Mid-term exam - Personal Finance

Opportunity cost refers to :

• Your personal values.

• Trade-offs when a decision is made.

• Current economic conditions.

• Commonly accepted financial goals.

The first step in the financial planning process is to

• Create a financial plan of action.

• Develop financial goals.

• Evaluate and revise your actions.

• Determine your current financial situation.

You need a place to live. You have determined that you can continue to rent an apartment, move in with your parents, look at buying a condominium or look at buying a house. This is an example of which step in the financial planning process?

• Determining your current financial position

• Developing financial goals

• Identifying alternative courses of action

• Evaluating alternatives

The life cycle approach is the idea that an average person goes through three basic stages in personal financial management.

• True

• False

You want to budget your money so that you can see a movie once a month. This is an example of:

• A consumable products financial goal

• A durable goods financial goal

• An intangible goal

• A long term financial goal

Economics refers to

• Setting personal financial goals.

• Planning future financial security.

• Changes in prices due to supply and demand.

• The study of wealth.

Financial strategies refer to :

• The process of predicting your future financial situation.

• Courses of action to achieve financial goals.

• Resources an individual has available for investing.

• Ideas or principles that are considered correct, desirable, or important.

Interest rate risk and inflation risk can affect any financial decision.

• True

• False

A(n) __________ is a specific plan for spending.

• Budget

• Balance sheet

• Income statement

• Bank statement

An example of a liquid asset would be

• A home

• An automobile

• A bank account

• Retirement account