Fin Lit U1 Quiz

A formalized report that summarizes your current financial situation, analyzes you financial needs, and recommends a direction for your financial activities is a(n) _____.

• budget

• financial plan

Which short-term goal is stated the most clearly?

• buy a car for less than $17,000 within 6 months

• retire in 10 years at age 65 with $2,000,000 in my 401(k) account

Which would be the easiest to implement and measure?

• save $100 a month to create a $4000 emergency fund

• spend less each month

John Smith has a goal of saving $25 per month for a TV. What is missing?

• a time frame

• a specific objective

What is the difference between discretionary cash flow (DCF) and disposable income?

• disposable income = income - taxes

  discretionary cash flow = income - taxes - expenses

• disposable income = income - taxes - expenses

  discretionary cash flow = income - taxes

When your income, values, and family situation changes, you should ____.

• evaluate and revise your actions

• start a financial plan

If I invest a dollar today and earn interest on it, then it should be worth ___ in the future.

• more

• less

Which is important to consider when you calculate the time value of money? [Choose 2.]

• principal

• annual interest rate

• type of investment (stock, bond, etc.)

What is another term for future value computations?

• compounding

• discounting

The next best choice not taken of a decision is called ____.

• opportunity cost

• consumer purchase