FIN Quiz 1

fickernuit's version from 2017-02-28 13:37

Section 1

Question Answer
Considers important elements of individual's financial affairs to fulfill financial goalsPersonal Financial Planning Process
(Role of Money) used to measure valueMedium of exchange
(Role of Money) amount of satisfaction derived from purchases versus costUtility
(Role of money) LastLink to personal psychological concepts and key role in personal relationships
Used to stimulate or contract economic growthMonetary Policy
Controls money supplyMonetary Policy
Controls levels of taxationFiscal policy
Sets levels of government spendingFiscal policy
Stages related to employment and production levelsEconomic Cycles
Measured by changes in CPI • Affects purchasing power and interest ratesInflation
What Determines Your Personal Income?Demographics and income – Age, marital status • Education • Where you live • Career

Section 2

Question Answer
compares actual figures with various budget categories and shows variancesBudget Control Schedule
Solvency RatioTotal net worth /Total assets
Indicates potential to withstand financial problemsSolvency Ratio
Liquidity RatiosLiquid assets/ Total current debts
Measures ability to pay current debts with existing liquid assetsLiquidity Ratios
Shows percentage of after-tax income saved during a time periodSavings Ratio
Savings RatioCash surplus/ Income after taxes
ndicates ability to repay loan obligations promptly with before-tax incomeDebt Service Rati
Debt Service RatiTotal monthly loan payments/ Monthly gross income
Short-term financial planning report that helps you achieve short-term financial goalsBudget
A dollar today is worth more than a dollar received in the future because it can be invested and earn interest.Time Value of Money
— one lump sum investment with no additions or subtractionsSingle sum
series of equal payments made at fixed time intervals for a specified number of periodsAnnuity
Value invested money will grow to become earning a specific rate of interest over a given time periodFuture Value
Amount needed today to invest at a specific rate of interest over a given time period to accumulate a desired future amountPresent Value
reverse of compounding - process of working from the future value back to present valueDiscounting
Process of growing today’s present value to a larger future value by applying compound interestcompounding

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