Chapter 2 & 3 Solutions

Chapter 2 & 3 Solutions - Chapter 2 Solutions 1. a. To...

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Chapter 2 Solutions 1. a. To calculate an investment assets-to-net-worth ratio for Victor and Maria, divide the value of their investment assets ($109,000) by their net worth ($208,555). The resulting ratio (0.52) suggests that 52 percent of the Hernandez’s net worth is attributable to their investments. This is an acceptable ratio for a couple with children. The Hernandezes do seem to have too few monetary assets, which should be readily available for meeting daily expenses as well as emergency expenses. Additional emergency funds would be recommended. Victor and Maria could use the net gain from their income and expense statement to increase the amount in savings. b. Victor and Maria own a wide variety of investments. However, 27 percent of their investments are in real estate. Therefore, they should refrain from investing in more real estate to achieve better balance in their investment portfolio. c. Victor and Maria’s asset-to-debt ratio is 3.06 ($309,920/$101,365). They have ample
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This note was uploaded on 08/27/2008 for the course FIN 200 taught by Professor Delcorral during the Spring '08 term at Loyola New Orleans.

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Chapter 2 & 3 Solutions - Chapter 2 Solutions 1. a. To...

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