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PF > Exam 1 > Flashcards

Exam 1 Flashcards

(75 cards)

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0
Q

The six types of Insurance are:

A 
Life
Health
Disability
Auto
Homeowners
Umbrella (Excess)
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1
Q

The process of managing your money to achieve personal economic satisfaction

A

Personal Financial Planning

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2
Q

Two consecutive terms in which the market falls 10%

A

Recession

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3
Q

Step __ : Determine your current financial situation

A

One

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4
Q

Step __ : Develop financial goals

A

Two

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5
Q

Step __ : identify alternate courses of action

A

Three

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6
Q

Step __ : Evaluate alternatives

A

Four

  • Consequences of choices
    • Opportunity cost
    • Evaluating risk
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7
Q

What you give up when you make a choice

A

Opportunity Cost

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8
Q

Gathering information from financial planning resources is the best way to _______ and ________ risk.

A

Analyze, minimize

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9
Q

Rising prices cause lost buying power: _________ Risk

A

Inflation

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10
Q

Changing rates affect your costs and earnings: ________-____ Risk

A

Interest-Rate

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11
Q

Factors creating undesirable situations: ________ Risk

A

Personal Risk

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12
Q

Difficulty converting assets to cash without loss in value: _________ Risk

A

Liquidity

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13
Q

Step __ : Create and implement your financial action plan

A

Five

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14
Q

Step __ : Review and revise your plan

A

Six

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15
Q

A) The time frame in which you achieve your goals

B) the financial need that drives your goals

These things influence

A

Types of financial planning

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16
Q

Poor planning, weak financial habits, and extensive market influences are all reasons why

A

We have money problems

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17
Q

GOALS FOR DIFFERENT FINANCIAL NEEDS

Frequent and inexpensive (food, clothing, entertainment): ________ Product

A

Consumer

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18
Q

GOALS FOR DIFFERENT FINANCIAL NEEDS

Infrequent and expensive (auto, A/C system, refrigerator): _______-Product

A

Durable

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19
Q

GOALS FOR DIFFERENT FINANCIAL NEEDS

Health, education, leisure, relationships: ___________

A

Intangibles

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20
Q

Goals should be: SMART

S_______: know what your goals are to create a plan
M_________: with a specific amount
A_____-________: Identify personal financial activities
R________: utilizing our income and life situation
T___-_____: identify time frame to achieve goal

A 
Specific
Measurable
Action-oriented
Realistic
Time-based
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21
Q

Study of how wealth is created and distributed

A

Economics

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22
Q

______ ______ of supply and demand set prices and interest rates

A

Market forces

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23
Q

Our central banking system

Influences the dollars available for spending in the economy

A

Federal Reserve System

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24
Rise in the general level of prices
Inflation
25
____ __ __ determines when something will double How long does it take to double your money? __ in the numerator, % rate or time in the denominator.
Rule of 72
26
Dollars available for spending in our economy
Money supply
27
% of people willing and able to work who cannot find employment
Unemployment
28
of new houses being built
Housing starts
29
Total value of all G&S produced within our borders
Gross domestic product (GDP)
30
Exports - Imports
Trade balance
31
(e.g. NYSE, S&P 500, NASDAQ) relative value of stocks represented by the index
Stock market indexes
32
Every financial decision involves ______ __ something to _____ something else
Giving up, obtain
33
Time, health, leisure, and personal resources are all
Personal opportunity costs
34
Financial opportunity costs - Money used for ___ _______ cannot be used for _______.
One purpose, another
35
The idea that money has value over time
Time-value of Money
36
What three amounts are required to calculate Time-Value of Money (TVM)?
Principal (how much?) Interest rate (what rate?) Time (how long and how frequently?)
37
The formula (Principle) x (Annual IR) x (Time Period) is used to calculate
Simple Interest
38
The amount to which current savings will increase, based on a certain interest rate and a certain time period
Future Value
39
Future Value (FV) is also called ___________ - earning interest on previously warned interest
Compounding
40
Future Value (FV) can be computed for a series of deposits called _______.
Annuity
41
The current value of a future amount based on a certain interest rate and a certain time period
Present Value
42
Present Value (PV) calculations are also called
Discounting
43
The PV of the amount you want in the future will always be ____ than the FV
Less
44
__ can be computed for a series of deposits
PV
45
Formulas, tables, financial calculators, spreadsheet software, web sites are all methods for computing
TVM
46
A financial plan is a formalized report that... _________ your current financial situation ________ your financial needs __________ future financial activities
Summarizes Analyzes Recommends
47
The day-to-day financial activities needed to manage personal economic resources, while working toward long-term financial security
Money Management
48
Items in the safety deposit box consist mainly of _______ that would be ____ to replace.
Records, hard
49
Current/past budgets, summary of checks/banking transactions, past income tax returns, account summaries & investment performance, and computerized versions of wills and other documents belong
On your personal computer
50
Birth certificates, wills, and social security information should be kept (time)
Indefinitely
51
Keep records on personal property and investments for as long as
You own them
52
Keep documents rated to the purchase and sale of real estate ____________.
Indefinitely
53
Copies of returns and supporting data should be kept for _-_ years.
6-7
54
On a balance sheet, you must first list your ______.
Assets
55
What you own
Assets
56
The second step to filling out a balance sheet is to list your
Liabilities
57
What you owe
Liabilities
58
The third step in filling out a balance sheet is to calculate your
Net worth
59
Net worth = ______ - ___________
Assets - Liabilities
60
An indication of the financial position at any given date
Net worth
61
Debt ratio = ___________ / __
Liabilities / NW (Net worth)
62
A lower debt ratio is better or worse?
Better
63
Current ratio = __ / __
CA / CL
64
A higher current ratio is better or worse?
Better
65
The actual inflow and outflow for a given time period
Cash flow
66
Total cash flow received during time period - cash outflows during the time period = cash surplus or deficit. This is known as
Income and Expenditure Statement
67
CASH FLOW STATEMENT Step _ : record income Wages, salaries, & commissions
One
68
CASH FLOW STATEMENT Step _ : Record cash outflows
Two
69
CASH FLOW STATEMENT Step _ : Determine net cash flows
Three
70
A spending plan that estimated income and expenses
Budget
71
The main purposes of a ______ are to help you: - Live within your income - Spend your money wisely - Reach your financial goals - Prepare for financial emergencies - Develop wise financial management habits
Budget
72
Well-planned, Realistic, Flexible, & Clearly communicated are characteristics of a successful ______.
Budget
73
Having extra money for unexpected expenses, paying for replacement of expensive items, buying special items, providing for long-term expenses, & earning income from interest to pay for living expenses are all reasons to ____.
Save
74
There are a number of different savings techniques, but you should always do what first?
Pay yourself

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