Exam 1: Overview of a Financial Plan

Use the following description of terms to answer the matching questions below: A) forecasting future expenses and savings B) uncertainty on a potential return on an investment C) what you own D) determining how much money you should set aside for retirement E) what you owe F) decisions regarding how much money to hold in liquid form and how to allocate funds among short term investments G) determining how your wealth will be distributed before or upon your death H) current value of what you own minus what you owe I) source of current information about a variety of topics J) access to funds to cover any short-term cash deficiencies -retirement planning

Credit should be used only when necessary, since it usually involves borrowed funds that you will need to pay back with interest.

Your budget is influenced by your income, which in turn is influenced by your education and career decisions.

Which of the following would be classified as a short-term goal?

Which of the following is not a step in developing a financial plan?

Match the goals in the first column with the items in the second column: -intermediate goal

Jessie has $4,000 in a bank account, $2,800 in a 401(k) plan at work, a car with a current value of $28,000, and a house that she purchased for $92,000 that has a current value of $118,000. The current balance of her home mortgage is $81,000, she has one credit card with a $3,000 balance, and a student loan with a balance of $6,000. What is Jessie's current net worth?

Use the following description of terms to answer the matching questions below: A) forecasting future expenses and savings B) uncertainty on a potential return on an investment C) what you own D) determining how much money you should set aside for retirement E) what you owe F) decisions regarding how much money to hold in liquid form and how to allocate funds among short term investments G) determining how your wealth will be distributed before or upon your death H) current value of what you own minus what you owe I) source of current information about a variety of topics J) access to funds to cover any short-term cash deficiencies -liquidity

To increase your savings,

One of the considerations that determines your investment choices is the level of risk you are willing to tolerate.

Which of the following is not a relevant consideration when identifying alternatives for achieving your financial goals?

Which item is not one of the components of a personal financial plan?

Why is it important to understand how taxes impact your personal financial planning?

Personal finance does not include the process of planning your

Which of the following is not a decision that you would probably encounter in managing your budget?

Jakob received a $1,000-a-year raise in January, sold stocks in March for $6,000 that were originally purchased for $4,000, and in July had a $100 monthly increase in mortgage payments on his adjustable rate mortgage. The increased mortgage payment started in July and was in effect for the remainder of the year. What was the total impact on Jakob's cash flow for the year?

Use the following description of terms to answer the matching questions below: A) forecasting future expenses and savings B) uncertainty on a potential return on an investment C) what you own D) determining how much money you should set aside for retirement E) what you owe F) decisions regarding how much money to hold in liquid form and how to allocate funds among short term investments G) determining how your wealth will be distributed before or upon your death H) current value of what you own minus what you owe I) source of current information about a variety of topics J) access to funds to cover any short-term cash deficiencies -Web site

Which of the following does not protect your assets and/or income?

Use the following description of terms to answer the matching questions below: A) forecasting future expenses and savings B) uncertainty on a potential return on an investment C) what you own D) determining how much money you should set aside for retirement E) what you owe F) decisions regarding how much money to hold in liquid form and how to allocate funds among short term investments G) determining how your wealth will be distributed before or upon your death H) current value of what you own minus what you owe I) source of current information about a variety of topics J) access to funds to cover any short-term cash deficiencies -net worth

The income in your budget is not affected by