PERSONAL FINANCE - FINAL EXAM REVIEW

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when creating a personal balance sheet whihc of the following is a current liability

medical bill

If I can invest a dollar today and earn interest on it, then it should be worth _________ in the future.

more

which of the following would increase the interest rate for a loan?

poor credit rating

Changes in personal, social, and economic factors may require you to

review and revise your financial plan more frequently

(Exam 1) personal finance planning is the process of managing your money to achieve personal economic satisfaction

true

Inflation is most harmful to people with fixed incomes

true

a balance sheet reports whan an individual or family owns and owes

true

a cash flow statement uses this equation: total cash received during the time period - cash outlaws during the time period= cash surplus or deficit

true

current liabilities are the debts you must pay within a short time, usually less than a year

true

inflation is a rise in the general level of prices and it reduces the buying power of the dollar

true

the equation to calculate net worth is

Assets - Liabilities = Net Worth

a budget is a record of how a person or a family has spent money

false

financial advantages suggest that an emergency fund should cover one to two months of living expenses

false

financial plans are only created by financial planners

false

the financial activities for a young, single person will probably be the same as those for an older couple with no dependent children at home

false

liquid assets can be easily converted to cash and include money in checking account and all personal possessions

fasle

a formalized report summarizes your current financial situation analyzes your financial need and recommends future financial activites is

financial plan

which of the following long term goals is stated most clearly using smart approach?

invest $50 per month for the next 12 years for my nephew's college fund

which of the following appears as a cash outflow on a cash flow statement

loan payment

which of the following financial documents would most likely be stored in a safe deposit box or fireproof home safe?

marriage certificates

money management refers to day to day financial activities necessary to manage current persona economic resources while working toward long term financial security

true

short term goals are usually achieved within the next year or so

true

the current financial position of an individual or family is a common starting point for financial planning

true

1.review and revise the financial plan 2.identify alternative courses of action 3.create and implement your financial action plan 4.determine your current financial situation 5. evaluate alternatives 6. develop your financial goals

4,6,2,5,3,1

financial experts recommend monthly savings of _______ gross income

5-10%

Every decision involves uncertainty, which is referred to as

evaluating risk

to develop financial goals one should

Identify specific, realistic goals that are measurable along with a time frame and an action plan

Many Americans have money problems because of

Poor planning and weak money management habits

the rule of 72 is

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

the main purpose of a personal financial statement is to

achieve all of the choices

the major function of personal financial planning is to

achieve personal economic satisfaction

the stages in the family situation and financial need of an adult is called the

adult life cycle

which of the following is component of money management

all of these choices are components of money management

which of the following is a liquid asset

all of theses liquid are assets

items that you own that have a monetary value referred to as

assets

who is less likely to be harmed by inflation

borrowers

Future value computations are often referred to as

compounding

which of the following ratios indicates that liquid assets are available to pay current liabilities for a household

current ratio

which of the following will increase the net worth of a household

decrease amount owed on credit cards

present value computations are also referred to as

discounting

a home file should be used to keep

financial records for current needs.

Steve Wilson wants to deposit $150 per month into an account earning 4 percent for the next 3 years, so he can purchase a used car at that time. What type of computation would he use to determine the amount he will have accumulated for his purchase?

future value of an annuity

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 single amount

patrick gutman graduated from college with 20,000 in student loans and 5,000 in credit card debt. he usually makes minimum payments on his debt and he has been late with three payment in the last year. he want to buy a new car but was told that his interest rate on a loan would be very high. what is the most likely reason this might be so

his Credit rating is below average due to missed payments

which of the following is a cash inflow

income from employment

An advantage of effective personal financial planning is:

increased control of financial affairs

the rising or falling of prices that causes changes in buying power is referred to as __________ risk

inflation

the inability to pay debts when they are due because liabilities far exceeds the value of assets is called

insolvency

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

interest rate

opportunity cost

what you give by making a choice

which of the following short term goals is stated most clearly using smart approach?

within the next 6 months, buy a car for less than 15,000


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