Personal Finance Unit 1

If Melinda estimates her $100 weekly grocery bill will increase at an annual inflation rate of 4% what will it be in three years

$112.50

If a $10,000 investment earns interest of $500 in one year what is rate of return

((10,500-10,000)/10,000)•100= .5%

Financial experts recommend a debt/ payments ratio of less than ____ of take home pay

20%

Rhonda wants to take out a four-year loan for a car what type of computation what she used to calculate monthly payments

Present value of an annuity

Brown wants to go to a concert but is scheduled to work if you get it covered what kind of cost is he incurring

Personal opportunity costs relating to time

Opportunity cost refers to

Trade off of a decision

If you begin saving $2000 a year at 5% for nine years what will funds grow

Use exhibit 1-3 page 12 $22,054

Annual earnings on a $500 certificate of deposit earnings 3% would be

$15

The document that tells you what you received and spent over the past month is

Cash flow statement

Which is an example of financial opportunity cost

Saving money instead of spending it today

What appears as a cash outflow on a cash flow statement

Variable expenses

The major function of personal finance planning is to

Achieve personal economic satisfaction

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

A regular savings plan for emergencies

The cpi measures

Average change in prices of goods and services of urban consumers

Who is less likely to be harmed by inflation

Borrowers

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

Borrowing

Attempts to increase income through employment are parts of the ____

Component of financial planning

Future value computations are often referred to as

Compounding

Which of the following ratios indicates that liquid assets are available to pay current liabilities

Current ratio

First step of financial planning process

Determine your current financial situation

______ goals related to infrequently purchase expensive items

Durable product

The actual cost-of-living increase for household will be

Either greater than or less than inflation rate reported by cpi depending on household necessities purchased

Using services a financial institutions or specialist to seek relevant info is done in which step in financial planning

Evaluate your alternations

Every decision involves uncertainty which is referred to as

Evaluating risk

A Home file should be used to keep

Financial records for current needs

Davis deposit money for vacation after graduate school which formula to determine amount for vacation

Future value of a single amount

Wilson wants to deposit $150 into account earning 4% for next three years what type of computation would he use to determine amount he will have

Future value of annuity

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

Higher uncertainty of getting his or her money back

To develop financial goals one should

Identify specific realistic goals that are measurable with a timeframe an action plan

The time value of money refers to

Increases in an amount of money as a result of interest earned

The risk or falling of prices that causes changes in buying power is referred to as ____ risk

Inflation

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____ ridj

Liquidity

Increased consumer saving and investing is likely to be accompanied by

Lower interest-rates

The borrowing component in a financial plan relates to

Maintaining control over credit buying habits

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

Nine years

The tangible and intangible factors that create a less than desirable situation is referred to as____ risk

Personal

The step in the personal financial planning process that follows" create and implement your final action plan" is

Review and revise the plan

And example of a personal opportunity cost would be

Time comparing several brands of computers

The rule of 72 is

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