PERSONAL FINANCE BUSG 1370

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PERSONAL  FINANCE      BUSG  1370    

   

Part 2: Managing Your Money Chapter 5: Cash or Liquid Asset Management

Chapter 6: Using Credit Cards: The Role of Open Credit

YOU MUST SHOW YOUR WORK. Just answering the question without showing the math/finance path will be counted as ZERO (0); even if you have the answer correct – you MUST show the mathematical path for getting to the answer.

3-Page Assignments Each Assignment will have atleast >3 Pages

• Page 1 = Cover • Page 2 = Assignments • Page 3 = Reference (textbook + >2)

Read Pages 282-285 Be a Financial Planner–Continuing Case: Cory and Tisha Dumont

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The continuing case of Cory and Tisha Dumont gives students the opportunity to synthesize and integrate the many different financial concepts that are presented in the five parts of this text. By observing the progression of this case, students are encouraged to:

• Analyze a changing financial situation • Construct financial statements • Calculate taxes • Measure risk exposure • Develop a financial plan

Page 282-285, Answer the following questions:

4. When considering the credit union, online, and bank alternatives, what three general factors should the Dumonts review for each? How might debit card services and costs vary with each? 7. Which provides the higher after-tax yield: the Dumonts’ 3 percent bank savings account or a federal and state tax-free money market fund yielding 2.25 percent? The Dumonts are in the 15 percent federal marginal tax bracket. 10. The Dumonts’ take-home pay (after deductions for taxes and benefits) is approximately $5,175 monthly. Current nonmortgage debt payments equal $911 (i.e., $405 auto, $100 miscellaneous credit, $196 student loan, and $210 furniture). Calculate and interpret their debt limit ratio. Assume they could purchase another auto with a $300 monthly payment. Calculate and interpret their revised debt limit ratio. What advice would you give the Dumonts about purchasing another vehicle? 13. In anticipation of purchasing a home, Cory and Tisha have been advised to check their credit report. Why? What is the role of the credit bureau, the credit report, and the FICO score in the determination of creditworthiness and the cost of credit? How can they get their credit report? What are the Dumonts’ alternatives if they find erroneous information in their credit report? 14. What are the “five Cs” of credit? Define and explain each, based on the information provided about the Dumont household.