Describe three major components of money management

Assignment Help Financial Management

Reference no: EM133203216 , Length: 3 Pages

Assignment:

Part 1. Answer each of the following questions.

1. Describe three major components of money management and how they can be used in the personal money management process.

2. Discuss why investors should diversify their investment portfolios using asset allocation. How would they do that?

3. Why should you engage in personal financial planning?

4. Identify and discuss two of the five Cs of credit.

5. Identify two advantages and two disadvantages of using credit

6. What s the difference between open-end and closed-end mutual funds?

Part B: Answer each of the following questions.

1. Jame has taxapie income of $568.000. She single. and her tax rates are 15% on the first $526.250 of taxable income and 28% on the remainder. What's Jamie's tax Liability and her average tax rate?

2. Ricky is purchasing a new truck for $35.000. Ricky is making a $54.000 down payment and he vntl make 48 monthly payments of $715 each to repay the principal and interest on the loan. In addition, he was charged a loan origination fee of $150. What are the total finance costs on this loan?

3. Calculate the dollar amount of the total return on the 100 shares of common stock of Bowl Game that Meddle Smelt owned for 4 years. She bought a for $15 per share and sold a for $28. She paid $25 in commission for each transaction. The dividend was $1.50 per share each year.

4. RACE Mutual Fund is a no-load fund that had a net asset value of $2740 when you invested $5,000 in the fund. purchasing $182.4818 shares. You sold the fund a year after investing in it, when the NAV was $29.32. During the year, dividends of $075 per share were paid out and a capital gains dis-tribution of $0.6S per share was made. Calculate the percent of total return over the year for your investment in RACE.

Part C: Answer each of the following questions.

1. The Hart family spends 28% of their disposable income on housing, 6% on medical expenses, 22% on food, 10% on clothing, 11% on loan repayments and 9% on entertainment. How much of their disposable income is available for savings and investment?

2. Gordon and Susan have a regular savings plan and have accumulated $12.000. How much will this be worth in S years If they can earn 5% simple interest on the money? (They aren't planning to add to this savings account.)

3. Janice wants to buy a new car for $40.000. At the end of S years. the car is expected to be worth 20% of the original price.

a. what will the car value be in 5 years?

b. What's the average annual deprecation on the car?

4. The APR on an account is 18%. Assuming the average daily balance (including new purchases) of $3.000 doesn't include any interest charges. how much of your minimum payment for the month will be used for interest?

5. The KLM Mutual Fund is a load fund with a net asset value of $15.56 and an offer price, which reflects the fund's load. of $16.45. Assuming you invest $1,000. what's the immediate dollar value of these shares?

6. George and Nancy have purchased home insurance to help them replace their home if disaster strikes. If their home's replacement value is $158.000 and their insurance covers 80% of the replace¬ment value of their home, how much would they have to pay out of their own pockets to replace their home should it be destroyed in an accident?

7. Mary's employer has a defined benefits retirement plan, which pays 3.2% of her last year's salary for each year of employment. Mary estimates her final salary will be $96.000. and she will have worked for 28 years. What's her expected retirement benefit?

Reference no: EM133203216

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