Questions and Answers of PFIN

CALCU LATIN G AP P ROX IM ATE Y IE LD O N M U TUAL FUN D . About a year ago, Gus Stanton bought some shares in the Anvil Fund. He bought the fund at $24.50 a share, and it now trades at$26.00. Last
E ALUATIN G ETF P E RFO RM AN CE. Do an online search for information on the PowerShares QQQ ETF. Discuss what information you need to evaluate the performance of the ETF, and use what you find to
CO M P ARIN G RIS S O F D IFFE RE N T M U TUAL FUN D TY P E S. For each pair of funds listed below, select the fund that would be the least risky and briefly explain your answer.a. Growth versus
CO M P ARIN G ETF W ITH SPDR. Describe an ETF and explain how it combines the characteristics of open- and closed-end funds. In the Vanguard family of funds, which would most closely resemble a
BU I LD IN G A M U TU AL FU N D P O RTFO LI O . Imagine that you’ve just inherited $40,000 from a rich uncle. Now you’re faced with the problem of deciding how to spend it. You could make a down
ESTIMATING COST OF MUTUAL FUND IN EST- MENTS. Using the mutual fund quotes in Exhibit 13.3, and assuming that you can buy these funds at their quoted NAVS, how much would you have to pay to buy each
CHOOSING BETWEEN A MUTUAL FUND AND AN ETF. Maria Coffey is considering whether she should invest some extra money in a mutual fund or an ETF. Explain the key factors that should influence her
Understand the role that real estate plays in a diversified investment portfolio along with the basics of investing in real estate, either directly or indirectly L01
Identify the sources of return and calculate the rate of return earned on an investment in a mutual fund, as well as evaluate the performance of an exchange traded fund. L01
Gain an understanding of the variables that should be considered when selecting funds for investment purposes. L01
Discuss the types of funds available to investors and the different kinds of investor services offered by mutual funds and exchange traded funds. L01
Differentiate between open- and closed-end mutual funds, as well as exchange traded funds, and discuss the various types of fund loads and charges. L01
Describe the basic features and operating characteristics of mutual funds and exchange traded funds. L01
AUTO INSURANCE CLAIM S. Zeke and Adele Hahn recently went out for dinner on a rainy night. When the traffic unexpectedly slowed down, they were rear-ended by an inexperienced driver. Describe what
SUPPLEMENTAL PROPERTY INSURANCE. Kevin and Miriam Huber are a high-net-worth couple. They have appropriate auto and homeowner's insur- ance, but are concerned that they could be sued by someone
PERSONAL AUTOM OB ILE P OLICY CO ERAGE. Brandon Dougherty has a personal automobile policy(PAP) with coverage of $25,000/$50,000 for bodily injury liability, $25,000 for property damage liability,
E ALU ATIN G P E RS O N AL AU TO M O B I LE P O LI CY FE ATU RE S. Tucker Carson of Pittsburgh, Pennsylvania is a single, 40-year-old loan officer at a large regional bank; he has a 16-yearold son.
CO LLE CTIN G O N A H O M E OW N E R’S IN SURAN CE CLAIM . Sasha Underwood’s home in Los Angeles was recently gutted in a fire. Her living and dining rooms were completely destroyed, and the
NEED FOR RENTER'S INSURANCE. lan and Elena Ballard, both graduate students, moved into an apartment near the university. Elena wants to buy renter's insurance, but lan thinks they don't need it
E AWATING HOMEOWNER'S POLICY CO ERAGE. Last year, Nash and Eve Hodges bought a home with a dwelling replacement value of $350,000 and insured it (via an HO-5 policy) for $310,000. The policy
Co-INSURANCE CLAUSES. Isla Potter had a homeowner's insurance policy with $175,000 of coverage on the dwelling. Would a 90 percent co-insurance clause be better than an 80 per- cent clause in such a
Choose a property and liability insurance agent and company, and settle claims.LO1
Describe other types of property and liability insurance.LO1
Analyze the coverage in a personal automobile policy (PAP) and choose the most cost-effective policy.LO1
Select the right homeowner’s insurance policy for your needs.LO1
Identify the types of coverage provided by homeowner’s insurance.LO1
Discuss the importance and basic principles of property insurance, including types of exposure, indemnity, and co-insurance.LO1
USING INSURANCE POUCY ILUSTRATIONS. Describe the key elements of an insurance policy illustration, and explain what a prospective client should focus on in evaluating an illustration. L01
LIFE INSURANCE PREMIUMS AND CON PARI- SON OF TYPES. Using the premium schedules provided in Exhibits 8.2, 8.3, and 8.5, how much in annual premiums would a 25-year-old male have to pay for $100,000
CHOOSING AM ONG TYPES OF LIFE INSU- RANCE. Sofia Fernandez, a 38-year-old widowed mother of three children (ages 12, 10, and 4), works as a product analyst for a major consumer products company.
APPROPRIATENESS OF ARIABLE LIFE INSU- RANCE. While at lunch with a group of coworkers, one of your friends mentions that he plans to buy a variable life insurance policy because it provides a good
APPROPRIATENESS OF WHOLE LIFE INSURANCE Poucy. Malcolm and Ainsley Weaver are a dual-career couple who just had their first child. Malcolm, age 30, already has a group life insurance policy, but
ES TIM ATIN G LIFE IN SU RAN CE N E E D S.US E WO R SH E E T 8.1. Margo Schmidt is a 72-year-old widow who has recently been diagnosed with Alzheimer’s disease.She has limited financial assets of
DE CID IN G IF AD D ITIO N AL LIFE IN SURAN CE IS N E E D E D AN D , IF SO, AP P RO P RIATE TY P E.USE WO R SH E E T 8.1. Mark Hawkins 45, is a recently divorced father of two children, ages 10 and
Become familiar with the key features of life insurance policies. L01
Choose the best life insurance policy for your needs at the lowest cost. L01
Distinguish among the various types of life insurance policies and describe their advantages and disadvantages. L01
Calculate how much life insurance you need. L01
Discuss the primary reasons for life insurance and identify those who need coverage. L01
Explain the concept of risk and the basics of insurance underwriting. L01
TRACING PORTO PEROEN ANCE. Use Work sheet 11.2to help Grant and Ble Harding, a married couple in their early 30s, evaluate their securities portfolio, which includes these holdings.a. IBM. (NYSE;
CHOOSING AN ORUNE SO E Based on Exhibit 11.3, which online broker do you believe would be best for you? Explain your rationale. L01
INTERPRETING STOC REPORT INFORMATION. Using the Value Line Investment Survey report in Exhibit 11.5, find the following information for Apple. a What was the amount of revenues (Le sales) generated
OBTAINING STOC HAR ET QUoms. Using the Internet site for Yahoo! Finance (http://finance yahoo.com), find the 52-week high and low for Coca-Cola's common stock (symbol KO). What is the stock's latest
FINDING AND AFFING MAR ET INDEX QUOTES. Using resources like The Wall Street Jour Barron's (either in print or online), find the lat est values for each of the following market av erages and indexes,
MAR IT AND UNIT ORDERS. Victor Gould places an order to buy 100 shares of Google. Explain how the order will be processed if it's a mar ket order. Would it make any difference if it had been a limit
TYPES OF FINANCIAL MAR ETS. What is the differ- ence between primary and secondary markets and between broker and dealer markets?? L01
RATIONALE FOR STOC EXCHANGE STINGS. Why do you suppose that well-known companies such as Apple, Starbucks, and Facebook prefer to have their shares traded on the NASDAQ rather than on one of the
CALCULATE AN OUNT TO IN EST TO NEET 03- C 15. Use Worksheet 11.1. Mary Bender is now employed as the managing editor of a well-known business journal. Although she thoroughly enjoys her job and the
Describe an investment portfolio and how you’d go about developing, monitoring, and managing a portfolio of securities.
Gain a basic understanding of the impact of the Internet on the field of investments.
Develop an appreciation of how various forms of investment information can lead to better investing skills and returns.
Explain the process of buying and selling securities and recognize the different types of orders.
Distinguish between primary and secondary markets as well as between broker and dealer markets.
Discuss the role that investing plays in the personal financial planning process and identify several different investment objectives.
CALCULATIN G N E E D FOR D ISAB ILITY IN COM E IN SURAN CE.Use Worksheet 9.2. Do you need disability income insurance? Calculate your need using Worksheet 9.2. Discuss how you’d go about purchasing
CALCU LATIN G N E E D FO R D I SAB ILI TY INCOM E IN SURAN CE. Use Worksheet 9.2.Fabio Rampulia, a 35-year-old computer programmer, earns $76,000 a year. His monthly take-home pay is $3,800. His
PRO S AN D CO N S O F LO N G-TE RM CARE IN -SU RAN CE. Discuss the pros and cons of long-term-care insurance. Does it make sense for anyone in your family right now?Why or why not? What factors might
E ALUATIN G H E ALTH CARE CO E RAGE. Blake Wright was a self-employed window washer earning approximately $700 per week. One day, while cleaning windows on the eighth floor of the First National Bank
OU T-O F-P O C E T H E ALTH CARE IN SURAN CE CO STS. Brian Nam was seriously injured in a skiing accident that broke both his legs and an arm. His medical expenses included five days of
CH OO SIN G A H E ALTH IN SURAN CE P LAN. Tim and Lena Wallace have two children, a six-year-old and a five-month old. Their younger child, Justin, was born with a congenital heart defect that will
COMPARING HEALTH INSURANCE POLICIES. Use Worksheet 9.1. Sylvia Lewis a recent college graduate, has decided to accept a job offer from a nonprofit organization. She'll earn $34,000 a year but will
E ALUATING CURRENT HEALTH INSURANCE. Assess your current health insurance situation. What does your policy cover? What is excluded? Are there any gaps that you think need to be filled? Are there any
Discuss the features of disability income insurance and how to determine your need for it? L01
Assess the need for and features of long-term-care insurance. L01
Explain the basic types of medical expenses covered by the policy provisions of health insurance plans. L01
Analyze your own health insurance needs and explain how to shop for appropriate coverage. L01
Differentiate among the major types of health insurance plans, and identify major private and public health insurance providers and their programs. L01
Discuss why having adequate health insurance is important, and identify the factors contributing to the growing cost of health insurance. L01
PROTECTING AGAINST CREDIT CARD FRAUD. Wyatt Scott takes pride in managing his finances carefully with great attention to detail. He recently received a phone call in which he was asked to confirm his
CREDIT CARD HABIUTY. Willow Xu was reviewing her credit card statement and noticed several charges that didn't look familiar to her. Willow is unsure whether she should "make some noise," or simply
BALANCE TRANSFER CREDIT CARDS. Rebecca Holland has several credit cards, on which she is carrying a total current balance of $14,500. She is considering transferring this balance to a new card issued
CALCULATING CREDIT CARD INTEREST. Lola 9. Schneider a student at State College, has a balance of $380 on her retail charge card. If the store levies a finance charge of 21 percent per year, how much
CHOOSING BETWEEN CREDIT CARDS. Otis Hopkins recently graduated from college and is evaluating two credit cards. Card A has an annual fee of $75 and an interest rate of 9 percent. Card B has no annual
HOME EQUITY UNES. Aaron and Laura Pearson have a home with an appraised value of $180,000 and a mortgage balance of only $90,000. Given that an S&L is willing to lend money at a loan-to-value ratio
COM PARING CREDIT AND DEBIT CARDS. Diego Ortega is trying to decide whether to apply for a credit card or a debit card. He has $8,500 in a savings account at the bank and spends his money frugally.
E ALUATING DEBTSAFETY RATIO. USE WOR SHEET 6.1. Diana Wade is evaluating her debt safety ratio. Her monthly take-home pay is $3,320. Each month, she pays $380 for an auto loan, $120 on a personal
E AWATING DEBT BURDEN. Carter Barnes has monthly take-home pay of $1,685; he makes payments of $410 a month on his outstanding consumer credit (excluding the mortgage on his home). How would you
ESTABUSHING CREDIT HISTORY. After graduating from college last fall, Elsa Crawford took a job as a consumer credit analyst at a local bank. From her work reviewing credit applications, she realizes
Avoid credit problems, protect yourself against credit card fraud, and understand the personal bankruptcy process? lo1
Choose the right credit cards and recognize their advantages and disadvantages. lo1
Apply for, obtain, and manage open forms of credit. lo1
Distinguish among the different forms of open account credit. lo1
Develop a plan to establish a strong credit history. lo1
Describe the reasons for using consumer credit and identify its benefits and problems. lo1
RE FIN AN C IN G A M O RTG AG E. US E WO R SH E E T 5.4. Lily Nguyen purchased a condominium four years ago for $200,000, paying $1,250 per month on her $162,000, 8 percent, 25-year mortgage. The
AD D IN G TO M O N TH LY M O RTGAG E P AY M E N TS.What are the pros and cons of adding $100 a month to your fixed-rate mortgage payment? lo1
US IN G A RE AL E STATE B RO E R. Describe the ways in which a real estate broker represents buyers versus sellers. What’s a typical real estate commission? lo1
ESTIM ATIN G CLO SIN G CO STS ON H O M E P URCH ASE.How much might a home buyer expect to pay in closing costs on a $220,000 house with a 10 percent down payment? How much would the home buyer have
CALCU LATIN G M O N TH LY M O RTGAG E P AY M E N TS.Find the monthly mortgage payments on the following mortgage loans using either your calculator or the table in Exhibit 5.6:a. $90,000 at 6.5
CALCU LATIN G RE QU IRE D D OW N P AY M E N T ON H OM E P URCHASE. How much would you have to put down on a house with an appraised value of$105,000 when the lender required an 80 percent
CH AN G E S IN M O RTGAG E P RIN CIP ALAN D IN TE RE ST O E R TIM E. Explain how the composition of the principal and interest components of a fixed-rate mortgage change over the life of the
MAX IM UM AFFO RD AB LE M O RTGAG E P AY M E N T.Using the maximum ratios for a conventional mortgage, how big a monthly payment could the Clinton family afford if their gross (beforetax) monthly
RE N T E RSU S B U Y H O M E. USE WO R SH E E T 5.2.Amelia Flores is currently renting an apartment for $725 per month and paying $275 annually for renter’s insurance. She just found a small
IN TE RPR E TIN G RE N T RATIO S. Henry Roberts has equally attractive job offers in San Jose and Houston. Henry would really like to buy rather than rent a home after he moves. Explain the relative
LE ASE E RSU S P U RCH ASE CAR D E CIS IO N . USE WO R SH E E T 5.1. Everett Adams is trying to decide whether to lease or purchase a new car costing $18,000. If he leases, he’ll have to pay a $600
PLAN N IN G A N E W CAR P U RCH ASE. Olivia Green has just graduated from college and needs to buy a car to commute to work. She estimates that she can afford to pay about $450 per month for a loan
Choose mortgage financing that meets your needs? lo1
Describe the home-buying process.? lo1
Evaluate the benefits and costs of homeownership and estimate how much you can afford to pay for a home.? lo1

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