Ch1
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.