Personal Finance: FIN 1100- Chapter 1

Being financially secure involves balancing what you earn with B) What you spend.
Which statement is true about managing personal finances? C) Financial difficulties can be a major cause of marital problems.
Personal financial planning can help you to E) All of the above.
Evaluating your financial health consists of E) All of the Above
The term that considers having money readily available when you need it is the concept of B) Liquidity
Suppose that you are a 21-year old college student. What stage of the financial life cycle are you currently in? A) Stage 1: wealth accumulation
Based on the Life Cycle of Financial Planning. When would be a good time to review and possibly adjust an effective financial plan? E) Both B and C are correct answers. B) When you get married C) When you have children
What is the main factor in determining your potential income level? A) Education and skills that you have attained.
According to a recent recruiting survey, the most common mistake made by job interviewees is B) talking too much.
According to a recent Rockefeller Foundation report, the ability to pay B) for retirement expenses.
The concept of diversification is illustrated by the old saying B) “Don’t put all your eggs in one basket.”
Chapter 1 discusses 10 principles that form the foundation of personal finance. The principle that considers the value of compound interest is the D) time value of money
In 2008, the Bear Stearns Company collapsed could not be saved and was sold to JP Morgan Chase for $10 per share, a price far below its pre-crisis 52-week high of $133.20 per share. Prior to the collapse, many of the company’s employees had all of their retirement money invested only in Bear Stearns common stock. This was a very risky financial strategy for just such a reason: What if the company dissolves? What financial principle from Chapter 1 did they need to understand better? A) Risk and return go hand in hand.
Matthew bought a used car last month for $2,400. He just found out he needs a new transmission that will cost $2,400 to install. He is asking you for advice as to what he should do. What financial principle would you use to base your advice on? B) Mind games, financial personality, and your money
A solid understanding of personal finance will E) All of the Above.

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