Case Questions

1. What factors should Brad consider in selecting a financial institution?

2. If Brad's stock doubles in value over the next five years, what annual return,

compounded monthly, would he realize? Based on his projected annualized return,

would it be advisable to sell the stock to pay off his credit card? Should Brad consider

shopping for a new credit card? If so, how should he go about doing this?

3. Address Brad's reluctance to pay off his credit card balance. Show him what he could

earn in five years if he paid the credit card balance off and invested the required

minimum monthly payment saved at 6 percent, compounded monthly. Note: The

required minimum monthly payment is 3 percent of the outstanding balance of $8,000.

4. Assume that Brad has managed to pay off his credit card and no longer has a required

minimum monthly payment of $250. All other expenses remain the same. Refer to

Brad's personal cash flow statement that you developed in Part 1. Recompute his

expenses to determine whether Brad can afford to:

a. Purchase the new car

b. Lease the new car

c. Purchase the condo

d. Purchase the car and the condo

e. Lease the car and purchase the condo

5. Based on the information you provided, Brad decides not to buy the condo \this time.

How can he save the necessary funds to purchase a condo or house in the future? Be

specific in your recommendations.

6. In talking to Brad, you mentioned the increasing threat of identity theft. Brad seems

concerned, and after asking him several questions, you determine the following:

a. Brad has several credit cards in his wallet but uses only one regularly. He also

carries his social insurance card, as he can never remember the number.

b. Brad recycles, including old invoices, credit card statements, and bank

statements after retaining them for the appropriate legal time period.

c. Brad uses his smartphone for virtually all his telephone calls, including ordering

merchandise and paying by credit card.

Comment on each of these points in terms of the risk of identity theft, and make

recommendations to Brad for appropriate changes that will reduce his risk of exposure

to identity theft.