q: Where would to go to obtain an installment loan to finance a

Where would to go to obtain an installment loan to finance a vehicle if you had a good credit rating and wanted to pay a low interest rate?

Q: What three aspects of a vehicle purchase should be negotiated? In

What three aspects of a vehicle purchase should be negotiated? In what order?

Q: Why should you make major purchase decisions at home using a decision

Why should you make major purchase decisions at home using a decision-making matrix?

Q: Why should a shopper negotiate?

Why should a shopper negotiate?

Q: What is dealer holdback and why is it important?

What is dealer holdback and why is it important?

Q: What is involved in cleaning up your credit to buy a home

What is involved in cleaning up your credit to buy a home?

Q: Distinguish between the two rules of thumb that lenders use to assess

Distinguish between the two rules of thumb that lenders use to assess housing affordability.

Q: When using a Realtor® why should you be cautious when working

When using a Realtor® why should you be cautious when working with a seller’s agent?

Q: What steps are involved with agreeing to terms with a seller?

What steps are involved with agreeing to terms with a seller?

Q: Distinguish among loan estimate, closing disclosure, and uniform settlement statement

Distinguish among loan estimate, closing disclosure, and uniform settlement statement.

Q: Do you think all of the steps in the planned buying process

Do you think all of the steps in the planned buying process are used when buying simple everyday products (such as a loaf of bread or a half-gallon of milk), or are they used only when buying big-tick...

Q: List the four types of losses covered under the property insurance portion

List the four types of losses covered under the property insurance portion of a homeowner’s policy.

Q: Give three examples of liability protection under homeowner’s insurance policies

Give three examples of liability protection under homeowner’s insurance policies

Q: Name the three types of homeowner’s insurance policies for most residences:

Name the three types of homeowner’s insurance policies for most residences: HO-3, HO-4, and HO-6.

Q: Identify four types of personal property for which the covered loss is

Identify four types of personal property for which the covered loss is limited to a specific dollar amount under standard homeowner’s insurance policies (see Table 10-1). Table 10-1...

Q: List the three questions you should ask yourself when determining the policy

List the three questions you should ask yourself when determining the policy limits for a homeowner’s insurance policy.

Q: Distinguish among an exclusion, deductible, coinsurance, and a copay

Distinguish among an exclusion, deductible, coinsurance, and a copay.

Q: What is meant by the out-of-pocket maximum?

What is meant by the out-of-pocket maximum?

Q: Distinguish among the owner, the insured, the beneficiary, and

Distinguish among the owner, the insured, the beneficiary, and the contingent beneficiary of a life insurance policy.

Q: Distinguish between an incontestability clause and a suicide clause in a life

Distinguish between an incontestability clause and a suicide clause in a life insurance contract.

Q: What are nonforfeiture values and why are they important?

What are nonforfeiture values and why are they important?

Q: What benefits do you see in leasing a vehicle? What negatives

What benefits do you see in leasing a vehicle? What negatives exist when leasing?

Q: Identify three of the five settlement options for the payment of the

Identify three of the five settlement options for the payment of the proceeds of a life insurance policy to its beneficiary.

Q: Distinguish between an automatic premium loan and a waiver-of-

Distinguish between an automatic premium loan and a waiver-of-premium option in a life insurance policy.

Q: Explain how guaranteed renewability for term life insurance and guaranteed insurability for

Explain how guaranteed renewability for term life insurance and guaranteed insurability for cash-value insurance protect insured people who develop serious health conditions.

Q: What is random risk, and how does it get reduced?

What is random risk, and how does it get reduced?

Q: Explain market risk, what causes it, and how it fits

Explain market risk, what causes it, and how it fits in one’s portfolio.

Q: Summarize three other types of investment risks that seem important to you

Summarize three other types of investment risks that seem important to you.

Q: Explain how transactions costs and leverage may increase or decrease investment returns

Explain how transactions costs and leverage may increase or decrease investment returns.

Q: How does one use a stock screening tool?

How does one use a stock screening tool?

Q: Name two places where you can go to find information about a

Name two places where you can go to find information about a company?

Q: Distinguish between the Dow Jones Industrial Average and the S&P

Distinguish between the Dow Jones Industrial Average and the S&P 500.

Q: Some credit cards offer rewards points or a cash back reward for

Some credit cards offer rewards points or a cash back reward for all purchases made on the card. Which rewards card would you prefer and why?

Q: Where can you go to look up stock symbols and prices?

Where can you go to look up stock symbols and prices?

Q: Give three examples of fees or charges associated with load funds.

Give three examples of fees or charges associated with load funds.

Q: Which is better for most investors, load or no-

Which is better for most investors, load or no-load funds? Why?

Q: Summarize the effects of loads and fees on investment returns.

Summarize the effects of loads and fees on investment returns.

Q: Summarize how the discounted cash-flow method helps determine the right

Summarize how the discounted cash-flow method helps determine the right price to pay for a real estate investment.

Q: Comment on the wisdom of buying a timeshare as an investment.

Comment on the wisdom of buying a timeshare as an investment.

Q: List two ways to finance a real estate investment.

List two ways to finance a real estate investment.

Q: Distinguish among after-tax money put into investments, pretax money

Distinguish among after-tax money put into investments, pretax money, and vesting.

Q: Explain what is meant by tax-sheltered investment growth on money

Explain what is meant by tax-sheltered investment growth on money invested through qualified retirement accounts.

Q: Summarize the main differences between defined-contribution and defined-benefit

Summarize the main differences between defined-contribution and defined-benefit pension plans.

Q: If you were the borrower, how would you feel about the

If you were the borrower, how would you feel about the fact that interest costs are higher in the early months of a declining balance loan than they are in the later months?

Q: Explain why defined-contribution retirement plans are called self-directed

Explain why defined-contribution retirement plans are called self-directed.

Q: Offer your impressions of working for an employer that offers a sizable

Offer your impressions of working for an employer that offers a sizable matching contribution compared with one that does not.

Q: Distinguish between a single-payment and an installment loan.

Distinguish between a single-payment and an installment loan.

Q: What is the difference between a secured and an unsecured loan?

What is the difference between a secured and an unsecured loan?

Q: What reasons do some people offer for not having a relative co

What reasons do some people offer for not having a relative co sign a student loan?

Q: What is an acceleration clause?

What is an acceleration clause?

Q: Which alternative lender probably charges the highest interest rate?

Which alternative lender probably charges the highest interest rate?

Q: Summarize the FTC’s cooling-off rule to cancel a contract.

Summarize the FTC’s cooling-off rule to cancel a contract.

Q: Distinguish between mediation and arbitration.

Distinguish between mediation and arbitration.

Q: How do lemon laws work?

How do lemon laws work?

Q: Are prepayment penalties such as that applied with the rule of 78s

Are prepayment penalties such as that applied with the rule of 78s justified? Why or why not?

Q: Summarize how a small claims court work.

Summarize how a small claims court work.

Q: Explain why the portions of a monthly mortgage payment that are allocated

Explain why the portions of a monthly mortgage payment that are allocated toward interest and toward principal will vary as the loan is repaid.

Q: Distinguish between a conventional mortgage loan and an adjustable-rate loan

Distinguish between a conventional mortgage loan and an adjustable-rate loan.

Q: Identify the two ways that homebuyers build equity in their property.

Identify the two ways that homebuyers build equity in their property.

Q: Identify the four types of automobile insurance coverage.

Identify the four types of automobile insurance coverage.

Q: Explain the meaning of the numbers 100/200/75.

Explain the meaning of the numbers 100/200/75.

Q: Identify who is protected by medical payments coverage.

Identify who is protected by medical payments coverage.

Q: Distinguish between collision and comprehensive insurance.

Distinguish between collision and comprehensive insurance.

Q: Explain why selecting a policy with a high deductible and high liability

Explain why selecting a policy with a high deductible and high liability limits is better than one with a low deductible and low liability limits.

Q: What are activities of daily living?

What are activities of daily living?

Q: Many people complain that property insurance policies should pay more than what

Many people complain that property insurance policies should pay more than what the insurance companies say is the actual cash value of the property, such as for a used motor vehicle with low mileage...

Q: Distinguish among the three levels of care in long-term insurance

Distinguish among the three levels of care in long-term insurance.

Q: Distinguish between the benefit period and the waiting period for a long

Distinguish between the benefit period and the waiting period for a long-term care policy.

Q: What is meant by integrating your life insurance into your financial plan

What is meant by integrating your life insurance into your financial plan over the life cycle?

Q: Give some examples of fair prices for life insurance and one example

Give some examples of fair prices for life insurance and one example of why some people must pay higher premiums than others.

Q: List the benefits of buying term and investing the rest.

List the benefits of buying term and investing the rest.

Q: Give three signs of an unethical life insurance agent.

Give three signs of an unethical life insurance agent.

Q: Distinguish between bull and bear markets.

Distinguish between bull and bear markets.

Q: What should long-term investors do about market volatility?

What should long-term investors do about market volatility?

Q: Identify three trading mistakes that can be avoided by long-term

Identify three trading mistakes that can be avoided by long-term investors.

Q: Summarize how herd behavior sometimes leads to a stock market bubble.

Summarize how herd behavior sometimes leads to a stock market bubble.

Q: Julia has been thinking about how she uses credit cards. She

Julia has been thinking about how she uses credit cards. She has two bank cards and three store cards. The APRs on the cards range from 10.5 to 24.9 percent, with the store cards being among the highe...

Q: What experiences have you or a family member had with the automobile

What experiences have you or a family member had with the automobile insurance claims process? What if anything might have been done differently or better?

Q: Summarize the differences among discount, online, and full-service

Summarize the differences among discount, online, and full-service brokers.

Q: Summarize the differences among types of stock orders: market, limit

Summarize the differences among types of stock orders: market, limit, and stop order.

Q: What is buying on margin and how it can go wrong for

What is buying on margin and how it can go wrong for an investor?

Q: Explain what selling short is and how it can go wrong for

Explain what selling short is and how it can go wrong for an investor.

Q: Explain why it is important to review your investment philosophy and goals

Explain why it is important to review your investment philosophy and goals when selecting mutual fund investments.

Q: Explain how you would eliminate funds inappropriate for your investment goals.

Explain how you would eliminate funds inappropriate for your investment goals.

Q: How might you go about monitoring your mutual fund investments?

How might you go about monitoring your mutual fund investments?

Q: Summarize why foreclosures and illiquidity are disadvantages in real estate investing.

Summarize why foreclosures and illiquidity are disadvantages in real estate investing.

Q: Briefly comment on why interest rate risk is dangerous to real estate

Briefly comment on why interest rate risk is dangerous to real estate investors.

Q: Comment on why real estate investors often have time-consuming management

Comment on why real estate investors often have time-consuming management demands.

Q: What percentage of your portfolio, if any, do you think

What percentage of your portfolio, if any, do you think should be invested in high-risk investments? Explain.

Q: Explain how the interest is calculated on a consumer loan that uses

Explain how the interest is calculated on a consumer loan that uses the declining balance method.

Q: Summarize how interest is calculated on a consumer loan that uses the

Summarize how interest is calculated on a consumer loan that uses the add-on method.

Q: What is the effect of the rule of 78s when a borrower

What is the effect of the rule of 78s when a borrower repays an add-on method loan early?

Q: Explain how the interest is calculated on a consumer loan that uses

Explain how the interest is calculated on a consumer loan that uses the discount method.

Q: List some disadvantages of trying to sell a home yourself.

List some disadvantages of trying to sell a home yourself.

Q: List one advantage and one disadvantage of using a real estate broker

List one advantage and one disadvantage of using a real estate broker to sell a home.

Q: Describe two costs associated with selling a home in addition to the

Describe two costs associated with selling a home in addition to the real estate commission.

Q: Explain how purchasing an umbrella liability insurance policy applies the large loss

Explain how purchasing an umbrella liability insurance policy applies the large loss principle.

Q: Who should consider buying flood and earthquake insurance?

Who should consider buying flood and earthquake insurance?

Q: Give two examples of someone who might want to purchase a floater

Give two examples of someone who might want to purchase a floater insurance policy.

Q: Describe what would encourage you to invest in real estate given that

Describe what would encourage you to invest in real estate given that in recent years prices in some communities have declined.

Q: Summarize how you determine your level of need for disability income insurance

Summarize how you determine your level of need for disability income insurance.

Q: Explain who needs disability insurance.

Explain who needs disability insurance.

Q: Identify three policy provisions to consider when purchasing disability income insurance.

Identify three policy provisions to consider when purchasing disability income insurance.

Q: Distinguish between own-occupation and any-occupation disability income insurance

Distinguish between own-occupation and any-occupation disability income insurance plans.

Q: Summarize what the buy-and-hold long-term investment

Summarize what the buy-and-hold long-term investment strategy is all about.

Q: What is the goal of portfolio diversification, and how is this

What is the goal of portfolio diversification, and how is this accomplished?

Q: Explain the concept of dollar-cost averaging including why one invests

Explain the concept of dollar-cost averaging including why one invests at below average costs.

Q: What is asset allocation, and why does it work?

What is asset allocation, and why does it work?

Q: Comment on three popular rules of thumb of asset allocation including being

Comment on three popular rules of thumb of asset allocation including being 100 percent invested in stocks.

Q: What happens to a worker’s 401(k) retirement account if

What happens to a worker’s 401(k) retirement account if he or she signs up for an auto-rebalance account service?

Q: Both options and futures are risky investments. Identify one that seems

Both options and futures are risky investments. Identify one that seems like an unwise idea, and explain why it is unappealing.

Q: Distinguish between investment- and speculative-grade bonds.

Distinguish between investment- and speculative-grade bonds.

Q: What are the basic differences between corporate, U.S.

What are the basic differences between corporate, U.S. government, and municipal bonds?

Q: Distinguish among Treasury bills, notes, and bonds.

Distinguish among Treasury bills, notes, and bonds.

Q: Summarize the differences between I-bonds and TIPS bonds.

Summarize the differences between I-bonds and TIPS bonds.

Q: Summarize why bonds and interest rates have an inverse relationship.

Summarize why bonds and interest rates have an inverse relationship.

Q: Give a math example of how to calculate a bond’s yield to

Give a math example of how to calculate a bond’s yield to maturity that is different than the one in the book.

Q: Identify one collectible that might be an interesting investment, and explain

Identify one collectible that might be an interesting investment, and explain why it might be difficult to make a profit.

Q: Identify some risks of investing in precious stones and gems.

Identify some risks of investing in precious stones and gems.

Q: Why should workers choose to save for retirement through a personally established

Why should workers choose to save for retirement through a personally established retirement account?

Q: Summarize the importance of low-cost investment fees to long-

Summarize the importance of low-cost investment fees to long-term retirement success.

Q: Now that you have read this chapter on credit cards and consumer

Now that you have read this chapter on credit cards and consumer loans, what would you recommend to Zachary Cochrane regarding: 1. His approach to using credit cards, including the number of cards he...

Q: List two differences between a Roth IRA and a traditional IRA.

List two differences between a Roth IRA and a traditional IRA.

Q: Who would use a Keogh rather than a SEP-IRA to

Who would use a Keogh rather than a SEP-IRA to save for retirement?

Q: What is the best way to establish documentation for potential losses to

What is the best way to establish documentation for potential losses to your personal property?

Q: Describe what you should do to file a claim most effectively when

Describe what you should do to file a claim most effectively when involved in an automobile accident.

Q: Describe the term release and explain why signing a release too soon

Describe the term release and explain why signing a release too soon might work to your disadvantage.

Q: What does a durable power of attorney provide, and can it

What does a durable power of attorney provide, and can it be changed?

Q: Offer some reasons why people should create advance directive documents.

Offer some reasons why people should create advance directive documents.

Q: What is a living will and what does it try to accomplish

What is a living will and what does it try to accomplish?

Q: What does a health care proxy achieve?

What does a health care proxy achieve?

Q: Review Figures 13-1 and 13-2, and record

Review Figures 13-1 and 13-2, and record in writing an investment plan to fund your retirement, presumably one of your own long-term goals. Figures 13-1: Figures 13-2:

Q: Now that you have read this chapter on vehicle and other major

Now that you have read this chapter on vehicle and other major purchases, what do you recommend to David and Lisa Cosgrove regarding: 1. How to search for a vehicle to replace Alyssa’s? 2. Whether to...

Q: Distinguish between a call and a put for the options investor.

Distinguish between a call and a put for the options investor.

Q: Summarize one way a person with a conservative investment philosophy can profit

Summarize one way a person with a conservative investment philosophy can profit in options.

Q: Explain how a speculative options investor can make a lot of money

Explain how a speculative options investor can make a lot of money.

Q: Offer reasons why futures contracts are not appropriate for the long-

Offer reasons why futures contracts are not appropriate for the long-term investor.

Q: What are some negative impacts of taking early withdrawals from retirement accounts

What are some negative impacts of taking early withdrawals from retirement accounts?

Q: Name two types of penalty-free withdrawals from retirement accounts.

Name two types of penalty-free withdrawals from retirement accounts.

Q: Summarize how long one’s retirement money will last given certain withdrawal rates

Summarize how long one’s retirement money will last given certain withdrawal rates.

Q: Offer some positive and negative observations on the wisdom of buying an

Offer some positive and negative observations on the wisdom of buying an annuity with some of your retirement nest egg money when you retire.

Q: What is probate, and give three examples of how people should

What is probate, and give three examples of how people should transfer assets by contract to avoid probate.

Q: Distinguish between probate and nonprobate property.

Distinguish between probate and nonprobate property.

Q: Now that you have read the chapter on buying housing, what

Now that you have read the chapter on buying housing, what do you recommend to Shelby Clark regarding: 1. Buying or renting housing in the Denver area? 2. Steps she should take prior to actively looki...

Q: What topics go into a properly drafted will?

What topics go into a properly drafted will?

Q: Distinguish between an irrevocable living trust and testamentary trusts?

Distinguish between an irrevocable living trust and testamentary trusts?

Q: What is the likelihood of average people paying estate or inheritance taxes

What is the likelihood of average people paying estate or inheritance taxes?

Q: Miguel Perez of Pamona, California, obtained a two-year

Miguel Perez of Pamona, California, obtained a two-year installment loan for $1,500 to buy a television set eight months ago. The loan had a 12.6 percent APR and a finance charge of $204.72. His month...

Q: Kayla Sampson, an antiques dealer from Mankato, Minnesota, received

Kayla Sampson, an antiques dealer from Mankato, Minnesota, received her monthly billing statement for April for her MasterCard account. The statement indicated that she had a beginning balance of $600...

Q: Kimberly Jensen of Storm Lake, Iowa, wants to buy some

Kimberly Jensen of Storm Lake, Iowa, wants to buy some living room furniture for her new apartment. A local store offered credit at an APR of 16 percent, with a maximum term of four years. The furnitu...

Q: Zachary Porter of Abilene, Texas, is contemplating borrowing $10

Zachary Porter of Abilene, Texas, is contemplating borrowing $10,000 from his bank. The bank could use add-on rates of 6.5 percent for 3 years, 7 percent for 4 years, and 8 percent for 5 years. Use Eq...

Q: They are considering trading their car in for a newer used vehicle

They are considering trading their car in for a newer used vehicle so that Harry can have dependable transportation for commuting to work. The couple still owes $5,130 to the credit union for their cu...

Q: Now that you have read the chapter on risk management and property

Now that you have read the chapter on risk management and property liability insurance, what would you recommend to Nick and Amber in the case at the beginning of the chapter regarding: 1. The risk-ma...

Q: Now that you have read the chapter on health care planning,

Now that you have read the chapter on health care planning, what do you recommend to Danielle DiMartino in the case at the beginning of the chapter regarding: 1. Choosing among the four alternatives a...

Q: Now that you have read the chapter on protecting loved ones through

Now that you have read the chapter on protecting loved ones through life insurance, what would you recommend to Stephanie and Will Bridgeman in the case at the beginning of the chapter regarding: 1. T...

Q: Lauren Rowland is a dentist in Hebron, Kentucky, who recently

Lauren Rowland is a dentist in Hebron, Kentucky, who recently entered into a contract to buy a new automobile. After signing to finance $38,000, she hurriedly left the office of the sales finance comp...

Q: What types of life insurance they should consider.

What types of life insurance they should consider.

Q: Coordinating their retirement savings and other investments with their life insurance program

Coordinating their retirement savings and other investments with their life insurance program?

Q: Shopping for life insurance?

Shopping for life insurance?

Q: Now that you have read the chapter on investment fundamentals, what

Now that you have read the chapter on investment fundamentals, what do you recommend to Shanice and Sarena on the subject regarding: 1. Portfolio diversification for Sarena? 2. Dollar-cost averaging f...

Q: Now that you have read the chapter on stocks and bonds,

Now that you have read the chapter on stocks and bonds, what do you recommend to Ariya Jutanugarn in the case at the beginning of the chapter regarding: 1. Investing for retirement in 18 years? 2. Own...

Q: Now that you have read the chapter on mutual funds, what

Now that you have read the chapter on mutual funds, what do you recommend to Helen and David Lilienthal in the case at the beginning of the chapter regarding: 1. Redeeming their CDs and investing thei...

Q: Now that you have read the chapter on real estate and high

Now that you have read the chapter on real estate and high-risk investments, what do you recommend to Brittany on: 1. Investing in real estate? 2. Putting some money into collectibles or gold? 3. Inve...

Q: Now that you have read the chapter on estate planning, what

Now that you have read the chapter on estate planning, what do you recommend to Chrisanna and Fernando on the subject of retirement and estate planning regarding: 1. How much in Social Security benefi...

Q: Explain the purpose and value of a lease for both the renter

Explain the purpose and value of a lease for both the renter and the landlord.

Q: Distinguish between periodic tenancy and tenancy for a specific time when renting

Distinguish between periodic tenancy and tenancy for a specific time when renting housing.

Q: After several years of riding a bus to work, Belinda finds

After several years of riding a bus to work, Belinda finds that she can no longer do so because her employer moved to a location that is not convenient for public transportation. Thus the Johnsons are...

Q: Identify three ways that home buyers can save on their income taxes

Identify three ways that home buyers can save on their income taxes.

Q: Illustrate how housing buyers can pay less than renters when taxes and

Illustrate how housing buyers can pay less than renters when taxes and appreciation of housing values are considered.

Q: Explain how net asset value is calculated and how it is used

Explain how net asset value is calculated and how it is used by mutual funds.

Q: List five advantages of investing in mutual funds.

List five advantages of investing in mutual funds.

Q: Name five services that are unique to mutual funds.

Name five services that are unique to mutual funds.

Q: Name two things investors should consider doing before investing in real estate

Name two things investors should consider doing before investing in real estate.

Q: What are the two key questions to consider before investing in real

What are the two key questions to consider before investing in real estate?

Q: Distinguish between the price-to-rent ratio and the rental

Distinguish between the price-to-rent ratio and the rental yield as measures of current income.

Q: Distinguish between capital improvements in real estate investing and repairs.

Distinguish between capital improvements in real estate investing and repairs.

Q: What is open-end credit and give three examples.

What is open-end credit and give three examples.

Q: The Hernandezes’ older son, Jacob, has reached the age at

The Hernandezes’ older son, Jacob, has reached the age at which it is time to consider purchasing a car for him. Victor and Maria have decided to give Maria’s old car to Jacob and buy a later-model us...

Q: Explain the basic features of bank credit cards..

Explain the basic features of bank credit cards..

Q: Distinguish between an unsecured line of credit and a home equity credit

Distinguish between an unsecured line of credit and a home equity credit line.

Q: Summarize the process to determine whether you can afford a particular purchase

Summarize the process to determine whether you can afford a particular purchase.

Q: What is planned buying?

What is planned buying?

Q: Distinguish between needs and wants, and explain why it may be

Distinguish between needs and wants, and explain why it may be better to act as if no needs exist.

Q: When shopping for a vehicle what are three things you need to

When shopping for a vehicle what are three things you need to know about when conducting preshopping research?

Q: Distinguish between pure risk and speculative risk.

Distinguish between pure risk and speculative risk.

Q: Explain the distinctions between risk and odds.

Explain the distinctions between risk and odds.

Q: List, describe, and give an example of each of the

List, describe, and give an example of each of the five ways to handle risk of loss.

Q: When considering likelihood of loss and severity of loss, explain which

When considering likelihood of loss and severity of loss, explain which one of these two concepts is more important when deciding whether to buy insurance and why.

Q: Alexis Monroe, a biologist from Dyersburg, Tennessee, is curious

Alexis Monroe, a biologist from Dyersburg, Tennessee, is curious about the accuracy of the interest charges shown on her most recent credit card billing statement, which appears as Figure 7-1. Use the...

Q: What does the book say about why the USA has such an

What does the book say about why the USA has such an expensive health care system?

Q: Summarize what the Affordable Care Act is supposed to accomplish.

Summarize what the Affordable Care Act is supposed to accomplish.

Q: Who does the ACA impact and who does it not?

Who does the ACA impact and who does it not?

Q: List three of the 10 essential benefits of all new health care

List three of the 10 essential benefits of all new health care plans.

Q: Summarize how subsidies reduce the price of insurance premiums under the ACA

Summarize how subsidies reduce the price of insurance premiums under the ACA.

Q: If you choose a “silver” health insurance plan, how

If you choose a “silver” health insurance plan, how much of your out-of-pocket medical costs will be paid by the plan?

Q: Distinguish between the dying-too-soon problem and the living

Distinguish between the dying-too-soon problem and the living-too-long problem and the best ways to address each.

Q: List five types of needs that can be addressed through life insurance

List five types of needs that can be addressed through life insurance.

Q: Explain why the multiple-of-earnings approach is less accurate

Explain why the multiple-of-earnings approach is less accurate than a needs-based approach to life insurance planning

Q: Identify periods in a typical person’s life when the need for life

Identify periods in a typical person’s life when the need for life insurance is low and one when it is high.

Q: James Sprater of Grand Junction, Colorado, has been shopping for

James Sprater of Grand Junction, Colorado, has been shopping for a loan to buy a used car. He wants to borrow $18,000 for four or five years. James’s credit union offers a declining-balance loan at 9....

Q: What two factors in the process of calculating life insurance needs are

What two factors in the process of calculating life insurance needs are likely to be the most expensive to replace?

Q: Offer some suggestions on where to get money to invest.

Offer some suggestions on where to get money to invest.

Q: How does savings differ from investing?

How does savings differ from investing?

Q: What are the two parts of an investor’s total return?

What are the two parts of an investor’s total return?

Q: What average investment returns from stocks do you anticipate in the future

What average investment returns from stocks do you anticipate in the future?

Q: Distinguish between common stocks and bonds in investments.

Distinguish between common stocks and bonds in investments.

Q: How do public corporations use stocks and bonds?

How do public corporations use stocks and bonds?

Q: Summarize how workers become qualified for retirement Social Security benefits.

Summarize how workers become qualified for retirement Social Security benefits.

Q: Distinguish between the benefits provided under Social Security for a worker who

Distinguish between the benefits provided under Social Security for a worker who is fully insured and a worker who is currently insured.

Q: Explain what happens if you choose to retire earlier than your full

Explain what happens if you choose to retire earlier than your full retirement age, which is probably 67.

Q: Allison Jones of Flagstaff, Arizona, is considering paying $400

Allison Jones of Flagstaff, Arizona, is considering paying $400 a year for an extended warranty on several of her major appliances. If the appliances are expected to last for five years and she can ea...

Q: Distinguish between a statement date and a payment due date on a

Distinguish between a statement date and a payment due date on a credit statement.

Q: Distinguish between transaction and posting dates on a credit statement.

Distinguish between transaction and posting dates on a credit statement.

Q: How does a penalty rate work on a credit card?

How does a penalty rate work on a credit card?

Q: What is the liability for a lost or stolen credit card?

What is the liability for a lost or stolen credit card?

Q: What are your action steps to dispute an error on a billing

What are your action steps to dispute an error on a billing statement?

Q: What are some pitfalls of leasing?

What are some pitfalls of leasing?

Q: Explain the difference between an implied warranty and an express warranty,

Explain the difference between an implied warranty and an express warranty, and how do they relate to the term as is?

Q: What is a service contract and what is its disadvantages?

What is a service contract and what is its disadvantages?

Q: What is the goal of comparison shopping?

What is the goal of comparison shopping?

Q: Summarize what is involved in comparison shopping for a safe vehicle.

Summarize what is involved in comparison shopping for a safe vehicle.

Q: James Canter of Auburn, Alabama, is a good shopper.

James Canter of Auburn, Alabama, is a good shopper. He always comparison shops and uses coupons every week. James figures he saves at least $40 a month as a result. Assuming an interest rate of 2 perc...

Q: Explain why lease payments for a new vehicle are lower than loan

Explain why lease payments for a new vehicle are lower than loan payments for the same vehicle.

Q: How do you choose between a low interest rate and a rebate

How do you choose between a low interest rate and a rebate?

Q: How do you comparison shop between financing and leasing?

How do you comparison shop between financing and leasing?

Q: What is the standard down payment amount on a mortgage loan?

What is the standard down payment amount on a mortgage loan?

Q: If you make a down payment that is lower than standard,

If you make a down payment that is lower than standard, identify the extra cost you will be required to pay.

Q: Why do lenders use points in home loans, and who is

Why do lenders use points in home loans, and who is responsible for paying points?

Q: Explain why the down payment and mortgage principal and interest understate the

Explain why the down payment and mortgage principal and interest understate the actual up-front and monthly costs of home ownership.

Q: When should you request that private mortgage insurance be canceled if such

When should you request that private mortgage insurance be canceled if such insurance was required at the time of purchase of a home?

Q: Identify the components of PITI.

Identify the components of PITI.

Q: Define insurance.

Define insurance.

Q: Belinda Johnson’s parents and maternal grandmother have combined their finances and presented

Belinda Johnson’s parents and maternal grandmother have combined their finances and presented Harry and Belinda with $50,000 cash gift to use to purchase a home. The Johnsons have sh...

Q: Julia has always tried to keep her insurance spending under control by

Julia has always tried to keep her insurance spending under control by purchasing low limits on her policies. Now that her assets and income have grown, she is beginning to reconsider the wisdom of th...

Q: Mark and Kelly Prince of Emmertsburg, Iowa, face a crisis

Mark and Kelly Prince of Emmertsburg, Iowa, face a crisis. Their automobile insurance company has notified them that their current coverage expires in 30 days and will not be renewed. Mark and the Pri...

Q: Makiko Iwanami, a student from Osaka, Japan, is in

Makiko Iwanami, a student from Osaka, Japan, is in one of your classes. She is considering the purchase of a used car and has been told that she must buy automobile insurance to register the car and o...

Q: Your friend Taliesha Jackson of Edwardsville, Illinois, recently changed to

Your friend Taliesha Jackson of Edwardsville, Illinois, recently changed to a new job as a CPA in a moderate-size accounting firm. Knowing that you were taking a personal finance course, she asked you...

Q: Dual-income households often have overlapping health care benefits. For

Dual-income households often have overlapping health care benefits. For example, both Harry and Belinda Johnson’s employers provide partially subsidized family health insurance plans as employee benef...

Q: Victor Hernandez recently learned that his uncle has Alzheimer’s disease. While

Victor Hernandez recently learned that his uncle has Alzheimer’s disease. While discussing this tragedy with Maria, he realized that both of his grandparents probably had Alzheimer’s or another dement...

Q: Julia is about to change jobs. Her new employer offers several

Julia is about to change jobs. Her new employer offers several different health care plans including a traditional health care plan, an HMO, a PPO, and a high-deductible plan. Her employer will pay th...

Q: Charles Napier of Barstow, California, recently took a new job

Charles Napier of Barstow, California, recently took a new job as a manufacturer’s representative for an aluminum castings company. While looking over his employee benefits materials, he discovered th...

Q: Coverage Harry and Belinda Johnson spend $20 per month on life

Coverage Harry and Belinda Johnson spend $20 per month on life insurance in the form of a premium on a $10,000, paid-at-65 cash-value policy on Harry that his parents bought for him years ago. Belinda...

Q: Switching Life Insurance Policies Victor and Maria Hernandez have a total of

Switching Life Insurance Policies Victor and Maria Hernandez have a total of $200,000 in life insurance. Victor has a $50,000 cash-value policy purchased more than 20 years ago soon after when they ma...

Q: Estate Agents Victor and Maria have been thinking about selling their home

Estate Agents Victor and Maria have been thinking about selling their home and buying a house with more yard space so that they can indulge their passion for gardening. Before they make such a decisio...

Q: Biming Chen is a college student from Cleveland, Mississippi. Soon

Biming Chen is a college student from Cleveland, Mississippi. Soon to graduate, Biming was approached recently by a life insurance agent, who set up a group meeting for several members of his fraterni...

Q: Joseph and Marcia Michael of Athens, Georgia, are a married

Joseph and Marcia Michael of Athens, Georgia, are a married couple in their mid-30s. They have two children, ages 5 and 3, and Marcia is pregnant with their third child. Marcia is a part-time book ind...