FINC 2400 Exam 1 Questions And Answers Well Elaborated Graded A+.
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Course
BUSI 2400
Institution
BUSI 2400
What is involved in personal financial planning? - correct answer spending, financing, investing
what you own - correct answer assets
what you owe - correct answer liabilities
the...
What is involved in personal financial planning? - correct answer spending,
financing, investing
what you own - correct answer assets
what you owe - correct answer liabilities
the value of what you own minus the value of what you owe - correct answer net
worth/wealth
access to funds to cover any short-term cash deficiencies - correct answer liquidity
financial assets that can be easily sold without a loss in value - correct answer liquid
assets
debts that will be paid within a year - correct answer current liabilities
decisions regarding how much money to retain in a liquid form and how to allocate the funds among
short-term investment instruments - correct answer money management
what you give up as a result of a decision - correct answer opportunity cost
Factors affecting cash inflows: - correct answer stage in your career path, type of
job, number of income earners in your household
Factors affecting cash outflows - correct answer size of family, age, personal
consumption behavior
, a summary of your assets (what you own), your liabilities (what you owe), and your net worth (assets
minus liabilities); reflects you financial position at a specific point in time - correct answer
personal balance sheet
Types of assets - correct answer liquid assets, household assets, investments
(stocks, bonds, mutual funds, real estate)
What is a current liability? - correct answer debts that will be paid within a year
What is a long-term liability? - correct answer debts that will be paid over a period
longer than one year
Net worth = - correct answer Total asset value - value of total liabilities
Difference between what you own and what you owe: - correct answer net worth
How do cash flows affect the Personal Balance Sheet? - correct answer Net cash
flows can be used to purchase assets that will grow in value and therefore add to your net worth. Net
worth only increases when change in asset value is greater than change in liabilities
Net worth only increases when: - correct answer change in asset value is greater
than change in liabilities
The time value of money is based on: - correct answer idea of interest earned over
time
Future value formula - correct answer FV = PV(1 + r)^t
Present value formula - correct answer PV=FV/(1+r)^t
interest earned only on the original principal amount invested - correct answer
simple interest
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