Question: Why is it preferable to donate appreciated

> 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?

> What are human weaknesses under both money planning and life planning?

> 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 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?

> How would you decide whether to transfer risk or share risk?

> A person who trades in his 15-year-old automobile and purchases a new car with disk brakes is practicing which method of managing risk?

> Which type of insurance might be more susceptible to moral hazard: term or whole life? Why?

> Contrast business and personal risk and separate the household’s risk exposure into one or the other.

> What are the functions of a risk manager?

> Why is diversification important in risk management?

> Contrast variable and universal life insurance.

> Assuming continuing payments, will the cash value of whole life always go up over a life cycle? Why?

> Josh earns $80,000 a year. He would like to purchase a home and applies for a mortgage from the bank. The bank requires that the debt not exceed 28 percent of his annual income. With the current down payment he is willing to pay, his monthly mortgage pay

> How is whole life insurance able to maintain a flat payment?

> Define risk management.

> What types of investments are most appropriate for short-term needs?

> What are the strengths of mutual funds?

> Why can real estate be an attractive portfolio holding?

> Investing abroad has substantial individual asset risk. Why invest in it then?

> Under the semi strong form of the EMH, should you read an annual report? Why?

> Under the weak form of the EMH, if you are given the following recent day price performance: is the likely future performance higher than nine? Why? Day 2 Days Ago The Day before Yesterday Yesterday Today Price 6. 7 8 9.

> Under the EMH, can you outperform the market?

> Stocks C and D move in opposite directions. Does that mean they have no correlation? Explain.

> Mary purchased a home for $200,000. By living in the home, she saved $18,000 annually because she did not have to pay rent. She had to pay $3000 annually for upkeep of the home. By the end of the first year, the home price had appreciated to $210,000. Wh

> Stock A and stock B have no correlation. Does that mean we don’t have to include correlation in calculating portfolio return? Explain.

> How are income taxes determined for mutual funds?

> How has mutual fund performance compared with overall indexes? Why do you think that is the case?