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by: Jeffery Rohan


Jeffery Rohan
GPA 3.67


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Class Notes
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This 31 page Class Notes was uploaded by Jeffery Rohan on Saturday September 12, 2015. The Class Notes belongs to HACE 3200 at University of Georgia taught by Moorman in Fall. Since its upload, it has received 87 views. For similar materials see /class/202280/hace-3200-university-of-georgia in Housing And Consumer Economics at University of Georgia.

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Date Created: 09/12/15
StudyBlue Flashcard Printing of Exam 3 Practice Problems lElFlashcard Print E E x Close Window Instructions gtgt 1 W 2 Cut 39em up and fold 39em 3 Study the limit for bodily injury The 100 in 10030050 refers to claims that can be paid to one person What coverage would pay for damage to your automobile in an accident for which you Collision were at fault What coverage would cover financial losses due to damage to your car caused by wind or hail your home insurance policy has a 250 deductible If a small fire causes 600 damage to your home what amount of the claim would the insurance company pay George has expensive photography equipment for use in his hobby a What type of coverage would pay for damage or theft of this equment property floater Josh was in a car crash The accident was ruled his fault Josh has splitcoverage insurance limits of 10030050 Four individuals in the other vehicle were seriously injured in this particular crash Their medical expenses were as follower Individual 1 100000 Individual 2 10000 Individual 3 75000 Individual 4 15000 What is I the total amount of medical bills that Josh39s insurance will pay for everyone39s medical expenses Keith and Keri have personal property coverage with a 250 limit on currency a 1000 limit on jewelry and a 2500 limit on gold silver and pewter If 500 cash 2400 of jewelry and 1500 of silver stolen from their home and they have a 250 deductible 1 how much will they receive on their claim Lindsey has a splitlimit 255010 We on her 1999 Chevy Driving home from work in a snow storm she hit a Mercedes slid into the guardrail and knocked down a telephone pole Damage to the Mercedes the guardrail and the telephone pole were 8500 2000 and 4500 respectively Calculate how much I Lindsey39s insurance will pay Your home insurance provides for replacement value for personal property losses A microwave is stolen It cost 300 three years ago and has an expected life of six years A comparable microwave costs 400 today Calculate the amount that the insurance company will pay Wind damage causes 800 damage to your automobile If you have a 100 deductible for collision and full coverage for comprehensive what portion of the claim will the insurance company pay comprehensive coverage as opposed to collision A consumer who has a great deal of expensive jewelry would need a to purchase to guarantee that his or her jewelry is fileCConverterInput8wkttigugxhtm432014 72823 PM StudyBlue Flashcard Printing of Exam 3 Practice Problems covered against a loss In insurance terms the cause of a loss is known as what a perll installing a security system paying your insurance premiums annually what ways can you decrease the cost of your taking as large ofa deductible as you can afford Insurance premium multiple policy discounts direct writer insurance company that distributes its products to customers without using agents Uninsured Georgia has a law that all motor vehicles must have insurance 39 Realistically we know that not everyone obeys this law As a result you must carry coverage on your own vehicle to offset this risk This type of coverage on your policy is called coverage actual cash value equals Homeowner39s insurance is set up to pay the policy holder the actual cash value of the loss What is the actual cash value of a loss the replacement COSt calculated minus the estimated depreciation of the item Alex has split limit 10040025 automobile 39 quot 39 Several months ago Alex was in an accident in which she was ruled to be at fault Five passengers were injured in the accident and were awarded 100000 each because of Alex39s I negligence How much of this judgment will Alex39s policy cover Brandy bought a television 5 years ago for 600 The expected life of the television is 10 years Today the television was destroyed by lightening Brandy ordered a new at screen TV fro 1000 to put where this old TV stood Unfortunately Brandy does not have Replacement Cost Coverage on her television She only had Actual Cash Value coverage How much of a check will Brandy receive from her insurance company for her destroyed television Cory has a combined single limit coverage policy for 250000 on his Ford Explorer Three weeks ago he caused an accident in which 3 people were hurt Their medical bills were as follows person 185000 person 2 120000 and person 3 75000 I How much of their medical debt will Cory have to pay out of pocket preeXIstlng Most health insurance policies sold to individuals contain a This means the policy might exclude coverage for any physical or mental problems you had at the time you bought it cla use In this type of health insurance plan the person from whom you receive health care 39 services is separate from the insurer The insurance company pays this provider for a lty specific percentage of eligible costs after you have paid your deductible You have an fileCConverterInput8wkttigugxhtm432014 72823 PM StudyBlue Flashcard Printing of Exam 3 Practice Problems unlimited choice in doctors or hospitals TF Insurance is an example of risk poolingindividuals share their financial risks to t reduce financially catastrophic losses from death accidents or health problems Agustus and his wife Cleohave 3 children If Agustus should die by what percentage should their household livmg expenses decrease 0 Cindy age 62 is considering the purchase of a 5 year longterm care policy If nursing home costs average 4000 per month in her area how much could she end up paying out of her pocket for 5 years of care without longterm care insurance I The term used to indicate the periodic monetary cost of purchasing insurance is called the premlum fee for allow you to freely choose which doctor or service hospital you wish to patronize medical plans quottransfershared riskquot Risk management is necessary to protect a family against the financial you transfershare the consequences of a financial loss There are several techniques available to manage risks associate with your risk Which risk management technique is associated with the purchase of both life health and life with and health insurance others who have the same policy We discussed in lecture how insurance allows the consumer to transfer some of 39 CO39lnsurance the risks associated with our health health insurance our driving auto deductibes insurance and our life styles home owners insurance to the insurance company In return for accepting the transfer of these risks insurance companies attempt to 39 pOlICY control consumer behavior through what provisions deductibles hold the consumer responsible In most types of Insurance deductibles perform what for paying for a portion 2 of the loss prior to the funCtlon insurance company paying for its portion of the loss Al has a choice bw 1 a traditional health insurance plan that pays 80 of the cost of his 50 doctor visits AFTER he has met a 250 deductible and 2 an HMO that requires Al to pay only a 10 copayment per 50 office visit BUT also t I charges a 20 monthly premium Al sees a doctor once a month for high blood ra I 390 pressure He sees the doctor 3 times a year for other things How much would Al pay annually for each plan Which plan is financially a better choice for Al both extended major medical expense insurance covers what illnesses and serious injuries fileCConverterInput8wkttigugxhtm432014 72823 PM StudyBlue Flashcard Printing of Exam 3 Practice Problems A family has a basic health insurance plan that pays 80 of out of hospital expenses up to 4000 a year after a deductible of 250 per person After the 4000 out of hospital expenses has been met then the insurance company pays 100 of the family39s medical expenses If 3 family members have doctor and prescription drug expenses of 980 1 1840 and 220 respectively what is the total amount that the insurance company will pay towards all of these expenses James has a basic health insurance plan that pays 80 of out of hospital expenses up to 2500 per year after he meets his annual 300 deductible After the 2500 out of hospital expenses have been met then the insurance company pays 100 of James39 medical expenses If James has doctor and prescription expenses of 2400 how much will James pay for his deductible and his share of the expenses Using the Earnings Multiple Approach calculate how much life insurance Heather and Robert need to take out on Heather the family39s bread winner if Heather is 37 years old earns 80000 per year and plans on working until she retires at age 67 Robert is sure he can get an 8 Annual Rate of Return on an invested insurance settlement I They have no children Jolene is a single parent with two children and earns 45000 per year She wants to purchase a term life insurance policy for 15 years until her youngest child is self supporting Assuming that her survivors can receive a 3 aftertax after inflation return on insurance proceeds use the earningsmultiple method to calculate how much I insurance Jolene should purchase Using the Earnings Multiple Approach calculate how much life insurance Nancy and her two children need to take out on Stacy the family39s bread winner Stacy is 28 years old earns 120000 per year and plans on working for the next 30 years Nancy is sure she I can get a 95 Annual Rate of Return on an invested insurance settlement workman39s compensation medicare medicaid what health care plans are government sponsored Elijah has a 150000 whole life insurance policy with 35000 cash value He decided to borrow 20000 against the policy He has repaid 5000 If he dies before repaying the remaining 15000 of the loan how much would his I bene ciary receive Calculate the rate of return on a share of stock if the stock rose from 120 per share to 185 per share over 1 year while paying 10 in dividends during the 62 500 yeah Calculate the annualized rate of return on a share of stock purchased for 22 and sold for 59 after 3 years Dividends paid during each year were 3 per 6900 share Calculate the rate of return of stock purchased in 2004 for 25 and sold in 2005 for 45 During the year the stock paid 4 in dividends 0 Calculate the rate of return if you purchased 100 shares of stock for 37 per share and after a year you sold your shares for 45 per share During the year you receive a 24 3200 dividend of 1 per share Calculate the annualized rate of return on 100 shares of stock purchased for 53 per share and sold at a loss at 41 per share During those 5 years the stock generated dividends of 7500 2 per share each year Randall bought one round lot of Gladoodle stock when it IPO39d on 6192007 The initial price was 3600 per share How much did Randall pay altogether for his stocks 1 fileCConverterInput8wkttigugxhtm432014 72823 PM StudyBlue Flashcard Printing of Exam 3 Practice Problems Charlie bought a share of stock for 82 and sold itfor 116 During the year he held the 10 stock he received 12 in diVidends Calculate Charlie39s rate of return 0 Marsha bought 7 round lots of Bridezilla stock when it IPO39d last week The total amount she spend was 18760 How much was the Bridezilla stock trading for per stock Kevin neglected to tell his wife that he purchased 2 round lots of John Deere stock 5 years ago for 42 per share Since then he has received 5 in dividend payments per share per year He has since spent this money How much has Kevin received in I dividend income over the years yes h is Scott and his brother are very competitive Each wants to do better in the stock market than the other Scott39s brother Jason just earned a rate of return on his stocks of 279 Scott bought 900 shares of MadDawg stock for 35 per share and sold them for 62 per share However the stock is so new he received no dividends Did Scott39s stock out perform his brother39s rn 77 14 Bad products or poor financial management may result in investors experiencing risk Busmess the number of different types DiverSIfication refers to of securities owned in one39s portfolio The type of risk that is associate with the amount of Manual debt a corporation has incurred is called risk TF the first shares ever issued by a company can be traded on false secondary markets An example of risk occurs when an investment does not keep up with prices that are increasing in the overall economy 39 39 limit the sale of purchase of a speci c number of rs shares of securities at a specific price for an investor interest rate risk call risk financial risk business risk what are the sources of risk in the quidiw risk in ation risk riskreturn tradeoff market risk political and regulatory risk the stated amount on the face of a fileCConverterInput8wkttiguggtlthtm432014 72823 PM CREDIT CARDS 39IO39I X Introduction K Credit card basics and terminology X Obtaining a credit card if Extra information for you X How to handle disputes X Conclusion and activity 5 The percentage of undergraduate students carrying at least 1 credit card has risen 24 since 1998 X5 92 of college students have a credit card by their sophomore year 35 Almost half 47 of all college students carry four or more credit cards X 21 of underrads owed between 3000 amp 7000 on their credit card a 611 increase from 2000 Preapproved credit which can be used for the purchase of items now and payment of them later Debit Cards are 85 Not the same as Credit cards 35 Not a form of credit at all X Directly linked to your bank account 3 Proper use can help establish good credit rating X5 Conveniently accepted across United States and abroad 35 Emergency buying power 35 Additional form of identi cation 35 Record of purchases on bill statement 35 Often required to hold a reservation Improper use can damage credit rating 35 Higher risk for impulsive buying and overspending 35 Debt trap when used unwiser Xs Expensive way to borrow due to high interest rates 35 Less to spend in the future due to paying Off purchases from past 5 Possible hidden fees amp surcharges X Bank Credit Cards c Card issued by nancial institution Credit is issued by service provider Wells Fargo Visa card a Balance paid off at end of month or extended over period of time X Travel and Entertainment Credit Cards 2 Credit and card issued by service provider Diner s Club Natacce cl at as many locations a W x Cards where 39 urchases are made in articular location 3 Retail Credit Cards c Credit and card issued by particular retailer Old Navy The Bon Home Depot Shell Oil c Balance paid off at end of month or extended over period of time 3 Comparison shop when choosing the right card 2 Know the facts Terms and conditions of credit card accounts differ Be aware of hidden costs of cards 3 Federal Truth in Lending Act Requires card issuer to display the cost of credit card Schumer Box easy to read box format Annual Percentage Rate for purchases and balance transfer5 i 599 M31 quot W 7quot L quot A i 1 1 transfers until the flISt day ofthe billingey cl39erhat includes the six 6 month anniversary date ofth e opening of your amount In the absence of the introductory rate 4299 on purchases and balance transfers Grace period for repayment of the balance for purchases You Will have a minimum of 25 days Without a finance charge on new purchases if the total New Balance is paid in full each month by the statement closing date Method of computing the balance used in calculating finance charges for purchases Average daily balance including new purchases Annual fee 25 Minimum finance charge For each Billing Period that your Account is subject to a finance charge a minimum total Finance Charge of 050 will be imposed Miscellaneous fees Cash advance fee 25 of amount of the cash advance but not less than 2 50 Annual Balance Percentage Grace Minimum Calculation Annual Fees Trans action Late Rate for Period for Finance Method for Fees for Payment Purchases Purchases Charges Purchases Cash Fees Advances Average daily 50 when a balance 2 with a 299 Not less finance method 20 per year minimum fee 25 than charge at a including of 3 25 days periodic rate new is charged purchases X Annual Percentage Rate APR interest rate charged for amount borrowed in terms of percentage per year Grace Period Annual Balance Percentage Grace Period Minimum Calculation Annual Fees Trans action Late Rate for for Finance Method for Fees for Payment Purchases Purchases Charges Purchases Cash Fees Advances Average 50 When a daily 2 with a 299 Not less than nance balance 20 per year minimum fee 25 25 days charge at a method of 3 periodic rate including is charged new purchases 85 Minimum Finance Charge minimum amount charged for card use Creditors use a number of ways to determine how interest often called finance charges accumulate X Average Defy Balame Method including new purchases with a grace period If the balance is not Zero interest is applied to new purchases when they are made if balance is zero a grace period is allowed before interest is charged X Average Daily Balame Method including new purchases with no grace period a Regardless of the previous month s balance interest is applied t0 Prew39om Bdd i M eZyod Interest is only paid on the previous balance not on purchases made since the last payment 3 TWO ce Awm e D5127 Botmm includin new urchases 9 g y g P This method should be avoided by consumers The interest is paid on the current balance as well as the previous month s balance this leads to double nance charges A zero balance must be held for two months in order to avoid manual Balance Percentage Grace Period Minimum calculation Annual Fees Transaction Late Rate for for Finance Method for Fees for Payment Purchases Purchases Charges Purchases Cash Fees Advances Average daily 50 when a balance 2 With a 299 Not less than nance charge method 20 per year minimum 25 25 days at a periodic including fee of 3 rate is charged new purchases 3 Annual Fees yearly charge for credit card ownership 3 Cash Advance Trans action Fees cash withdrawal fees F Wr39eP Nl Applicant completes a credit application Lender conducts a credit investigation Applicant is given a credit rating Lender accepts 0r denies the credit request If accepted applicant evaluates the credit card details USE THE SCHUMER BOX Applicant accepts or refuses credit terms X5 Minimum Payment Due minimum amount to be paid If this amount is paid and a balance is left on the account additional nance charges will be included in the following month s balance 3 Past Due Amount the previous amount due which was not paid before the due date 35 Due Date the day by which the company requires a payment to be made 35 New Balance the total amount owed on a credit card 35 Credit Line the maximum amount of charges allowed to an account 35 Closing Date last day for transactions to be reported on the statement 5quot Charges Payments and Credits the transactions which occur with the use of a credit card 3 Finance Charge charges assessed for credit card use 1 In the case of any unauthorized use of your card Liability Limited to 50 Must Notify Company ASAP Phone AND Written 2 In the case of a billing error Notify Company Within 60 Days Letter must include Name Account Dollar Amount Involved 3 Fair Debt Collection Practices Act Collectors can call you between 8 AM and 9 PM once a day each day They can call you at work They can call your family friends They can repossess your property They can put a lien on your property quott W La 3 3 Only use when there is no doubt about ability to pay off the charges at the end of the billing cycle 5 Record all expenses and keep receipts 3 Check credit statement for errors 5 Always pay off balance completely and timely card with signature Ed Please See ID Do not leave cards lying around Close unused accounts in Writing and by phone then cut up the card Do not give out account number unless making purchases Keep a list of all cards account numbers and phone frm Chapter 1 Flexibilig The ability for your plan to change as your situation or goals change Liguidig the relative ease and speed with which you can convert noncash assets into cash In effect it involves having access to your money when you need it Protection Your ability to meet the unexpected large expenses without destroying your plan Minimization of taxes Your ability to pay as little as possible to Uncle Sam Estate Planning planning for your eventual death and the passage of your wealth to your heirs Inflation an economic condition in which rising prices reduce the purchasing power of money Compound Interest Interest paid on interest This occurs when interest paid on an investment is reinvested and added to the principle thus allowing you to earn interest on the interest as well as on the principle Diversification Acquisition of a variety of different investments instead ofjust one to reduce risk Chapter 2 Personal Balance Sheet A statement of your financial position on a given date It includes the assets you own the debt or liabilities you have incurred and your level of wealth which is referred to as net worth Assets What you own Monetary Assets cash or other assets that can be easily liquidated Investment Assets Assets that are invested for the future Retirement Plans Investments by you or your employer to save for retirement Liabilities Something that is owed or borrowing of money Net Worth or Eguig A measure of the level of your wealth It is determined by subtracting the level of your debt or borrowing from the value of your assets Fair Market Value What an asset could be sold for rather than what it cost or what is will be worth sometime in the future Tangible Asset A physical asset such as a house or a car as opposed to an investment Blue Book A listing of usedcar prices giving the average price a particular year and model sells for and what you might expect to receive for it as a tradein Insolvent The condition in which you owe more money than your assets are worth Personal Income Statement A statement that tells you where your money has come from and where it has gone over some period Variable Expenditure An expenditure over which you have control That is you are not obligated to make that expenditure and it may vary from month to month Fixed Expenditure An expense over which you have no control You are obligated to make the expenditure and it is generally at a constant level each month Budget A plan for controlling cash inflows and cash outflows Based on your goals and financial obligations a budget limits spending in different categories Current Ratio A ratio as determining ifyou have adequate liquidity to meet emergencies Month39s Living Expenses Covered Ratio A ratio aimed at determining if you have adequate liquidity to meet emergencies Debt Ratio A ratio aimed at determining if you have the ability to meet your debt obligations Longterm Debt Coverage Ratio A ratio aimed at determining ifyou have the ability to meet your debt obligations Savings Ratio A ratio aimed at determining how much you are saving Ledger A book or notebook set aside to record expenditures Chapter 3 Time Value of Money the concept that a dollar received today is worth more than a dollar received in the future and therefore comparisons between amounts in different periods cannot be made without adjustments to their values Reinvesting Taking money that you have earned on an investment and plowing in back into that investment Rule of 72 a helpful investment rule that states you can determine how many years it will take for a sum to double by dividing the annual growth rate into 72 Discount Rate The interest rate used to bring future dollars back to the present Annuity A series of equal dollar payments coming at the end of each period for a specific number of periods Compound Annuity An investment that involves depositing an equal sum of money at the end of each year for a certain number of years and allowing it to grow Amortized Loan A loan paid offin equal installments Perpetuity An annuity that continues forever


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