What are human weaknesses under both money planning and life planning?
> Why borrow using secured debt?
> Why are goals important for financial planning?
> When is a home equity loan better than refinancing a first mortgage?
> Why are adjustable-rate mortgages generally cheaper than fixed-rate mortgage loans?
> What are the differences between financial planning and a financial plan?
> How does financial counseling differ from financial advising?
> What is debt’s role in the household?
> How do you establish trust?
> What is a pro forma statement? What is its use?
> Kenneth was considering whether to place $10,000 in a tax-deferred annuity or a tax-free municipal bond. Assume the municipal bond returned 5 percent a year and the tax-deferred annuity 6 percent. Calculate approximately how long he would have to hold th
> Contrast a functional and a traditional cash flow statement.
> Detail the sections of a functional cash flow statement.
> What is a cash flow statement, and why is it important?
> What is household equity, and how do you calculate it?
> What is the major difference between household accounting and business accounting?
> What is a balance sheet, and why is it important?
> What makes the household the financial structure for the individual?
> What is to be gained by incorporating both theory and practical tools, such as opportunity cost of time, into household planning?
> How do finance and economics differ in emphasis?
> If operating efficiently is the main goal of a household enterprise, are there any drawbacks?
> Dawn and Mildred had the same starting sum of $120,000. Each made withdrawals of $24,000 a year. In years 2, 3, and 4, each had returns of 9 percent a year. Dawn had a 50 percent drop in year 1 and a 50 percent gain in year 5, while Mildred had a 50 perc
> What would be the consequence of not accounting for inflation?
> What is future value and how is it calculated?
> How is the Rule of 72 a helpful tool?
> What is the significance of IRR?
> How do you think the financial planner will be of the most help to Dan and Laura? Be specific and explain why.
> Name some common financial problems with which planners deal with.
> What does a financial planner do?
> Define the household in financial terms.
> Do people make integrated financial decisions? Explain.
> What is the difference between strengths and weaknesses, on the one hand, and opportunities and threats, on the other?
> Marisa and Jennifer both attempted to put away $10,000 a year toward savings. Marisa used a 401(k) pension plan while Jennifer tried to do the same but was forced to pay taxes on that $10,000 in savings each year. Assuming that the process was the same e
> Richard and Monica have diametrically opposite points of view on debt. Richard views debt as an opportunity to generate cash to make up for past investment losses. He has asked you whether he should remortgage his house and place the proceeds in the stoc
> Describe SWOT analysis.
> Why is integration so important?
> How are we able to express the household goal in money terms when its underlying goals is to maximize utility—pleasure?
> Why is a household’s similarity with a business important?
> Why is periodic review important?
> What are the reasons that a financial plan is important?
> Some people say that money is the only goal that counts, while others indicate that once living costs are covered, it hardly matters at all. Indicate which statement you believe to be more accurate. Justify your answer.
> Do you believe loss aversion is practiced widely? Justify your answer.
> Why do some people have difficulty saving?
> How does satisficing compare with classical economic goals? Illustrate.
> Paulette, a trial attorney for a corporation, was forced to leave the field due to an injury to her vocal cords. She switched careers and became a lower-paying author. Fortunately, she had three disability policies. Policy A had an own occupation definit
> Melinda thought about going to a dealership two hours from her location to buy a new car. She was told she might be able to save $2,000 over purchasing it locally. She decided against it. What are possible reasons for doing so?
> What is cash flow planning?
> Why are financial ratios important?
> What are the reasons that a person’s gross saving percentage may be low, while his or her net cash flow may be high?
> How do basic feelings differ from higher-level feelings?
> Contrast money planning and life planning.
> Maya had a low nondiscretionary cost percentage and a high discretionary one. Is that good or bad? Explain.
> What is behavioral financial planning? Differentiate it from behavioral finance.
> Why bring figures from today to the beginning of the retirement period?
> Jeremy lost a wing of his house in a storm, which resulted in an outlay of $250,000 to replace it. The replacement cost on the house was $900,000, and he had $500,000 of insurance. His policy had an 80 percent coinsurance clause. How much will the insura
> Provide a reason why a real estate salesperson should not have the same amount allocated to his or her home as the average person.
> What factors would cause one to decrease the withdrawal rate?
> What factors would cause one to increase the withdrawal rate?
> Why perform a retirement needs analysis?
> Distinguish between technical analysis and fundamental analysis.
> What is the significance of bond ratings?
> Why are bond maturity dates important?
> Fred compared smaller-company fund returns against the Dow Jones Industrial Average. Is that advisable? Explain.
> How does a separate account differ from a mutual fund?
> What is the difference between a load and a no-load fund?
> Given the following information: Find the return on the whole life insurance policy when the cost of term is included. Which would you select if you can invest the difference between the term and whole life policies’ premiums at a 9 p
> Howard said he wouldn’t have to pay taxes on the money he inherited from his deceased father because it was under the $5.34 million threshold. He promptly withdrew the $900,000 that was in his father’s traditional IRA. Was his belief correct? Explain.
> What is a letter of instruction and why have it?
> Explain the difference between an executor and a guardian.
> Why is life insurance potentially useful in estate planning matters?
> Carl and his wife had a total estate of $400,000. What estate planning tool would you recommend? Why?
> Why set up an irrevocable trust when you can establish a revocable one that provides you with more flexibility?
> Why is it preferable to donate appreciated property to a charity rather than sell it and contribute the cash?
> Why can tax deferral be so advantageous?
> John discovered a $400 tax deduction. In order to calculate its cash benefit, should he use his marginal or average tax bracket? Why?
> A person’s marginal tax bracket includes the sum of the relevant federal, state, and local income taxes. True or false? Explain.
> Randy had two term policies to compare, with costs as shown below. Calculate the NPV at a 6 percent after-tax discount rate and the IRR. Which one should she select and why? Years A B 1 $225 $300 2 $275 $350 $310 $320 3 4 $400 $330 $500 $340
> Contrast marginal and average tax brackets.
> Give three examples of tax elimination.
> What is the difference between conversion and shifting income?
> What does capital needs analysis provide?
> What is the principal benefit of nonqualified plans over other forms of savings?
> Why do people save through qualified pension plans?
> List the principal concerns of people in planning retirement.
> Identify the factors that will help make the decision as to whether to take Social Security early.
> Name three strengths and weaknesses of annuities.
> What is longevity risk?
> A stock has an expected rate of return of 9 percent and the risk-free rate is 3 percent. What is the risk premium?
> Why is retirement perceived as so important to people?
> Contrast the traditional tort system and no-fault auto insurance.
> Erin purchases disability insurance from her employer. Will any payments she receives be taxable?
> Marisa has a policy with replacement cost coverage and has a loss of $100,000 on a house. Total policy coverage is $300,000 and replacement cost is $400,000. Because the loss is less than the coverage, she expects to get the full amount of the claim paid
> Distinguish between an HO-3 and an HO-4 property policy.
> Why are group policies often cheaper than individual ones?
> Gerald wanted to purchase a medical policy with 100 percent coverage. The best he could get was $200 deductible and 80 percent coinsurance. Why wouldn’t companies provide fuller coverage?
> Why are insurable interest and indemnity basic insurance beliefs?
> For what type of retired individuals is long-term care insurance particularly appropriate?
> Explain why life insurance is so much more popular than disability insurance.
> Gennaro purchased a stock for $24 that paid $2.00 at the end of each year in dividends (dividends remained level over time). He sold it four years later for $28 at the time of the last dividend payment. What was his IRR?
> John was young and Lisa elderly. Discuss potential provider preferences.
> Indicate what type of life insurance you would recommend for someone who is scheduled to be financially independent in eight years. Why?
