Test Bank for PFIN 6th Edition by Randall Billingsley ISBN 8214350394 9798214350394

Chapter 1. Understanding the Financial Planning Process

1-1. The Rewards of Sound Financial Planning

1-1a. Improving Your Standard of Living

1-1b. Spending Money Wisely

1-1c. Accumulating Wealth

1-2. The Personal Financial Planning Process

1-2a. Steps in the Financial Planning Process

1-2b. Defining Your Financial Goals

1-2c. Money and Relationships

1-2d. Types of Financial Goals

1-2e. Putting Target Dates on Financial Goals

1-3. From Goals to Plans: A Lifetime of Planning

1-3a. The Life Cycle of Financial Plans

1-3b. Plans to Achieve Your Financial Goals

1-3c. Special Planning Concerns

1-3d. Using Professional Financial Planners

1-4. The Planning Environment

1-4a. The Players

1-4b. The Economy

1-5. What Determines Your Personal Income?

1-5a. Where You Live

1-5b. Your Career

1-5c. Planning Your Career

Financial Planning Exercises

Chapter Review 1. Learning Objectives/Key Terms

Section Content

Chapter 2. Using Financial Statements and Budgets

2-1. Mapping out Your Financial Future

2-1a. The Role of Financial Statements in Financial Planning

2-2. The Balance Sheet: How Much Are You Worth Today?

2-2a. Assets: The Things You Own

2-2b. Liabilities: The Money You Owe

2-2c. Net Worth: A Measure of Your Financial Worth

2-2d. Balance Sheet Format and Preparation

2-2e. A Balance Sheet for Silas and Emily Nelson

2-3. The Income and Expense Statement: What We Earn and where It Goes

2-3a. Income: Cash In

2-3b. Expenses: Cash Out

2-3c. Cash Surplus (or Deficit)

2-3d. Preparing the Income and Expense Statement

2-3e. An Income and Expense Statement for Silas and Emily Nelson

2-4. Using Your Personal Financial Statements

2-4a. Keeping Good Records

2-4b. Tracking Financial Progress: Ratio Analysis

2-5. Cash in and Cash Out: Preparing and Using Budgets

2-5a. The Budgeting Process

2-5b. Dealing with Deficits

2-5c. A Cash Budget for Silas and Emily Nelson

2-5d. Using Your Budgets

2-6. The Time Value of Money: Putting a Dollar Value on Financial Goals

2-6a. Future Value

2-6b. Present Value

Financial Planning Exercises

Chapter Review 2. Learning Objectives/Key Terms

Section Content

Chapter 3. Preparing Your Taxes

3-1. Understanding Federal Income Tax Principles

3-1a. The Economics of Income Taxes

3-1b. Your Filing Status

3-1c. Your Take-Home Pay

3-2. It’s Taxable Income that Matters

3-2a. Gross Income

3-2b. Adjustments to (Gross) Income

3-2c. Deductions: Standard or Itemized?

3-2d. Exemptions

3-3. Calculating and Filing Your Taxes

3-3a. Tax Rates

3-3b. Tax Credits

3-3c. Tax Forms and Schedules

3-3d. The 2015 Tax Return of Luke and Claire Burns

3-3e. Issues for High Income Taxpayers

3-4. Other Filing Considerations

3-4a. Estimates, Extensions, and Amendments

3-4b. Audited Returns

3-4c. Tax Preparation Services: Getting Help on Your Returns

3-4d. Computer-Based Tax Returns

3-5. Effective Tax Planning

3-5a. Fundamentals of Tax Planning

3-5b. Some Popular Tax Strategies

Financial Planning Exercises

Chapter Review 3. Learning Objectives/Key Terms

Section Content

Chapter 4. Managing Your Cash and Savings

4-1. The Role of Cash Management in Personal Financial Planning

4-1a. The Problem with Low Interest Rates

4-2. Today’s Financial Services Marketplace

4-2a. Types of Financial Institutions

4-2b. How Safe Is Your Money?

4-3. A Full Menu of Cash Management Products

4-3a. Checking and Savings Accounts

4-3b. Electronic Banking Services

4-3c. Regulation of EFTS Services

4-3d. Other Bank Services

4-4. Maintaining a Checking Account

4-4a. Opening and Using Your Checking Account

4-4b. Monthly Statements

4-4c. Special Types of Checks

4-5. Establishing a Savings Program

4-5a. Starting Your Savings Program

4-5b. Earning Interest on Your Money

4-5c. A Variety of Ways to Save

Financial Planning Exercises

Chapter Review 4. Learning Objectives/Key Terms

Section Content

Chapter 5. Making Automobile and Housing Decisions

5-1. Buying an Automobile

5-1a. Choosing a Car

5-1b. Affordability

5-1c. The Purchase Transaction

5-2. Leasing a Car

5-2a. The Leasing Process

5-2b. The Lease versus Purchase Analysis

5-2c. When the Lease Ends

5-3. Meeting Housing Needs: Buy or Rent?

5-3a. Housing Prices and the Recent Financial Crisis

5-3b. What Type of Housing Meets Your Needs?

5-4. How Much Housing Can You Afford?

5-4a. Benefits of Owning a Home

5-4b. The Costs of Homeownership

5-4c. Performing a Home Affordability Analysis

5-5. The Home-Buying Process

5-5a. Shop the Market First

5-5b. Using an Agent

5-5c. Prequalifying and Applying for a Mortgage

5-5d. The Real Estate Sales Contract

5-5e. Closing the Deal

5-6. Financing the Transaction

5-6a. Sources of Mortgage Loans

5-6b. Types of Mortgage Loans

5-6c. Refinancing Your Mortgage

Financial Planning Exercises

Chapter Review 5. Learning Objectives/Key Terms

Section Content

Chapter 6. Using Credit

6-1. The Basic Concepts of Credit

6-1a. Why We Use Credit

6-1b. Improper Uses of Credit

6-1c. Establishing Credit

6-2. Credit Cards and other Types of Open Account Credit

6-2a. Bank Credit Cards

6-2b. Special Types of Bank Credit Cards

6-2c. Retail Charge Cards

6-2d. Debit Cards

6-2e. Revolving Credit Lines

6-3. Obtaining and Managing Open Forms of Credit

6-3a. Opening an Account

6-3b. The Credit Decision

6-3c. Computing Finance Charges

6-3d. Managing Your Credit Cards

6-4. Using Credit Wisely

6-4a. Shop Around for the Best Deal

6-4b. Avoiding Credit Problems

6-4c. Credit Card Fraud

6-4d. Bankruptcy: Paying the Price for Credit Abuse

Financial Planning Exercises

Chapter Review 6. Learning Objectives/Key Terms

Section Content

Chapter 7. Using Consumer Loans

7-1. Basic Features Of Consumer Loans

7-1a. Using Consumer Loans

7-1b. Different Types of Loans

7-1c. Where Can You Get Consumer Loans?

7-2. Managing Your Credit

7-2a. Shopping for Loans

7-2b. Keeping Track of Your Consumer Debt

7-3. Single-Payment Loans

7-3a. Important Loan Features

7-3b. Finance Charges and the Annual Percentage Rate

7-4. Installment Loans

7-4a. A Real Consumer Credit Workhorse

7-4b. Finance Charges, Monthly Payments, and the APR

7-4c. Buy on Time or Pay Cash?

Financial Planning Exercises

Chapter Review 7. Learning Objectives/Key Terms

Section Content

Chapter 8. Insuring Your Life

8-1. Basic Insurance Concepts

8-1a. The Concept of Risk

8-1b. Underwriting Basics

8-2. Why Buy Life Insurance?

8-2a. Benefits of Life Insurance

8-2b. Do You Need Life Insurance?

8-3. How Much Life Insurance is Right for You?

8-3a. Step 1: Assess Your Family’s Total Economic Needs

8-3b. Step 2: Determine What Financial Resources Will Be Available After Death

8-3c. Step 3: Subtract Resources from Needs to Calculate How Much Life Insurance You Require

8-3d. Life Insurance Underwriting Considerations

8-4. What Kind of Policy is Right for You?

8-4a. Term Life Insurance

8-4b. Whole Life Insurance

8-4c. Universal Life Insurance

8-4d. Other Types of Life Insurance

8-5. Buying Life Insurance

8-5a. Compare Costs and Features

8-5b. Select an Insurance Company

8-5c. Choosing an Agent

8-6. Key Features of Life Insurance Policies

8-6a. Life Insurance Contract Features

8-6b. Other Policy Features

8-6c. Understanding Life Insurance Policy Illustrations

Financial Planning Exercises

Chapter Review 8. Learning Objectives/Key Terms

Section Content

Chapter 9. Insuring Your Health

9-1. The Importance of Health Insurance Coverage

9-2. Health Insurance Plans

9-2a. Private Health Insurance Plans

9-2b. Government Health Insurance Plans

9-3. Health Insurance Decisions

9-3a. Evaluate Your Health Care Cost Risk

9-3b. Determine Available Coverage and Resources

9-3c. Choose a Health Insurance Plan

9-4. Medical Expense Coverage and Policy Provisions

9-4a. Types of Medical Expense Coverage

9-4b. Policy Provisions of Medical Expense Plans

9-4c. Cost Containment Provisions for Medical Expense Plans

9-5. Long-Term-Care Insurance

9-5a. Do You Need Long-Term-Care Insurance?

9-5b. Long-Term-Care Insurance Provisions and Costs

9-5c. How to Buy Long-Term-Care Insurance

9-6. Disability Income Insurance

9-6a. Estimating Your Disability Insurance Needs

9-6b. Disability Income Insurance Provisions and Costs

Financial Planning Exercises

Chapter Review 9. Learning Objectives/Key Terms

Section Content

Chapter 10. Protecting Your Property

10-1. Basic Principles of Property Insurance

10-1a. Types of Exposure

10-1b. Principle of Indemnity

10-1c. Co-insurance

10-2. Homeowner’s Insurance

10-2a. Perils Covered

10-2b. Factors Affecting Home Insurance Costs

10-2c. Property Covered

10-2d. Personal Property Floater

10-2e. Renter’s Insurance: Don’t Move In Without It

10-2f. Coverage: What Type, Who, and Where?

10-2g. Limitations on Payment

10-2h. Homeowner’s Insurance Premiums

10-3. Automobile Insurance

10-3a. Types of Auto Insurance Coverage

10-3b. No-Fault Automobile Insurance

10-3c. Automobile Insurance Premiums

10-3d. Financial Responsibility Laws

10-4. Other Property and Liability Insurance

10-4a. Supplemental Property Insurance Coverage

10-4b. Personal Liability Umbrella Policy

10-5. Buying Insurance and Settling Claims

10-5a. Property and Liability Insurance Agents

10-5b. Property and Liability Insurance Companies

10-5c. Settling Property and Liability Claims

Financial Planning Exercises

Chapter Review 10. Learning Objectives/Key Terms

Section Content

Chapter 11. Investment Planning

11-1. The Objectives and Rewards of Investing

11-1a. How Do I Get Started?

11-1b. The Role of Investing in Personal Financial Planning

11-1c. What Are Your Investment Objectives?

11-1d. Different Ways to Invest

11-2. Securities Markets

11-2a. Primary and Secondary Markets

11-2b. Broker Markets and Dealer Markets

11-2c. Foreign Securities Markets

11-2d. Regulating the Securities Markets

11-2e. Bull Market or Bear?

11-3. Making Transactions in the Securities Markets

11-3a. Stockbrokers

11-3b. Executing Trades

11-3c. Types of Orders

11-3d. Calculating Investment Returns

11-4. Becoming an Informed Investor

11-4a. Annual Stockholders’ Reports

11-4b. The Financial Press

11-4c. Advisory Services

11-5. Online Investing

11-5a. Online Investor Services

11-6. Managing Your Investment Holdings

11-6a. Building a Portfolio of Securities

11-6b. Asset Allocation and Portfolio Management

11-6c. Keeping Track of Your Investments

Financial Planning Exercises

Chapter Review 11. Learning Objectives/Key Terms

Section Content

Chapter 12. Investing in Stocks and Bonds

12-1. The Risks and Rewards of Investing

12-1a. The Risks of Investing

12-1b. Returns from Investing

12-1c. The Risk-Return Trade-Off

12-1d. What Makes a Good Investment?

12-2. Investing in Common Stock

12-2a. Common Stocks as a Form of Investing

12-2b. Dividends

12-2c. Some Key Measures of Performance

12-2d. Types of Common Stock

12-2e. Market Globalization and Foreign Stocks

12-2f. Investing in Common Stock

12-2g. Making Investment Decisions

12-3. Investing in Bonds

12-3a. Why Invest in Bonds?

12-3b. Bonds versus Stocks

12-3c. Basic Issue Characteristics

12-3d. The Bond Market

12-3e. Bond Ratings

12-3f. Pricing a Bond

12-3g. Bond Prices and Yields

Financial Planning Exercises

Chapter Review 12. Learning Objectives/Key Terms

Section Content

Chapter 13. Investing in Mutual Funds, ETFs, and Real Estate

13-1. Mutual Funds and Exchange Traded Funds: Some Basics

13-1a. The Mutual Fund Concept

13-1b. Why Invest in Mutual Funds or ETFs?

13-1c. How Mutual Funds Are Organized and Run

13-1d. Open-End versus Closed-End Mutual Funds

13-1e. ETFs

13-1f. Choosing between ETFs and Mutual Funds

13-1g. Some Important Cost Considerations

13-1h. Buying and Selling Funds

13-2. Types of Funds and Fund Services

13-2a. Types of Funds

13-2b. Services Offered by Mutual Funds

13-3. Making Mutual Fund and ETF Investments

13-3a. The Selection Process

13-3b. Getting a Handle on Fund Performance

13-4. Investing in Real Estate

13-4a. Some Basic Considerations

13-4b. Speculating in Raw Land

13-4c. Investing in Income Property

13-4d. Other Ways to Invest in Real Estate

Financial Planning Exercises

Chapter Review 13. Learning Objectives/Key Terms

Section Content

Chapter 14. Planning for Retirement

14-1. An Overview of Retirement Planning

14-1a. Role of Retirement Planning in Personal Financial Planning

14-1b. The Three Biggest Pitfalls to Sound Retirement Planning

14-1c. Estimating Income Needs

14-1d. Sources of Retirement Income

14-2. Social Security

14-2a. Coverage

14-2b. Social Security Payroll Taxes

14-2c. Social Security Retirement Benefits

14-2d. How Much Are Monthly Social Security Benefits?

14-3. Pension Plans and Retirement Programs

14-3a. Employer-Sponsored Programs: Basic Plans

14-3b. Employer-Sponsored Programs: Supplemental Plans

14-3c. Evaluating Employer-Sponsored Pension Plans

14-3d. Self-Directed Retirement Programs

14-4. Annuities

14-4a. Classification of Annuities

14-4b. Sources of Annuities

14-4c. Investment and Income Properties of Annuities

Financial Planning Exercises

Chapter Review 14. Learning Objectives/Key Terms

Section Content

Chapter 15. Preserving Your Estate

15-1. Principles of Estate Planning

15-1a. Who Needs Estate Planning?

15-1b. Why Does an Estate Break Up?

15-1c. What Is Your Estate?

15-1d. The Estate Planning Process

15-2. Thy will Be Done…

15-2a. Absence of a Valid Will: Intestacy

15-2b. Preparing the Will

15-2c. Common Features of the Will

15-2d. Requirements of a Valid Will

15-2e. Changing or Revoking the Will: Codicils

15-2f. Safeguarding the Will

15-2g. Letter of Last Instructions

15-2h. Administration of an Estate

15-2i. Other Important Estate Planning Documents

15-2j. What About Joint Ownership?

15-3. Trusts

15-3a. Why Use a Trust?

15-3b. Selecting a Trustee

15-3c. Common Types and Characteristics of Trusts

15-4. Federal Unified Transfer Taxes

15-4a. Gifts and Taxes

15-4b. Is It Taxable?

15-4c. Reasons for Making Lifetime Gifts

15-5. Calculating Estate Taxes

15-5a. Computing Federal Estate Tax

15-6. Estate Planning Techniques

15-6a. Gift Giving Program

15-6b. Use of the Unified Transfer Tax Credit

15-6c. Charitable Contributions

15-6d. Life Insurance Trust

15-6e. Trusts

15-6f. Valuation Issues

15-6g. Future of Estate Taxes

Financial Planning Exercises

Chapter Review 15. Learning Objectives/Key Terms

Section Content

App. Appendices

Appendix A. Table of Future Value Factors

Appendix B. Table of Future Value Annuity Factors

Appendix C. Table of Present Value Factors

Appendix D. Table of Present Value Annuity Factors

Appendix E. Using a Financial Calculator