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<strong>BUSN</strong> <strong>380</strong> <strong>DEVRY</strong> <strong>ENTIRE</strong> <strong>COURSE</strong><br />
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<strong>BUSN</strong> <strong>380</strong> DeVry Entire Course<br />
<strong>BUSN</strong><strong>380</strong><br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 1 Discussion 1<br />
Time Value of Money (graded)<br />
Incorporating time-value-of-money concepts and information from well-developed personal financial<br />
statements, identify your long-term financial goals and discuss the pertinent aspects for realizing these<br />
long-term financial goals. Explain the choices that you must make and how career planning will also fit<br />
into your plan.<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 1 Discussion 2<br />
Opportunity Cost (graded)<br />
Identify, quantify, and discuss the opportunity costs that arise from your decision to attend DeVry<br />
University. Using the concept of present value analysis, how would you justify your decision to acquire a<br />
college degree?<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 2 Discussion 1<br />
Disposable Income (graded)<br />
Identify and present all taxes you pay during the course of a typical year. Include taxes that are called<br />
fees (such fees are really taxes by another name). Some of the taxes you pay may have to be estimated<br />
(i.e., sales taxes). What is the percentage proportion of these taxes in relation to your income, and—with<br />
respect to your disposable income (that is, income after taxes)—what are the implications insofar as your<br />
spending behavior is concerned?
<strong>BUSN</strong> <strong>380</strong> DeVry Week 2 Discussion 2<br />
Alternative Savings Vehicles (graded)<br />
Identify the savings (investment) instruments you use or have used in the past (if you haven’t used any,<br />
identify those that you are most likely to use). Now, identify a number of alternative savings (investment)<br />
instruments that you have not used (or are least likely to use). Compare your two lists. Analyze the tradeoffs<br />
that emerge. Why have you selected certain instruments in the past? Why may you use specific<br />
savings (investment) instruments in the future? Why will you decide to not use certain instruments in the<br />
future?<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 3 Discussion 1<br />
Hazardous to Your Health! (graded)<br />
Using the Internet, locate a source that identifies the number of personal bankruptcies that have occurred<br />
in the United States during a relatively recent time period. Locate and report the results of Internet (or<br />
other) sources that assess the role played by credit card debt in relation to personal bankruptcies<br />
declared. What are the general conclusions regarding the effects of credit card debt upon bankruptcy<br />
filings? Do you believe that credit card debt is the only cause of bankruptcy? Are there any additional<br />
factors that can lead a consumer to make a personal bankruptcy decision?<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 3 Discussion 2<br />
Credit Card Balances (graded)<br />
As a proportion of your personal net worth (total assets minus total liabilities), identify the proportion of<br />
credit card debt you currently have outstanding (or have had outstanding at some point in your life).<br />
Identify the expenditures that have given rise to your credit card debt. Which expenditures were<br />
discretionary and which were not? Discuss the implications. Are there any strategies that you can<br />
implement in order to better manage and reduce credit card debt? What strategies have you used?<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 4 Discussion 1<br />
Portfolio Diversification (graded)<br />
Identify any long-term investment instruments you use or have used in the past (if you haven’t used any,<br />
identify those that you are most likely to use). Include any retirement funds established at work and<br />
pension/retirement contributions made by your employer. Assess whether or not your overall investment
portfolio is efficiently diversified. Why is there a lack of diversification? What steps can you take to modify<br />
this? If you plan to invest long term, what steps will you take towards diversification?<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 4 Discussion 2<br />
Portfolio Risk (graded)<br />
Using the investment portfolio you identified for this week’s first discussion question, informally identify<br />
the beta for each of the asset components of this portfolio. Include your reasoning for the betas you have<br />
identified. (If you have not formally invested in a portfolio yet, find 3–5 asset components that you would<br />
want to invest in as a portfolio, and informally identify the beta for these asset components). Now, identify<br />
the overall beta of your investment portfolio and explain how you arrived at this result. What implications<br />
can you draw from this exercise? How does each component beta differ from the portfolio beta, and why?<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 5 Discussion 1<br />
Payment Obligations (graded)<br />
As a percentage of your estimated monthly disposable income (which you identified in Week 2), what<br />
proportion is represented by your monthly automobile, mortgage, and/or rental payments? What is the<br />
percentage remaining after those monthly expenses have been deducted? Assess and discuss the<br />
implications in terms of how they influence your personal financial planning.<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 5 Discussion 2<br />
Subsistence Spending (graded)<br />
Suppose you found yourself in a position where your monthly level of income was cut in half. Assume this<br />
misfortune will persist for the long term. Discuss the effect such a salary reduction would have on your<br />
current lifestyle. What conclusions can you draw? What changes would you make regarding your<br />
expenses and how would you implement any new financial strategies?<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 6 Discussion 1<br />
Insurance Trade-Offs (graded)<br />
What forms of insurance coverage do you currently carry and pay for? As a percentage of your estimated<br />
monthly disposable income (which you identified in Week 2), what proportion do these coverages<br />
represent? Are there areas where you feel you are underinsured? Overinsured? What trade-offs are<br />
involved in determining the amount of insurance coverage you currently carry?
<strong>BUSN</strong> <strong>380</strong> DeVry Week 6 Discussion 2<br />
Lowering Insurance Costs and Risks (graded)<br />
What strategies might you implement to lower your insurance costs, while at the same time minimizing<br />
the risks involved in lowering such coverage? For example, in the area of health insurance, ask whether<br />
you are a smoker. In the area of auto insurance, how could your driving habits change?<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 7 Discussion 1<br />
Zero-Based Asset (graded)<br />
U.S. Treasury bills held to maturity have a beta of zero. Why? Discuss the implications of this risk-return<br />
trade-off with respect to your overall investment portfolio as you approach retirement age. Are there any<br />
assets that you would avoid investing in as you near retirement age?<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 7 Discussion 2<br />
Home Valuation and Estate Taxes (graded)<br />
Discuss the factors that may lead to an appreciation in the value of a home over the next 15 years.<br />
Discuss the factors that may lead to a depreciation in the value of a home over the next 15 years. How<br />
will the value of your home affect the amount of tax to which your estate will be liable subject to your<br />
death?<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 1 Problem Set 1<br />
Problem Set 1 (Note: Some of these problems require the use of the time value of money tables in the<br />
Chapter 1 Appendix).<br />
1. Ben Collins plans to buy a house for $65,000. If that real estate property is expected to increase in<br />
value 5 percent each year, what would its approximate value be seven years from now?<br />
2. At an annual interest rate of five percent, how long would it take for your savings to double?<br />
3. In the mid-1990s, selected automobiles had an average cost of $12,000. The average cost of those<br />
same motor vehicles is now $20,000. What was the rate of increase for this item between the two time<br />
periods?<br />
4. A family spends $28,000 a year for living expenses. If prices increase by 4 percent a year for the next<br />
three years, what amount will the family need for its living expenses?
5. What would be the yearly earnings for a person with $6,000 in savings at an annual interest rate of 5.5<br />
percent?<br />
6. Elaine Romberg prepares her own income tax return each year. A tax preparer would charge her $60<br />
for this service. Over a period of 10 years, how much does Elaine gain from preparing her own tax return?<br />
Assumes she can earn 3 percent on her savings.<br />
7. Tran Lee plans to set aside $1,800 a year for the next six years, earning 4 percent. What would be the<br />
future value of this savings amount?<br />
8. If you borrow $8,000 with a 5 percent interest rate to be repaid in five equal payments at the end of the<br />
next five years, what would be the amount of each payment? (Note: Use the present value of an annuity<br />
table in the Chapter 1 Appendix.)<br />
9. Based on the following data, compute the total assets, total liabilities, and net worth. Liquid assets,<br />
$3,670 Household assets, $89,890 Investment assets, $8,340 Long-term liabilities, $76,230 Current<br />
liabilities, $2,670<br />
10.Which of the following employee benefits has the greater value? Use the formula given in the<br />
“Financial Planning Calculations” – “Tax-Equivalent Employee Benefits” box found in Chapter 2 to<br />
compare these benefits. (Assume a 28 percent tax rate.)<br />
A nontaxable pension contribution of $4,300 or the use of a company car with a taxable value of $6,325.<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 2 Problem Set 2<br />
Problem Set 2<br />
1. Thomas Franklin arrived at the following tax information:<br />
Gross salary, $46,660<br />
Interest earnings, $225<br />
Dividend income, $80<br />
One personal exemption, $3,400<br />
Itemized deductions, $7,820<br />
Adjustments to income, $1,150<br />
What amount would Thomas report as taxable income?<br />
2. What would be the net annual cost of the following checking account?<br />
Monthly fee, $3.75; processing fee, 25 cents per check; checks written, an average of 22 a month.
3. What would be the average tax rate for a person who paid taxes of $4,864.14 on a taxable income of<br />
$39,870?<br />
4. A payday loan company charges 4 percent interest for a two-week period. What would be the annual<br />
interest rate from that company?<br />
5. What is the annual opportunity cost of a checking account that requires a $350 minimum balance to<br />
avoid service charges? Assume an interest rate of 6.5 percent.<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 3 Problem Set 3<br />
Problem Set 3<br />
1. Louise McIntyre’s monthly gross income is $2,000. Her employer withholds $400 in federal, state, and<br />
local income taxes and $160 in Social Security taxes per month. Louise contributes $80 per month for her<br />
IRA. Her monthly credit payments for VISA, MasterCard, and Discover card are $35, $30, and $20,<br />
respectively. Her monthly payment on an automobile loan is $285. What is Louise’s debt payments-toincome<br />
ratio? Is Louise living within her means?<br />
2. Calculating Debt Payments – to – Income Ratio. Suppose that your monthly net income is $2,400. Your<br />
monthly debt payments include your student loan payment, a gas credit card and they total $360. What is<br />
your debt payments – to – income ratio?<br />
3. Dave borrowed $500 for one year and paid $50 in interest. The bank charged him a $5 service charge.<br />
What is the finance charge on this loan?<br />
Dave borrowed $500 on January 1, 2006, and paid it all back at once on December 31, 2006.<br />
What was the APR?<br />
If Dave paid the $500 in 12 equal monthly payments, what is the APR?<br />
4. Calculating Simple Interest on a Loan. Damon convinced his aunt to lend him $2,000 to purchase a<br />
plasma digital TV. She has agreed to charge only 6 % simple interest, and he has agreed to repay the<br />
loan at the end of one year. How much interest will he pay for the year?<br />
5. After visiting several automobile dealerships, Richard Welch selects the car he wants. He likes its<br />
$10,000 price, but financing through the dealer is no bargain. He has $2,000 cash for a down payment,<br />
so he needs an $8,000 loan. In shopping at several banks for an installment loan, he learns that interest<br />
on most automobile loans is quoted at add-on rates. That is, during the life of the loan, interest is paid on<br />
the full amount borrowed even though a portion of the principal has been paid back. Richard borrows<br />
$8,000 for a period of four years at an add-on interest rate of 11 percent.
Questions<br />
a. What is the total interest on Richard’s loan?<br />
b. What is the total cost of the car?<br />
c. What is the monthly payment?<br />
d. What is the annual percentage rate (APR)?<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 4 Problem Set 4<br />
Problem Set 4<br />
1. Determining Profit or Loss from an Investment. Three years ago, you purchased 150 shares of IBM<br />
stock for $88 a share. Today, you sold your IBM stock for $103 a share. For this problem, ignore<br />
commissions that would be charged to buy and sell your IBM shares.<br />
1. What is the amount of profit you earned on each share of IBM stock?<br />
2. What is the total amount of profit for your IBM investment?<br />
2. Calculating Rate of Return. Assume that at the beginning of the year, you purchase an investment for<br />
$8,000 that pays $100 annual income. Also assume the investment’s value has decreased to $7,400 by<br />
the end of the year.<br />
1. What is the rate of return for this investment?<br />
2. Is the rate of return a positive or negative number?<br />
3. Calculating Earnings Per Share, Price-Earnings Ratio, and Book Value. As a stockholder in Bozo Oil<br />
Company, you receive its annual report. In the financial statements, the firm has reported assets of $9<br />
million, liabilities of $5 million, after-tax earnings of $2 million, and 750,000 outstanding shares of<br />
common stock.<br />
1. Calculate the earnings per share of Bozo Oil’s common stock.<br />
2. Assuming that a share of Bozo Oil’s common stock has a market value of $40, what is the firm’s<br />
price-earnings ratio?<br />
3. Calculate the book value of a share of Bozo Oil’s common stock.<br />
4. Determining Interest and Approximate Bond Value. Assume that three years ago, you purchased a<br />
corporate bond that pays 9.5 percent. The purchase price was $1,000. Also assume that three years after<br />
your bond investment, comparable bonds are paying 8 percent.<br />
1. What is the annual dollar amount of interest that you will receive from your bond investment?
2. Assuming that comparable bonds are paying 8 percent, what is the approximate dollar price for<br />
which you could sell your bond?<br />
3. In your own words, explain why your bond increased or decreased in value.<br />
5. Using Margin. Bill Campbell invested $4,000 and borrowed $4,000 to purchase shares in Wal-Mart. At<br />
the time of investment, Wal-Mart was selling for $45 a share.<br />
1. If Bill paid $30 commission, how many shares could Bill buy if he used only his own money and<br />
did not use margin?<br />
2. If Bill paid $50 commission, how many shares could Bill buy if he used his $4,000 and borrowed<br />
$4,000 on margin to buy Wal-Mart stock?<br />
3. Assuming that Bill did use margin, paid $90 commission to sell his stock, and sold his Wal-Mart<br />
stock for $53, how much profit did he make on his Wal-Mart investment?<br />
6. Calculating yields. Assume you purchased a corporate bond at its current market price of $850 on<br />
January 2, 2002. It pays 9 percent interest and it will mature on December 31, 2011, at which time the<br />
corporation will pay you the face value of $1,000.<br />
a. Determine the current yield on your bond investment at the time of purchase.<br />
b. Determine the yield to maturity on your bond investment.<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 5 Problem Set 5<br />
Problem Set 5<br />
1. Tammy Monahan is considering the purchase of a home entertainment center. The product attributes<br />
and weights she plans to consider are:<br />
Portability .1<br />
Sound projection .6<br />
Warranty .3<br />
Tammy rated the brands as follows:<br />
portability sound projection warran<br />
Brand A 6 8 7<br />
Brand B 9 6 8<br />
Brand C 5 9 6<br />
Using the Consumer Buying Matrix presented in Chapter 8, conduct a quantitative product evaluation<br />
rating for each brand. What other factors is Tammy likely to consider when making her purchase?<br />
2. Based on the following, calculate the costs of buying and of leasing a motor vehicle.<br />
Purchase Costs<br />
Leasing Costs
Down payment $1,500 Security deposit $500<br />
Loan payment $450 for 48 months<br />
Lease payment $450 for 36 months<br />
Estimated value at End of loan $4,000 End of lease charges $600<br />
Opportunity cost interest rate: 4 percent<br />
3. You can purchase a service contract for all of your major appliances for $180 a year. If the appliances<br />
are expected to last for 10 years, and you earn 5 percent on your savings, what would be the future value<br />
of the amount you would pay for the service contract?<br />
4. You estimate that you can save $3,800 by selling your own home rather than using a real estate agent.<br />
What would be the future value of that amount if invested for five years at 7 percent?<br />
5. John Walters is comparing the cost of credit to the cash price of an item. If John makes a $60 down<br />
payment, and pays $34 a month for 24 months, how much more would that be than the cash price of<br />
$695?<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 6 Problem Set 6<br />
Problem Set 6<br />
1. For each of the following situations, what amount would the insurance company pay?<br />
1. Wind damage of $835; the insured has $500 deductible.<br />
2. Theft of a stereo system worth $1,300; the insured has a $250 deductible.<br />
3. Vandalism that does $425 of damage to a home; the insured has a $500 deductible.<br />
2. Beverly and Kyle Nelson currently insure their cars with separate companies paying $650 and $575 a<br />
year. If they insure both cars with the same company, they would save 10 percent on the annual<br />
premiums. What would be the future value of the annual savings over ten years based on an annual<br />
interest rate of 6 percent?<br />
3. As of 2008, per capita spending on health care in the United States was about $8,000. If this amount<br />
increased by 5 percent a year, what would be the amount of per capital spending for health care in 10<br />
years?<br />
4. Sarah’s comprehensive major medical health insurance plan at work has a deductible of $750. The<br />
policy pays 85 percent of any amount above the deductible. While on a hiking trip, she contracted a rare<br />
bacterial disease. Her medical costs for treatment, including medicines, tests, and a six-day hospital stay,<br />
totaled $8,893. A friend told her that she would have paid less if she had a policy with a stop-loss feature<br />
that capped her out-of-pocket expenses at $3,000. Was her friend correct? Show your computations.<br />
Then determine which policy would have cost Sarah less and by how much.
5. The Kelleher family has health insurance coverage that pays 80 percent of out-of-hospital expenses<br />
after a $500 deductible per person. If one family member has doctor and prescription medication<br />
expenses of $1,100, what amount would the insurance company pay?<br />
6. You are the wage earner in a “typical family,” with $40,000 gross annual income. Use the easy method<br />
to determine how much life insurance you should carry.<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 7 Problem Set 7<br />
Problem Set 7<br />
1. Calculating Net Asset Value. Given the information below, calculate the net asset value for the Boston<br />
Equity mutual fund.<br />
Total assets $225,000,000<br />
Total liabilities 5,000,000<br />
Total number of shares 4,400,000<br />
2. Calculating the Rate of Return of Investment Using Financial Leverage. Suppose Shaan invested just<br />
$10,000 of his own money and had a $90,000 mortgage with an interest rate of 8.5 percent. If after three<br />
years he sold the property for $120,000.<br />
1. What is his gross profit?<br />
2. What is his net profit/loss?<br />
3. What is the rate of return on investment?<br />
3. Shelly’s assets include money in the checking and savings accounts, investments in stocks and mutual<br />
funds, personal property, such as furniture, appliances, an automobile, coin collection and jewelry. Shelly<br />
calculates that her total assets are $108,800. Her current unpaid bills, including an auto loan, credit card<br />
balances, and taxes total $16,300. Calculate Shelly’s net worth.<br />
4. Barry and his wife Mary have accumulated over $4 million during their 45 years of marriage. They have<br />
three children and five grandchildren.<br />
<br />
<br />
<br />
How much money can Barry and Mary gift to their children in 2008 without any gift tax liability?<br />
How much money can Barry and Mary gift to their grandchildren?<br />
What is the total amount of estate removed from Barry and Mary’s estate?<br />
5. Dave bought a rental property for $200,000 cash. One year later, he sold it for $240,000.<br />
<br />
<br />
What was the return on his $200,000 investment?<br />
Suppose Dave invested only $20,000 of his own money and borrowed $180,000 (interest free<br />
from his rich father). What was his return on investment?
<strong>BUSN</strong> <strong>380</strong> DeVry Week 3 Project 1<br />
Job Search and Personal Budget<br />
In this assignment, we are going to find a job (this could be your dream job or current job) and then use<br />
the Personal Budget spreadsheet located in Doc Sharing to fill out the spreadsheet based on your<br />
expected income and expenses. A grading rubric for Project 1 is available in Doc Sharing.<br />
Instructions for Project #1<br />
Using your income from your current job or using income from a future job that you are planning on<br />
having after graduating from college, construct a budget.<br />
Searching for a job: Using a daily newspaper or an online search engine, find the monthly income/salary<br />
which will be used as your income in your personal budget.<br />
Some useful job search websites: Monster (.monster.com/”>www.monster.com), Career Builder<br />
(.careerbuilder.com/”>www.careerbuilder.com), and Jobs (.jobs.com/”>www.jobs.com).<br />
Additional information can be found at the United States Department of Labor, Bureau of Statistics<br />
(.bls.gov/oco/home.htm”>http://stats.bls.gov/oco/home.htm).<br />
You may also take the research above to confirm and/or project what you should be earning if you intend<br />
to use your current job to complete this assignment.<br />
Use the Personal Budget spreadsheet from Doc Sharing to enter your income from your current job or the<br />
income from the job that you are planning on having, then enter the rest of the details based on this<br />
personal income (expenses, spending, etc.).<br />
Write a short paper (two page maximum, double spaced, APA format) on your job and budget; it should<br />
include the following as a minimum:<br />
<br />
<br />
<br />
<br />
a job description;<br />
reasons why you would like to have his job;<br />
a salary; and<br />
a discussion and explanation of how this dream job will or will not help you achieve your personal<br />
goals based on the outcome of your budget.<br />
Submit your assignment to the Dropbox located on the silver tab at the top of this page. For instructions<br />
on how to use the Dropbox, read these<br />
.next.ecollege.com/default/launch.ed?ssoType=DVUHubSSO2&node=node/184″>step-by-step
instructions or watch this<br />
.next.ecollege.com/default/launch.ed?ssoType=DVUHubSSO2&node=node/232″>Dropbox Tutorial.<br />
See the Syllabus section “Due Dates for Assignments & Exams” for due date information.<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 6 Project 2<br />
Car Buying<br />
In this assignment, we will learn how to buy a car and figure out whether it is priced at or below market<br />
value.<br />
Instructions for Project #2<br />
First, you need to decide on your budget, which is the maximum you can spend on a car, and that<br />
maximum number should take into consideration price, tax, registration, and fixing if needed.<br />
Second, go to a website such as cars.com, and search for a car in within your budget constraint.<br />
Third, go to a website such as the one for the Kelly Blue Book, and find out whether the car is at market<br />
value, overpriced, or underpriced.<br />
Finally, write a two-page paper discussing your findings and issues to explain or discuss.<br />
Explain your choice. Why did you select the car that you identified? What are the three different prices the<br />
Kelly Blue Book provides?<br />
<br />
<br />
<br />
<br />
<br />
Based on Kelly Blue Book prices, is the car overpriced or underpriced?<br />
Did you have any surprises, prior experience, feedback, thoughts, and so on?<br />
Referring to the car that you selected, discuss the insurance decisions you will need to make.<br />
What type of coverage will you need?<br />
What is the minimum amount of coverage you will need (based on your state of residence) and<br />
what amount of coverage would you actually like to have?<br />
Are there any actions you can take to reduce your premiums? Address these questions, taking into<br />
account your current budget and financial status.<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 5 You Decide<br />
Scenario Summary<br />
After a number of years of planning, you have made the decision to evaluate the potential purchase of a<br />
home. The goal of the assignment is to compare two homes based on demographics, and also to analyze<br />
a number of additional factors related to the home-buying process and ongoing possession.
Your Assignment<br />
You will first need to research the housing market and compare the values of two similar homes in two<br />
different areas. The two homes must be extremely similar in structure size, land size, year built, and<br />
additions such as swimming pools or barns. Then, based upon your findings, you will select one of the<br />
homes to purchase, calculate a monthly payment on the mortgage note, compare this information with<br />
what you can potentially afford, and address additional questions related to home ownership.<br />
KEY PLAYERS<br />
.1em; font-weight: normal;”> ScenarioYour RoleKey PlayersAssignmentYou Decide<br />
Scenario<br />
After a number of years of planning, you have made the decision to evaluate the potential purchase of a<br />
home. The goal of the assignment is to compare two homes based upon on demographics, and to also<br />
analyze a number of additional factors related to the home buying process and ongoing possession.<br />
Your Role<br />
You will first need to research the housing market and compare the values of two similar homes in two<br />
different areas. The two homes must be extremely similar in structure size, land size, year built, and<br />
additions like a swimming pool or a barn. Then, based upon your findings, you will select one of the<br />
homes to purchase, calculate a monthly payment on the mortgage note, compare this information with<br />
what you can potentially afford, and address additional questions related to home ownership.<br />
Key Players<br />
Michael JosephReal Estate AgentBethany SmithMortgage LenderTimothy BaxterCurrent<br />
Homeowner/Seller Mary ThompsonCondominium Association, President<br />
Assignment<br />
Given the scenario, your role and the information provided by the key players involved, it is time for you to<br />
make a decision.<br />
If you are finished reviewing this scenario, close this window and return to this week’s You Decide item, in<br />
your course window, to complete the activity for this scenario.<br />
You can return and review this scenario again at any time.<br />
YOU DECIDE Activity or Assignment
Assignment<br />
House #1 House #2<br />
1. Go to the following website:<br />
.realtor.com/”>http://www.realtor.com/.<br />
2. Enter a ZIP code.<br />
3. Chose Homes for Sale.<br />
4. Enter your price range (the minimum and maximum amount<br />
you want to spend).<br />
5. Enter the specifications (number of bedrooms and number<br />
of baths).<br />
6. Hit Search.<br />
7. Find a home that you like or would consider.<br />
8. Go to the U.S. Census website:<br />
.census.gov/”>http://www.census.gov.<br />
9. Click on the American Factfinder tab on the left of the<br />
screen.<br />
10. Under the Fact Access to Information title, enter the ZIP<br />
code of the house you found.<br />
11. You will get lots of data on demographics like age, gender,<br />
family size, education, income, and crime rates.<br />
12. Find out the price per square foot for the house you found.<br />
The goal now is to find a very similar house (age, lot s<br />
number of rooms, and number of bathrooms).<br />
Repeat Steps 1 through 12.<br />
In Step 2, pick another ZIP code 20+ miles away from<br />
you picked for the first house.<br />
In Step 5, pick the same specification and choose a ho<br />
the same year or so as the first house. Also, try your b<br />
that has the same lot size and square footage as the f<br />
Construct a table showing a comparison of data (including location, square footage, total price, price per<br />
square foot, and specifications), for both houses and then write a 3–4-page paper detailing the following:<br />
1. What is the logic for choosing your two ZIP codes? Is the selection based upon work location,<br />
family location, good schools, and so on?<br />
2. What is the logic behind choosing the size and specifications of each house?<br />
3. Compare the total price of the two homes.<br />
4. Compare the price per square foot for each house.<br />
5. Compare the demographic data (referring to the location and ZIP code) of each house. Based<br />
upon these data, try to explain the similarities and differences in pricing for each home.<br />
6. Select the home that you will purchase and explain the reasoning behind your selection. Assume<br />
that at least a 20% down payment is required. How much money would you need to have saved?<br />
After the down payment, what would be the purchase price of the home?<br />
7. Assume the following:<br />
Closing costs (including all potential loan origination, title, and closing fees) are $3,500.<br />
You have been approved for a 30-year fixed-rate mortgage note at a rate of 5.0%. Calculate the<br />
monthly payment for this loan. (It is recommended that you show your calculation.)<br />
1. Using your textbook readings this week as a resource, and based upon your monthly gross<br />
income and current additional debt payments, perform the calculations below (it is recommended<br />
that you show your calculations).<br />
<br />
<br />
<br />
Your affordable monthly mortgage payment (assume your lender uses a guideline of 33% for<br />
monthly gross income or 38% if you have other debt payment obligations)<br />
Your affordable mortgage amount (meaning the amount that can be financed; assume the loan<br />
terms under #7b)<br />
Your affordable home purchase price (assume a 20% down payment). Compare these<br />
calculations to the previous data under #6 and #7. What are your conclusions? Discuss your<br />
findings, including any surprises!
When purchasing a home, what additional considerations must you take into account? Discuss the<br />
parties that will be involved, what type of documentation will be required, home inspection requirements,<br />
any additional financing options that you would evaluate, and so on<br />
Present a general summary regarding home ownership. What are the advantages and disadvantages of<br />
home ownership, and how does your personal choice fit into your overall personal financial plan?<br />
Grading Rubric<br />
Points will be deducted for poor grammar, spelling, or writing style. Any external source<br />
Category<br />
Points Description<br />
Home Research and<br />
A comparison of the two homes identified is presented in detail through the completion<br />
20<br />
Comparisons<br />
discussion (#1–5)<br />
Home Selection and<br />
Mortgage Payment 20 Home selection decision; calculation of the mortgage payment (# 6 and #7)<br />
Calculation<br />
Home Affordability 15 Calculate, discuss, and compare home affordability (#8).<br />
Home Purchasing<br />
Considerations<br />
15 Discuss home purchasing considerations (#9).<br />
Home Ownership<br />
Summary<br />
20 Present a general summary related to home ownership (#10).<br />
Formatting and Grammar 10 References must be cited in two places: within the body of your paper and on a separat<br />
Please follow required APA guidelines, as well as guidelines regarding plagiarism.<br />
Total 100 A quality paper will meet or exceed all of the above requirements.<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 1 Quiz Latest<br />
1. Question : (TCO 1) A(n) _____ summarizes your current financial situation, analyzes your financial<br />
needs, and recommends a direction for your financial activities.<br />
<br />
<br />
<br />
<br />
<br />
insurance prospectus<br />
statement<br />
budget<br />
investment forecast<br />
financial plan<br />
Question 2. Question : (TCO 1) In financial planning, a major activity component involves the<br />
<br />
<br />
<br />
<br />
<br />
allocation of current resources for spending.<br />
evaluation of investment alternatives.<br />
evaluation of one’s career.<br />
selection of insurance coverage.<br />
establishment of credit.<br />
Question 3. Question : (TCO 1) Higher interest rates can be caused by<br />
<br />
<br />
increased saving and investing by consumers.<br />
an increase in the money supply.
a decrease in consumer borrowing.<br />
lower government spending.<br />
a lower money supply.<br />
Question 4. Question : (TCO 1) The _____ refers to stages that an individual goes through based on<br />
age, financial needs, and family situation.<br />
<br />
<br />
<br />
<br />
<br />
financial planning process<br />
financial cycle<br />
adult life cycle<br />
personal economic cycle<br />
tax planning process<br />
Question 5. Question : (TCO 1) The future value of an account in which $2,000 is deposited each year<br />
for 5 years, and which earns 4%, is approximately _____ after 5 years.<br />
$2,000<br />
$2,400<br />
$10,000<br />
$400<br />
$10,800<br />
Question 6. Question : (TCO 1) Higher employment levels can be attributed to<br />
<br />
<br />
<br />
<br />
<br />
lower consumer prices.<br />
reduced employment levels.<br />
lower interest rates.<br />
higher employment levels.<br />
increased consumer spending.<br />
Question 7. Question : (TCO 1) When it comes to the financial planning process, the first step is to<br />
<br />
<br />
<br />
<br />
<br />
develop financial goals.<br />
implement the financial plan.<br />
evaluate and revise your actions.<br />
analyze your current personal and financial situation.<br />
create a financial plan of action.<br />
Question 8. Question : (TCO 1) The simple calculation of interest can be performed by multiplying the<br />
amount in a savings account by the<br />
<br />
<br />
<br />
<br />
<br />
annual interest rate.<br />
annual interest rate and the time period.<br />
number of months in a year.<br />
time period and number of months.<br />
time period.
Question 9. Question : (TCO 1) Brad Opper has a goal of “saving $50 a month for vacation.” Brad’s goal<br />
lacks<br />
<br />
<br />
<br />
<br />
<br />
a realistic perspective.<br />
specific terms.<br />
the type of action to be taken.<br />
a purpose.<br />
a time frame.<br />
Question 10. Question : (TCO 1) _____ risk refers to the changing cost of money.<br />
<br />
<br />
<br />
<br />
<br />
Monetary<br />
Inflation<br />
Economic<br />
Personal<br />
Interest rate<br />
Question 11. Question : (TCO 1) You want to determine the current value of an annuity that pays $350 a<br />
month for the next 5 years. What type of calculation would provide you with this value?<br />
<br />
<br />
<br />
<br />
<br />
Future value of a single amount<br />
Simple interest<br />
Present value of a single amount<br />
Future value of a series of deposits<br />
Present value of a series of deposits<br />
Question 12. Question : (TCO 1) A commitment to a profession that requires continued training and<br />
offers a clear path for occupational growth is a(n)<br />
<br />
<br />
<br />
<br />
<br />
apprenticeship.<br />
internship<br />
employment.<br />
cooperative employment experience.<br />
career.<br />
Question 13. Question : (TCO 1) In order to evaluate one’s current financial position (including net<br />
worth), the best tool that can be used is a<br />
<br />
<br />
<br />
<br />
<br />
budget.<br />
cash flow statement.<br />
bank statement.<br />
time-value-of-money report.<br />
balance sheet.
Question 14. Question : (TCO 1) A _____ résumé would best be used by an employee who has worked<br />
in many fields and has a variety of skills in a variety of work-related categories.<br />
<br />
<br />
<br />
<br />
<br />
targeted<br />
goal-oriented<br />
chronological<br />
functional<br />
career change<br />
Question 15. Question : (TCO 1) A _____ résumé is designed to obtain a specific job.<br />
<br />
<br />
<br />
<br />
<br />
functional<br />
chronological<br />
goal-oriented<br />
targeted<br />
data<br />
Question 16. Question : (TCO 1) Which of the following would be a competency commonly associated<br />
with successful people?<br />
<br />
<br />
<br />
<br />
<br />
An ability to work well with others in a variety of settings<br />
A desire to do tasks better than they have to be done<br />
An ability to solve problems creatively in team settings<br />
Well-developed written and oral communication skills<br />
All of the above<br />
Question 17. Question : (TCO 1) Cash and other items that are easily converted to cash are referred to<br />
as _____.<br />
<br />
<br />
<br />
<br />
<br />
quick assets<br />
working assets<br />
liquid assets<br />
investments<br />
solvent items<br />
Question 18. Question : (TCO 1) A savings amount of $3,500 on deposit for 4 years at 4% interest<br />
(compounded annually) would earn about<br />
$ 650.<br />
$ 600.<br />
$560.<br />
$140.<br />
$350.
Question 19. Question : (TCO 1) Solvency can be assessed through the analysis of the following<br />
financial document.<br />
<br />
<br />
<br />
<br />
<br />
Cash flow statement<br />
Debt consolidation statement<br />
Personal income statement<br />
Credit report<br />
The balance sheet<br />
Question 20. Question : (TCO 1) Which of the following situations best represents an individual facing<br />
insolvency?<br />
Assets $30,000; liabilities $37,000<br />
Assets $78,000; net worth $22,000<br />
Liabilities $45,000; net worth $6,000<br />
Assets $56,000; annual expenses $60,000<br />
Annual cash inflows $45,000; liabilities $50,000<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 2 Quiz Latest<br />
1. Question : (TCO 2) This type of tax is calculated based upon the value of land and buildings.<br />
<br />
<br />
<br />
<br />
<br />
Personal<br />
Real estate<br />
Direct<br />
Proportional<br />
Regressive<br />
Question 2. Question : (TCO 2) Interest earnings of $2,400 from a taxable investment for a person in a<br />
28% tax bracket would result in after-tax earnings of<br />
$672.<br />
$1,728.<br />
$2,400.<br />
$3,333.<br />
$8,571.<br />
Question 3. Question : (TCO 2) _____ can reduce taxable income.<br />
<br />
<br />
<br />
<br />
<br />
Portfolio income<br />
Tax credits<br />
Exclusions<br />
Passive income<br />
Earned income
Question 4. Question : (TCO 2) You have invested in the stock market and receive dividends. The<br />
dividend income must be reported as _____ income.<br />
<br />
<br />
<br />
<br />
<br />
passive<br />
earned<br />
investment<br />
capital gain<br />
excluded<br />
Question 5. Question : (TCO 2) George Washburn had earnings from his salary of $44,000, interest on<br />
savings of $800, a contribution to a traditional individual retirement account of $2,000, and dividends from<br />
mutual funds of $600. George’s adjusted income (AGI) would be<br />
$43,400.<br />
$44,000.<br />
$45,400.<br />
$42,000.<br />
$42,800.<br />
Question 6. Question : (TCO 2) _____ can be calculated as a result of various items being subtracted<br />
from gross income, such as individual retirement account contributions and alimony payments.<br />
<br />
<br />
<br />
<br />
<br />
Adjusted gross income<br />
Taxable income<br />
Earned income<br />
Passive income<br />
Total exclusions<br />
Question 7. Question : (TCO 2) Expenses that a taxpayer is allowed to deduct from adjusted gross<br />
income are called _____.<br />
<br />
<br />
<br />
<br />
<br />
exemptions<br />
exclusions<br />
itemized deductions<br />
tax credits<br />
passive income<br />
Question 8. Question : (TCO 2) Taxes owed can be reduced through _____.<br />
<br />
<br />
<br />
<br />
<br />
the standard deduction<br />
a tax credit<br />
an itemized deduction<br />
an exclusion<br />
an exemption
Question 9. Question : (TCO 2) In order for a dependent to qualify as an exemption, he or she must<br />
be married.<br />
receive more than one half of his or her support from the taxpayer.<br />
be under age 16.<br />
be registered in school.<br />
be a relative.<br />
Question 10. Question : (TCO 2) People who _____ must make estimated quarterly tax payments.<br />
<br />
<br />
<br />
<br />
are employed in a foreign country.<br />
receive dividends.<br />
work for the government.<br />
do not have adequate amounts withheld from income.<br />
Question 11. Question : (TCO 2) A(n) _____ is an all-purpose account that provides several services.<br />
<br />
<br />
<br />
<br />
<br />
NOW account<br />
asset management account<br />
EFT account<br />
mutual fund<br />
money market account<br />
Question 12. Question : (TCO 2) An example of a _____ deposit is a checking account.<br />
<br />
<br />
<br />
<br />
<br />
common<br />
time<br />
current<br />
loan<br />
demand<br />
Question 13. Question : (TCO 2) An example of a place where one will encounter high fees for loans<br />
when borrowing money is a _____.<br />
<br />
<br />
<br />
<br />
<br />
credit union<br />
savings and loan association<br />
pawnshop<br />
commercial bank<br />
mutual savings bank<br />
Question 14. Question : (TCO 2) _____ are the major products offered by investment companies.<br />
<br />
<br />
<br />
<br />
<br />
Interest-bearing checking accounts<br />
Variable-rate loans<br />
Credit card accounts<br />
Savings bonds<br />
Mutual funds
Question 15. Question : (TCO 2) One of the characteristics of a certificate of deposit is that it can have<br />
<br />
<br />
<br />
<br />
<br />
high interest-rate risk.<br />
low safety for savers.<br />
limited liquidity.<br />
a variable rate of return.<br />
no minimum deposit amount.<br />
Question 16. Question : (TCO 2) On a savings account, the rate of return can also be referred to as<br />
<br />
<br />
<br />
<br />
<br />
liquidity.<br />
compounding.<br />
yield.<br />
insolvency.<br />
asset management.<br />
Question 17. Question : (TCO 2) A savings account in which interest is compounded _____ would have<br />
the highest effective yield.<br />
<br />
<br />
<br />
<br />
<br />
daily<br />
annually<br />
semiannually<br />
monthly<br />
weekly<br />
Question 18. Question : (TCO 2) At times, funds deposited in an account may be restricted by_____.<br />
<br />
<br />
<br />
<br />
<br />
a holding period<br />
outstanding checks<br />
interest earned<br />
service charges<br />
electronic banking<br />
Question 19. Question : (TCO 2) Service fees would be _____ in the bank reconciliation process.<br />
<br />
<br />
<br />
<br />
added to the bank statement balance<br />
subtracted from the bank statement balance<br />
added to the checkbook balance<br />
subtracted from the checkbook balance<br />
Question 20. Question : (TCO 2) When an individual borrows money to purchase a new home, he or<br />
she will be charged a _____.<br />
<br />
<br />
<br />
prime rate<br />
discount rate<br />
mortgage rate
Treasury bond rate<br />
corporate bond<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 3 Quiz Latest<br />
1. Question : (TCO 3) Examples of _____ include automobile and installment loans for purchasing<br />
furniture or appliances.<br />
<br />
<br />
<br />
<br />
<br />
a line of credit<br />
a credit card loan<br />
open-end credit<br />
closed-end credit<br />
convenience credit<br />
Question 2. Question : (TCO 3) The maximum percentage of your net income that should be spent on<br />
credit purchases is recommended to be _____.<br />
10%<br />
20%<br />
30%<br />
40%<br />
50%<br />
Question 3. Question : (TCO 3) One of the concerns and risks associated with cosigning is that<br />
<br />
<br />
<br />
<br />
<br />
you are not being asked to guarantee the debt.<br />
it is not your legal responsibility to pay the debt.<br />
you’ll have to pay up to the full amount of the debt if the borrower does not pay.<br />
the creditor must first try to collect from the borrower.<br />
the creditor cannot garnish your wages.<br />
Question 4. Question : (TCO 3) Dividing monthly debt payments (not including house payments) by net<br />
monthly income will allow you to calculate your _____.<br />
<br />
<br />
<br />
<br />
<br />
net-worth-to-debt ratio<br />
debt-payments-to-income ratio<br />
liability status<br />
credit capacity status<br />
income-to-liability ratio<br />
Question 5. Question : (TCO 3) In determining your credit capacity, you first provide for basic<br />
necessities, such as<br />
<br />
<br />
<br />
furniture.<br />
home furnishings.<br />
mortgage or rent.
automobiles.<br />
durable goods.<br />
Question 6. Question : (TCO 3) If you ask to review your file within _____ days of being notified of a<br />
denial based upon a credit report, the credit bureau cannot charge you a disclosure fee.<br />
10<br />
60<br />
30<br />
40<br />
20<br />
Question 7. Question : (TCO 3) If a bank needs to examine the value of a specific asset when you are<br />
applying for a loan, this process refers to which aspect of the five Cs of lending?<br />
<br />
<br />
<br />
<br />
<br />
Character<br />
Capacity<br />
Collateral<br />
Capital<br />
Conditions<br />
Question 8. Question : (TCO 3) When reviewing your credit file, if you find that there is information that<br />
is incorrect, then<br />
<br />
<br />
<br />
<br />
<br />
there are legal remedies available to you.<br />
you have no legal remedies.<br />
credit bureaus are not required to change it.<br />
you can’t really do much about it.<br />
don’t worry much, because you will still get the credit.<br />
Question 9. Question : (TCO 3) All of the following reasons are reasonable situations when you would<br />
decide to use credit except<br />
<br />
<br />
<br />
<br />
borrowing for a stay in a hospital because of appendicitis.<br />
borrowing to pay for your expensive dinner and movie every week.<br />
borrowing to buy a printer for your home office now because you know it will be twice as<br />
expensive in 2 years.<br />
borrowing to purchase a car so that you can go to work full time.<br />
Question 10. Question : (TCO 3) Mary Jones has obtained a loan that must be paid over the next 12<br />
months and she will use this money for a vacation. What type of credit is being used?<br />
<br />
<br />
<br />
<br />
Installment sales credit<br />
Incremental credit<br />
Single lump sum credit<br />
Revolving credit
Installment cash credit<br />
Question 11. Question : (TCO 3) By evaluating your credit options, you can do all of the following except<br />
<br />
<br />
<br />
<br />
<br />
reduce your finance charges.<br />
reconsider your decision to borrow money.<br />
discover a less expensive type of loan.<br />
find a lender that charges a lower rate.<br />
purchase goods and services without specific limitations.<br />
Question 12. Question : (TCO 3) While collateralized loans may provide lower interest rates, these loans<br />
have a disadvantage because<br />
<br />
<br />
<br />
<br />
<br />
the loan must be repaid in a short period of time.<br />
you ruin your credit rating.<br />
the loan is difficult to obtain.<br />
commercial banks do not make such loans.<br />
the assets used as collateral are tied up until the loan has been repaid.<br />
Question 13. Question : (TCO 3) Referring to trends in credit union membership, it can be observed that<br />
membership has been<br />
restricted by the Tax Reform Act of 1986.<br />
declining gradually.<br />
static.<br />
growing steadily.<br />
restricted by state laws.<br />
Question 14. Question : (TCO 3) Which one of the following is a signal of a potential debt problem?<br />
<br />
<br />
<br />
<br />
<br />
Paying the maximum balance due each month<br />
Borrowing money to pay old debts<br />
Using savings to pay for major purchases<br />
Receiving notice of prompt payment from creditors<br />
Occasionally working overtime and moonlighting<br />
Question 15. Question : (TCO 3) Allison Smith starts the month with a balance of $1,100 on her credit<br />
card. On the 10th day of the month, she purchases $200 in clothes with her credit card. On the 15th day<br />
of the month, she makes a payment on her credit card of $500. The average daily balance for the month<br />
including the new purchase is $883. The average daily balance for the month excluding the new purchase<br />
is $750. Allison’s interest rate is 1.5% for the month. Allison’s bank calculates the finance charge on the<br />
credit card by using the adjusted balance method. What would Allison’s finance charges be for the<br />
month?
$7.50<br />
$9.00<br />
$11.25<br />
$13.25<br />
$16.50<br />
Question 16. Question : (TCO 3) Jerry Dean starts the month with a balance of $1,500 on his credit<br />
card. On the 10th day of the month, he purchases $200 in clothes with his credit card. On the 15th day of<br />
the month, he makes a payment on his credit card of $500. The average daily balance for the month<br />
including the new purchase is $883. The average daily balance for the month excluding the new purchase<br />
is $750. Jerry’s interest rate is 1.5% for the month. Jerry’s bank calculates the finance charge on the<br />
credit card by using the previous balance method. What would Jerry’s finance charges be for the month?<br />
$7.50<br />
$13.25<br />
$15.00<br />
$22.50<br />
$18.00<br />
Question 17. Question : (TCO 3) If Jeff rushes to purchase a home by obtaining an interest-only loan,<br />
and the reason why he wants a home is because he wants to have a house just like the one that his<br />
parents had when he was a teenager, this is an example of which of the following?<br />
<br />
<br />
<br />
<br />
<br />
Misunderstanding or lack of communication<br />
The use of money to punish<br />
Overindulgence of children<br />
Keeping up with the Joneses<br />
The expectation of instant comfort<br />
Question 18. Question : (TCO 3) Steve has three children and has purchased each of them his or her<br />
own TV that is placed in his or her respective room. Which reason for indebtedness is this an example of?<br />
<br />
<br />
<br />
<br />
<br />
Misunderstanding or lack of communication<br />
Overindulgence of children<br />
The expectation of instant comfort<br />
Keeping up with the Joneses<br />
The use of money to punish<br />
Question 19. Question : (TCO 3) _____ families rely heaviest on student loans to finance college.<br />
<br />
<br />
<br />
<br />
Low-income<br />
Middle-income<br />
High-income<br />
Large Small
Question 20. Question : (TCO 3) If Tracy Sears borrows $1,250 for 1 year with an APR of 9% with no<br />
service fees, what is her total cost of credit?<br />
$125<br />
$112.50<br />
$7.50<br />
$9.38<br />
$0<br />
<strong>BUSN</strong> <strong>380</strong> DeVry Week 4 Quiz Latest<br />
1. Question : (TCO 5) Which of the following statements is false?<br />
<br />
<br />
<br />
<br />
<br />
No one is going to make you save the money; you need to start a program.<br />
To be useful, investment objectives must be very specific.<br />
Investment goals can be different for each individual.<br />
Because investment objectives deal with the future, it is useful to plan more than 5 years in the<br />
future.<br />
A long-term investment objective involves a time period of 2 years or less.<br />
Question 2. Question : (TCO 5) If an investment objective is considered to be long term, then this<br />
means the goal should be achieved in what time frame?<br />
<br />
<br />
<br />
<br />
<br />
Less than 2 years<br />
In 2–5 years<br />
More than 5 years<br />
Less than 1 year<br />
None of the above<br />
Question 3. Question : (TCO 5) You currently hold a $1,000 corporate bond; however, if interest rates in<br />
the overall economy decrease, which of the following is most likely to be the market value of this bond?<br />
The bond is worthless.<br />
$1,000<br />
$900<br />
$1,100<br />
It is impossible to determine whether the bond’s value will increase or decrease.<br />
Question 4. Question : (TCO 5) Which of the following individuals should have the highest tolerance for<br />
risk?<br />
<br />
<br />
<br />
<br />
<br />
Joan Cummings, who is a single mother with two small children<br />
Darren Carter, who works for American Airlines and is worried that he is going to be laid off soon<br />
Barry Parks, who is an investment banker and earns over $200,000 per year<br />
Michael Clark, who is 74 years old and been retired for 6 years<br />
Fred Funderbunk, who delivers pizzas and makes about $15,000 per year
Question 5. Question : (TCO 5) Mary Ann recently received a $20,000 gift from her uncle and is<br />
considering investing in stocks, because she knows that historically they have earned an approximately<br />
10–12% rate of return over the last few years. Referring to aspects of investing, Mary Ann is most<br />
concerned about which of the following?<br />
<br />
<br />
<br />
<br />
<br />
Risk<br />
Return<br />
Diversification<br />
Liquidity<br />
Income<br />
Question 6. Question : (TCO 5) A $1,000 corporate bond pays 7.5% a year. What is the annual interest<br />
you will receive?<br />
$1,075<br />
$7.50<br />
$0.75<br />
$75.00<br />
$0<br />
Question 7. Question : (TCO 5) _____ risk occurs when an investment does not keep up with increasing<br />
price levels in our economy.<br />
<br />
<br />
<br />
<br />
<br />
Market<br />
Interest<br />
Inflation<br />
Business failure<br />
Current<br />
Question 8. Question : (TCO 5) John Farmer recently received a legal form from the company where he<br />
owns stocks that list the issues to be decided at the annual stockholders’ meeting. The item asks that he<br />
signs something that allows