Test 1 Review - Personal Finance Basics

What are some ways to increase your human capital?

What determines the rate of return on an investment?

What is the rule of 72 and how do you calculate it?

• An estimate for the number of years it will take for an investment to double, calculated by subtracting the rate of return (interest rate) from 72.

• An estimate for the number of years it will take for the rate of return to double, calculated by dividing 72 by the length of time the principal amount is held on deposit.

• An estimate for the number of years it will take for the principal deposit to double, calculated by dividing 72 by the rate of return.

• An estimate of the time it will take you to graduate from a 4-year college, you divide 72 by the total number of courses you need to graduate.

Human capital is defined as:

• the knowledge, talent, and skills that people possess.

• the common knowledge, talent, and skills that all people in the workforce need to have to be successful.

• all the members of a population who are able and available to work.

• money used by humans.

What are some financial options for funding post secondary education?

The first step in successfully creating and using a budget is

• developing the budget plan.

• determining income.

• identifying expenses and tracking spending.

• to take an inventory of all the silverware in the house.

In general, an inverse relationship exists between:

• education and earnings

• education and unemployment

• human capital and income

• supply and price

What is compound interest?

How can you plan for a post secondary education?

You are considered unemployed if you are a full time college student.

• True

• False