6-10

question 6 thru 10

Dumonts have asked your advice on using a CD, money market mutua fund or asset management account for their emergency fund. What is the bes ce? Why? Is there another type of account they should consider? balance between liquidity and return so important with an emergency fund? The newsletter enclosed with their bank statement had articles on blocking well as the safety and convenience of stored value cards. Briefly explain how the Dumonts can avoid problems with blocking. What cautions should they con sider with stored value cards? Why is the 6. 7. Which provides the higher after-tax yield: the Dumonts' 3 percent bank savings ount or a federal and state tax-free money market fund yielding 2.25 percent? acc The Dumonts are in the 15 percent federal marginal tax bracket. 8 The Money article recommended that you pay yourself first. Tisha s not sure how to do this but likes th it." Give her some advice about ways to "automate" her savings e idea of "saving money without having to think about 9. Because of his concern over "financial surprises," Cory wants to learn more about 10. The Dumonts' take-home pay (after deductions for taxes and benefits) is approx identity theft. What practices should he and Tisha follow to protect themselves? imately $5,175 monthly. Current nonmortgage debt payments equal $911 (i.e $405 auto, $100 miscellaneous credit, $196 student loan, and $210 furniture). Calculate and interpret their debt limit ratio. Assume they could purchase another auto with a $300 monthly payment. Calculate and interpret their revised debt limit ratio. What advice would you give the Dumonts about purchasing another vehicle? 11. Concerned that they might depend on credit too much, Tisha and Cory have asked you about the typical warning signs of excessive credit use. List five to eight of those signs. What alternatives should they consider if they occasionally can't pay their bills on time? What is the maximum number of credit cards recommended? Given what you know about the typical characteristics of the cards Cory and Tisha carry, what Consider the advantages and disadvantages of each type and class of card. How eatures are important to "credit users" as opposed to "convenience users"? 2. recommendations would you make about keeping or canceling their cards? does the FICO score calculation affect your recommendation? Also, what card report. Why? What is the role of the credit bureau, the credit ation of creditworthiness and the cost 13. In anti cipation of purchasing a home, Cory and Tisha have been advised t check their credit Dumonts have asked your advice on using a CD, money market mutua fund or asset management account for their emergency fund. What is the bes ce? Why? Is there another type of account they should consider? balance between liquidity and return so important with an emergency fund? The newsletter enclosed with their bank statement had articles on blocking well as the safety and convenience of stored value cards. Briefly explain how the Dumonts can avoid problems with blocking. What cautions should they con sider with stored value cards? Why is the 6. 7. Which provides the higher after-tax yield: the Dumonts' 3 percent bank savings ount or a federal and state tax-free money market fund yielding 2.25 percent? acc The Dumonts are in the 15 percent federal marginal tax bracket. 8 The Money article recommended that you pay yourself first. Tisha s not sure how to do this but likes th it." Give her some advice about ways to "automate" her savings e idea of "saving money without having to think about 9. Because of his concern over "financial surprises," Cory wants to learn more about 10. The Dumonts' take-home pay (after deductions for taxes and benefits) is approx identity theft. What practices should he and Tisha follow to protect themselves? imately $5,175 monthly. Current nonmortgage debt payments equal $911 (i.e $405 auto, $100 miscellaneous credit, $196 student loan, and $210 furniture). Calculate and interpret their debt limit ratio. Assume they could purchase another auto with a $300 monthly payment. Calculate and interpret their revised debt limit ratio. What advice would you give the Dumonts about purchasing another vehicle? 11. Concerned that they might depend on credit too much, Tisha and Cory have asked you about the typical warning signs of excessive credit use. List five to eight of those signs. What alternatives should they consider if they occasionally can't pay their bills on time? What is the maximum number of credit cards recommended? Given what you know about the typical characteristics of the cards Cory and Tisha carry, what Consider the advantages and disadvantages of each type and class of card. How eatures are important to "credit users" as opposed to "convenience users"? 2. recommendations would you make about keeping or canceling their cards? does the FICO score calculation affect your recommendation? Also, what card report. Why? What is the role of the credit bureau, the credit ation of creditworthiness and the cost 13. In anti cipation of purchasing a home, Cory and Tisha have been advised t check their credit