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SOLUTION MANUAL ii
Personal Finance, 14th Edition
ii ii ii
By E. Thomas Garman, Chapter 1 - 17
ii ii ii ii ii ii ii
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TABLE OF CONTENTS ii ii ii
Part I: FINANCIAL PLANNING.
ii ii ii
1. Understanding Personal Finance.
ii ii ii
2. Career Planning.
ii ii
3. Financial Statements, Goals, and Budgets.
ii ii ii ii ii
Part II: MONEY MANAGEMENT.
ii ii ii
4. Managing Income Taxes.
ii ii ii
5. Managing Checking and Savings Accounts.
ii ii ii ii ii
6. Building and Maintaining Good Credit.
ii ii ii ii ii
7. Credit Cards and Consumer Loans.
ii ii ii ii ii
8. Vehicles and Other Major Purchases.
ii ii ii ii ii
9. Obtaining Affordable Housing.
ii ii ii
Part III: INCOME AND ASSET PROTECTION.
ii ii ii ii ii
10. Managing Property and Liability Risk.
ii ii ii ii ii
11. Planning for Health Care Expenses.
ii ii ii ii ii
12. Life Insurance Planning.
ii ii ii
Part IV: INVESTMENTS.
ii ii
13. Investment Fundamentals.
ii ii
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14. Investing in Stocks and Bonds.
ii ii ii ii ii
15. Mutual and Exchange-Traded Funds.
ii ii ii ii
16. Real Estate and High-Risk Investments.
ii ii ii ii ii
17. Retirement and Estate Planning.
ii ii ii ii
Solution and Answer Guide i i i
GARMAN/FOX, PERSONAL II I I FINANCE I I 14E, CHAPTER
II I I 1: THINKING LIKE
II II I I A II FINANCIAL PLANNER
II
TABLE OF CONTENTS II II
Answers iito iiChapter iiConcept iiChecks ...................................................................................... 2
What iiDo iiYou iiRecommend iiNow? ........................................................................................... 4
Let’s iiTalk iiAbout iiIt ...................................................................................................................................................... 5
Do iithe iiMath ............................................................................................................................. 6
Financial iiPlanning iiCases........................................................................................................... 8
Extended iiLearning ..................................................................................................................10
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ANSWERS TO CHAPTER CONCEPT CHECKS
II II II II
LO1.1 iiRecognize iithe iikeys iito iiachieving iifinancial iisuccess.
1. Explain iithe iifive iisteps iiin iithe iifinancial iiplanning iiprocess.
Answer: iiThere iiare iifive iifundamental iisteps iito iithe iipersonal iifinancial iiplanning iiprocess: ii(1)
iievaluate iiyour iifinancial iihealth iito iiyour iieducation iiand iicareer iichoice; ii(2) iidefine iiyour iifinancial
iigoals; ii(3) iidevelop iia iiplan iiof iiaction iito iiachieve iiyour iigoals; ii(4) iiimplement iispending iiand
iisaving iiplans iito iimonitor iiand iicontrol iiprogress iitoward iiyour iigoals; iiand ii(5) iireview iiyour
iifinancial iiprogress iiand iimake iichanges iias iiappropriate.
2. Distinguish iiamong iifinancial iisuccess, iifinancial iisecurity, iiand iifinancial iihappiness.
Answer: iiFinancial iisuccess iiis iithe iiachievement iiof iifinancial iiaspirations iithat iiare iidesired,
iiplanned, iior iiattempted. iiSuccess iiis iidefined iiby iithe iiindividual iior iifamily iithat iiseeks iiit. iiFinancial
iisuccess iimay iibe iidefined iias iibeing iiable iito iilive iiaccording iito iione’s iistandard iiof iiliving.
iiFinancial iisecurity iiis iithat iicomfortable iifeeling iithat iiyour iifinancial iiresources iiwill iibe
iiadequate iito iifulfill iiany iineeds iiyou iihave iias iiwell iias iiyour iiwants. iiFinancial iihappiness iiis iithe
iiexperience iiyou iihave iiwhen iiyou iiare iisatisfied iiwith iimoney iimatters. iiPeople iiwho iiare iihappy
iiabout iitheir iifinances iiwill iisee iia iispillover iiinto iipositive iifeelings iiabout iilife iiin iigeneral.
3. Summarize iiwhat iiyou iiwill iiaccomplish iistudying iipersonal iifinance.
Answer: iiSeveral iithings iican iibe iiaccomplished iiby iistudying iipersonal iifinance. iiRecognize iihow iito
iimanage iiunexpected iiand iiexpected iifinancial iievents. iiPay iias iilittle iias iipossible iiin iiincome iitaxes.
iiUnderstand iihow iito iieffectively iicomparison iishop iifor iivehicles iiand iihomes. iiProtect iiwhat iiwe iiown.
iiInvest iiwisely. iiAccumulate iiand iiprotect iithe iiwealth iithat iiwe iimay iichoose iito iispend iiduring iiour
iinon-working iiyears ii(e.g., iiretirement) iior iidonate.
4. What iiare iithe iibuilding iiblocks iito iiachieving iifinancial iisuccess?
Answer: iiThe iibuilding iiblocks iifor iiachieving iifinancial iisuccess iiinclude iia iifoundation iiof
iiregular iiincome iithat iiprovides iithe iimeans iito iisupport iiyour iilifestyle iiand iisave iifor iidesired
iigoals iiin iithe iifuture. iiThe iifoundation iisupports iia iibase iiof iivarious iibanking iiaccounts,
iiinsurance iiprotection, iiand iiemployee iibenefits. iiThen iiwe iican iiestablish iigoals, iia iirecordkeeping
iisystem, iia iibudget, iiand iian iiemergency iisavings iifund. iiWe iiwill iialso iimanage iivarious iiexpenses
iisuch iias iihousing, iitransportation, iiinsurance, iiand iithe iipayment iiof iitaxes. iiWe iiwill iialso iineed iito
iihandle iicredit, iisavings, iiand iieducational iicosts. iiFinally, iiwe iiinvest iiin iivarious iiinvestment
iialternatives iisuch iias iimutual iifunds, iistocks, iiand iibonds, iioften iifor iiretirement. iiAs iia iiresult iiof
iiall iithese iibuilding iiblocks, iiwe iiare iimore iiapt iito iihave iia iifinancially iisuccessful iilife.
LO1.2 iiUnderstand iihow iithe iieconomy iiaffects iiyour iipersonal iifinancial iisuccess.
1. Summarize iithe iiphases iiof iithe iibusiness iicycle.
Answer: iiThe iibusiness iicycle iientails iia iiwavelike iipattern iiof iirising iiand iifalling iieconomic
iiactivity iias iimeasured iiby iieconomic iiindicators iilike iiunemployment iirates iior iithe iigross iidomestic
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SOLUTION MANUAL ii
Personal Finance, 14th Edition
ii ii ii
By E. Thomas Garman, Chapter 1 - 17
ii ii ii ii ii ii ii
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TABLE OF CONTENTS ii ii ii
Part I: FINANCIAL PLANNING.
ii ii ii
1. Understanding Personal Finance.
ii ii ii
2. Career Planning.
ii ii
3. Financial Statements, Goals, and Budgets.
ii ii ii ii ii
Part II: MONEY MANAGEMENT.
ii ii ii
4. Managing Income Taxes.
ii ii ii
5. Managing Checking and Savings Accounts.
ii ii ii ii ii
6. Building and Maintaining Good Credit.
ii ii ii ii ii
7. Credit Cards and Consumer Loans.
ii ii ii ii ii
8. Vehicles and Other Major Purchases.
ii ii ii ii ii
9. Obtaining Affordable Housing.
ii ii ii
Part III: INCOME AND ASSET PROTECTION.
ii ii ii ii ii
10. Managing Property and Liability Risk.
ii ii ii ii ii
11. Planning for Health Care Expenses.
ii ii ii ii ii
12. Life Insurance Planning.
ii ii ii
Part IV: INVESTMENTS.
ii ii
13. Investment Fundamentals.
ii ii
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14. Investing in Stocks and Bonds.
ii ii ii ii ii
15. Mutual and Exchange-Traded Funds.
ii ii ii ii
16. Real Estate and High-Risk Investments.
ii ii ii ii ii
17. Retirement and Estate Planning.
ii ii ii ii
Solution and Answer Guide i i i
GARMAN/FOX, PERSONAL II I I FINANCE I I 14E, CHAPTER
II I I 1: THINKING LIKE
II II I I A II FINANCIAL PLANNER
II
TABLE OF CONTENTS II II
Answers iito iiChapter iiConcept iiChecks ...................................................................................... 2
What iiDo iiYou iiRecommend iiNow? ........................................................................................... 4
Let’s iiTalk iiAbout iiIt ...................................................................................................................................................... 5
Do iithe iiMath ............................................................................................................................. 6
Financial iiPlanning iiCases........................................................................................................... 8
Extended iiLearning ..................................................................................................................10
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ANSWERS TO CHAPTER CONCEPT CHECKS
II II II II
LO1.1 iiRecognize iithe iikeys iito iiachieving iifinancial iisuccess.
1. Explain iithe iifive iisteps iiin iithe iifinancial iiplanning iiprocess.
Answer: iiThere iiare iifive iifundamental iisteps iito iithe iipersonal iifinancial iiplanning iiprocess: ii(1)
iievaluate iiyour iifinancial iihealth iito iiyour iieducation iiand iicareer iichoice; ii(2) iidefine iiyour iifinancial
iigoals; ii(3) iidevelop iia iiplan iiof iiaction iito iiachieve iiyour iigoals; ii(4) iiimplement iispending iiand
iisaving iiplans iito iimonitor iiand iicontrol iiprogress iitoward iiyour iigoals; iiand ii(5) iireview iiyour
iifinancial iiprogress iiand iimake iichanges iias iiappropriate.
2. Distinguish iiamong iifinancial iisuccess, iifinancial iisecurity, iiand iifinancial iihappiness.
Answer: iiFinancial iisuccess iiis iithe iiachievement iiof iifinancial iiaspirations iithat iiare iidesired,
iiplanned, iior iiattempted. iiSuccess iiis iidefined iiby iithe iiindividual iior iifamily iithat iiseeks iiit. iiFinancial
iisuccess iimay iibe iidefined iias iibeing iiable iito iilive iiaccording iito iione’s iistandard iiof iiliving.
iiFinancial iisecurity iiis iithat iicomfortable iifeeling iithat iiyour iifinancial iiresources iiwill iibe
iiadequate iito iifulfill iiany iineeds iiyou iihave iias iiwell iias iiyour iiwants. iiFinancial iihappiness iiis iithe
iiexperience iiyou iihave iiwhen iiyou iiare iisatisfied iiwith iimoney iimatters. iiPeople iiwho iiare iihappy
iiabout iitheir iifinances iiwill iisee iia iispillover iiinto iipositive iifeelings iiabout iilife iiin iigeneral.
3. Summarize iiwhat iiyou iiwill iiaccomplish iistudying iipersonal iifinance.
Answer: iiSeveral iithings iican iibe iiaccomplished iiby iistudying iipersonal iifinance. iiRecognize iihow iito
iimanage iiunexpected iiand iiexpected iifinancial iievents. iiPay iias iilittle iias iipossible iiin iiincome iitaxes.
iiUnderstand iihow iito iieffectively iicomparison iishop iifor iivehicles iiand iihomes. iiProtect iiwhat iiwe iiown.
iiInvest iiwisely. iiAccumulate iiand iiprotect iithe iiwealth iithat iiwe iimay iichoose iito iispend iiduring iiour
iinon-working iiyears ii(e.g., iiretirement) iior iidonate.
4. What iiare iithe iibuilding iiblocks iito iiachieving iifinancial iisuccess?
Answer: iiThe iibuilding iiblocks iifor iiachieving iifinancial iisuccess iiinclude iia iifoundation iiof
iiregular iiincome iithat iiprovides iithe iimeans iito iisupport iiyour iilifestyle iiand iisave iifor iidesired
iigoals iiin iithe iifuture. iiThe iifoundation iisupports iia iibase iiof iivarious iibanking iiaccounts,
iiinsurance iiprotection, iiand iiemployee iibenefits. iiThen iiwe iican iiestablish iigoals, iia iirecordkeeping
iisystem, iia iibudget, iiand iian iiemergency iisavings iifund. iiWe iiwill iialso iimanage iivarious iiexpenses
iisuch iias iihousing, iitransportation, iiinsurance, iiand iithe iipayment iiof iitaxes. iiWe iiwill iialso iineed iito
iihandle iicredit, iisavings, iiand iieducational iicosts. iiFinally, iiwe iiinvest iiin iivarious iiinvestment
iialternatives iisuch iias iimutual iifunds, iistocks, iiand iibonds, iioften iifor iiretirement. iiAs iia iiresult iiof
iiall iithese iibuilding iiblocks, iiwe iiare iimore iiapt iito iihave iia iifinancially iisuccessful iilife.
LO1.2 iiUnderstand iihow iithe iieconomy iiaffects iiyour iipersonal iifinancial iisuccess.
1. Summarize iithe iiphases iiof iithe iibusiness iicycle.
Answer: iiThe iibusiness iicycle iientails iia iiwavelike iipattern iiof iirising iiand iifalling iieconomic
iiactivity iias iimeasured iiby iieconomic iiindicators iilike iiunemployment iirates iior iithe iigross iidomestic
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