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SOLUTION MANUAL Personal Finance, 14th Edition By E. Thomas Garman, Chapter 1 - 17
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SOLUTION MANUAL Personal Finance, 14th Edition By E. Thomas Garman, Chapter 1 - 17
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SOLUTION MANUAL0
Personal Finance, 14th Edition
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By E. Thomas Garman, Chapter 1 - 17
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,TABLE OF CONTENTS 0 0 0
Part I: FINANCIAL PLANNING.
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1. Understanding Personal Finance.
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2. Career Planning.
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3. Financial Statements, Goals, and Budgets.
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Part II: MONEY MANAGEMENT.
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4. Managing Income Taxes.
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5. Managing Checking and Savings Accounts.
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6. Building and Maintaining Good Credit.
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7. Credit Cards and Consumer Loans.
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8. Vehicles and Other Major Purchases.
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9. Obtaining Affordable Housing.
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Part III: INCOME AND ASSET PROTECTION.
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10. Managing Property and Liability Risk.
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11. Planning for Health Care Expenses.
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12. Life Insurance Planning.
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Part IV: INVESTMENTS.
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13. Investment Fundamentals.
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14. Investing in Stocks and Bonds.
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15. Mutual and Exchange-Traded Funds.
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16. Real Estate and High-Risk Investments.
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17. Retirement and Estate Planning.
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,Solution and Answer Guide 0 0 0
GARMAN/FOX,0 PERSONAL0 FINANCE0 14E,0 CHAPTER0 1:0 THINKING0 LIKE0 A0 FINANCIAL0 PLANNER
TABLE OF CONTENTS0 0
Answers0to0Chapter0Concept0Checks ........................................................................................................ 2
What0Do0You0Recommend0Now? .............................................................................................................. 4
Let’s0Talk0About0It ..................................................................................................................................... 5
Do0the0Math ................................................................................................................................................. 6
Financial0Planning0Cases ............................................................................................................................ 8
Extended0Learning .................................................................................................................................... 10
, ANSWERS TO CHAPTER CONCEPT CHECKS
0 0 0 0
LO1.10Recognize0the0keys0to0achieving0financial0success.
1. Explain0the0five0steps0in0the0financial0planning0process.
Answer:0There0are0five0fundamental0steps0to0the0personal0financial0planning0process:0(1)0evaluate0your0fi
nancial0health0to0your0education0and0career0choice;0(2)0define0your0financial0goals;0(3)0develop0a0plan0of0a
ction0to0achieve0your0goals;0(4)0implement0spending0and0saving0plans0to0monitor0and0control0progress0to
ward0your0goals;0and0(5)0review0your0financial0progress0and0make0changes0as0appropriate.
2. Distinguish0among0financial0success,0financial0security,0and0financial0happiness.
Answer:0Financial0success0is0the0achievement0of0financial0aspirations0that0are0desired,0planned,0or0attem
pted.0Success0is0defined0by0the0individual0or0family0that0seeks0it.0Financial0success0may0be0defined0as0bei
ng0able0to0live0according0to0one’s0standard0of0living.0Financial0security0is0that0comfortable0feeling0that0y
our0financial0resources0will0be0adequate0to0fulfill0any0needs0you0have0as0well0as0your0wants.0Financial0h
appiness0is0the0experience0you0have0when0you0are0satisfied0with0money0matters.0People0who0are0happy0a
bout0their0finances0will0see0a0spillover0into0positive0feelings0about0life0in0general.
3. Summarize0what0you0will0accomplish0studying0personal0finance.
Answer:0Several0things0can0be0accomplished0by0studying0personal0finance.0Recognize0how0to0manage0unex
pected0and0expected0financial0events.0Pay0as0little0as0possible0in0income0taxes.0Understand0how0to0effectivel
y0comparison0shop0for0vehicles0and0homes.0Protect0what0we0own.0Invest0wisely.0Accumulate0and0protect0the0
wealth0that0we0may0choose0to0spend0during0our0non-working0years0(e.g.,0retirement)0or0donate.
4. What0are0the0building0blocks0to0achieving0financial0success?
Answer:0The0building0blocks0for0achieving0financial0success0include0a0foundation0of0regular0income0that
0provides0the0means0to0support0your0lifestyle0and0save0for0desired0goals0in0the0future.0The0foundation0sup
ports0a0base0of0various0banking0accounts,0insurance0protection,0and0employee0benefits.0Then0we0can0esta
blish0goals,0a0recordkeeping0system,0a0budget,0and0an0emergency0savings0fund.0We0will0also0manage0vari
ous0expenses0such0as0housing,0transportation,0insurance,0and0the0payment0of0taxes.0We0will0also0need0to0h
andle0credit,0savings,0and0educational0costs.0Finally,0we0invest0in0various0investment0alternatives0such0as0
mutual0funds,0stocks,0and0bonds,0often0for0retirement.0As0a0result0of0all0these0building0blocks,0we0are0mor
e0apt0to0have0a0financially0successful0life.
LO1.20Understand0how0the0economy0affects0your0personal0financial0success.
1. Summarize0the0phases0of0the0business0cycle.
Answer:0The0business0cycle0entails0a0wavelike0pattern0of0rising0and0falling0economic0activity0as0measure
d0by0economic0indicators0like0unemployment0rates0or0the0gross0domestic0product.0The0phases0of0the0busin
ess0cycle0include0expansion0(preferred0stage—
production0is0high,0unemployment0low,0interest0rates0low0or0falling,0stock0market0and0consumer0demand0
high),0peak,0contraction,0downturn,0trough,0and0recovery.
2. Describe0two0statistics0that0help0predict0the0future0direction0of0the0economy.
Answer:0Forecasting0the0state0of0the0economy0involves0predicting,0estimating,0or0calculating0what0will0h
appen0in0advance.0We0need0to0be0able0to0forecast0the0state0of0the0economy,0inflation,0and0interest0rates0so0
that0we0have0advance0warning0of0the0directions0and0strength0of0changes0in0economic0trends0since0they0wil
l0affect0our0personal0finances.0Two0statistics0we0could0watch0are0the0consumer0confidence0index0(how0co
nsumers0feel0about0the0economy0and0their0personal0finances)0and0the0index0of0leading0economic0indicator
s0(composite0index,0averages0ten0components0of0economic0growth).
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