Personal Finance Final

If a $10,000 investment earns a 4 percent annual return, what should its value be after 1 year?

10,400

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

20%

Given the following information, calculate the debt ratio percentage: Liabilities = $25,000Liquid assets = $5,000Monthly credit payments = $800Monthly savings = $760Net worth = $75,000 Take-home pay = $2,300Gross income = $3,500Monthly expenses = $2,050

33.33%

Common stock and bond brokerage statements are an example of a(n) ____________ record.

investment

Randy Hill wants to retire in 20 years with $1,000,000. If he can earn 10 percent per year on his investments, how much does he need to deposit each year to reach his goal?Use Exhibit 1-B. (Round your answer to the nearest dollar.)

$17,460

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 (Rule of 72: 72/8 = 9 years)

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

A regular savings plan for emergencies

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

Present value computations are also referred to as:

Discounting

A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities is a(n):

Financial plan.

Which of the following best describes the concept of the time value of money?

Increases in amounts of money as a result of interest earned

Changes in the cost of money is referred to as ____________ risk.

Interest rate

Increased consumer saving and investing is likely to be accompanied by:

Lower interest rates

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

A current ratio means:

___ of liquid assets are available for every ___ of current liabilities.