Page 482 - Business Principles and Management

C HAPTER 17 A SSESSMENT

APPLY WHAT YOU KNOW

21. Based on the Reality Check scenario at the beginning of the chapter,
what should be the investment goals of Kilgore Kitchens? What are
three investments you would recommend to Andrew and Julie?
22. Why would a business choose to use a bank rather than a nonbank
as its primary financial institution? Why might it choose a nonbank?
23. What effects have changes in laws and increases in competition
among financial institutions had on consumers?
24. What effect does the prime rate have on those who apply for bank
loans?
25. How has the Internet improved banking services? What problems
have resulted from its increased use?
26. What are the advantages and disadvantages of certificates of deposit
over savings accounts?
27. Why would individuals and businesses want to purchase Treasury
securities for terms as long as 20 or 30 years? What risks, if any, are
they taking when purchasing those very long-term investments?
28. If you had to pick one financial goal today to guide your financial
planning, what would it be? Why? How do you think your goals may
need to change in 15 years? What will be your top goal at that time?

MAKE CONNECTIONS

29. Research Use the Internet to check the current interest rates offered
by (a) a local bank, (b) a credit union, (c) an Internet bank, and
(d) a large financial services organization. Determine the rates for
a checking account, a 12-month CD of $10,000, a money market
account, a 30-year mortgage, and a 48-month auto loan. Prepare
a table that compares the interest rates from all of the financial
institutions.
30. Law and Politics You are an intern for Melinda Jones, a local bank vice
president who is concerned about the changing competition the
bank is facing. She asks you to use the Internet to investigate the
current status of federal banking regulations and their effect on
banking. Conduct the research and prepare a one-page memo to
Ms. Jones discussing significant developments within the past five
years and any proposed changes.
31. Visual Communications Track the value of the Dow Jones Industrial Av-
erage, NASDAQ Market Index, and Standard & Poor’s 500 Index
for one week. Prepare graphs that illustrate and compare the perfor-
mance of the three indexes.
32. Oral Communications Assume you are an investment adviser. One of
your clients is a 35-year-old single female employed by a fast-
growing firm and making $60,000 a year. She wants her current
savings of $25,000 to be 80 percent liquid, with the balance in
short-term bonds. Pair with a classmate and role-play a conversa-
tion in which you advise her on the advantages and disadvantages
of her financial plan.

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