FIN 3330 EXAM 1 QUESTIONS AND ANSWERS
100% VERIFIED
Average propensity to consume (APC) - ANSWER The percentage of each dollar of
income, on average, that is spent for current needs and wants, rather than saved. For
example, Mary's APC is 95%; on average, she spends $0.95 and saves only a nickel of
every dollar earned.
Business cycle/economic cycle - ANSWER The irregularly occurring wavelike pattern of
economic activity, generally depicted as an undulating wave of expansions, peaks,
contractions, and troughs.
Employee benefit - ANSWER any non-monetary benefit provided by employers to
employees. This form of compensation comes in a form other than wages, salary,
commissions, or other cash payments. Employee benefits may include health, disability,
and life insurance; retirement, pension, and profit-sharing plans; child and elder care;
and/or educational assistance programs.
Financial planner - ANSWER A financial professional who provides financial evaluations
and advice to individuals and families and who receives compensation in the form of
commissions, fees, or some combination thereof.
Inflation - ANSWER A steady and sustained increase in general price levels across
economic sectors. This phenomenon is measured by the changing cost over time of
goods and services that a typical household might purchase.
Money - ANSWER The medium of exchange used as a measure of the value of financial
transactions. It is used to purchase goods and services and the utility (or satisfaction)
that these goods and services provide.
Purchasing power - ANSWER Used to characterize the value of a currency by
describing the amount of goods and services that can be purchased by a dollar at a
given time. Inflation tends to decrease this value; deflation, the opposite of inflation,
tends to increase this value.
Standard of living - ANSWER The material well-being and peace of mind that individuals
and groups desire and seek to attain, to maintain if attained, to preserve if threatened,
and to regain if lost.
utility - ANSWER The satisfaction received from buying and using certain types or
quantities of goods and services. Utility will result from consuming free as well as costly
goods and services. A basic economic goal is to achieve the maximum amount of utility
per dollar of income spent.
Wealth - ANSWER The total value of all items owned by an individual or family, including
,tangible and financial assets. Therefore, wealth includes the value of home(s), personal
belongings, car(s), and other tangible assets, as well as intangible assets like cash,
checking and savings accounts, stocks, bonds, and other financial assets. Remember, it
is possible that these assets may also have outstanding debts associated with them.
The benefits of effective and efficient personal financial planning include: - ANSWER
Increased flexibility and ability to accommodate significant life changes and events.
Better informed and deliberate decision making regarding current and deferred
spending.
Which of the following activities also contributes to your financial success? - ANSWER
The development of personal financial goals and target dates that are consistent with
your values, attitudes, and behaviors.
The development of an effective plan that is consistently applied until it is revised in
accordance with changes in your goals and life circumstances.
Self-awareness and knowledge of your own values, as well as attitudes and behaviors
regarding money, spending, and saving.
Knowledge of what other average people believe and how they behave, because they
affect the same financial markets and economic conditions that affect you.
The financial planning process - ANSWER Step 1: Define your financial goals.
Step 2: Develop the financial plans and strategies needed to achieve those goals.
Step 3: Implement your financial plans and strategies.
Step 4: Develop and implement budgets to control your progress toward your goals.
Step 5: Develop and use financial statements to evaluate the results of your plans and
budgets.
, Step 6: As your personal circumstances change, redefine your goals and revise your
plans and strategies.
Financial goals describe the desired outcomes of your financial planning activities. Most
financial advisors recommend developing goals with three broad categories of
completion dates - ANSWER Long-term goals, which identify wants and needs that are
expected to be realized 6-40 years from now.
Short-term goals, which address more immediate needs and wants, such as those
occurring within the next 12 months.
Intermediate-term goals, which identify wants and needs that occur between the other
two categories.
Asset acquisition planning - ANSWER One of the earliest financial activities you
undertake in life. It involves the purchase ofthings we own , including tangible and
financial assets, liquid assets, investments, and personal and real property.
Liquid assets are X and are held either to consume and use or to generate a return or
income as an investment. An example of a liquid asset is X - ANSWER Easily convertible
into cash
Cash or money in a savings account
In general, the cost and value of your tangible, personal, and real assets tend to X with
your age, income, and wealth, all other things remaining constant. The value of your
financial and liquid assets, on the other hand, tends to be a function of economic
conditions and your investment returns. - ANSWER Increase
Tangible assets - ANSWER Are physical assets, such as a car or house
100% VERIFIED
Average propensity to consume (APC) - ANSWER The percentage of each dollar of
income, on average, that is spent for current needs and wants, rather than saved. For
example, Mary's APC is 95%; on average, she spends $0.95 and saves only a nickel of
every dollar earned.
Business cycle/economic cycle - ANSWER The irregularly occurring wavelike pattern of
economic activity, generally depicted as an undulating wave of expansions, peaks,
contractions, and troughs.
Employee benefit - ANSWER any non-monetary benefit provided by employers to
employees. This form of compensation comes in a form other than wages, salary,
commissions, or other cash payments. Employee benefits may include health, disability,
and life insurance; retirement, pension, and profit-sharing plans; child and elder care;
and/or educational assistance programs.
Financial planner - ANSWER A financial professional who provides financial evaluations
and advice to individuals and families and who receives compensation in the form of
commissions, fees, or some combination thereof.
Inflation - ANSWER A steady and sustained increase in general price levels across
economic sectors. This phenomenon is measured by the changing cost over time of
goods and services that a typical household might purchase.
Money - ANSWER The medium of exchange used as a measure of the value of financial
transactions. It is used to purchase goods and services and the utility (or satisfaction)
that these goods and services provide.
Purchasing power - ANSWER Used to characterize the value of a currency by
describing the amount of goods and services that can be purchased by a dollar at a
given time. Inflation tends to decrease this value; deflation, the opposite of inflation,
tends to increase this value.
Standard of living - ANSWER The material well-being and peace of mind that individuals
and groups desire and seek to attain, to maintain if attained, to preserve if threatened,
and to regain if lost.
utility - ANSWER The satisfaction received from buying and using certain types or
quantities of goods and services. Utility will result from consuming free as well as costly
goods and services. A basic economic goal is to achieve the maximum amount of utility
per dollar of income spent.
Wealth - ANSWER The total value of all items owned by an individual or family, including
,tangible and financial assets. Therefore, wealth includes the value of home(s), personal
belongings, car(s), and other tangible assets, as well as intangible assets like cash,
checking and savings accounts, stocks, bonds, and other financial assets. Remember, it
is possible that these assets may also have outstanding debts associated with them.
The benefits of effective and efficient personal financial planning include: - ANSWER
Increased flexibility and ability to accommodate significant life changes and events.
Better informed and deliberate decision making regarding current and deferred
spending.
Which of the following activities also contributes to your financial success? - ANSWER
The development of personal financial goals and target dates that are consistent with
your values, attitudes, and behaviors.
The development of an effective plan that is consistently applied until it is revised in
accordance with changes in your goals and life circumstances.
Self-awareness and knowledge of your own values, as well as attitudes and behaviors
regarding money, spending, and saving.
Knowledge of what other average people believe and how they behave, because they
affect the same financial markets and economic conditions that affect you.
The financial planning process - ANSWER Step 1: Define your financial goals.
Step 2: Develop the financial plans and strategies needed to achieve those goals.
Step 3: Implement your financial plans and strategies.
Step 4: Develop and implement budgets to control your progress toward your goals.
Step 5: Develop and use financial statements to evaluate the results of your plans and
budgets.
, Step 6: As your personal circumstances change, redefine your goals and revise your
plans and strategies.
Financial goals describe the desired outcomes of your financial planning activities. Most
financial advisors recommend developing goals with three broad categories of
completion dates - ANSWER Long-term goals, which identify wants and needs that are
expected to be realized 6-40 years from now.
Short-term goals, which address more immediate needs and wants, such as those
occurring within the next 12 months.
Intermediate-term goals, which identify wants and needs that occur between the other
two categories.
Asset acquisition planning - ANSWER One of the earliest financial activities you
undertake in life. It involves the purchase ofthings we own , including tangible and
financial assets, liquid assets, investments, and personal and real property.
Liquid assets are X and are held either to consume and use or to generate a return or
income as an investment. An example of a liquid asset is X - ANSWER Easily convertible
into cash
Cash or money in a savings account
In general, the cost and value of your tangible, personal, and real assets tend to X with
your age, income, and wealth, all other things remaining constant. The value of your
financial and liquid assets, on the other hand, tends to be a function of economic
conditions and your investment returns. - ANSWER Increase
Tangible assets - ANSWER Are physical assets, such as a car or house
