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Business and Personal Finance Student Edition Glencoe
Mcgraw-Hill Digital Instant Download
Author(s): Glencoe McGraw-Hill
ISBN(s): 9780199280636, 0199280630
Edition: 1
File Details: PDF, 59.83 MB
Year: 2007
Language: english
interactive student edition
 Jack R. Kapoor Les R. Dlabay
Professor of Business and Economics Professor of Business
Business and Services Division Department of Economics and Business
College of DuPage Lake Forest College
Glen Ellyn, Illinois Lake Forest, Illinois

Robert J. Hughes William B. Hoyt

Professor of Business Contributing Editor
Dallas County Community Colleges Wilton High School
Dallas, Texas Wilton, Connecticut
About the Authors

Jack R. Kapoor Les R. Dlabay Robert J. Hughes

Jack R. Kapoor is professor of Les R. Dlabay teaches in the Robert J. Hughes teaches
business and economics in the Department of Economics and business, management, and
Business and Services Division Business at Lake Forest College. finance courses at Dallas County
at College of DuPage, where He received his Bachelor of Community Colleges. He
he has taught since 1969. He Science in Accounting from received his Bachelor of Arts in
received his Bachelor of Arts in University of Illinois, his Master Business Administration from
Business Administration and of Business Administration in Southern Nazarene University
Master of Science in International Business Management from and his Master of Business
Business from San Francisco State DePaul University, and his Administration and Doctor of
College. He received his Doctor Doctor of Education in Business Education from the University
of Education from Northern and Economic Education from of North Texas. Dr. Hughes
Illinois University. Dr. Kapoor Northern Illinois University. He is has taught at the high school,
was awarded the Business and a founding member of the Illinois community college, and four-
Services Division’s Outstanding Consumer Education Association. year university levels for 36
Professor Award for l999–2000. years. He received the Excellence
in Teaching Award at Richland
College and has 15 years of
experience teaching personal
finance courses.

NOTICE: Information on featured companies, organizations, and their products and

services is included for educational purposes only, and it does not present or imply
endorsement of the Business and Personal Finance program.

Copyright © 2007 by The McGraw-Hill Companies. All rights reserved. Except as permitted under the United States Copyright Act,
no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system,
without prior written permission of the publisher.
Printed in the United States of America.
Send all inquiries to:
Glencoe/McGraw-Hill
21600 Oxnard Street, Suite 500
Woodland Hills, California 91367-4906
ISBN-13: 978-0-07-868712-9 (Student Text)
ISBN-10: 0-07-868712-8 (Student Text)

ISBN-13: 978-0-07-869846-0 (Teacher Annotated Edition)

ISBN-10: 0-07-869846-4 (Teacher Annotated Edition)
2 3 4 5 6 7 8 9 027 09 08 07 06 05
Reviewers
Rosella Bannister Paul Jussila Betty Tobler
Jump$tart Personal Finance South Windsor High School St. Louis Public Schools
Clearinghouse South Windsor, Connecticut St. Louis, Missouri
Ann Arbor, Michigan
Mike Kelly Mark Van Hoy
Janet Barnes Hazelwood East High School Hazelwood West High School
Hazelwood West High School St. Louis, Missouri Hazelwood, Missouri
Hazelwood, Missouri
Jason Lee Patty Wamble
Thelma Brooks Olympia High School Cape Central High School
Educational Consultant Orlando, Florida Cape Girardeau, Missouri
Columbus, Ohio
Diane Manley Elizabeth Watt
Edlena Carmon St. Louis, Missouri North Education Center
Marion Franklin High School Columbus, Ohio
Greg Moore
Columbus, Ohio
Columbus, Ohio Ken Watts
Sharon Clemons Montclair High School
Jeff Noyes
Thomas Worthington High Montclair, New Jersey
Minnetonka High School
School
Minnetonka, Minnesota Polly White
Worthington, Ohio
Wawasee High School
Verta Parks
John E. Clow, Ph.D. Syracuse, Indiana
Marion Franklin High School
State University of New York
Columbus, Ohio Tamara Wickline
Oneonta, New York
Dublin Coffman High School
Kevin Richberg
Joe Cook Dublin, Ohio
Montclair High School
Southeast Career Center
Montclair, New Jersey Susie Wright
Columbus, Ohio
Walnut Ridge High School
Verlin Samples
Diane W. Culpepper Columbus, Ohio
Hamilton Local
Winter Park Tech
Columbus, Ohio Glenn Zipfel
Winter Park, Florida
Christian Brothers High
James C. Scharer
Joy Davis School
Fremont Ross High School
Delaware Area Career Center St. Louis, Missouri
Fremont, Ohio
Delaware, Ohio
Natalie Schaublin
Laneita Dunphy
Westerville North High
Montclair High School
School
Montclair, New Jersey
Westerville, Ohio
Ernestine Gordon
Ken Schnitzer
Montclair High School
Montclair High School
Montclair, New Jersey
Montclair, New Jersey
Georgia Hoover
Julie Smith
Dublin Scioto High School
Southeast Career Center
Dublin, Ohio
Columbus, Ohio

Contents iii
Welcome to Business and Personal Finance
Each day you are surrounded by new choices for shopping, watching television, and other
activities. You also have many choices about how to spend your money. Business and Personal
Finance can help you make the right decisions. You will develop financial literacy through inte-
grated academics, real-world examples, and practical advice. By learning how to make informed
decisions related to spending, saving, borrowing, and investing, you can build a solid foundation
for your financial security now and in the future.

Brief Table of Contents

Unit 1 Planning Personal Finances
Chapter 1 Personal Financial Planning
Chapter 2 Finances and Career Planning
Chapter 3 Money Management Strategy
Chapter 4 Consumer Purchasing and Protection

Unit 2 Banking and Credit

Chapter 5 Banking
Chapter 6 Consumer Credit
Chapter 7 The Finances of Housing

Unit 3 Investing Financial Resources

Chapter 8 Saving and Investing
Chapter 9 Stocks
Chapter 10 Bonds and Mutual Funds
Chapter 11 Real Estate and Other Investments

Unit 4 Protecting Your Finances

Chapter 12 Planning Your Tax Strategy
Chapter 13 Home and Motor Vehicle Insurance
Chapter 14 Health, Disability, and Life Insurance
Chapter 15 Retirement and Estate Planning

Unit 5 Business Ownership and Planning

Chapter 16 Types of Business Ownership
Chapter 17 Developing a Business Plan
Chapter 18 Developing a Financial Plan

Unit 6 Business Finance Basics

Chapter 19 Sources of Funding
Chapter 20 Financial Accounting
Chapter 21 Managing Payroll and Inventory
Chapter 22 Pricing, Costing, and Growth

iv Contents
Table of Contents
To the Student xvi

UNIT 1 Planning Personal Finances 2

WebQuest Internet Project One Life to Plan 2

Finance File Which Adviser Knows the Way? 3

Chapter 1 Personal Financial Planning 4

Section 1.1 Financial Decisions and Goals 6

Section 1.2 Opportunity Costs and Strategies 19
Go Figure Annual Interest 21
Go Figure The Future Value of a Single Deposit 21
Ask Standard & Poor’s 5
Global Financial Landscape India 15
Academic Connection Language Arts 13
Careers in Finance Personal Banker 11
Document Detective Monthly Budget Worksheet 12
Chapter 1 Review and Activities 26
What’s Your Financial ID? Your Spending Profile 28
Your Financial Portfolio Getting Your Own Wheels 29

Chapter 2 Finances and Career Planning 30

Section 2.1 Planning Your Career 32

Section 2.2 Employment and Career Development 40
Ask Standard & Poor’s 31
Global Financial Landscape Japan 38
Academic Connection Science 34
Careers in Finance Cashier 49
Document Detective IRS Form W-4 42
Chapter 2 Review and Activities 54
What’s Your Financial ID? Find Your Personality Traits 56
Your Financial Portfolio Applying for a Job 57

Contents v
 Chapter 3 Money Management Strategy 58

Section 3.1 Organizing Financial Records 60

Section 3.2 Personal Financial Statements 65
Section 3.3 Budgeting for Financial Goals 74
Go Figure Net Worth 68
Go Figure Net Cash Flow 71
Ask Standard & Poor’s 59
Global Financial Landscape
South Korea 80
Academic Connection History 75
Careers in Finance Financial Advisor 69
Document Detective Personal Balance Sheet 81
Chapter 3 Review and Activities 84
What’s Your Financial ID? Money Management Quiz 86
Your Financial Portfolio What Is Your Net Worth? 87

Chapter 4 Consumer Purchasing and

Protection 88

Section 4.1 Consumer Purchasing 90

Section 4.2 Resolving Consumer Complaints 104
Go Figure Unit Pricing 101
Ask Standard & Poor’s 89
Global Financial Landscape
Ecuador 106
Academic Connection Language Arts 108
Careers in Finance Retail Sales Associate 109
Document Detective A Warranty 102
Chapter 4 Review and Activities 112
What’s Your Financial ID? Are You a Smart Shopper? 114
Your Financial Portfolio Your Budget 115

UNIT 1 LAB Get a Financial Life!

Setting Up a Career Plan 116

vi Contents
UNIT 2 Banking and Credit 118

WebQuest Internet Project Your Own Home 118

Finance File Consumer Debt 119

Chapter 5 Banking 120

Section 5.1 Financial Services and Institutions 122

Section 5.2 Savings Plans and Payment
Methods 132
Go Figure Interest Compounded Monthly 136
Go Figure Rate of Return 137
Ask Standard & Poor’s 121
Global Financial Landscape Switzerland 140
Academic Connection History 141
Careers in Finance Bank Teller 124
Document Detective Checking Account Bank
Statement 138
Chapter 5 Review and Activities 148
What’s Your Financial ID? Basic Banking Quiz 150
Your Financial Portfolio Comparison Shopping
for Banking Services 151

Chapter 6 Consumer Credit 152

Section 6.1 What Is Consumer Credit? 154

Section 6.2 The Costs and Methods of Obtaining Credit 162
Section 6.3 Protecting Your Credit 178
Section 6.4 Managing Your Debts 186
Go Figure Debt Payments-to-Income Ratio (DPR) 163
Go Figure Simple Interest on a Loan 166
Ask Standard & Poor’s 153
Global Financial Landscape Israel 164
Academic Connection History 174
Careers in Finance Credit Analyst 167
Document Detective Credit Card Statement 171
Chapter 6 Review and Activities 192
What’s Your Financial ID? Your Credit Profile 194
Your Financial Portfolio Credit Cards: Getting
the Best Deal 195
Contents vii
 Chapter 7 The Finances of Housing 196

Section 7.1 Housing Options 198

Section 7.2 Renting a Residence 202
Section 7.3 Buying and Selling a Home 209
Ask Standard & Poor’s 197
Global Financial Landscape Spain 220
Academic Connection Math 217
Careers in Finance Real Estate Agent 213
Document Detective Calculating a Mortgage Payment 214
Chapter 7 Review and Activities 228
What’s Your Financial ID? Where Would
You Like to Live? 230
Your Financial Portfolio Renting or Buying
Your Home 231

UNIT 2 LAB Get a Financial Life! Home Ownership 232

UNIT 3 Investing Financial

Resources 234

WebQuest Internet Project Nest Egg 234

Finance File The Best Homes for

Rollover IRAs 235

Chapter 8 Saving and Investing 236

Section 8.1 Preparing for a Savings or

Investment Program 238
Section 8.2 Savings and Investment
Options 250
Section 8.3 Reducing Risk and Sources
of Information 257
Go Figure Inflation Rates and Investments 245
Go Figure A Bond’s Market Price When Interest
Rates Go Up 246
Go Figure A Bond’s Market Price When Interest
Rates Go Down 247
Ask Standard & Poor’s 237
Global Financial Landscape China 259

viii Contents
 Academic Connection Language Arts 246
Careers in Finance Investment Analyst 252
Document Detective Savings Goals Worksheet 253
Chapter 8 Review and Activities 266
What’s Your Financial ID? Are You a Risk Taker? 268
Your Financial Portfolio Avoiding Future Shock 269

Chapter 9 Stocks 270

Section 9.1 Common and Preferred Stocks 272

Section 9.2 Evaluating Stocks 277
Section 9.3 Buying and Selling Stocks 291
Go Figure Current Yield of a Stock Investment 286
Go Figure Total Return 287
Go Figure Earnings Per Share 288
Go Figure Price-Earnings Ratio 288
Ask Standard & Poor’s 271
Global Financial Landscape
United Kingdom 279
Academic Connection Economics 292
Careers in Finance Stockbroker 289
Document Detective Stock Confirmation Report 282
Chapter 9 Review and Activities 300
What’s Your Financial ID? Taking Stock 302
Your Financial Portfolio Investing in Stock 303

Chapter 10 Bonds and Mutual Funds 304

Section 10.1 Corporate and Government Bonds 306

Section 10.2 Investing in Bonds 319
Section 10.3 Mutual Funds 326
Section 10.4 Investing in Mutual Funds 335
Go Figure A Bond’s Annual Interest 307
Go Figure Approximate Market Value of a Bond 312
Go Figure Dollar Amount of Return on a T-Bill 315
Go Figure Rate of Return on a T-Bill 316
Go Figure Current Yield of a Bond Investment 323
Go Figure Net Asset Value 328
Go Figure Capital Gain 340
Go Figure Percentage of Asset Growth Withdrawal 344
Contents ix
 Ask Standard & Poor’s 305
Global Financial Landscape Brazil 333
Academic Connection Government 321
Careers in Finance Certified Financial Planner 329
Document Detective Mutual Fund Account Statement 324
Chapter 10 Review and Activities 346
What’s Your Financial ID? What’s Your Investing IQ? 348
Your Financial Portfolio Evaluating Mutual Funds 349

Chapter 11 Real Estate and Other Investments 350

Section 11.1 Real Estate Investment 352
Section 11.2 Precious Metals, Gems,
and Collectibles 361
Ask Standard & Poor’s 351
Global Financial Landscape
South Africa 365
Academic Connection Geography 364
Careers in Finance Commercial Property Manager 359
Document Detective County Real Estate Valuation 356
Chapter 11 Review and Activities 370
What’s Your Financial ID? All that Glitters 372
Your Financial Portfolio Collecting Treasures 373

UNIT 3 LAB Get a Financial Life! Investment Strategies 374

UNIT 4 Protecting Your Finances 376

WebQuest Internet Project Avoiding Financial Fraud 376

Finance File So What’s the Plan? 377

Chapter 12 Planning Your Tax Strategy 378

Section 12.1 Income Tax Fundamentals 380

Section 12.2 Preparing an Income Tax Return 389
Section 12.3 Tax Assistance and Strategies 401
Go Figure 1040EZ Tax Due 396
Ask Standard & Poor’s 379
Global Financial Landscape
Saudi Arabia 382

x Contents
 Academic Connection Math 385
Careers in Finance Tax Preparer 390
Document Detective Form W-2 404
Chapter 12 Review and Activities 406
What’s Your Financial ID? Test Your Tax Facts 408
Your Financial Portfolio Take It EZ 409

Chapter 13 Home and Motor Vehicle Insurance 410

Section 13.1 Insurance and Risk Management 412
Section 13.2 Home and Property Insurance 419
Section 13.3 Motor Vehicle Insurance 430
Ask Standard & Poor’s 411
Global Financial Landscape Germany 423
Academic Connection Language Arts 424
Careers in Finance Insurance Claims Adjuster 428
Document Detective Auto Insurance Declaration 435
Chapter 13 Review and Activities 438
What’s Your Financial ID? Vehicle Insurance Quiz 440
Your Financial Portfolio The Price of Car Insurance 441

Chapter 14 Health, Disability, and Life Insurance 442

Section 14.1 Health Insurance and
Financial Planning 444
Section 14.2 Private and Government Plans 453
Section 14.3 Disability Insurance 460
Section 14.4 Life Insurance 464
Ask Standard & Poor’s 443
Global Financial Landscape Canada 448
Academic Connection Art 449
Careers in Finance Insurance Agent 458
Document Detective Life Insurance Policy Statement 469
Chapter 14 Review and Activities 472
What’s Your Financial ID? Insurance Facts
and Fiction 474
Your Financial Portfolio Comparing Life Insurance 475

Contents xi
 Chapter 15 Retirement and Estate Planning 476

Section 15.1 Retirement Planning 478

Section 15.2 Planning Retirement Income 486
Section 15.3 Estate Planning and Taxes 499
Ask Standard & Poor’s 477
Global Financial Landscape Mexico 491
Academic Connection Language Arts 495
Careers in Finance Estate Administrator 483
Document Detective Projected Retirement
Budget Worksheet 494
Chapter 15 Review and Activities 514
What’s Your Financial ID? What Is Your Personality? 516
Your Financial Portfolio Saving for Retirement 517

UNIT 4 LAB Get a Financial Life!

Making Retirement Plans 518

UNIT 5 Business Ownership

and Planning 520

WebQuest Internet Project Be Your Own Boss 520

Finance File Good Works—

with a Business Plan 521

Chapter 16 Types of Business Ownership 522

Section 16.1 Sole Proprietorship and Partnership 524

Section 16.2 The Corporation 534
Ask Standard & Poor’s 523
Global Financial Landscape
Netherlands 537
Academic Connection Marketing 542
Careers in Finance General Contractor 526
Document Detective Application for Employer
ID Number 531
Chapter 16 Review and Activities 544
What’s Your Financial ID? What Kind of Business? 546
Your Financial Portfolio Setting Up a Partnership 547

xii Contents
 Chapter 17 Developing a Business Plan 548

Section 17.1 A Plan for Business 550

Section 17.2 Financial Management 561
Ask Standard & Poor’s 549
Global Financial Landscape Greece 555
Academic Connection Social Studies/Marketing 560
Careers in Finance Bookkeeper 566
Document Detective Job Description 562
Chapter 17 Review and Activities 568
What’s Your Financial ID? What’s Your
Business Personality? 570
Your Financial Portfolio Planning for Success 571

Chapter 18 Developing a Financial Plan 572

Section 18.1 Identifying Required Capital 574

Section 18.2 Case Study: A Financial Plan 589
Ask Standard & Poor’s 573
Global Financial Landscape Russia 586
Academic Connection Language Arts 591
Careers in Finance Controller 593
Document Detective Personal Financial Statement 587
Chapter 18 Review and Activities 600
What’s Your Financial ID? Are You a Persuader? 602
Your Financial Portfolio Start with a Plan 603

UNIT 5 LAB Get a Financial Life! A Business Is Born 604

UNIT 6 Business Finance Basics 606

WebQuest Internet Project Franchise Ownership 606

Finance File Cycling Back to the Future 607

Chapter 19 Sources of Funding 608

Section 19.1 Analyzing Financial Needs 610

Section 19.2 Sources of Funding 625
Go Figure A Home Equity Loan 618

Contents xiii
 Ask Standard & Poor’s 609
Global Financial Landscape Estonia 619
Academic Connection Language Arts 622
Careers in Finance Commercial Loan Officer 613
Document Detective Application for Business Loan 615
Chapter 19 Review and Activities 630
What’s Your Financial ID? Are You a Go-Getter? 632
Your Financial Portfolio Tanya’s Toys 633

Chapter 20 Financial Accounting 634

Section 20.1 The Accounting Cycle:

The First Five Steps 636
Section 20.2 Financial Statements for a Business 650
Ask Standard & Poor’s 635
Global Financial Landscape France 658
Academic Connection International Finance/Math 652
Careers in Finance Accounting Teacher 639
Document Detective Income Statement 643
Chapter 20 Review and Activities 660
What’s Your Financial ID? Do You Think Logically
or Intuitively? 662
Your Financial Portfolio Income Statements 663

Chapter 21 Managing Payroll and Inventory 664

Section 21.1 Managing Payroll 666
Section 21.2 Managing Inventory 680
Go Figure Gross Earnings and Overtime 668
Go Figure FICA Deduction 671
Go Figure Unemployment Taxes 678
Go Figure Average Inventory 689
Go Figure Inventory Turnover 689
Go Figure Number of Days in Stock 690
Ask Standard & Poor’s 665
Global Financial Landscape Singapore 676
Academic Connection Language Arts 671
Careers in Finance Purchasing Agent 667

xiv Contents
 Document Detective Paycheck Stub 685
Chapter 21 Review and Activities 692
What’s Your Financial ID? Stocking Up on Knowledge 694
Your Financial Portfolio Keeping Track of Inventory 695

Chapter 22 Pricing, Costing, and Growth 696

Section 22.1 Merchandise Pricing and Costing 698

Section 22.2 Planning For Growth 709
Go Figure Break-Even Point 707
Go Figure Target Sales 712
Ask Standard & Poor’s 697
Global Financial Landscape Vietnam 702
Academic Connection Math 704
Careers in Finance Chief Financial Officer 701
Document Detective Break-Even Analysis 706
Chapter 22 Review and Activities 716
What’s Your Financial ID? Creative Thinking 718
Your Financial Portfolio Business Expansion Magic 719

UNIT 6 LAB Get a Financial Life! Growing a Business 720

Appendix Math Skills Builder 722

Glossary 746

Index 758

Features Index 774

Contents xv
 To the Student

Understanding the Unit

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To the Student xvii

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