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WSU / Finance / FMS 223 / What are the rewards of financial planning?

What are the rewards of financial planning?

What are the rewards of financial planning?


School: Washington State University
Department: Finance
Course: Personal Finance
Professor: Alan sorenson
Term: Summer 2015
Tags: Personal and finance
Cost: 50
Name: FIN 223 Study Guide for Midterm on 2/24
Description: This is a general list of topics to study for the exam and the review session on 2/22 should be much more helpful!
Uploaded: 02/18/2018
3 Pages 50 Views 2 Unlocks

FIN 223 Study Guide 2/24

What are the rewards of financial planning?

Rewards of financial planning:

∙ Better Standard of living

∙ Spending money wisely

∙ Wealth

S.M.A.R.T. financial goals:  

S – specific

M – measurable

A – attainable

R – realistic

T – timely

Personal finance planning: process to consider financial affairs to reach a goal

6 step financial planning process:

1. Define goals

2. Develop plans and strategies  

3. Apply plans and strats  

4. Periodically develop budgets to monitor goals

5. Use financial statements to evaluate  

6. Redefine goals and revise strats and plans as circumstances change

What is the meaning of s.m.a.r.t. financial goals?

Types of financial planning:

- Asset acquisition

- Liability and insurance

- Savings and investment

- Employee benefit

- Tax

- Retirement and estate

Financial planning participants

1. Government

2. Businesses

3. Consumers

Phases of economic cycles:

1. Expansion

2. Peak If you want to learn more check out What is the meaning of integration by parts?

3. Contaction  

4. Trough

Step for career planiing:

- Identify interests, skills, needs, and values

- Set long and short term goals Don't forget about the age old question of What is the branch of psych that studies physical, cognitive, and social change throughout the lifespan?

- Use an action plan

- Review and revise plans

What is the meaning of personal finance planning?

Ratios for personal financial statement analysis:

Solvency ratio: total net worth / total assets  

Liquidity ratio: total liquid assets / total assets

Savings ratio: cash surplus / income over time

Debt service ratio: total monthly loan payments/ monthly gross income  

Investing: placing money in a medium with the expectation of growth (long term Speculating: future value and returns are uncertain (short term)

Ways to invest:  

-common stock


-preferred and convertible securities

-mutual funds

-real estate  

Types of security markets:  

Primary markets

Secondary markets:

- Broker markets (direct) If you want to learn more check out What is the difference between a balance sheet and a classified balance sheet?

- Dealer markets (indirect)  

Bull market: optimism

Bear market: pessimism  

Types of brokers:  

1. Full service broker

2. Discount broker: low commissions and little service 3. Online broker If you want to learn more check out Why are carbs such a large component of a diet?

Components of a good investment:

-future return

-approximate yield

Types of common stock:

-blue chip: continuous stream of dividends  

-growth: above average earnings over time We also discuss several other topics like When were viruses first seen under a microscope?
We also discuss several other topics like Which critique did capitalists like albert augustus pope make of competition?

-tech: represents tech sector

-income: dividend payments that increase over time -speculative: hopes that price per share will increase - cyclical: price movements are similar to the economy’s  - defensive: price movements opposite to economy

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