Solution Manual and Answer Guide for Personal Finance, 14th Edition By (E. Thomas Garman) Verified Chapters 1 - 17, Complete Newest Version

SOLUTION MANUAL

Personal Finance, 14th Edition

By E. Thomas Garman, Chapter 1 - 17

,TABLE OF CONTENTS nf nf nf




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 nf nf nf




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




Answers to Chapter Concept Checks......................................................................................................... 2
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What Do You Recommend Now? ............................................................................................................... 4
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Let’s Talk About It ...................................................................................................................................... 5
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Do the Math ................................................................................................................................................. 6
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Financial Planning Cases ............................................................................................................................ 8
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Extended Learning .................................................................................................................................... 10
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, ANSWERS TO CHAPTER CONCEPT CHECKS NF NF NF NF




LO1.1 Recognize the keys to achieving financial success.
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1. Explain the five steps in the financial planning process.
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Answer: There are five fundamental steps to the personal financial planning process: (1) evaluate your fin
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ancial health to your education and career choice; (2) define your financial goals; (3) develop a plan of actio
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n to achieve your goals; (4) implement spending and saving plans to monitor and control progress toward y
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our goals; and (5) review your financial progress and make changes as appropriate.
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2. Distinguish among financial success, financial security, and financial happiness.
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Answer: Financial success is the achievement of financial aspirations that are desired, planned, or attempt
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ed. Success is defined by the individual or family that seeks it. Financial success may be defined as being ab
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le to live according to one’s standard of living. Financial security is that comfortable feeling that your fina
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ncial resources will be adequate to fulfill any needs you have as well as your wants. Financial happiness i
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s the experience you have when you are satisfied with money matters. People who are happy about their fi
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nances will see a spillover into positive feelings about life in general.
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3. Summarize what you will accomplish studying personal finance. nf nf nf nf nf nf nf




Answer: Several things can be accomplished by studying personal finance. Recognize how to manage unexp
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ected and expected financial events. Pay as little as possible in income taxes. Understand how to effectively c
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omparison shop for vehicles and homes. Protect what we own. Invest wisely. Accumulate and protect the wealt
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h that we may choose to spend during our non-working years (e.g., retirement) or donate.
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4. What are the building blocks to achieving financial success?
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Answer: The building blocks for achieving financial success include a foundation of regular income that p
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rovides the means to support your lifestyle and save for desired goals in the future. The foundation support
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s a base of various banking accounts, insurance protection, and employee benefits. Then we can establish g
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oals, a recordkeeping system, a budget, and an emergency savings fund. We will also manage various expe
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nses such as housing, transportation, insurance, and the payment of taxes. We will also need to handle credit
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, savings, and educational costs. Finally, we invest in various investment alternatives such as mutual funds,
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stocks, and bonds, often for retirement. As a result of all these building blocks, we are more apt to have a f
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inancially successful life. nf nf




LO1.2 Understand how the economy affects your personal financial success.
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1. Summarize the phases of the business cycle. nf nf nf nf nf nf




Answer: The business cycle entails a wavelike pattern of rising and falling economic activity as measured
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by economic indicators like unemployment rates or the gross domestic product. The phases of the business c
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ycle include expansion (preferred stage—
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production is high, unemployment low, interest rates low or falling, stock market and consumer demand hi
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gh), peak, contraction, downturn, trough, and recovery.
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2. Describe two statistics that help predict the future direction of the economy.
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Answer: Forecasting the state of the economy involves predicting, estimating, or calculating what will hap
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pen in advance. We need to be able to forecast the state of the economy, inflation, and interest rates so that
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we have advance warning of the directions and strength of changes in economic trends since they will affect
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our personal finances. Two statistics we could watch are the consumer confidence index (how consumers f
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eel about the economy and their personal finances) and the index of leading economic indicators (composit
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e index, averages ten components of economic growth).
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