FNCE 2820 Midterm 1| Questions and Complete
Answers| Verified 100% Correct| Rated A+
Goal of Annuity - ✔✔to proide a stable, long- term source of income for the annuity
holder
Ordinary Annuity - ✔✔an annuity with end-of-period payments
Annuity Due - ✔✔An annuity with beginning-of-period payments
Discounting - ✔✔Finding present values
the process of reducing future values to present values
(Lottery)
Personal Balance Sheet - ✔✔Snapshot of a person's wealth at certain point in time.
Includes assets, liabilities, and net worth.
a financial statement that lists items of value owned, debts owed, and a person's net
worth
tells you what your financial position is at a point in time
Assets - ✔✔Items of value owned (measured by their fair market values)
Liabilities - ✔✔Bills and obligations to be paid in the future
Amounts owed to creditors
, Net Worth - ✔✔Your wealth
=Assets - Liabilities
Liquid Assets - ✔✔assets in the form of cash (or easily convertible into cash) with
little inconvenience and with no loss in market value
Lifestyle Assets - ✔✔Assets that influence our quality of life
ex. house purchase, cars, hobby expenses, etc.
Investment Assets - ✔✔Money which has been invested long-term which will provide
future income
Current Liabilities - ✔✔Accounts payable (debts) that must be paid within one year
Noncurrent Liabilities - ✔✔Debt obligations not due within one year
Positive Contribution to Savings - ✔✔Increased net worth
when cash income > cash expenses
Dissavings - ✔✔Negative savings. You spend more than your disposable income.
Income Statement - ✔✔Detailed breakdown of cash income and expenses over a
past period.
Income - ✔✔Cash inflow
Salaries and wages
Answers| Verified 100% Correct| Rated A+
Goal of Annuity - ✔✔to proide a stable, long- term source of income for the annuity
holder
Ordinary Annuity - ✔✔an annuity with end-of-period payments
Annuity Due - ✔✔An annuity with beginning-of-period payments
Discounting - ✔✔Finding present values
the process of reducing future values to present values
(Lottery)
Personal Balance Sheet - ✔✔Snapshot of a person's wealth at certain point in time.
Includes assets, liabilities, and net worth.
a financial statement that lists items of value owned, debts owed, and a person's net
worth
tells you what your financial position is at a point in time
Assets - ✔✔Items of value owned (measured by their fair market values)
Liabilities - ✔✔Bills and obligations to be paid in the future
Amounts owed to creditors
, Net Worth - ✔✔Your wealth
=Assets - Liabilities
Liquid Assets - ✔✔assets in the form of cash (or easily convertible into cash) with
little inconvenience and with no loss in market value
Lifestyle Assets - ✔✔Assets that influence our quality of life
ex. house purchase, cars, hobby expenses, etc.
Investment Assets - ✔✔Money which has been invested long-term which will provide
future income
Current Liabilities - ✔✔Accounts payable (debts) that must be paid within one year
Noncurrent Liabilities - ✔✔Debt obligations not due within one year
Positive Contribution to Savings - ✔✔Increased net worth
when cash income > cash expenses
Dissavings - ✔✔Negative savings. You spend more than your disposable income.
Income Statement - ✔✔Detailed breakdown of cash income and expenses over a
past period.
Income - ✔✔Cash inflow
Salaries and wages
