Focus on Personal Finance

576 Pages·2015·28.38 MB·English

by  Jack Kapoor, Les Dlabay, Robert J. Hughes, Melissa Hart

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F ocus on Personal Finance
A n Active Approach to Help You Achieve Financial Literacy
F IFTH EDITION
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T he McGraw-Hill/Irwin Series in Finance, Insurance, and Real Estate
S tephen A. Ross,
Franco Modigliani Professor of Finance and Economics, Sloan School of Management,
Massachusetts Institute of Technology, Consulting Editor
F INANCIAL MANAGEMENT S hefrin L ing and A rcher
B ehavioral Corporate Finance: Decisions that R eal Estate Principles: A Value Approach
B lock, Hirt, and D anielsen
Create Value F ourth Edition
F oundations of Financial Management
F irst Edition
F ifteenth Edition
F INANCIAL PLANNING AND
W hite
B realey, Myers, and A llen
F inancial Analysis with an Electronic Calculator INSURANCE
P rinciples of Corporate Finance
S ixth Edition A llen, Melone, Rosenbloom, and M ahoney
E leventh Edition
R etirement Plans: 401(k)s, IRAs, and Other
B realey, Myers, and A llen I NVESTMENTS Deferred Compensation Approaches
P rinciples of Corporate Finance, Concise E leventh Edition
B odie, Kane, and M arcus
S econd Edition
E ssentials of Investments A ltfest
B realey, Myers, and M arcus N inth Edition P ersonal Financial Planning
F undamentals of Corporate Finance F irst Edition
B odie, Kane, and M arcus
E ighth Edition
I nvestments H arrington and N iehaus
B rooks T enth Edition R isk Management and Insurance
F inGame Online 5.0 S econd Edition
H irt and B lock
B runer F undamentals of Investment Management K apoor, Dlabay, Hughes, and Hart
C ase Studies in Finance: Managing for T enth Edition F ocus on Personal Finance: An Active Approach
Corporate Value Creation to Help You Achieve Financial Literacy
J ordan, Miller, and D olvin
S eventh Edition F ifth Edition
F undamentals of Investments: Valuation and
C ornett, Adair, and N ofsinger Management K apoor, Dlabay, and H ughes
F inance: Applications and Theory S eventh Edition P ersonal Finance
T hird Edition E leventh Edition
S tewart, Piros, and H eisler
C ornett, Adair, and N ofsinger R unning Money: Professional Portfolio W alker and W alker
M : Finance Management P ersonal Finance: Building Your Future
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D eMello S undaram and D as
C ases in Finance D erivatives: Principles and Practice
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G rinblatt (editor)
S tephen A. Ross, Mentor: Influence through F INANCIAL INSTITUTIONS AND MARKETS
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G rinblatt and T itman B ank Management and Financial Services
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H iggins F inancial Institutions and Markets
A nalysis for Financial Management E leventh Edition
E leventh Edition
S aunders and C ornett
K ellison F inancial Institutions Management: A Risk
T heory of Interest Management Approach
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R oss, Westerfield, and J affe S aunders and C ornett
C orporate Finance F inancial Markets and Institutions
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C orporate Finance: Core Principles and I NTERNATIONAL FINANCE
Applications E un and R esnick
F ourth Edition I nternational Financial Management
R oss, Westerfield, and J ordan S eventh Edition
E ssentials of Corporate Finance
E ighth Edition R EAL ESTATE
R oss, Westerfield, and J ordan B rueggeman and F isher
F undamentals of Corporate Finance R eal Estate Finance and Investments
E leventh Edition F ourteenth Edition
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Focus on Personal Finance
A n Active Approach to Help You Achieve
Financial Literacy
F IFTH EDITION
J ack R. K apoor
C O L L E G E O F D U P A G E
L es R. D labay
L A K E F O R E S T C O L L E G E
R obert J. H ughes
D A L L A S C O U N T Y C O M M U N I T Y C O L L E G E S
M elissa M. Hart
N O R T H C A R O L I N A S T A T E U N I V E R S I T Y
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F OCUS ON PERSONAL FINANCE: AN ACTIVE APPROACH TO HELP YOU ACHIEVE FINANCIAL
LITERACY, FIFTH EDITION
P ublished by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2016 by McGraw-Hill
Education. All rights reserved. Printed in the United States of America. Previous editions © 2013, 2010, 2008,
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L ibrary of Congress Cataloging-in-Publication Data
Kapoor, Jack R., 1937–
Focus on personal finance : an active approach to help you achieve
financial literacy/Jack R. Kapoor, Les R. Dlabay, Robert J. Hughes, Melissa M. Hart.—Fifth edition.
pages cm
ISBN 978-0-07-786174-2 (alk. paper)
1. Finance, Personal. 2. Investments. I. Dlabay, Les R. II. Hughes, Robert
James, 1946– III. Hart, Melissa M. IV. Title.
HG179.K368 2016
332.024—dc23
2014041672
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guarantee the accuracy of the information presented at these sites.
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D edication
T o my wife, Theresa, and my children, Karen, Kathryn, and
Dave; and in the memory of my parents, Ram and Sheela
Kapoor
T o my wife, Linda, and my children, Carissa and Kyle; and
the memory of my parents, Les and Mary Dlabay
T o my mother, Barbara Y. Hughes; and my wife, Peggy
T o my husband, David Hart; and my children, Alex and
Madelyn
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F ocus on . . . the Authors
J ack R. Kapoor, EdD, C ollege of DuPage
J ack Kapoor is a professor of business and economics in the Business and Technology
Division of the College of DuPage, Glen Ellyn, Illinois, where he has taught business and
economics since 1969. He received his BA and MS from San Francisco State College and
his EdD from Northern Illinois University. He previously taught at Illinois Institute of
Technology’s Stuart School of Management, San Francisco State University’s School of
World Business, and other colleges. Professor Kapoor was awarded the Business and Tech-
nology Division’s Outstanding Professor Award for 1999–2000. He served as an assistant
national bank examiner for the U.S. Treasury Department and has been an international
trade consultant to Bolting Manufacturing Co., Ltd., Mumbai, India.
D r. Kapoor is known internationally as a co-author of several textbooks, including
B usiness: A Practical Approach (Rand McNally), B usiness (Cengage Learning), Business
and Personal Finance (Glencoe), and P ersonal Finance (McGraw-Hill). He served as a
content consultant for the popular national television series The Business File: An Intro-
duction to Business and developed two full-length audio courses in Business and Personal
Finance. He has been quoted in many national newspapers and magazines, including USA
Today, U.S. News & World Report, the Chicago Sun-Times, Crain’s Small Business, the
C hicago Tribune, and other publications.
Dr. Kapoor has traveled around the world and has studied business practices in capital-
ist, socialist, and communist countries.
L es R. Dlabay, EdD, Lake Forest College
T eaching about the “Forgotten Majority” (the three billion people living on $2 or less a
day) is a priority of Les Dlabay, professor of business at Lake Forest College, Lake For-
est, Illinois. He believes our society can improve global business development through
volunteer time, knowledge sharing, and financial donations. In addition to writing several
textbooks, Dr. Dlabay teaches accounting and various international business courses. His
“hobbies” include a collection of cereal packages from over 100 countries and banknotes
from 200 countries, which are used to teach about economic, cultural, and political aspects
of international business environments.
H is research involves informal and alternative financial services, microfinance, and
value chain facilitation in base-of-the-pyramid (BoP) market settings. Dlabay has pre-
sented more than 300 workshops and seminars for teachers and community organiza-
tions. He serves on the boards of Bright Hope International ( www.brighthope.org ), which
emphasizes microenterprise development through microfinance programs, and Andean
Aid (w ww.andeanaid.org) , which provides tutoring assistance to school-age children in
Colombia and Venezuela. Professor Dlabay has a BS (Accounting) from the University of
Illinois, Chicago; an MBA from DePaul University; and an EdD in Business and Economic
Education from Northern Illinois University. He has twice received the “Great Teacher”
award at Lake Forest College.
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Focus on . . . the Authors ix
R obert J. Hughes, EdD, D allas County
Community Colleges
Financial literacy! Only two words, but Bob Hughes, professor of business at Dallas County
Community Colleges, believes that these two words can change your life. Whether you
want to be rich or just manage the money you have, the ability to analyze financial deci-
sions and gather financial information are skills that can always be improved. Dr. Hughes
has taught personal finance, introduction to business, business math, small business man-
agement, small business finance, and accounting for over 35 years. In addition to F ocus on
Personal Finance and P ersonal Finance, published by McGraw-Hill/Irwin, he has authored
college textbooks for Introduction to Business, Business Mathematics, and Small Business
Management. He also served as a content consultant for two popular national television
series, D ollars & Sense: P ersonal Finance for the 21st Century and I t’s Strictly Business,
and he is the lead author for a business math project utilizing computer-assisted instruction
funded by the ALEKS Corporation. He received his BBA from Southern Nazarene Uni-
versity and his MBA and EdD from the University of North Texas. His hobbies include
writing, investing, collecting French antiques, art, and travel.
M elissa M. Hart, CPA North Carolina State University
Melissa Hart is a permanent lecturer in the Poole College of Management at North
Carolina State University. She was inducted into the Academy of Outstanding Teachers
in 2012. She teaches courses in personal finance and corporate finance. She has devel-
oped multiple ways to use technology to introduce real-life situations into the classroom
and the distance education environment. Spreading the word about financial literacy has
always been a p assion of hers. It doesn’t stop at the classroom. Each year she shares her
common-sense approach of “No plan is a plan” to various student groups, clubs, high
schools, and outside organizations. She is a member of the North Carolina Association of
Certified Public Accountants (NCACPA) where she serves on the Accounting Education
Committee. She received her BBA from the University of Maryland and an MBA from
North Carolina State University. Prior to obtaining an MBA, she worked eight years in
public a ccounting in auditing, tax compliance, and consulting. Her hobbies include keep-
ing up with her family’s many extracurricular activities as well as working on various
crafts. She travels extensively with her family to enjoy the many cultures and beauty of the
state, the country, and the world.
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