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42 Cards in this Set

  • Front
  • Back
Personal financial planning has the main goal of
managing money to achieve personal economic satisfaction
The first step of the financial planning process is to
determine your current personal and financial situation
Opportunity cost refers to
the trade-off decision
Increased consumer spending will usually cause
higher employment levels
The uncertainty associated with decision making is referred to as
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:
liquidity risk
The financial planning process concludes with efforts to:
revaluate and revise your actions
Changes in income, values, and family situation make it necessary to:
evaluate and revise your actions
As Jeanne Taillefer plans to set aside funds for her young children’s college education, she is setting a(n) _________ goal
long term
_________ goals relate to personal relationships, health and education
Brad Opper has a goal of “saving %50 a month for vacation.” Brad’s goal lacks
a time frame
Which of the following goals would be the easiest to implement and measure its accomplishment?
”save $100 a month to create $4000 emergency fund.”
The present value of a future amount will decrease if
the discount rate incr., the compounding freq. incr., inflation incr.
Higher prices are likely a result from:
increase spending by consumers
Who is most likely to benefit by inflation
Higher consumer prices are likely to be accompanied by:
higher interest rates
Higher interest rates can be caused by
a lower money supply
The changing cost of money is referred to as__________risk
interest rate
A risk premium associated with interest rates refers to:
lower consumer prices
The stages that an individual goes through based on age, financial needs, and family situation is called the
adult life cycle
The main economic influence that determines prices is
supply and demand
Reduced funds available for investment in our economy could result from
higher imports than exports
Which of the following would cause prices to drop
increased production by business
An example of a personal opportunity cost would be
time comparing several brands of personal computers
The time value of money refers to
increases in an amount of money as a result of interest
The amount for simple interest is determined by multiplying the amount in savings by the
annual interest rate and the time period
If a person deposited $100 per month for 5 years earning 9 percent, this would involve what type of computation
future value of a series of deposits
Which type of computation would a person use to determine current value of a desired amount for the future
preset value of a single amount
Future value calculations consider
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?
future value of a single amount
A major activity in the planning component of financial planning is
allocating current resources for spending
Liquidity refers to
the ease of converting a financial resource into cash
The problem of bankruptcy is associated with poor decisions in the ____________component of financial planning
restructuring debt
A question associated with the saving component of financial planning is
do you have an adequate emergency fund?
When an individual makes a purchase without considering the financial consequences of that purchase, they are ignoring the _________ aspect of financial planning
The major function of a financial plan is to
achieve financial goals
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?
developing her financial goals
Which of the following is usually considered a long-term financial strategy?
investing in a growth mutual fund to accumulate retirement funds
The second step of the financial planning process is to
develop financial goals
Decreased consumer spending will usually cause
reduced employment levels
Anne has a goal of “sabving some money month for vacation next summer” Anne’s goal lacks
measurable terms
Time value of money calculations consider
pv, int rate, pmt, and time period