Ch1

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

If you begin saving $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

Rhonda Miller wants to take out a 4 year loan to purchase a car. What type of computation would she use to calculate her monthly payments?

Present value of an annuity

Personal opportunity costs refer to resources, such as time, health, and energy, that are given up when a choice is made.

TRUE

Retirement planning includes thinking about your housing situation, recreational activities, and possible volunteer or part-time work.

TRUE

The major function of personal financial planning is to

Achieve personal economic satisfaction.

The goal of purchasing a long-term care insurance policy would be most appropriate for

An older single person with children.

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

9 years

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 'borrowing' component in a financial plan relates to

Maintaining control over credit-buying habits

The first step of the financial planning process is to

Determine your current financial situation.

Present value computations are also referred to as

Discounting.

Purchasing an appliance is an example of a consumable-product goal.

FALSE

There are only 3 methods of calculating time value of money.

FALSE

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 a single amount

A savor or an investor should expect to receive a risk premium for

Higher uncertainty about getting his/her money back

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

Long-term

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

Many Americans have money problems because of

Poor planning and weak money management habits

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

Type of investment.


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