The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Fall 2015
FINA 1203 Personal Finance
Fall 2015
Assignment 1
Due date: Oct 5 (Mon)
Objective
This assignment aims to help you set the foundation of your financial plan so your
financial plan can be aligned with your personal goals. It requires you to develop SMART
g
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Spring 2014
Chapter 1
Problems
1.
If your goal budget was to follow the 9010 rule, and you were bringing home about
$2,000/month, how would your check be allocated over the course of the year? (LO 11)
a.
2.
For the past year, you made $58,000. To see if you were fo
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Spring 2014
Chapter 14
2
Lynn Pi
LO 141 Describe the characteristics of
bonds
LO 142 Explain how bonds are valued
LO 143 Explain the interest rate risk of
bonds
LO 144 Explain the default risk of bonds
3
Lynn Pi
4
Lynn Pi
5
Lynn Pi
6
Lynn Pi
A bond is a debt inst
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Spring 2014
Chapter 3
Your Financial Plan should include
A future income plan (career goals)
A budget plan (spending goals)
A savings plan (savings goals)
An investment plan (gaining assets
goals)
An insurance plan (protection goals)
An estate plan (giving goal
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Spring 2014
Topic 2
(contd)
LO 23 Calculate the future value of ordinary
annuity and annuity due in order to know
how much your savings will grow to at a
future date.
LO 24 Explain the power of compounding and
make it work for you.
LO 25 Apply the rule of 72 to fi
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Spring 2014
Chapter 1
Planning &
Budgeting
Credit
Management
Financial
Success
Tax &
Protection
Investing
2
Lynn Pi
What are the steps in setting the
foundation of your financial plan?
4
Lynn Pi
7
Lynn Pi
What Makes You Happy?
A. Circumstances
B. Intentional activity
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Spring 2014
Topic 2
There is an opportunity for you to invest $100,000 today
and get back $105,000 in one year.
Will you accept or reject this investment opportunity and
why?
Suppose the current annual interest rate offered by the
bank is 10%.
3
Lynn Pi
LO 21 Calc
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Spring 2014
Topic 2
(contd)
LO 27 Calculate the present value of ordinary
annuity and annuity due in order to know
how much to save to meet your personal
financial goals.
LO 28 Using present value of annuities method
to calculate payment amounts of
amortized loans.
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Fall 2015
A
B
C
B
D
E
A
C
E
D
A
C
E
D
B
A
E
A
C
B
D
E
WORKSHEET 1.1  Money Personality
In order to selfassess your relationship with money, circle the statements below that best describe your outlook.
Its a good feeling to have money in my wallet.
No one can ever
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Fall 2015
WORKSHEET 2.1  Cost of Long, Intermediate, and ShortTerm Goals and Cost Per Month of Saving for Goals
2.1 Select one SMART longterm, one intermediate, and one shortterm goal
from Chapter 1 Worksheet 1.6 and estimate the cost of each.
SMART LongTerm
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Spring 2014
Personal Finance
Getting to know the course instructor and
teaching assistant
Explaining the course structure and
course requirements
Beginning our first lecture
2
Lynn Pi
Education:
PhD (Finance, Georgia State U)
Academic Experience:
California St
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Spring 2014
Chapter 3
(contd)
LO 33
Identify methods of spending money
responsibly.
LO 34
Construct a realistic budget that
reflects your priorities and provides a
means of protection from
overspending.
3
Lynn Pi
Differentiate between
needs and wants
Consider opp
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Spring 2014
Chapter 7
1. How does the home decision fit in
with your overall goals?
2. Can you afford buying a home?
3. How to compare mortgage options
and how to become savvy
borrowers?
2
Lynn Pi
LO 71 Describe benefits of owning a home.
LO 72 Describe costs of ow
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Spring 2014
Chapter 13
LO 131 Describe the basics of common
stocks and preferred stocks
LO 132 Describe the features of stock
markets
LO 133 Describe the basics of buying and
selling stocks
LO 134 Describe investment opportunities
in various types of stocks and t
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Spring 2014
Chapter 11
(Contd)
LO 114 Distinguish between savings and
investments.
LO 115 Describe the risk and return on different
investment products.
LO 116 Define correlation and explain how it
determines the degree of diversification
and reduces investment ri
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Spring 2014
Chapter 11
Planning &
Budgeting
Credit
Management
Financial
Success
Tax &
Protection
Investing
2
Lynn Pi
LO 111 Explain the risk and return
relationship.
LO 112 Know how to determine your risk
tolerance.
LO 113 Describe the nature of risk and its
sourc
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Spring 2014
Chapter 10
Planning &
Budgeting
Credit
Management
Financial
Success
Tax &
Protection
Investing
2
Lynn Pi
LO 101 Describe the basics of insurance.
LO 102 Describe the terms in life
insurance policies.
LO 103 Compare the provisions in main
life insurance
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Spring 2014
Chapter 5
Planning &
Budgeting
Credit
Management
Financial
Success
Tax &
Protection
Investing
4
Lynn Pi
You want to buy a laptop computer which costs $8,000
but you only have $5,000 cash at hand. Which of the
following methods will you use to buy the comp
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Spring 2014
Chapter 5
(contd)
LO 54 Describe the features of credit
cards.
LO 55 Calculate the cost of carrying
unpaid balance on credit cards.
LO 56 Explain amortization and calculate
the amortization repayment
amount.
3
Lynn Pi
4
Lynn Pi
Billing Cycle
the peri
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Spring 2014
Chapter 7
(Contd)
LO 73 Compare buying vs. renting a home.
LO 74 Compare variable rate mortgage with
fixed rate mortgage.
LO 75 Discuss other arrangements of home
loans: mortgage refinancing decision,
home equity loans, and reverse
mortgage.
2
Lynn Pi
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Fall 2015
Create eBook
FIRST DAY OF CLASS
McGrawHill Education
Create eBook access card
Course:
School:
Personal Finance
Course code: FINA1203
Instructors: Lynn Pi
Department: Department of Finance
ISBN: 9781308572154
Before you begin, take note
Mozilla Firefox i
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Fall 2015
1
Personal Finance: Building Your Future Confirming Pages
Rev.
A appendix
Financial Tables
Tables begin on the next page.
429
2
Personal Finance
Rev. Confirming Pages
A1
Future Value Interest Factors (FVIF)
FVIF for $1 compounded at i percent for n perio
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Fall 2013
Topic 10
LO 141 Describe the characteristics of
bonds
LO 142 Explain how bonds are valued.
LO 143 Explain the interest rate risk of
bonds
LO 144 Explain the default risk of bonds
2
Fall 2013
3
Fall 2013
4
Fall 2013
A bond is a debt instrument issued
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Fall 2013
Topic 8
LO 161 Describe the retirement system in HK
LO 162 Describe the features of MPF system in
HK
LO 163 Describe the features of MPF
constituent funds
LO 164 Use target date funds as a guide to
determine the appropriate asset
allocation of MPF por
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Fall 2013
Topic 6
In this world, nothing can be said to be
certain, except death and taxes.
~ Benjamin Franklin,The Works of
Benjamin Franklin, 1817
2
Fall 2013
You are the lucky winner of Mark Six
lottery and win $10 million. Do you have to
pay tax on your cash pr
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Fall 2013
Topic 9
LO 131 Describe the basic principles of
stocks
LO 132 Describe the features of stock
markets
LO 133 Describe the basics of buying and
selling stocks
LO 134 Describe investment opportunities
in various types of stocks and the
valuation techniqu
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Fall 2013
Topic 7
LO 121
Describe the benefits and risks of
investing in mutual funds
LO 122
Describe dollar cost averaging
strategy and the benefits of automatic
investing
LO 123
Know how to choose a mutual fund
LO 124
Describe the key features of ETFs
offered
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Fall 2013
Topic 4
If you only have $5,000 cash and you want to
buy a laptop computer which costs $8,000,
which of the following methods will you use to
own the computer and why?
A. Borrow $3,000 from your parents.
B. Use the stores monthly installment plan and
pay
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Fall 2013
Topic 6
LO 114 Describe the risk and return on different
investment products
LO 115 Know how to determine your risk
tolerance
LO 116 Define correlation and explain how it
determines the degree of diversification
and reduces investment risk.
LO 117 Com
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Fall 2012
Present Value of an Annuity
Amortization
MATH 1003 Calculus and Linear Algebra
(Lecture 4)
MATH 1003 Calculus and Linear Algebra (Lecture 4)
Present Value of an Annuity
Amortization
Announcements
1. Slides are available on both course webpage and CANVAS.
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Fall 2012
MATH 1003 Calculus and Linear Algebra
(Lecture 12)
MATH 1003 Calculus and Linear Algebra (Lecture 12)
Leontief InputOutput Analysis
Wassily Leontief was a RussianAmerican economist who pioneered
the analysis of the socalled inputoutput model  a model
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Fall 2012
Examples
MATH 1003 Calculus and Linear Algebra
(Lecture 7)
MATH 1003 Calculus and Linear Algebra (Lecture 7)
Examples
GaussJordan Elimination
In the last lecture, we learned how to solve a system of 2 equations
with 2 variables by performing row operatio
The Hong Kong University of Science and Technology
Personal Finance
FINA 1203

Fall 2012
Systems of Linear Equations in Two Variables
Types of Linear Systems
MATH 1003 Calculus and Linear Algebra
(Lecture 5)
MATH 1003 Calculus and Linear Algebra (Lecture 5)
Systems of Linear Equations in Two Variables
Types of Linear Systems
Systems of Linear