FIN 2000 Test 1 (Ch 1-3, 11, 12) ACTUAL UPDATED QUESTIONS AND CORRECT ANSWERS
Step 1 Evaluate your financial health
Step 2 Define your Financial Goals
, Defining goals entails: *Writing them down & finalizing
*Attaching costs
*Determine when the money will be needed
Step 3 Develop a plan of action
A solid plan: *Includes an informed and controlled budget
*Determines investment strategy
*Reflects your personal goals
Common Factors: *Flexibility
*Liquidity
*Protection
*Minimization of taxes
Flexibility Planning for the unexpected
Liquidity The relative ease and speed with which you can convert noncash assets into cash.
Ability to get to money.
Protection Insurance. Having enough insurance to prevent financial ruin at a reasonable rate.
Minimization of taxes Maximize cash after taxes. If you need 1,000 remember that it needs to be 1,000
after taxes
Step 4 Implement your plan
The tool used to achieve financial goals Financial Plan
3 time horizons *Short term
*Intermediate
*Long term
Step 1 Evaluate your financial health
Step 2 Define your Financial Goals
, Defining goals entails: *Writing them down & finalizing
*Attaching costs
*Determine when the money will be needed
Step 3 Develop a plan of action
A solid plan: *Includes an informed and controlled budget
*Determines investment strategy
*Reflects your personal goals
Common Factors: *Flexibility
*Liquidity
*Protection
*Minimization of taxes
Flexibility Planning for the unexpected
Liquidity The relative ease and speed with which you can convert noncash assets into cash.
Ability to get to money.
Protection Insurance. Having enough insurance to prevent financial ruin at a reasonable rate.
Minimization of taxes Maximize cash after taxes. If you need 1,000 remember that it needs to be 1,000
after taxes
Step 4 Implement your plan
The tool used to achieve financial goals Financial Plan
3 time horizons *Short term
*Intermediate
*Long term
