PFIN 6th Edition Randall Billingsley , Lawrence J. Gitman, Michael D. Joehnk - Solutions

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 year, the fund paid dividends of 40 cents a share and had capital gains distributions of $1.83 a
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 evaluate the QQQ ETF. What kind of investor should invest in this ETF? L01
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 growth-and-incomeb. Equity-income versus high-grade corporate bondsc. Intermediate-term bonds 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 “Spider” (SPDR)? In what respects are the Vanguard fund (that you selected) and SPDRs the same? How
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 payment on a condo—or better yet, on that BMW that you’ve always wanted. Or you could spend your
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 of the following funds?a. AEMMXb. ADCVX C. FCPAXd. FSFAX According to the quotes, which of these
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 decision. L01
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 steps the Hahns should have taken after the accident to assure that their auto insurance claim would
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 visiting or working at their home. What type of supplemental insurance might be appropriate for the
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, $5,000 for medical payments, and a $500 deductible for collision insurance.How much will his insurance
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. He has decided to use his annual bonus as a down payment on a new car. One Saturday afternoon in late
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 damaged personal property had a replacement value of $25,000. The average age of the damaged personal
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 because their furniture isn't worth much. Elena points out that, among other things, they have some
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 reimburses for actual cash value and has a $500 deductible, standard limits for coverage C items, and no
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 policy? Give reasons to support your answer.L01
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 of annual renewable term, level premium term, and whole life insurance? (Assume a 10-year term or
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. Although she's covered by a group life insurance policy at work, she feels, based on some rough
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 annual return and is a good way to build savings for his five-year-old's college education. Another
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 Ainsley's employer does not offer a life insurance benefit. A financial planner is recommending that the
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 her own and has been living with her daughter Esther for two years. Her income is $850 a month in
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 7. He currently earns $95,000 a year as an operations manager for a utility company. The divorce
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; symbol IBM): 100 shares bought in 2011 for $170.40 per share.b. Procter & Gamble (NYSE; symbol PG): 150
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 by the company in 2015?b. What were the latest annual dividends per share and dividend yield?c. What
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 dividend yield? What was Coca-Cola's most recent closing price, and at what P/E ratio was the stock
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, and indicate how each has performed over the past six months: 2 DJIAb. S&P 500 C NASDAQ Composited.
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 order? Explain.? L01
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 major listed exchanges, such as the NYSE (for which they'd easily meet all listing requirements)? What's
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 people she works with, what she would really like to do is open a bookstore of her own. She would
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 this coverage.
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 wife, Regina, works part-time at their children’s elementary school but receives no benefits. Under
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 change this assessment in the future? L01
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 Building, he tripped and fell from the scaffolding to the pavement below.He sustained multiple
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 hospitalization at$900 a day, $6,200 in surgical fees, $4,300 in physician’s fees (including time in the
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 require several major surgeries in the next few years to correct fully. Tim is employed as a
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 receive no employee health benefits. Sylvia estimates that her monthly living expenses will be about
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 risks in your current lifestyle or situation that might make additional coverage necessary? If you
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 account number and social security number. Wyatt was pleased he had the information
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 pay the bill in full and forget about the unfamiliar charges. If some of these charges aren't hers,
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 by a local bank. The bank advertises that, for a 2 percent fee, she can transfer her balance to a
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 monthly interest will be added to Lola's account? lo1
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 fee and an interest rate of 16 percent. Assuming that Otis intends to carry no balance and pay off
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 of 75 percent, how big a home equity credit line can Aaron and Laura obtain? How much, if any, of
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. What advice would you have for Diego? Describe the benefits and drawbacks of each type of card. lo1
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 line of credit, $60 on a department store charge card, and $85 on her bank credit card. Complete
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 characterize Carter's debt burden? What if his take-home pay were $850 a month and he had monthly credit
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 that she should begin establishing her own credit history. Describe for Elsa several steps that she
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 current loan balance is $152,401.Recently, interest rates dropped sharply, causing Lily to consider
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 to pay at the time of closing, taking into account closing costs, down payment, and a loan fee of
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 percent for 30 yearsb. $125,000 at 5.5 percent for 20 yearsc. $97,500 at 5 percent for 15 years? lo1
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 loan-to-value ratio? lo1
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 mortgage.What are the implications of this change? lo1
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 income amounted to $3,500?Would it make any difference if they were already making monthly installment
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 townhouse she can buy for $185,000. She has enough cash for a $10,000 down payment and$4,000 in closing
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 attractiveness of moving to Houston rather than San Jose based on the data portrayed in Exhibit 5.3
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 security deposit and monthly payments of $450 over the 36-month term of the closedend lease. On the
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 or lease and has about $2,000 in savings to use for a down payment. Develop a plan to guide her
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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PFIN 6th Edition Randall Billingsley , Lawrence J. Gitman, Michael D. Joehnk - Solutions

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