Connect Chapter 1 Smartbook Personal Finance
Future value computations are often referred to as compounding, as ______.
interest is earned on previously earned interest
Selecting your time rather than your money to meet your needs, achieve your goals, and satisfy your personal values are examples of:
personal opportunity costs.
The current value of an amount to be received at some time in the future, computed based on a certain interest rate and for a certain time period, is called Blank______.
present value
Long-term financial security begins with a regular savings plan to provide for
unexpected bills. replacement of major items. emergencies.
According to the text, why is goal setting an important aspect for personal financial growth?
Goal setting assists with the financial decision-making process.
True or false: A financial plan is a formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities. True false question.
True
True or false: Frank can invest some of the money he has been saving in the stock market now; however, that would probably require some trade-offs on his part.
True
True or false: Three items needed to calculate future value include: principal, length of time, and annual interest rate.
True
Which term is a set of federal laws that allows you to either restructure your debts or remove certain debts? Multiple choice question.
BANKRUPTCY
True or false: A key factor in making financial decisions is time value of money.
True
True or false: Liquidity needs vary based upon a person's age, health, and family situation.
True
The amount to which current savings will increase based on a certain interest rate and a certain time period is called
future value
Examples of opportunity costs do not include: Multiple choice question.
having enough money to fund retirement and pay for current expenses.
Savings plans are not designed to provide for:
last-minute vacations. unplanned social events.
To calculate time value of money, the following items are needed:
length of time annual interest rate principal amount
Sandra continues to have challenges keeping her debt at a reasonable level. This will mean that there will be:
less money available for the future.
The ability to buy or sell an investment quickly without substantially affecting the investments value is called ______
liquidity
When people first begin planning for retirement, saving for a child's college education, and planning the purchase of a vacation home, these are usually:
long term goals
What are some of the methods that can be used to compute time value of money?
mathematical formulas financial calculator time value of money tables
Since Carl has gone bankrupt, he decided to stop misusing his credit. This will mean that there will be:
more money available for the future.
According to your text, when there are influences on personal financial planning, what three elements should be assessed?
your life situation, personal values, and economic factors
What is the current value of a future amount based on a certain interest rate and a certain time period? Notice that the future value is already known. You want to find the current value of that amount.
present value
Paul invested $185. The interest earned is 4%, compounded annually. At the end of two years, Paul will have about:
$200
Sam has an investment of $200 that is expected to earn 10% annually. How much will the investment be worth at the end of the first year if the investment earns simple interest?
$220
Sam has an investment of $200 that is expected to earn 10% annually. How much will the investment be worth at the end of the first year if the investment earns simple interest? Multiple choice question.
$220
Phillip has an investment of $200 that is expected to earn 10% annually. How much will the investment be worth at the end of the second year if the investment earns simple interest annually? Multiple choice question.
$240
Paula invested $370. The interest earned is 4%, compounded annually. At the end of two years, Paula will have about:
$400
Samantha is trying to decide between two investments. The first one will earn 5% simple interest annually. The second investment will earn 5% compounded quarterly. Assuming they have the same amount of risk, which is the better investment? Multiple choice question.
5% compounded quarterly
Amy is creating and implementing her new financial action plan. As a result, she asks for more hours at work and she begins to save more money. Why is she doing this?
Amy has identified ways she can achieve her financial goals and has implemented her plan.
True or false: When creating a financial plan, it is a simple, static process that is easy to implement and requires little maintenance moving forward.
False
A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities is called a(n) ______.
Financial Plan
Which of the following is the outcome of poor financial management and extensive selling efforts by Americans? Multiple choice question.
Financial Problems
One of the methods used to calculate future value is:
Spreadsheet Software
Liquidity is the ability to buy or sell an investment quickly without substantially affecting the investments value.
True
Obtaining monetary resources is the foundation of personal ______ planning. Multiple choice question.
financial
Personal opportunity costs include using your time, in addition to or in place of money, to Multiple select question.
achieve your goals. satisfy your personal values. meet your needs.
When setting financial goals, you should ensure they are:
action-oriented. specific. time-based. measurable.
The different stages of the financial and family needs of an adult is called the:
adult life cycle.
A series of equal deposits or payments is called a(n):
annuity. (I have an annuity, but I need cash now! Call J.G. Wentworth 877CashNow!)
The present value is the ______ value for a ______ amount based on a particular interest rate for a certain period of time.
current;future
The (blank) environment includes various institutions, including businesses, labor, and government, that work together to satisfy needs and wants.
economic
What are three main elements that affect overall financial planning?
economic factors personal values life situation
An annuity is a series of ______ deposits. Multiple choice question.
equal
Liquidity needs vary based upon which of the following items?
family situation health the person's age
What is the typical time frame for an intermediate goal?
one to five years
Paul can invest his money in the stock market now instead of buying a new car; however, that would require a trade-off or:
opportunity costs.
Common ways to obtain financial resources are:
ownership of a business. employment. investments.
Three methods that help develop successful financial habits are:
providing adequate insurance coverage focusing on a defined spending plan understanding tax and investment information
Two methods that will not help develop long-term successful financial habits are:
saving as much money as possible for only one year. regularly using your emergency fund for routine expenses
One of the methods used to calculate future value is
spreadsheet software
Examples of opportunity costs include:
taking home less pay now because you have increased tax withholdings to receive a larger tax refund. not having as much money in savings because you purchased new appliances to save energy costs. not getting a high yield because you have set aside funds in a low-risk investment.
What is the definition of economics as described in this text under economic factors?
the study of how wealth is created and distributed
What measures the increase in an amount of money as a result of interest earned?
time value of money
So many Americans have money problems because:
1) of weak money management habits 2) of poor planning
The legal status of a person who is not able to pay debts owed is called: Multiple choice question.
BANKRUPTCY
