Personal Finance - CORRECT ANSWER-process of planning, spending, financing, and investing so as to optimize your financial situation
Personal Financial Plan - CORRECT ANSWER-A plan that specifies your financial goals and plans to achieve them
Opportunity Cost - CORRECT ANSWER-What you give up...
PERSONAL FINANCE EXAM 1 WITH ALL
QUESTIONS AND COMPLETE ANSWERS
APPROVED
Personal Finance - CORRECT ANSWER-process of planning, spending, financing, and investing so as to
optimize your financial situation
Personal Financial Plan - CORRECT ANSWER-A plan that specifies your financial goals and plans to
achieve them
Opportunity Cost - CORRECT ANSWER-What you give up as a result of a decision
Financial Plan Components - CORRECT ANSWER-1. Budgeting and tax planning
2. Managing your liquidity
3. Financing your large purchases
4. Protecting your assets and income (insurance)
5. Investing your money
6. Planning your retirement estate
Budget Planning - CORRECT ANSWER-Process of forecasting future expenses and savings
Assets - CORRECT ANSWER-What you own
Liabilities - CORRECT ANSWER-What you owe
Net Worth - CORRECT ANSWER-(Value of what you own) - (Value of what you owe)
Liquidity - CORRECT ANSWER-Access to funds to cover any short term cash deficiencies
, Money Management - CORRECT ANSWER-Decisions regarding how much money to retain in a liquid
form, and how to allocate the funds among short-term investments
Credit Management - CORRECT ANSWER-Decisions regarding how much credit to obtain to support your
spending and which source of credit to use
Plans for Investing - CORRECT ANSWER-Any funds beyond what you need to maintain liquidity should be
invested.
Estate Planning - CORRECT ANSWER-determining how your wealth will be distributed before or upon
your death
Effective financial plan can... - CORRECT ANSWER-enhance net worth and build wealth
Financing focuses on... - CORRECT ANSWER-obtaining cash for large purchases or repaying loans
Steps of Developing a Financial Plan - CORRECT ANSWER-1. Establish Your Financial Goals
2. Consider Your Current Financial Position
3. Identify and Evaluate Alternative Plans That Could Achieve Your Goals
4. Select and Implement the Best Plan for Achieving Your Goals
Cash Outflows - CORRECT ANSWER-All expenses, large and small
Personal Cash Flow Statement - CORRECT ANSWER-statement by recording your revenues and expenses
over a period of time
Net Cash Flows - CORRECT ANSWER-(Cash Inflows) - (Cash Outflows)
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