Personal Finance 14th Ed Garman & Forgue Solution Manual (Chapters 1-17)

SOLUTION MANUAL
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Personal Finance, 14th Edition
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By E. Thomas Garman, Chapter 1 - 17
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,TABLE OF CONTENTS A A A




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 A A A


GARMAN/FOX,A PERSONALA FINANCEA 14E,A CHAPTERA 1:A THINKINGA LIKEA AA FINANCIALA PLANNER


TABLE OF CONTENTS
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AnswersAtoAChapterAConceptAChecks........................................................................................... 2
WhatADoAYouARecommendANow? ................................................................................................ 4
Let’sATalkAAboutAIt ........................................................................................................................................................ 5
DoAtheAMath ................................................................................................................................... 6
FinancialAPlanningACases ............................................................................................................... 8
ExtendedALearning....................................................................................................................... 10

, ANSWERS TO CHAPTER CONCEPT CHECKS
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LO1.1ARecognizeAtheAkeysAtoAachievingAfinancialAsuccess.
1. ExplainAtheAfiveAstepsAinAtheAfinancialAplanningAprocess.

Answer:AThereAareAfiveAfundamentalAstepsAtoAtheApersonalAfinancialAplanningAprocess:A(1)Aevaluat
eAyourAfinancialAhealthAtoAyourAeducationAandAcareerAchoice;A(2)AdefineAyourAfinancialAgoals;A(3)Ade
velopAaAplanAofAactionAtoAachieveAyourAgoals;A(4)AimplementAspendingAandAsavingAplansAtoAmonit
orAandAcontrolAprogressAtowardAyourAgoals;AandA(5)AreviewAyourAfinancialAprogressAandAmakeAcha
ngesAasAappropriate.

2. DistinguishAamongAfinancialAsuccess,AfinancialAsecurity,AandAfinancialAhappiness.

Answer:AFinancialAsuccessAisAtheAachievementAofAfinancialAaspirationsAthatAareAdesired,Aplanned,
AorAattempted.ASuccessAisAdefinedAbyAtheAindividualAorAfamilyAthatAseeksAit.AFinancialAsuccessAmayA

beAdefinedAasAbeingAableAtoAliveAaccordingAtoAone’sAstandardAofAliving.AFinancialAsecurityAisAthatA
comfortableAfeelingAthatAyourAfinancialAresourcesAwillAbeAadequateAtoAfulfillAanyAneedsAyouAhaveAa
sAwellAasAyourAwants.AFinancialAhappinessAisAtheAexperienceAyouAhaveAwhenAyouAareAsatisfiedAwit
hAmoneyAmatters.APeopleAwhoAareAhappyAaboutAtheirAfinancesAwillAseeAaAspilloverAintoApositiveAfe
elingsAaboutAlifeAinAgeneral.

3. SummarizeAwhatAyouAwillAaccomplishAstudyingApersonalAfinance.

Answer:ASeveralAthingsAcanAbeAaccomplishedAbyAstudyingApersonalAfinance.ARecognizeAhowAtoAman
ageAunexpectedAandAexpectedAfinancialAevents.APayAasAlittleAasApossibleAinAincomeAtaxes.AUnderstan
dAhowAtoAeffectivelyAcomparisonAshopAforAvehiclesAandAhomes.AProtectAwhatAweAown.AInvestAwisely.A
AccumulateAandAprotectAtheAwealthAthatAweAmayAchooseAtoAspendAduringAourAnon-
workingAyearsA(e.g.,Aretirement)AorAdonate.

4. WhatAareAtheAbuildingAblocksAtoAachievingAfinancialAsuccess?

Answer:ATheAbuildingAblocksAforAachievingAfinancialAsuccessAincludeAaAfoundationAofAregularAinco
meAthatAprovidesAtheAmeansAtoAsupportAyourAlifestyleAandAsaveAforAdesiredAgoalsAinAtheAfuture.AT
heAfoundationAsupportsAaAbaseAofAvariousAbankingAaccounts,AinsuranceAprotection,AandAemployee
Abenefits.AThenAweAcanAestablishAgoals,AaArecordkeepingAsystem,AaAbudget,AandAanAemergencyAsa

vingsAfund.AWeAwillAalsoAmanageAvariousAexpensesAsuchAasAhousing,Atransportation,Ainsurance,Aan
dAtheApaymentAofAtaxes.AWeAwillAalsoAneedAtoAhandleAcredit,Asavings,AandAeducationalAcosts.AFinall
y,AweAinvestAinAvariousAinvestmentAalternativesAsuchAasAmutualAfunds,Astocks,AandAbonds,AoftenAfo
rAretirement.AAsAaAresultAofAallAtheseAbuildingAblocks,AweAareAmoreAaptAtoAhaveAaAfinanciallyAsucce
ssfulAlife.

LO1.2AUnderstandAhowAtheAeconomyAaffectsAyourApersonalAfinancialAsuccess.
1. SummarizeAtheAphasesAofAtheAbusinessAcycle.

Answer:ATheAbusinessAcycleAentailsAaAwavelikeApatternAofArisingAandAfallingAeconomicAactivityAasA
measuredAbyAeconomicAindicatorsAlikeAunemploymentAratesAorAtheAgrossAdomesticAproduct.ATheA