Solutions Manual for

Solutions Manual for Introduction to Personal Finance Beginning Your Financial Journey, 1e John Grable, Lance Palmer (All Chapters) 1 / 4

Chapter 1—Solutions Manual

Beginning Your Financial Journey: The Interior Finance Point of View

Introduction to Personal Finance: Beginning Your Financial Journey

By John Grable and Lance Palmer

Learning Objectives 1.1 Describe how your financial knowledge, experience, risk tolerance, and feelings of control influence the way you view the financial world.

1.2 Explain how your human and social capital relate to your financial well-being.

1.3 Discuss how financial risk tolerance relates to financial goal achievement.

1.4 Use your unique time perspective to create SMART financial goals.

1.5 Describe strategies to overcome mental biases and improve financial decision making and well-being.

Key to metadata for questions:

LO: Learning objective number

BT: Bloom’s taxonomy [Knowledge (K), Comprehension (C), Application (Ap), Analysis (An), Synthesis (S), Evaluation (E)]

Diff: Difficulty level [Easy (E), Medium (M), Hard (H)]

TOT: Expected time for student to complete

AACSB: Communication (C), Ethics (E), Analytic (A), Technology (T), Diversity (D), Reflective Thinking (RT), Not Applicable (n/a)

Sample rubric for writing questions:

Note: It is generally recommended that the rubric be shared with students, so it should be sufficiently general to not give away answers.

Notes for instructor:

Each writing question will have criteria which are specific to the question. The instructor may want to add or delete grading criteria (rows) depending on the topic and assignment. How each grading criterion will be assessed and the associated points for each level of performance are found in columns 2–5.In the sample rubric, a total of 16 points are possible for this assignment. Each grading criterion (row) is worth up to 4 points (column 2).

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Rubric: (It is suggested that the rubric be shared with the students.)

Criteria Full points (4 out of 4) 75% of points (3 out of 4) 50% of points (2 out of 4) 25% of points (1 out of 4) Thoroughness of answer to the question The question is answered thoroughly The response is lacking a few details The response is lacking significant details The response is incomplete and limited Answer is realistic/relevant Amounts and information discussed are relevant and pertinent to the question Some of the response is irrelevant to the question Much of the response is irrelevant, unrealistic, or overly simplistic The response does not represent realistic or relevant understanding of topic Organization/clarity of thought (25% of score) Well organized Adequate organization Limited organization Poor organization Appropriate recommendations and conclusions are reached (25% of score) A clear conclusion or recommendation is presented that is appropriate given the content discussed Conclusion or recommendation is mostly clear and appropriate given the content Conclusion or recommendation is incomplete No conclusion or recommendation is provided Please refer to the sample writing assignment rubric in the solutions manual.

1.1 Describe how your financial knowledge, experience, risk tolerance, and feelings of control influence the way you view the financial world.

1.1 Multiple-Choice Questions

• how well you understand personal finance information.

Answer: b; Section: 1.1; LO: 1.1; BT: K; Diff: E; TOT: 2 min; AACSB: n/a

• I and II only.

Answer: c; Section: 1.1; LO: 1.1; BT: C; Diff: E; TOT: 2 min; AACSB: n/a .

• your financial knowledge, financial risk-taking, and feelings of control over your situation. 3 / 4

Answer: d; Section: 1.1; LO: 1.1; BT: K; Diff: E; TOT: 2 min; AACSB: RT

• believe strongly in luck and fate

Answer: c; Section: 1.1; LO: 1.1; BT: C; Diff: E; TOT: 2 min; AACSB: RT

• more knowledgeable about the financial marketplace over time and increase his personal wealth.

Answer: a; Section: 1.1; LO: 1.1; BT: C; Diff: E; TOT: 2 min; AACSB: RT

• Having and raising a child.

Answer: c; Section: 1.1; LO: 1.1; BT: C; Diff: E; TOT: 2 min; AACSB: n/a

• Consumer spending.

Answer: a; Section: 1.1; LO: 1.1; BT: K; Diff: E; TOT: 2 min; AACSB: n/a

• GDP would fall because consumers would spend less on goods and services.

Answer: b; Section: 1.1; LO: 1.1; BT: C; Diff: E; TOT: 2 min; AACSB: RT

• A willingness to save money on a regular basis.

Answer: a; Section: 1.1; LO: 1.1; BT: C; Diff: E; TOT: 2 min; AACSB: n/a

• c. Michelle, who gives regularly to charity, reads about investing and is self-confident.

Answer: c; Section: 1.1; LO: 1.1; BT: C; Diff: E; TOT: 2 min; AACSB: n/a

1.1 Adventures in Personal Finance Short Answer

• Answer: High-quality responses should include a discussion of how the wealth was

accumulated, work effort, and locus of control (chance versus work), and also include a discussion of the student’s perception of his or her locus of control. Please refer to the sample writing assignment rubric in the solutions manual.Section: 1.1; LO: 1.1; BT: C; Diff: M; TOT: 15 min; AACSB: RT, E

• Answer: Risk tolerance describes your willingness to engage in financial activities

that have uncertain outcomes. Individuals with low risk tolerance may be fearful of the financial markets and financial activities and avoid them. As your financial literacy increases and risk perceptions are properly understood, your willingness to engage in risks may increase.Section: 1.1; LO: 1.1; BT: Ap; Diff: M; TOT: 5 min; AACSB: RT, A

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