MCS 2100 Final Exam Review
1. Financial plan: A formalized report that summarizes your current
financial sit- uation, analyzes your financial needs, and recommends
future financial activities.
2. Budget: A specific plan for spending income.
3. Adult life cycle: The stages in the family situation and financial
needs of an adult.
4. Annuity: A series of equal amounts (deposits or withdrawals) made
at regular time intervals.
5. Bankruptcy: A set of federal laws that allow you to either restructure
your debts or remove certain debts.
6. Compounding: A process that calculates interest based iously
on prev interest. earned
7. Economics: The study of how wealth is created and distributed.
8. Future value: The amount to which current savings will increase
based on
certain interest rate and a certain time period; typically involves
a co
9. Inflation: A rise in the general level of prices.
10.Life cycle approach: The idea that the average person goes
through four basic stages in personal financial management.
11.Liquidity: (1) The ability to readily convert financial resources into
cash without a loss in value;
(2) the ability to buy or sell an investment quickly without substantially
affecting the investment's value.
12.Opportunity cost: What a person gives up by making a choice.
13.Personal financial planning: The process of managing your
money to achieve personal economic satisfaction.
14.Present value: The current value for a future amount a
based on interest rate and a certain time period; also certain
referred to as discounti
,15.Simple interest: Interest computed on the principal, reviousl
excluding p earned interest.
, 16.Time value of money: Increases in an amount of money as a result of
interest earned.
17.Values: Ideas and principles that a person considers correct,
desirable, and important.
18.6 steps in financial planning process:: 1. Develop financial goal.
2. Determine your current financial situation.
3. Identify alternative courses of action.
4. Evaluate alternatives
5. Create and implement .financial plan.
6. Re-evaluate and revise the plan.
19.Common actions in the first step of financial planning.: Analyze your
values, attitude towards money, and who is the core financial decision
processor.
20.Common actions in the second step of financial planning.: Preparing
list of current assets and debts by determining income, savings, living
expenses, and debts.
21.Common actions in the third step of financial planning.: Making
decisions around whether to:
1. continue same course of action
2. expand current situation
3. change the current situation
4. take new course of action.
Creativity is key, and not taking action is a dangerous alternative.
22.Common actions in the fourth step of financial planning.: After
decisions are made, evaluation of consequences of choices will be
seen. This is seen where opportunity cost and the time value of money
when making trade-offs. Evaluating risk is another part of the fourth
step where interest rate and inflation risks are shown.
23.Common actions in the fifth step of financial planning.: To implement,
assistance may be acquired. Services of insurance agent or
investment broker are used to purchase property insurance or
purchasing bonds, stocks, or mutual funds.
24.Future value of an annuity: The amount accumulated in ture when
the fu series of payments is invested and accrues interest.
1. Financial plan: A formalized report that summarizes your current
financial sit- uation, analyzes your financial needs, and recommends
future financial activities.
2. Budget: A specific plan for spending income.
3. Adult life cycle: The stages in the family situation and financial
needs of an adult.
4. Annuity: A series of equal amounts (deposits or withdrawals) made
at regular time intervals.
5. Bankruptcy: A set of federal laws that allow you to either restructure
your debts or remove certain debts.
6. Compounding: A process that calculates interest based iously
on prev interest. earned
7. Economics: The study of how wealth is created and distributed.
8. Future value: The amount to which current savings will increase
based on
certain interest rate and a certain time period; typically involves
a co
9. Inflation: A rise in the general level of prices.
10.Life cycle approach: The idea that the average person goes
through four basic stages in personal financial management.
11.Liquidity: (1) The ability to readily convert financial resources into
cash without a loss in value;
(2) the ability to buy or sell an investment quickly without substantially
affecting the investment's value.
12.Opportunity cost: What a person gives up by making a choice.
13.Personal financial planning: The process of managing your
money to achieve personal economic satisfaction.
14.Present value: The current value for a future amount a
based on interest rate and a certain time period; also certain
referred to as discounti
,15.Simple interest: Interest computed on the principal, reviousl
excluding p earned interest.
, 16.Time value of money: Increases in an amount of money as a result of
interest earned.
17.Values: Ideas and principles that a person considers correct,
desirable, and important.
18.6 steps in financial planning process:: 1. Develop financial goal.
2. Determine your current financial situation.
3. Identify alternative courses of action.
4. Evaluate alternatives
5. Create and implement .financial plan.
6. Re-evaluate and revise the plan.
19.Common actions in the first step of financial planning.: Analyze your
values, attitude towards money, and who is the core financial decision
processor.
20.Common actions in the second step of financial planning.: Preparing
list of current assets and debts by determining income, savings, living
expenses, and debts.
21.Common actions in the third step of financial planning.: Making
decisions around whether to:
1. continue same course of action
2. expand current situation
3. change the current situation
4. take new course of action.
Creativity is key, and not taking action is a dangerous alternative.
22.Common actions in the fourth step of financial planning.: After
decisions are made, evaluation of consequences of choices will be
seen. This is seen where opportunity cost and the time value of money
when making trade-offs. Evaluating risk is another part of the fourth
step where interest rate and inflation risks are shown.
23.Common actions in the fifth step of financial planning.: To implement,
assistance may be acquired. Services of insurance agent or
investment broker are used to purchase property insurance or
purchasing bonds, stocks, or mutual funds.
24.Future value of an annuity: The amount accumulated in ture when
the fu series of payments is invested and accrues interest.
