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BM 418 Day 7 Summary Sudweeks Spring 2012 I. Understand how a car fits into your financial plan A. We discuss the key reasons: Its mainly transportation B. We shared the #1 Auto Sales Scams. They haven’t changed much II. Understand how to buy or lease a vehicle A. We shared the story of Kermit and the best time to buy: month and year end III. Understand the lease versus buy decision A. We talked about the positives and negatives of Leasing B. We shared Leasing Terminology including: 1. MSRP, capitalized cost, capitalized cost reduction, net capitalized cost, lease term 2. We discussed the three areas of a lease: usage or depreciation, monthly interest or finance costs, and taxes. 3. We explained that money factor and usage is similar to the APR. It is “Average amount borrowed * average interest rate” 4. We did a case study and then showed TT21 – Lease versus Buy and how it works. a) Our answer was the same IV. Understand how to buy a new or used car A. We talked on the Key parts of car ownership which was: 1. Choosing a vehicle: goals, budget, safety, reports, insurance 2. Before you go looking: prices, holdback, warranties, service contracts 3. After you have found it: vehicle history, checked by mechanic, and maintenance records B. We shared some good websites, including: 1. Consumer Reports Consumerreports.com 2. Safer Car: www.safercar.gov 3. Carfax Online Carfaxonline.com C. I shared the story of the Expedition, where we never did go to dealership: Expedition D. Finally, I shared a story of the Jeep Cherokee, that even when do it all, still there are risks V. In conclusion A. My final thought is a list of some key formulas in Finance. These are for all people, not just finance people. They are: Key Formulas in Finance Expected Return of a Portfolio: The weighted return of a portfolio is the sum Of the weight of each individual asset times the expected Return of each asset Variance of a portfolio: The variance of a portfolio is the sum of the weight squared times the Standard deviation squared, plus the sum of the weights times the standard deviations Times the correlations between the assets Expected Return for life: The key to life is to always make sure that what you want (wYw) is always less than what God wants (wGw). If this is the case, you will always put your Father first, And yon will receive the blessings of always remembering Him and seeking first the Kingdom of God wYw < wGw