MACRO TEST pt.2

Making financial decisions related to income involves all of the following except

Taking

The consumer price index measures

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

Example of a personal opportunity cost would be

Time comparing several brands of personal computers

To calculate the time value of money we need to consider all the following except

Type of investment

Future value computations are often referred to as

compounding

The goal of investing $50 per month for the next 12 years for your nephews college fund is a ______ goal

long term

Increased consumer saving and investing is likely to be accompanied by

lower interest rates

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 saving $2000 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

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

A regular savings plan for emergencies

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

A. Poor credit rating

Many Americans have money problems because of

A. Poor planning and weak money management habits

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

Adult life cycle

The problem of bankruptcy is associated with overuse and miss use of credit in the ______ component of financial planning

Borrowing

The 'borrowing' component in a financial plan relates to

Maintaining control over credit buying habits

If you want $1000 three years from now and you earn 4% on your savings how much do you need to deposit now

889%

If inflation is expected to be 8% how long will it take for prices to double

9 years

The first step of the financial planning process

Determine your current financial situation

_________ goals relate to infrequently purchased, expensive tangible items

Durable-product

Every decision involves uncertainty which is referred to as

Evaluating Risk

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

Financial plan

Which of the following is correct

Food and clothing are consumable product goals

Which of the following is an example of a financial opportunity cost

Foregoing wages to attend school

In investor should expect to receive a risk premium for

Higher uncertainty about getting his money back

The loss of a job or in countering 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

If I can invest a dollar today and earn interest on it 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 of cost is he incurring

Personal opportunity cost relating to time

Changes in personal social and economic factors may require you to

Review and revise your financial plan more frequently

The rule of 72 is

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

Opportunity cost refers to

What you give up by making a choice

Who is less likely to be harmed by inflation

borrowers

Present value computations are also referred to as

discounting

Changes in the cost of money is referred to as ____________ risk.

interest rate

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

liquidity