SOLUTION MANUAL for Personal Finance, 14th Edition By E. Thomas Garman, Chapter 1-19.pdf

Solution Manual for Personal Financial Planning, 16th Edition 2
b b b b b b b b


024 by Randy Billingsley, Lawrence J. Gitman,
b b b b b b b




TborbF:bAbstockbcertificatebisbanbexamplebofbabtangiblebasset.b-bANSWER:bFalse

TborbF:bThebpresencebofbmaterialbitems,bsuchbasbabhouse,bcar,bclothing,bandbhavingbmon
eybavailablebforbhealthbcarebcontributesbtobourbqualitybofblife.b-bANSWER:bTrue

Youbwouldbmostblikelybhavebablowbaveragebpropensitybtobconsumebifbyoubhave:
A)babhighbincomebandbspendbeverybdollarbonbcurrentbneeds
B)bablowbincomebandbspendbeverybdollarbonbcurrentbneeds
C)bnobincomebandbborrowbtobpaybforbcurrentbneeds
D)babhighbincomebandbsavebmostbofbitb-bANSWER:bD)babhighbincomebandbsavebmostbofbit

TborbF:bPersonalbfinancialbplanningbwillbnotbhelpbyoubifbyourbincomebseemsbtobbebinade
quatebtobmeetbyourbmostbbasicbneedsb-bANSWER:bFalse

TborbF:bthebfirstbstepbinbthebfinancialbplanningbprocessbisbtobdevelopbfinancialbplansbandb
strategiesb-bANSWER:bFalse

TborbF:bLearningbtobcommunicatebwithbyourbparterbaboutbmoneybisbabcriticalbstepbinbde
velopingbeffectivebfinancialbplansb-bANSWER:bTrue

TborbF:bYoubarebmoreblikelybtobattainbyourbfinancialbgoalsbifbyoubsetbthembhigherbthanby
oubarebcurrentlybablebtobachieveb-bANSWER:bFalse

TborbF:bUnlessbyoubattainbyourbshort-
termbgoals,byoubprobablybwillbnotbbebablebtobachievebyourbintermediateborblongbtermbg
oals.b-bANSWER:bTrue

"Financialbshocks"bthatbcanbdrasticallybchangebone'sbfinancialbcircumstancesbinclude
A)bdivorce
B)bdeathbofbabspouse
C)bsupportingbelderlybparentsbwhilebpayingbforbyourbchildren'sbcollegebeducations
D)ballbofbthesebchoicesb-bANSWER:bD)ballbofbthesebchoices

Whichbofbthebfollowingbwouldbnotbbebconsideredbanbasset?
A)bsavingsbaccount
B)bland
C)bcreditbcardbbalance
D)bjewelryb-bANSWER:bC)bcreditbcardbbalance

TborbF:bInbfinancialbplanning,badequatebinsurancebcoveragebisbessentialbonlybafterbyoubh
avebattainedbsize-ablebwealthb-bANSWER:bFalse

,TborbF:bInbfinancialbplanning,bitbisbimportantbtobconsiderbthebtaxbimplicationsbofbvariousb
investmentsb-bANSWER:bTrue

TborbF:bRetirementbplanningboptimallybbeginsbwhenbpeoplebarebinbtheirb40sborb50sb-
bANSWER:bFalse




TborbF:bFinancialbplansbarebnotbinfluencedbbybthebeconomicbenvironmentb-
bANSWER:bFalse




Thebfederalbgovernment
A)bplaysbabmajorbrolebinbregulatingbeconomicbactivity
B)bisbbothbabcustomerbofbbusinessbandbanbemployerbofbconsumers
C)bleviesbtaxesbprimarilybonbrealbestatebandbpersonalbproperty
D)bplaysbabmajorbrolebinbregulatingbeconomicbactivitybANDbisbbothbabcustomerbofbbusin
essesbandbanbemployerbofbconsumersb-
bANSWER:bD)bplaysbabmajorbrolebinbregulatingbeconomicbactivitybANDbisbbothbabcustom

erbofbbusinessesbandbanbemployerbofbconsumers

TborbF:bBusinessesbultimatelybdeterminebthebkindsbofbgoodsbandbservicesbtobprovidebtob
customersb-bANSWER:bFalseb-
bconsumerbchoicesbultimatelybdeterminebthebkindsbofbgoods/servicesbbusinessesbwillbp

rovide

Thebfederalbgovernment'sbmonetarybpolicy
A)bcontrolsbthebamountbofbmoneybinbcirculation
B)bdeterminesbthebspendingbforbsocialbservices,beducation,bdefense,bandbotherbprogra
ms
C)bcontrolsbthebincreaseborbdecreasebinbtaxes
D)bdoesballbofbthesebchoicesb-
bANSWER:bA)bcontrolsbthebamountbofbmoneybinbcirculation




RealbGDPbisbdecreasingbduring
A)banbexpansion
B)babpeak
C)babcontraction
D)babtroughb-bANSWER:bC)babcontraction

InbwhichbstatebofbanbeconomicbcyclebdoesbrealbGDPbincreasebuntilbitbhitsbabpeak?
A)bexpansion
B)bpeak
C)bcontraction
D)btroughb-bANSWER:bA)bexpansion

TborbF:bEconomicbgrowthbinbAmericabisbmeasuredbbybchangesbinbthebconsumerbpricebin
dexb(CPI)b-bANSWER:bFalse

, Ifbyourbsalarybincreasedb4%blastbyearbandbinflationbaveragedb4%,byourbpurchasingbpow
erbwould
A)bhavebincreased
B)bhavebdecreased
C)bhavebremainedbthebsame
D)bbebimpossiblebtobtellb-bANSWER:bC)bhavebremainedbthebsame

Higherbratesbofbinflationbusuallybcause
A)bhigherbinterestbrates
B)blowerbmonthlybcarbpayments
C)blowerbmortgagebrates
D)banbincreasedbpurchasingbpowerbofbmoneyb-bANSWER:bA)bhigherbinterestbrates

Whenbapplyingbforbabjobbwithinbablargebnationwidebcompany,byoubnoticebthatbsalariesbf
orbthebsamebpositionbdifferbbasedbonbgeographicbregion.bInbwhichbofbthebfollowingbregi
onsbwouldbyoubmostblikelybreceivebthebhighestbsalary?
A)bsmallbtownbinbthebMidwest
B)bmetropolitanbareabinbthebNortheast
C)bruralbareabinbthebwest
D)bmetropolitanbareabinbthebsouthb-bANSWER:bB)bmetropolitanbareabinbthebNortheast

TborbF:bTypically,bpeoplebwithblowbincomesbfallbintobthebmiddlebagebandbolderbagebgrou
ps,bwithbtheblowestbearningsbgenerallyboccurringbbetweenbthebagesbofb55bandb64.b-
bANSWER:bFalse




TborbF:bAbpersonbwithbabmaster'sbdegreebwillblikelybearnbmorebincomebthanbabpersonbwi
thbabprofessionalbdegreeb-bANSWER:bFalse

ThebaveragebAmericanbstartingbabcareerbtodaybcanbexpectbtobhave
A)bthreebjobsbwithbthebsamebemployer
B)batbleastbtenbjobsbwithbfiveborbmorebemployers
C)bonebjobbforblife
D)batbleastbfifteenbjobsbwithbtenborbmorebemployersb-
bANSWER:bB)batbleastbtenbjobsbwithbfiveborbmorebemployers




TborbF:bCareerbplanningbandbpersonalbfinancialbplanningbarebdistinct,bunrelatedbactiviti
esb-bANSWER:bFalse

TborbF:bThebfirstbstepbinbcareerbplanningbisbtobsetblong-termbandbshort-
termbcareerbgoalsb-bANSWER:bFalseb-
bthebfirstbstepbisbtobidentifybyourbinterests,bskills,bneeds,bandbvalues




Whichbofbthebfollowingbmeasuresbyourbfinancialbconditionbsobyoubcanbestablishbrealisti
cbfinancialbgoalsbandbevaluatebyourbprogressbtowardbthosebgoals?
a.bFinancialbplans
b.bBudgets
c.bFinancialbplanners