personal finance exam 1 study guide
personal finance exam 1 study guide FINC 2400 - 001
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This 3 page Study Guide was uploaded by Mary-Cynthia Okeke on Wednesday September 7, 2016. The Study Guide belongs to FINC 2400 - 001 at Auburn University taught by Sven Nicolai Thommesen in Fall 2015. Since its upload, it has received 16 views. For similar materials see Personal Finance in Finance at Auburn University.
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Date Created: 09/07/16
Chapter 1 review questions 1. Define personal financial planning. What types of decisions are involved in a personal financial plan? 2. What is an opportunity cost? 3. How can an understanding of personal finance benefit you? 4. What are the components of a financial plan? 5. Why is it important to track your spending before creating a budget? 6. How is your net worth calculated? 7. What factors influence income? How do tax laws affect the budgeting process? 8. What is liquidity and what factors are considered in managing liquidity? 9. What is the primary objective of investing? 10. What are the three elements of planning to protect your assets? 11. What are the six steps in developing a financial plan? 12. What are some factors that might affect your current financial position? 13. Why is it important to revise your financial plan? 14. How can peer pressure impact your spending habits? 15. Discuss the economic impact on net worth? Chapter 2 revision questions 1. Define cash inflows and cash outflows. How are they both determined? 2. What two personal final statements are most important to personal financial statement? 3. What is a budget? 4. Give some factors affecting cash inflows. 5. Give some factors affecting cash outflows. 6. How are unexpected expenses and liquidity related? 7. What is a personal balance sheet? 8. Describe the process of creating an annual budget? 9. What are assets and name the three classifications. 10. Lists the types of investments. 11. What are mutual funds? 12. List the types of liabilities. 13. What is a liquidity ratio? 14. How does a personal balance sheet help you track your net worth? 15. How is the debttoasset ratio calculated? 16. What does a high debt ratio indicate? 17. Explain how credit card usage can impact your spending habits? Chapter 3 Review questions 1. What is the time value of money? How does it relate to opportunity costs? 2. List one reason why the time value of money is an important concept. 3. What is annuity? 4. Define compounding and how is it used in financial planning? 5. What are the two methods used in calculating future value? 6. What is discounting? 7. Describe the instances where determining the present value of an amount is useful. 8. What is the formula for present value of annuity? 9. What is the formula for future value of annuity? 10. In determining the future value of annuity to be invested monthly over a fiveyear period, what number of periods should you use? 11.To what types of cash flows is the time value of money concept applied
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