SOLUTION MANUAL
Personal Finance, 14th Edition
By E. Thomas Garman, Chapter 1 - 17
,TABLE OF CONTENTS D D D
Part I: FINANCIAL PLANNING.
D D D
1. Understanding Personal Finance.
D D D
2. Career Planning.
D D
3. Financial Statements, Goals, and Budgets.
D D D D D
Part II: MONEY MANAGEMENT.
D D D
4. Managing Income Taxes.
D D D
5. Managing Checking and Savings Accounts.
D D D D D
6. Building and Maintaining Good Credit.
D D D D D
7. Credit Cards and Consumer Loans.
D D D D D
8. Vehicles and Other Major Purchases.
D D D D D
9. Obtaining Affordable Housing.
D D D
Part III: INCOME AND ASSET PROTECTION.
D D D D D
10. Managing Property and Liability Risk.
D D D D D
11. Planning for Health Care Expenses.
D D D D D
12. Life Insurance Planning.
D D D
Part IV: INVESTMENTS.
D D
13. Investment Fundamentals.
D D
14. Investing in Stocks and Bonds.
D D D D D
15. Mutual and Exchange-Traded Funds.
D D D D
16. Real Estate and High-Risk Investments.
D D D D D
17. Retirement and Estate Planning.
D D D D
,Solution and Answer Guide D D D
GARMAN/FOX,D PERSONALD FINANCED 14E,D CHAPTERD 1:D THINKINGD LIKED AD FINANCIALD PLANNER
TABLE OF CONTENTSD D
AnswersDtoDChapterDConceptDChecks ....................................................................................................... 2
WhatDDoDYouDRecommendDNow? ............................................................................................................. 4
Let’sDTalkDAboutDIt ..................................................................................................................................... 5
DoDtheDMath................................................................................................................................................. 6
FinancialDPlanningDCases ........................................................................................................................... 8
ExtendedDLearning.................................................................................................................................... 10
, ANSWERS TO CHAPTER CONCEPT CHECKS
D D D D
LO1.1DRecognizeDtheDkeysDtoDachievingDfinancialDsuccess.
1. ExplainDtheDfiveDstepsDinDtheDfinancialDplanningDprocess.
Answer:DThereDareDfiveDfundamentalDstepsDtoDtheDpersonalDfinancialDplanningDprocess:D(1)DevaluateDyour
DfinancialDhealthDtoDyourDeducationDandDcareerDchoice;D(2)DdefineDyourDfinancialDgoals;D(3)DdevelopDaDpla
nDofDactionDtoDachieveDyourDgoals;D(4)DimplementDspendingDandDsavingDplansDtoDmonitorDandDcontrolDpro
gressDtowardDyourDgoals;DandD(5)DreviewDyourDfinancialDprogressDandDmakeDchangesDasDappropriate.
2. DistinguishDamongDfinancialDsuccess,DfinancialDsecurity,DandDfinancialDhappiness.
Answer:DFinancialDsuccessDisDtheDachievementDofDfinancialDaspirationsDthatDareDdesired,Dplanned,DorDatte
mpted.DSuccessDisDdefinedDbyDtheDindividualDorDfamilyDthatDseeksDit.DFinancialDsuccessDmayDbeDdefinedDas
DbeingDableDtoDliveDaccordingDtoDone’sDstandardDofDliving.DFinancialDsecurityDisDthatDcomfortableDfeeling
DthatDyourDfinancialDresources DwillDbeDadequateDtoDfulfillDanyDneedsDyouDhaveDasDwellDasDyourDwants.DFin
ancialDhappinessDisDtheDexperienceDyouDhaveDwhenDyouDareDsatisfiedDwithDmoneyDmatters.DPeopleDwhoDa
reDhappyDaboutDtheirDfinancesDwillDseeDaDspilloverDintoDpositiveDfeelingsDaboutDlifeDinDgeneral.
3. SummarizeDwhatDyouDwillDaccomplishDstudyingDpersonalDfinance.
Answer:DSeveralDthingsDcanDbeDaccomplishedDbyDstudyingDpersonalDfinance.DRecognizeDhowDtoDmanageDun
expectedDandDexpectedDfinancialDevents.DPayDasDlittleDasDpossibleDinDincomeDtaxes.DUnderstandDhowDtoDeffec
tivelyDcomparisonDshopDforDvehiclesDandDhomes.DProtectDwhatDweDown.DInvestDwisely.DAccumulateDandDprot
ectDtheDwealthDthatDweDmayDchooseDtoDspendDduringDourDnon-workingDyearsD(e.g.,Dretirement)DorDdonate.
4. WhatDareDtheDbuildingDblocksDtoDachievingDfinancialDsuccess?
Answer:DTheDbuildingDblocksDforDachievingDfinancialDsuccessDincludeDaDfoundationDofDregularDincomeDth
atDprovidesDtheDmeansDtoDsupportDyourDlifestyleDandDsaveDforDdesiredDgoalsDinDtheDfuture.DTheDfoundation
DsupportsDaDbaseDofDvariousDbankingDaccounts,DinsuranceDprotection,DandDemployeeDbenefits.DThenDweDca
nDestablishDgoals,DaDrecordkeepingDsystem,DaDbudget,DandDanDemergencyDsavingsDfund.DWeDwillDalsoDman
ageDvariousDexpensesDsuchDasDhousing,Dtransportation,Dinsurance,DandDtheDpaymentDofDtaxes.DWeDwillDalso
DneedDtoDhandleDcredit,Dsavings,DandDeducationalDcosts.DFinally,DweDinvestDinDvariousDinvestmentDalternati
vesDsuchDasDmutualDfunds,Dstocks,DandDbonds,DoftenDforDretirement.DAsDaDresultDofDallDtheseDbuildingDbloc
ks,DweDareDmoreDaptDtoDhaveDaDfinanciallyDsuccessfulDlife.
LO1.2DUnderstandDhowDtheDeconomyDaffectsDyourDpersonalDfinancialDsuccess.
1. SummarizeDtheDphasesDofDtheDbusinessDcycle.
Answer:DTheDbusinessDcycleDentailsDaDwavelikeDpatternDofDrisingDandDfallingDeconomicDactivityDasDmeasu
redDbyDeconomicDindicatorsDlikeDunemploymentDratesDorDtheDgrossDdomesticDproduct.DTheDphasesDofDtheDb
usinessDcycleDincludeDexpansionD(preferredDstage—
productionDisDhigh,DunemploymentDlow,DinterestDratesDlowDorDfalling,DstockDmarketDandDconsumerDdeman
dDhigh),Dpeak,Dcontraction,Ddownturn,Dtrough,DandDrecovery.
2. DescribeDtwoDstatisticsDthatDhelpDpredictDtheDfutureDdirectionDofDtheDeconomy.
Answer:DForecastingDtheDstateDofDtheDeconomyDinvolvesDpredicting,Destimating,DorDcalculatingDwhatDwillD
happenDinDadvance.DWeDneedDtoDbeDableDtoDforecastDtheDstateDofDtheDeconomy,Dinflation,DandDinterestDrate
sDsoDthatDweDhaveDadvanceDwarningDofDtheDdirectionsDandDstrengthDofDchangesDinDeconomicDtrendsDsinceDt
heyDwillDaffectDourDpersonalDfinances.DTwoDstatisticsDweDcouldDwatchDareDtheDconsumerDconfidenceDindex
D(howDconsumersDfeelDaboutDtheDeconomyDandDtheirDpersonalDfinances)DandDtheDindexDofDleadingDeconom
icDindicatorsD(compositeDindex,DaveragesDtenDcomponentsDofDeconomicDgrowth).
