Macro Ch. 4-8 unlimited questions

If I can invest a dollar today and earn interest on it, then it should be worth _________ in the future.

more

Attempts to increase income through employment are part of the_______ component of financial planning.

obtaining

The tangible and intangible factors that create a less than desirable situation is referred to as _______ risk.

personal

Robert Brown is interested in attending a concert next weekend. Unfortunately, he is scheduled to work. If he finds a substitute for his shift so he can attend the concert, what kind fo cost is he incurring?

personal opportunity cost related to time

Which of the following would increase the interest rate for a loan?

poor credit rating

Changes in personal, social, and economic factors may require you to

review and revise your financial plan more frequently

In making financial decisions related to income involves all the following except -spending -saving -sharing -taking -all of these are financial decisions

taking

An example of a personal opportunity cost would be

time comparing several brands of personal computers

If a $10,000 investment earns a 7% annual return, what should its value be after 6 years?

$15,010

Randy Hill wants to retire in 20 years with $1,000,000. If he can earn 10% per year on his investments, how much does he need to deposit each year to reach his goal? Round your answer to the nearest dollar.

$17,460

If you begin savings $2,000 a year at 5% (from age 22 to age 30 or 9 years), what will these funds grow to in this time period?

$22,054

A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities is a(n)

financial plan

The difficulty of converting savings and investments to cash is referred to as _______ risk

liquidity

Increased consumer saving and investing is likely to be accompanied by

lower interest rates

The 'borrowing' component in a financial plan relates to

maintaining control over credit-buying habits

If you want $1,000 three years from now and you warn 4 percent on your savings, how much do you need to deposit now?

$889

Which of the following is correct? - a car purchase is a consumable product goal. -entertainment is a durable product goal. -appliances and sporting equipment are intangible purchase goals. -leisure and education are durable product goals -food and clothing are consumable product goals

- food and clothing are consumable product goals

If inflation is expected to be 8 percent, how long will it take for prices to double?

9 years (72 rule)

which of the following is an example of a financial opportunity cost?

Forgoing wages to attend school

The goal of investing $50 per month for the next 12 years for your nephew's college fund is a(n)________ goal

Long-term

Many Americans have money problems because of

Poor planning and weak money management habits

The consumer price index measures:

The average change in prices of goods and services of urban consumers

The rule of 72 is:

Used to estimate how fast prices will double using a given annual inflation rate

The saving component of financial planning focuses on long-term security and includes:

a regular savings plan for emergencies

The stages in the family situation and financial needs of an adult is called the

adult life cycle

Who is less likely to be harmed by inflation?

borrowers

The problem of bankruptcy is associated with overuse and misuse of credit in the ________ component of financial planning.

borrowing

Future value computations are often referred to as

compounding

The first step of the financial planning process is to

determine your current financial situation

present value computations are also referred to as

discounting

________ goals relate to infrequently purchased, purchased, expensive tangible items.

durable-product

Every decision involves uncertainty, which is referred to as

evaluating risk

An investor should expect to receive a risk premium for

higher uncertainty about getting his/her money back

The loss of a job or encounter an illness results in _______ risk.

income

An advantage of effective personal financial planning is

increased control of financial affairs

Which of the following best describes the concept of the time value of money?

increases in an amount of money as a result of interest earned

The rising or falling of prices that causes changes in buying power is referred to as _______ risk

inflation

changes in the cost of money is referred to as ______ risk.

interest-rate

To calculate the time value of money, we need to consider all the following except the -amount of the savings -annual interest rate -length of time the money is on deposit -type of investment -principal

type of investment

Opportunity cost refers to

what you give up by making a choice