Personal Finance Chapter 1 Quiz

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

Budget.

Future value computations are often referred to as

Compounding.

The first step of the financial planning process is to

Determine your current financial situation.

Present value computations are also referred to as

Discounting.

Changes in the cost of money is referred to as _______risk.

Interest - Rate

The 'borrowing' component in a financial plan relates to

Maintaining control over credit-buying habits

Making financial decisions related to income involves all of the following except

Taking

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.

The loss of a job or encountering an illness results in _________risk.

income

The rising or falling of prices that causes changes in buying power is referred to as _________risk.

inflation

The difficulty of converting savings and investments to cash is referred to as _______risk.

liquidity

The problem of bankruptcy is associated with overuse and misuse of credit in the _____________component of financial planning.

Вогоwing

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

Adult life cycle

Every decision involves uncertainty, which is referred to as

Evaluating Risk

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.

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