PERSONAL FINANCE - FINAL EXAM REVIEW
when creating a personal balance sheet whihc of the following is a current liability
medical bill
If I can invest a dollar today and earn interest on it, then it should be worth _________ in the future.
more
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
(Exam 1) personal finance planning is the process of managing your money to achieve personal economic satisfaction
true
Inflation is most harmful to people with fixed incomes
true
a balance sheet reports whan an individual or family owns and owes
true
a cash flow statement uses this equation: total cash received during the time period - cash outlaws during the time period= cash surplus or deficit
true
current liabilities are the debts you must pay within a short time, usually less than a year
true
inflation is a rise in the general level of prices and it reduces the buying power of the dollar
true
the equation to calculate net worth is
Assets - Liabilities = Net Worth
a budget is a record of how a person or a family has spent money
false
financial advantages suggest that an emergency fund should cover one to two months of living expenses
false
financial plans are only created by financial planners
false
the financial activities for a young, single person will probably be the same as those for an older couple with no dependent children at home
false
liquid assets can be easily converted to cash and include money in checking account and all personal possessions
fasle
a formalized report summarizes your current financial situation analyzes your financial need and recommends future financial activites is
financial plan
which of the following long term goals is stated most clearly using smart approach?
invest $50 per month for the next 12 years for my nephew's college fund
which of the following appears as a cash outflow on a cash flow statement
loan payment
which of the following financial documents would most likely be stored in a safe deposit box or fireproof home safe?
marriage certificates
money management refers to day to day financial activities necessary to manage current persona economic resources while working toward long term financial security
true
short term goals are usually achieved within the next year or so
true
the current financial position of an individual or family is a common starting point for financial planning
true
1.review and revise the financial plan 2.identify alternative courses of action 3.create and implement your financial action plan 4.determine your current financial situation 5. evaluate alternatives 6. develop your financial goals
4,6,2,5,3,1
financial experts recommend monthly savings of _______ gross income
5-10%
Every decision involves uncertainty, which is referred to as
evaluating risk
to develop financial goals one should
Identify specific, realistic goals that are measurable along with a time frame and an action plan
Many Americans have money problems because of
Poor planning and weak money management habits
the rule of 72 is
Used to estimate how fast prices will double using a given annual inflation rate
the main purpose of a personal financial statement is to
achieve all of the choices
the major function of personal financial planning is to
achieve personal economic satisfaction
the stages in the family situation and financial need of an adult is called the
adult life cycle
which of the following is component of money management
all of these choices are components of money management
which of the following is a liquid asset
all of theses liquid are assets
items that you own that have a monetary value referred to as
assets
who is less likely to be harmed by inflation
borrowers
Future value computations are often referred to as
compounding
which of the following ratios indicates that liquid assets are available to pay current liabilities for a household
current ratio
which of the following will increase the net worth of a household
decrease amount owed on credit cards
present value computations are also referred to as
discounting
a home file should be used to keep
financial records for current needs.
Steve Wilson wants to deposit $150 per month into an account earning 4 percent for the next 3 years, so he can purchase a used car at that time. What type of computation would he use to determine the amount he will have accumulated for his purchase?
future value of an annuity
Tim Taylor received a $500 gift from his grandparents. He wants to invest this money for the down payment of a house that he plans to purchase in 3 years. What type of computation should he use?
future value of single amount
patrick gutman graduated from college with 20,000 in student loans and 5,000 in credit card debt. he usually makes minimum payments on his debt and he has been late with three payment in the last year. he want to buy a new car but was told that his interest rate on a loan would be very high. what is the most likely reason this might be so
his Credit rating is below average due to missed payments
which of the following is a cash inflow
income from employment
An advantage of effective personal financial planning is:
increased control of financial affairs
the rising or falling of prices that causes changes in buying power is referred to as __________ risk
inflation
the inability to pay debts when they are due because liabilities far exceeds the value of assets is called
insolvency
Changes in the cost of money is referred to as ____________ risk.
interest rate
opportunity cost
what you give by making a choice
which of the following short term goals is stated most clearly using smart approach?
within the next 6 months, buy a car for less than 15,000
