Chapter 1 HW Quiz

If a $10,000 investment earns interest of $500 in one year, what is the rate of return? A. 5 percent B. 10term-5 percent C. 50 percent D. 75 percent E. 100 percent

A. 5 percent $500/$10,000 = .05 = 5%*

Changes in personal, social, and economic factors may require you to: A. Review and revise your financial plan more frequently B. Implement your financial action plan C. Develop your financial goals D. Determine current financial situation E. Create your financial plan of action

A. Review and revise your financial plan more frequently

A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities is a(n) A. Insurance Prospectus B. Financial Plan C. Budget D. Investment Forecast E. Statement

B. Financial Plan

Opportunity Cost refers to A. Money needed for major consumer purchases B. What you give up by making a choice C. The amount paid for taxes when a purchase is made D. Current interest rates E. Evaluating different alternatives for financial decisions

B. What you give up by making a choice

The major function of personal financial planning is to: A. Reduce taxes B. Increase savings C. Achieve personal economic satisfaction D. Improve your credit rating E. Obtain adequate insurance protection.

C. Achieve personal economic satisfaction

The first step of the financial planning process is to A. Develop financial goals B. Implement the financial plan C. Determine your current financial situation D. Evaluate and revise the financial plan E. Create a financial action plan

C. Determine your current financial situation

The goal of investing $50 per month for the next 12 years for your nephew's college fund is a(n) ______________ goal. A. Short Term B. Intermediate C. Long Term D.term-2 Intangible E. Durable

C. Long Term

If I can invest a dollar today and earn interest on it, then it should be worth ____________________ in the future. A. Less B. The same as C. More D. Either less or the same as E. Either the same as or more

C. More

If a $10,000 investment earns a 4% annual return, what should its value be after one year? A. $100 B. $400 C. $4,000 D. $10,000 E. $10,400

E. $10,400

Every decision involves uncertainty, which is referred to as A. Consequences of choice B. Alternate courses of action C. Financial goals D. Personal Values E. Evaluating Risk

E. Evaluating Risk