Ch1: Personal Finance

Front 1

Personal financial planning has the main goal of

Back 1

managing money to achieve personal economic satisfaction

Front 2

The first step of the financial planning process is to

Back 2

determine your current personal and financial situation

Front 3

Opportunity cost refers to

Back 3

the trade-off decision

Front 4

Increased consumer spending will usually cause

Back 4

higher employment levels

Front 5

The uncertainty associated with decision making is referred to as

Back 5

risk

Front 6

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:

Back 6

liquidity risk

Front 7

The financial planning process concludes with efforts to:

Back 7

revaluate and revise your actions

Front 8

Changes in income, values, and family situation make it necessary to:

Back 8

evaluate and revise your actions

Front 9

As Jeanne Taillefer plans to set aside funds for her young children’s college education, she is setting a(n) _________ goal

Back 9

long term

Front 10

_________ goals relate to personal relationships, health and education

Back 10

intangible-purchase

Front 11

Brad Opper has a goal of “saving %50 a month for vacation.” Brad’s goal lacks

Back 11

a time frame

Front 12

Which of the following goals would be the easiest to implement and measure its accomplishment?

Back 12

”save $100 a month to create $4000 emergency fund.”

Front 13

The present value of a future amount will decrease if

Back 13

the discount rate incr., the compounding freq. incr., inflation incr.

Front 14

Higher prices are likely a result from:

Back 14

increase spending by consumers

Front 15

Who is most likely to benefit by inflation

Back 15

borrowers

Front 16

Higher consumer prices are likely to be accompanied by:

Back 16

higher interest rates

Front 17

Higher interest rates can be caused by

Back 17

a lower money supply

Front 18

The changing cost of money is referred to as__________risk

Back 18

interest rate

Front 19

A risk premium associated with interest rates refers to:

Back 19

lower consumer prices

Front 20

The stages that an individual goes through based on age, financial needs, and family situation is called the

Back 20

adult life cycle

Front 21

The main economic influence that determines prices is

Back 21

supply and demand

Front 22

Reduced funds available for investment in our economy could result from

Back 22

higher imports than exports

Front 23

Which of the following would cause prices to drop

Back 23

increased production by business

Front 24

An example of a personal opportunity cost would be

Back 24

time comparing several brands of personal computers

Front 25

The time value of money refers to

Back 25

increases in an amount of money as a result of interest

Front 26

The amount for simple interest is determined by multiplying the amount in savings by the

Back 26

annual interest rate and the time period

Front 27

If a person deposited $100 per month for 5 years earning 9 percent, this would involve what type of computation

Back 27

future value of a series of deposits

Front 28

Which type of computation would a person use to determine current value of a desired amount for the future

Back 28

preset value of a single amount

Front 29

Future value calculations consider

Back 29

compounding

Front 30

If you put $1000 in a savings account and make no further deposits, what type of calculation would provide you with the value of the account in 20 years?

Back 30

future value of a single amount

Front 31

A major activity in the planning component of financial planning is

Back 31

allocating current resources for spending

Front 32

Liquidity refers to

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the ease of converting a financial resource into cash

Front 33

The problem of bankruptcy is associated with poor decisions in the ____________component of financial planning

Back 33

restructuring debt

Front 34

A question associated with the saving component of financial planning is

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do you have an adequate emergency fund?

Front 35

When an individual makes a purchase without considering the financial consequences of that purchase, they are ignoring the _________ aspect of financial planning

Back 35

spending

Front 36

The major function of a financial plan is to

Back 36

achieve financial goals

Front 37

Dani Roy wants to travel after she retires as well as pay off the balance of the loans she has on the home that she own. Which step in the financial planning process does the situation demonstrate?

Back 37

developing her financial goals

Front 38

Which of the following is usually considered a long-term financial strategy?

Back 38

investing in a growth mutual fund to accumulate retirement funds

Front 39

The second step of the financial planning process is to

Back 39

develop financial goals

Front 40

Decreased consumer spending will usually cause

Back 40

reduced employment levels

Front 41

Anne has a goal of “sabving some money month for vacation next summer” Anne’s goal lacks

Back 41

measurable terms

Front 42

Time value of money calculations consider

Back 42

pv, int rate, pmt, and time period