Pearson PF ch1 vocab

What is bankruptcy?

• A strategy for increasing personal wealth

• A process where a person invests in stocks

• A method of saving money for future use

• A legal process for managing the finances of someone unable to pay bills

Which of the following is considered a liquid asset?

• Real estate

• A car

• Cash

• A long-term bond

What does opportunity cost refer to?

• The cost of buying a new opportunity

• The cost of pursuing one option over another

• The cost of hiring new employees

• The cost of maintaining a business

What is personal finance?

• Financial issues affecting a company

• Financial issues affecting an individual

• Financial issues affecting a government

• Financial issues affecting a non-profit organization

What is personal financial planning?

• Saving money in a bank account

• Investing in stocks and bonds

• Specifying financial goals and planning to achieve them

• Paying off all debts immediately

Which of the following is NOT a liquid asset?

• Savings account

• Stocks

• Real estate

• Cash

What is the main goal of personal financial planning?

• To increase debt

• To avoid paying taxes

• To specify financial goals and plan spending, financing, and investing

• To spend all your money

Which term describes the value of the activity you gave up when choosing another option?

• Liquid asset

• Bankruptcy

• Opportunity cost

• Personal finance

What does a court do in a bankruptcy process?

• Sells assets to the highest bidder

• Provides loans to individuals

• Takes over some of the finances of a person unable to pay bills

• Invests in the stock market

Which of the following best describes a liquid asset?

• An asset that is used for long-term investment

• An asset that depreciates over time

• An asset that is difficult to sell

• An asset that can be quickly converted to cash without loss of value