Describe the major components of a personal financial plan.2.why are there different types of bankruptcy? 3.discuss the advantages of investing through a mutual fund. PART.B answer each of the...

Personal financial management
PART;A answer each of the following questions in one or two paragraphs. Each answer is
worth 20 points.
1.describe the major components of a personal financial plan.
Solution:
Personal financial plan takes into consideration different aspect, the major components of the
financial plan is assessing the current situation of the person along with their future goals on
basis of which personal financial plan is made. The main components of financial planning that
are taken into consideration are obtaining, planning, saving, borrowing, spending, managing risk,
investing, and retirement and estate planning.
For developing a comprehensive financial plan, different aspects needs to be taken into
consideration which will take into consideration establishing the necessary foundation, securing
basic needs which will include consumption and housing needs, setting aside funds for financial
emergencies, protecting your assets with insurance, establishing a career path, and making
educated employee benefits decisions, building the wealth which will help in fulfilling the future
needs. The final stage includes protecting wealth and dependents. The personal financial plan
includes the current situation, the personal goals, retirement analysis, and different assumptions
on the basis of which net worth statement is prepared.
2.why are there different types of bankruptcy?
Solution:
There are different types of bankruptcy as all the bankruptcy are levied as per the situation of the
person. Chapter 7 bankruptcy is when the all the assets that are owned by an individual are
collected by the trustee of the court and are sold for cash. Under chapter 13 bankruptcy is
designed for the individuals who have steady source of income. It focuses on individual
reorganization in which the debtor settles its debt in the period of three to five years. Chapter 11
is applicable generally for large organizations. On different personal situations, different
bankruptcy types are applicable.
3.discuss the advantages of investing through a mutual fund.
Solution:
Investment in mutual funds has different advantages, investment in mutual funds fosters
diversification, as mutual fund is diverse pool of investments in each asset class and it generally
specializes in few asset classes. Transaction cost associated with the investment in mutual fund is
comparatively quite less. Mutual funds make large-volume trades, their costs per trade are likely



to be...