12-1. A good investment is one that promises enough return to compensate the investor for the
amount of risk involved; this basic risk-return rule applies to any type of investment vehicle.
Investments should also be selected according to their
Answers to Week 6 Assignments
10-2. a. With an 80% co-insurance requirement, the minimum insurance policy the Stillmans
can have on their home and still be covered is $200,000 ($250,000 x 0.80). Their policy is
for $210,000, so they have adequate coverage
Chapter 1 Answers to Concept Check Questions
Standard of living, which varies from person to person, represents the necessities,
comforts, and luxuries enjoyed by a person. It is reflected in the material items a person
owns, as well as the
Answers to Week 3 Assignments
Chapter 5 Financial Planning Exercises 5-2, 5-3, 5-4, 5-5, 5-6
The Automobile Lease vs. Purchase Analysis form for Damien Smart follows. The total
cost of the lease (Item 9) is $15,372, while the total cost of the purchase
Concept Check Questions 8-2, 8-3, 8-4, 8-9, 8-13, 8-21, 8-23
a. Risk avoidance involves avoiding the act that creates the risk. It is an attractive way to
deal with risk when the estimated cost of avoidance is less than the estimated cost of
Chapter 3: Concept Check Questions
With a progressive tax structure, the larger the amount of taxable income, the higher the
rate at which it is taxed. The economic rationale underlying the progressive income tax is
that taxation should be based not
1-1 What is a standard of living? What factors affect the quality of life?
Standard of living is the level of wealth, comfort, which is desired by an individual or his family.
Income, Employment, Poverty, Inflation rate, Access to healthcare, and such.
3-1 Progressive tax structure is a tax structure in which the larger amount of taxable income the
higher will be the rate at which it is taxed.
The economic rationale for it is the taxable amount determines what tax rate you are.
3-5 Gross income is the t
5-2 If the value of leasing is less than that of buying, then leasing would be best and vice versa.
AUTOMOBILE LEASE VERSUS PURCHASE
Lease=1) 0 down payment but 500 security deposit, 2) 4-year term, 3) 48-month term, 4) 440 per
month, 5) Total payment ite
Chapter 11: Financial Planning Exercises 11-5, 11-6, 11-7, 11-8, 11-9
10-2 (a) .80 x $250,000= $200,000 They have enough since they insured for $210,000
(b) .50 x ($1,850 + $3,000) =$2,425
(c) Replacement cost policies would give them more protection than