Chapter 1 Financial Planning Process
A person would use the future value of a single amount computation to determine current value of a desired amount for the future.
False
As Jean Tyler plans to set aside funds for her young children's college education, she is setting a short-term goal.
False
Future value calculations involve discounting
False
Some savings and investment choices have the potential for higher earnings. However, these may also be difficult to convert to cash when you need the funds. This problem refers to inflation risk.
False
The financial planning process is complete once you implement your financial plan.
False
With an inflation rate of 9 percent, prices would double in about 3 years.
False
A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends a direction for your financial activities is a financial plan.
True
If a person deposited $50 a month for 6 years earning 8 percent, this would involve a future value of a series of deposits computation.
True
Inflation risk refers to the danger of lost buying power during times of rising prices.
True
Opportunity cost refers to what a person gives up by making a choice.
True
The first step of the financial planning process is to analyze your current personal and financial situation.
True
The main economic influence that determines prices is supply and demand.
True
The main goal of personal financial planning is achieving personal economic satisfaction.
True
The stages that an individual goes through based on age, financial needs, and family situation is called the adult life cycle.
True
The time value of money refers to increases in an amount of money as a result of interest.
True