Personal finance Ch 1 quiz
The life situation of a household includes a combination of personal factors such as age, income, household size, and personal beliefs.
True
The difficulty of converting savings and investments to cash is referred to as ____________ risk.
liquidity
Interest rate risk
changes in the cost of money which can affect your costs and benefits
income risk
result from a loss of a job or encountering illness
Inflation risk
rising or falling (deflation) prices that cause changes in buying power
If Melinda Miller estimates that her $100 weekly grocery bill will increase at an annual inflation rate of 4%, what should her weekly grocery bill be in 3 years?
$112.50
The saving component of financial planning focuses on long-term security and includes:
A regular savings plan for emergencies
There are only 3 possible courses of action when developing alternatives for decision making.
False
Future Value
=Present Value(1+interest)^number of time periods
Financial Plans are only created by financial planners.
False
Opportunity costs refer to money already spent.
Flase
The time value of money refers to
Increases in an amount of money as a result of interest earned.
personal risk
involves tangible and intangible factors that create a less than desirable situation such as health or safety concerns
liquidity risk
when savings and investments that have potential for higher earnings are difficult to convert to cash or to sell without significant loss in value