Finals

Question 1

It refers to managing the financial resources of an individual and his family to improve their equity and maintaining sufficient liquidity in the process. As in the management of a business entity, it involves adoption of long-term objectives, short-term goals and strategies to attain the latter,
actualization of predetermined plans, periodic review of performance and adoption of corrective measures.

Answer 1

Personal finance

Question 2

It refers to the excess of the total market value of assets owned over total obligations. Thus, if the total market value of the assets of an individual were P300,000 and total obligations amount to P80,000, his equity is the difference of P220,000. The emphasis in personal finance is on equity rather than on earnings because there are those who earn so much but spend all and there are those who earn less but live below their means.

Answer 2

Equity or net assets

Question 3

It refers to the relative amount of cash and assets that are readily convertible into cash based on the amount of disbursements to be made. This is emphasized in the definition of personal finance because one’s inability to meet obligations as they mature and family emergencies as they occur would result in insolvency regardless of how much equity he has.

Answer 3

Liquidity

Question 4

It refers to freedom from financial worries and being able to do what one enjoys doing.

Answer 4

Financial and personal independence

Question 5

Levels of Wealth

Answer 5

Level 1
Level 2
Level 3
Level 4
Level 5

Question 6

A family or an individual is able to meet its (his) periodic target savings goal and has adopted sufficient safety nets to ensure sufficient cash inflow and medical care in case of accidents and to ensure the continued education of the children or dependents.

At this level, there must have been adequate insurance coverage for accidents and sufficient amounts are being set aside to ensure the continued education of children and dependents. If the monthly target savings foal were P10,000 or P2,000 said amount is being religiously set aside in bank accounts.

Answer 6

Levels I:

Question 7

Portfolio must have reached that level at which periodic earnings therefrom equal the periodic target savings goal thereby bringing about an increase in portfolio value equal to double the latter.

The saver’s portfolio may now be a combination of savings accounts, time deposits,
premium savings accounts, trust investments,
commercial papers and treasury bills. The composition depends on the amount thereof. Assuming that a saver’s TSG were P5,000 per month, the portfolio’s monthly earnings must amount to more or less P5,000 also so that the periodic increase in portfolio value must be at least 10,000 per month.

Answer 7

Levels II:

Question 8

Portfolio must have reached that level at which periodic earnings therefrom approximate the saver’s current living cost.

At this level, the saver can already afford to be choosy as to the kind of livelihood he goes into. If based on his lifestyle, his living cost amounts to P400,000, his portfolio at this wealth level would be able to generate earnings that approximate this amount.

Answer 8

Levels III:

Question 9

Portfolio must have reached that level at which the annual earnings therefrom is sufficient to cover the saver’s living cost based on his desired lifestyle and as adjusted for inflation.
At this point, the saver may upgrade his lifestyle by traveling more often, improving his residence and even starting on another portfolio.

Answer 9

Levels IV

Question 10

Portfolio value has reached that level at which earnings therefrom can sustain more than saver’s annual living costs based on his improved lifestyle so that he can set up trust funds for the benefit of his children, buy another house, set up more scholarships and contribute bigger amounts to charity.

Answer 10

Levels V:

Question 11

The keys to success in personal finance are

Answer 11

*frugality
*vision
*safety nets.

Question 12

Spending less than earning. This refers to living below our means so that savings may be effected. In being frugal, we have to save, save and save. It requires control over expenditures which is taken up later in this chapter. Inasmuch as one continuously spends while he lives, personal finance is a continuous process. An individual may be successful at a certain point but suffers from lack of liquid assets because of over-investment in non-cash assets and sudden loss of earnings.

Answer 12

Frugality

Question 13

This refers to foresight or the ability to look far into the future. It entails short-term and long-term planning. In order to achieve our financial goals, we have to maintain focus on what we want to achieve in the long-run. From time to time mistakes are apt to be committed. These are charged to experience from which we learn and which we hope to avoid in the future.

Answer 13

Vision

Question 14

These are buffers or protections from losses of property and income.
These may be in the from of investment portfolios,
insurance policies and retirement or pension funds.

Answer 14

Safety Nets

Question 15

Why Save?

Answer 15

-Savings provide liquidity buffer
-Savings improve one’s financial position
-Savings provide a person with the capacity to make investments as the opportunity therefor arises
-Savings provide leverage
-Savings attract lenders.
-Savings promote self-confidence

Question 16

It refers to how much should a person save monthly or annually in order to accumulate a desired amount at a certain point in the future.

Answer 16

Target savings goal (TSG)

Question 17

2 types of Debt

Answer 17

1. Debts to incur
2. Debts to avoid

Question 18

Is a strategic or beneficial debt like loan for business

Answer 18

Debts to incur

Question 19

Is an unproductive debt like credit card debt

Answer 19

Debt to avoid

Question 20

are outlays of cash and noncash assets for goods and services. Objects of expenditures may be in the form of expenses and assets and some of the latter may be in the form of investment.

Answer 20

Expenditures

Question 21

These are expenditures or diminution in assets that provide current benefits only. Examples are food, depreciation and travel expenses.

Answer 21

Expenses

Question 22

It is anything of future value. Examples are appliances, cars, house, jewelry and real estate.

Answer 22

Asset

Question 23

It is an asset that is expected to result in future earnings. Examples are jewelry, real estate and stocks.

Answer 23

Investment

Question 24

It refers to the keeping track of actual expenditures, determining whether they are in accordance with budgets and promptly adopting corrective measures.

Answer 24

Control of expenditures

Question 25

Living cost includes?

Answer 25

Food House rental Transportation Car maintenance Telephone Light Power and water.

Question 26

This is usually the biggest item or expense in the budget.

Answer 26

Food

Question 27

A tool for budgeting. adherence to budgets may be enhanced by using this and by for the different recurring expenditures. There may be for children’s daily allowances, food, newspapers and medical expenses. The amounts set aside for other expenditures may be deposited into a current account.

Answer 27

money envelopes

Question 29

It is one from which withdrawals are made by issuing checks. It is advisable for an individual or family to maintain it and to control disbursements such as those water, light and power, telephone and amortization on loans. Periodic earnings may be deposited to this account from which periodic transfers to investment accounts are made.

Answer 29

current bank account

Question 30

An individual should prepare this and compare the same with his beginning balance sheet to determine where improvements were made or where weaknesses lie. In case of reduction in savings, there may have been accomplishments that are not measurable in terms of money such as improvement in the educational status of children, brothers or nephews and improved health of the family.

Answer 30

Year-End balance sheet

Question 31

Financial agreement between an individual and an insurance company. A safety net, an individual should have life and disability. This is preferably obtained at an early age when he cannot afford to leave his family without a bread-earner or suffer from loss of income in case of disability. The policy may be terminated when the individual has already accumulated his nest egg that is sufficient to take care of himself and his family in case of loss of income.

Answer 31

Insurance

Question 32

It is one that enables the holder thereof to make purchases on credit. It is often referred to as “plastic money”. It is issued by a credit card company upon approval of the application filed by the prospective cardholder. Some credit card companies charge annual fees and most of them charge interest on monthly balances. The latter are also referred to as surcharge or finance charge on the settlement of accounts. The card holder is able to make purchases on installment basis.

Answer 32

credit card

Question 33

It is a grayish white metallic element that is soft, dense, very ductile and malleable and with a high tensile strength. It has been used in jewelry, dentistry, X-ray equipment, medical and surgical instruments and heating units. It is much more expensive than gold because of its rarity and extensive usage.

Answer 33

Platinum

Question 34

It is a metallic chemical element that is soft, malleable and ductile so that it is an excellent conductor of heat and electricity. It is extracted by mining companies and is recovered from its contaminants by washing and filtering. If it is imbedded in a vein of another mineral, it is mechanically recovered by power shovels, drilling and blasting. It was widely used as money and as a base for monetary systems.

Answer 34

Gold

Question 35

It is very soft and resistant to sulfide formation so that it is mixed with silver to produce a soft and ductile alloy that is useful for electrical contacts.

Answer 35

Pure gold

Question 36

Yellow gold

Answer 36

*silver *copper in equal proportion.

Question 37

White gold

Answer 37

*nickel, *Zinc *Copper

Question 38

Red or rose gold

Answer 38

copper and sometimes a small quantity of silver

Question 39

The proportion of gold in an alloy is stated in terms of?

Answer 39

fineness or karat (k)

Question 40

Gold is quoted in the market per?

Answer 40

troy ounce. A troy ounce is equal to 31.1 grams

Question 41

Gold in bar forms and per US standard, the alloy consists of 90% pure gold and 10% copper. In as much as they are kept in vaults, ownership thereof is evidenced by certificates.

Answer 41

Gold bullions

Question 43

It is a white metallic element, ductile and malleable, having the highest electrical and thermal conductivity of any substance. It is resistant to corrosive materials, has some germicidal effect and is the most lustrous of all metals (reflecting about 95% of the light falling on it)

Answer 43

Silver

Question 44

The weight of gemstones is measured in?

Answer 44

carats and the equivalent of a carat is: One (1) carat (ct.) = 20 milligrams = 1/5 gram

Question 45

It is crystallized carbon and the hardest substance ever known. It is used in jewelry and in industries as an abrasive and in cutting tools. Its brilliance arises from its high refraction index, unusual clarity and transparency. Its dispersion power results in the refraction of light broken into the colours of the spectrum. They extracted subsequently cut or faceted to reveal to the naked eye its beauty and brilliance

Answer 45

Diamond

Question 47

Four C’s in Determining Value of Diamonds

Answer 47

Carat weight Clarity Color Cut.

Question 48

Diamond weight is expressed in? with one being equal to .2 gram. Thet are expressed in points so that a ¼ carat is stated as .25 ct. or 25 points and a ½ carat as .5 ct or 50 points

Answer 48

Carat

Question 49

This refers to the extent to which a diamond’s quality is free of inclusions. These are traces of non-crystallized carbon that are like nature’s fingerprints, thus making each diamond unique. The fewer and smaller are the inclusions, the less interference there is with the passage of light through the diamond and the more it will sparkle. Clarity is determined by examination under 10-times magnification by a trained eye.

Answer 49

Clarity

Question 50

These are traces of non-crystallized carbon that are like nature’s fingerprints, thus making each diamond unique.

Answer 50

Inclusions

Question 51

A diamond is considered? if it is without surface characteristics or internal inclusions

Answer 51

Flawless

Question 52

diamonds range from the totally colorless to light yellow and they are graded accordingly. The reason for this is that when a diamond has less color, the more white light can pass effortlessly through it and be dispersed on top as dazzling rainbows of color. However, there are very rare diamonds with color such as the canary yellow diamond

Answer 52

Colors

Question 53

This refers to the arrangement of a diamond’s facets and is due to the skills of a master cutter. A good cut brings out more sparkle because the diamond is better able to handle light thereby creating more brilliance. The conventional round brilliant consists of 58 facets.

Answer 53

Cut

Question 54

A nacre encrusted matter produced within the shell of some species of mollusks and is used as a gem. As such it is the only gem that comes from the sea and made by a living process. nacre encrusted matter produced within the shell of some species of mollusks and is used as a gem. As such it is the only gem that comes from the sea and made by a living process. nacre encrusted matter produced within the shell of some species of mollusks and is used as a gem. As such it is the only gem that comes from the sea and made by a living process.

Answer 54

Pearl

Question 55

They are considered superior to cultured pearls which are produced by using freshwater mussels

Answer 55

Saltwater pearls

Question 56

A standard south seas pearl takes how many years processing?

Answer 56

seven to nine years so that its nacre must be thicker than that on most of the other pearls.

Question 57

Why we should invest in gold?

Answer 57

1. Increases in value 2. In case of emergency you can instantly found it so you can have money quickly 3. Low maintenance 4. Tax free 5. Trendy

Question 59

Four reasons why is it good to invest in gold

Answer 59

1. Maganda itong panlaban sa inflation 2. Masasandalan sa panahon ng krisis 3. Magandang ipang dagdag sa iyong investment portfolio 4. Madali lang itong simulan

Question 60

It is the most common silver in the world with 92% silver and 7.5% copper fineness

Answer 60

Sterling silver

Question 61

Four things to consider before investing in gold

Answer 61

1. Don't buy gold when the value rises 2. Put it in a safe and secure storage 3. No income in cold investment 4. Make sure to buy interested stores or sellers

Question 62

Ways to invest in gold

Answer 62

1. Physical gold like gold jewelries bullions or gold coins 2. Stocks 3. ETF's