Solution manual for personal finance 14th edition by e thomas garman raymond e forgue

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 m m m




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 m m m


GARMAN/FOX, PERSONAL FINANCE 14E, CHAPTER 1: THINKING LIKE A FINANCIAL PLANNER
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TABLE OF CONTENTSM M




AnswersmtomChaptermConceptmChecks ...................................................................................................... 2
WhatmDomYoumRecommendmNow? ............................................................................................................ 4
Let’smTalkmAboutmIt .................................................................................................................................... 5
DomthemMath ................................................................................................................................................ 6
FinancialmPlanningmCases ........................................................................................................................... 8
ExtendedmLearning ................................................................................................................................... 10

, ANSWERS TO CHAPTER CONCEPT CHECKS
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LO1.1mRecognizemthemkeysmtomachievingmfinancialmsuccess.
1. Explainmthemfivemstepsminmthemfinancialmplanningmprocess.

Answer:mTheremaremfivemfundamentalmstepsmtomthempersonalmfinancialmplanningmprocess:m(1)mevaluatemyou
rmfinancialmhealthmtomyourmeducationmandmcareermchoice;m(2)mdefinemyourmfinancialmgoals;m(3)mdevelopmampl
anmofmactionmtomachievemyourmgoals;m(4)mimplementmspendingmandmsavingmplansmtommonitormandmcontrolmp
rogressmtowardmyourmgoals;mandm(5)mreviewmyourmfinancialmprogressmandmmakemchangesmasmappropriate.

2. Distinguishmamongmfinancialmsuccess,mfinancialmsecurity,mandmfinancialmhappiness.

Answer:mFinancialmsuccessmismthemachievementmofmfinancialmaspirationsmthatmaremdesired,mplanned,mormatt
empted.mSuccessmismdefinedmbymthemindividualmormfamilymthatmseeksmit.mFinancialmsuccessmmaymbemdefinedm
asmbeingmablemtomlivemaccordingmtomone’smstandardmofmliving.mFinancialmsecuritymismthatmcomfortablemfeel
ingmthatmyourmfinancialmresourcesmwillmbemadequatemtomfulfillmanymneedsmyoumhavemasmwellmasmyourmwants.
mFinancialmhappinessmismthemexperiencemyoumhavemwhenmyoumaremsatisfiedmwithmmoneymmatters.mPeoplem

whomaremhappymaboutmtheirmfinancesmwillmseemamspillovermintompositivemfeelingsmaboutmlifeminmgeneral.

3. Summarizemwhatmyoumwillmaccomplishmstudyingmpersonalmfinance.

Answer:mSeveralmthingsmcanmbemaccomplishedmbymstudyingmpersonalmfinance.mRecognizemhowmtommanagemu
nexpectedmandmexpectedmfinancialmevents.mPaymasmlittlemasmpossibleminmincomemtaxes.mUnderstandmhowmtomeff
ectivelymcomparisonmshopmformvehiclesmandmhomes.mProtectmwhatmwemown.mInvestmwisely.mAccumulatemandmp
rotectmthemwealthmthatmwemmaymchoosemtomspendmduringmourmnon-workingmyearsm(e.g.,mretirement)mormdonate.

4. Whatmaremthembuildingmblocksmtomachievingmfinancialmsuccess?

Answer:mThembuildingmblocksmformachievingmfinancialmsuccessmincludemamfoundationmofmregularmincomemt
hatmprovidesmthemmeansmtomsupportmyourmlifestylemandmsavemformdesiredmgoalsminmthemfuture.mThemfoundati
onmsupportsmambasemofmvariousmbankingmaccounts,minsurancemprotection,mandmemployeembenefits.mThenmwe
mcanmestablishmgoals,mamrecordkeepingmsystem,mambudget,mandmanmemergencymsavingsmfund.mWemwillmalsom

managemvariousmexpensesmsuchmasmhousing,mtransportation,minsurance,mandmthempaymentmofmtaxes.mWemwil
lmalsomneedmtomhandlemcredit,msavings,mandmeducationalmcosts.mFinally,mweminvestminmvariousminvestmentmal
ternativesmsuchmasmmutualmfunds,mstocks,mandmbonds,moftenmformretirement.mAsmamresultmofmallmthesembuildi
ngmblocks,mwemaremmoremaptmtomhavemamfinanciallymsuccessfulmlife.

LO1.2mUnderstandmhowmthemeconomymaffectsmyourmpersonalmfinancialmsuccess.
1. Summarizemthemphasesmofmthembusinessmcycle.

Answer:mThembusinessmcyclementailsmamwavelikempatternmofmrisingmandmfallingmeconomicmactivitymasmmeas
uredmbymeconomicmindicatorsmlikemunemploymentmratesmormthemgrossmdomesticmproduct.mThemphasesmofmthe
mbusinessmcyclemincludemexpansionm(preferredmstage—

productionmismhigh,munemploymentmlow,minterestmratesmlowmormfalling,mstockmmarketmandmconsumermdema
ndmhigh),mpeak,mcontraction,mdownturn,mtrough,mandmrecovery.

2. Describemtwomstatisticsmthatmhelpmpredictmthemfuturemdirectionmofmthemeconomy.

Answer:mForecastingmthemstatemofmthemeconomyminvolvesmpredicting,mestimating,mormcalculatingmwhatmwill
mhappenminmadvance.mWemneedmtombemablemtomforecastmthemstatemofmthemeconomy,minflation,mandminterestmra

tesmsomthatmwemhavemadvancemwarningmofmthemdirectionsmandmstrengthmofmchangesminmeconomicmtrendsmsinc
emtheymwillmaffectmourmpersonalmfinances.mTwomstatisticsmwemcouldmwatchmaremthemconsumermconfidencemi
ndexm(howmconsumersmfeelmaboutmthemeconomymandmtheirmpersonalmfinances)mandmthemindexmofmleadingme
conomicmindicatorsm(compositemindex,maveragesmtenmcomponentsmofmeconomicmgrowth).