MACRO TEST pt.2
Making financial decisions related to income involves all of the following except
Taking
The consumer price index measures
The average change in prices of fixed basket of goods and services of urban consumers
Example of a personal opportunity cost would be
Time comparing several brands of personal computers
To calculate the time value of money we need to consider all the following except
Type of investment
Future value computations are often referred to as
compounding
The goal of investing $50 per month for the next 12 years for your nephews college fund is a ______ goal
long term
Increased consumer saving and investing is likely to be accompanied by
lower interest rates
If a $10,000 investment earns a 7% annual return, what should its value be after 6 years?
$15,010
Randy Hill wants to retire in 20 years with $1,000,000. If he can earn 10% per year on his investments, how much does he need to deposit each year to reach his goal? Round your answer to the nearest dollar.
$17,460
If you begin saving $2000 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
The saving component of financial planning focuses on long-term security and includes:
A regular savings plan for emergencies
Which of the following would increase the interest rate for a loan
A. Poor credit rating
Many Americans have money problems because of
A. Poor planning and weak money management habits
The stages in the family situation and financial needs of an adult is called the
Adult life cycle
The problem of bankruptcy is associated with overuse and miss use of credit in the ______ component of financial planning
Borrowing
The 'borrowing' component in a financial plan relates to
Maintaining control over credit buying habits
If you want $1000 three years from now and you earn 4% on your savings how much do you need to deposit now
889%
If inflation is expected to be 8% how long will it take for prices to double
9 years
The first step of the financial planning process
Determine your current financial situation
_________ goals relate to infrequently purchased, expensive tangible items
Durable-product
Every decision involves uncertainty which is referred to as
Evaluating Risk
A formalized report that summarizes your current financial situation analyzes your financial needs and recommends future financial activities is a
Financial plan
Which of the following is correct
Food and clothing are consumable product goals
Which of the following is an example of a financial opportunity cost
Foregoing wages to attend school
In investor should expect to receive a risk premium for
Higher uncertainty about getting his money back
The loss of a job or in countering illness results in _______ risk
Income
An advantage of effective personal financial planning is
Increased control of financial affairs
Which of the following best describes the concept of the time value of money
Increases in an amount of money as a result of interest earned
The rising or falling of prices that causes changes in buying power is referred to as_____ risk.
Inflation
If I can invest a dollar today and earn interest on it it should be worth_______ in the future
More
Attempts to increase income through employment are part of the_____ component of financial planning
Obtaining
The tangible and intangible factors that create a less than desirable situation is referred to as ________ risk
Personal
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
Changes in personal social and economic factors may require you to
Review and revise your financial plan more frequently
The rule of 72 is
Used to estimate how fast prices will double using a given annual inflation rate
Opportunity cost refers to
What you give up by making a choice
Who is less likely to be harmed by inflation
borrowers
Present value computations are also referred to as
discounting
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 ____________ risk.
liquidity