BUSI 223 Read & Interact Dlabay, Hart, Hughes, & Kapoor Chapter 1 solutions complete answers

BUSI 223 Read & Interact Dlabay, Hart, Hughes, & Kapoor Chapter 1 solutions complete answers

 

Another name used for calculating the present value is Blank______.

 

The current value of an amount to be received at some time in the future, computed based on a certain interest rate and for a certain time period, is called Blank______.

 

Sound financial goals for a young family might include:

 

Which of the following is the outcome of poor financial management and extensive selling efforts by Americans?

 

A working mother of two children decides she wants to work less so she can spend more time with her children. This is an example of a(n):

 

Personal financial planning is the process of managing your money to achieve

 

The first step in the financial planning process is:

 

What are examples of well-written financial goals? (Select all that apply.)

 

A key aspect to using financial goals is:

 

True or false: Creating and implementing a financial action plan is the third step of the financial planning process.

 

The definition of personal financial planning is:

 

The fourth step of the financial planning process is evaluating each alternative course of action, taking into account the individual's life situation, personal values, and current economic conditions.

 

Determining your current financial situation regarding income, savings, living expenses, and debts is the _______ step in the financial planning process.

 

What is another term for opportunity cost?

 

True or false: Everyone has the same personal financial goals.

 

Your chances of losing something of great value is one way of looking at

 

The second step in the financial planning process is

 

Bill is concerned about his year-end tax payments. What are some options that are available to him to lessen his concerns?

 

The third step in the financial planning process is:

 

The fifth step of the financial planning process is to create and implement the financial action plan. What is involved in this process?

 

Why should you evaluate your personal alternatives?

 

The Robinson family has just learned that Mr. Robinson, the primary income source for the family, has been laid off from his job. The family will have a better chance of being able to handle this situation if they have a:

 

Opportunity cost is what you give up by making a choice.

 

A financial plan should be reviewed and revised if necessary once every five years.

 

In order to evaluate risk, people need

 

So many Americans have money problems because (Select all that apply.)

 

If you are concerned about year-end tax payments, you may increase the amount withheld from each paycheck.

 

When people first begin planning for retirement, saving for a child's college education, and planning the purchase of a vacation home, these are usually:

 

True or false: Creating and implementing your financial action plan is the fifth step of the financial planning process.

 

Food and clothing are examples of:

 

William has been reviewing his financial plan every six months. Should William continue to check his financial plan every six months during an economic downturn? Why or why not?

 

When setting financial goals, you should ensure they are:

 

True or false: It is recommended that you review your financial plan at a minimum once in ten years.

 

What have poor financial management and extensive selling efforts created for Americans?

 

If you have an income of $35,000 a year, and you want to save around $7,000 a year, should you have a financial goal of purchasing a new exotic sports car? Why or why not?

 

Saving for four years for a down payment on a house affects how soon you are able to purchase a home. This is an example of:

 

Paul can invest his money in the stock market now instead of buying a new car; however, that would require a trade-off or:

 

Examples of short-term consumable products are:

 

Selecting your time rather than your money to meet your needs, achieve your goals and satisfy your personal values are examples of:

 

When determining goal-setting guidelines, what three things should you take into account?

 

True or false: A key factor in making financial decisions is time value of money.

 

Spending money from your savings account would mean:

 

A 'SMART' financial goal is specific,      , action-oriented, realistic, and time-based. This is a one word answer.

 

True or false: Frank can invest some of the money he has been saving in the stock market now; however, that would probably require some trade-offs on his part.

 

Examples of opportunity costs do NOT include:

 

Personal opportunity costs include using your time, in addition to or in place of money, to

 

True or false: Three items needed to calculate future value include: principal, length of time, annual interest rate.

 

What measures the increase in an amount of money as a result of interest earned?

 

Phillip has an investment of $200 that is expected to earn 10% annually. How much will the investment be worth at the end of the SECOND year if the investment earns simple interest compounded annually?

 

Every time you save or spend you should consider the ________________.

 

The amount to which current savings will increase based on a certain interest rate and a certain time period is called:

 

Paul invested $185. The interest earned is 4%, compounded annually. At the end of two years, Paul will have about:

 

Examples of opportunity costs include:

 

One of the methods used to calculate future value is:

 

To calculate time value of money, the following items are needed:

 

In time value of money calculations, considering a positive interest rate of return, the future value of an amount will always be greater than the original amount.

 

Sam has an investment of $200 that is expected to earn 10% annually. How much will the investment be worth at the end of the first year if the investment earns simple interest?

 

The current value of an amount at some time in the future, based on a certain interest rate and a certain time period is called:

 

Samantha is trying to decide between two investments. The first one will earn 5% simple interest annually. The second investment will earn 5% compounded quarterly. Assuming they have the same amount of risk, which is the better investment?

 

Paula invested $370. The interest earned is 4%, compounded annually. At the end of two years, Paula will have about:

 

An annuity is a series of _____ deposits.

 

What are some of the methods that can be used to compute time value of money?

 

If you deposit $500 per year in an account for six years at 9%, how much will you have in the account? Use the appropriate table in the appendix at the back of the chapter for the future value of an annuity. Round your answer to the nearest whole dollar amount.

 

As long as you can earn a positive rate of interest, the future value of an amount will be __________ the original amount.

 

What is the current value of a future amount based on a certain interest rate and a certain time period? Notice that the future value is already known. You want to find the current value of that amount.

 

Another name used for calculating present value is ______.

 

Future value computations are often referred to as compounding, as _____.

 

Paula needs to have $400 in three years. The interest earned on the account is 6%, compounded annually. How much does she need to invest today? Use the appropriate table in the appendix to the chapter for the present value of $1. at the end of a given number of time periods.

 

A series of equal deposits or payments is called a(n):

 

Simon will be receiving $200 per year for the next five years. The interest on the account is 6%, compounded annually. What is roughly the present value of this annuity? Use the appropriate table in the appendix at the back of the chapter for the present value of an annuity.

 

If you deposit $500 per year in an account for nine years at 6%, how much will you have in the account?

 

Common ways to obtain financial resources are:

 

The present value is the ______ value for a _____ amount based on a particular interest rate for a certain period of time.

 

Savings plans are not designed to provide for:

 

Discounting is the process of calculating:

 

Financial planning is designed to:

 

Paul needs to have $200 in two years. The interest earned on the account is 4%, compounded annually. How much does he need to invest today?

 

A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities is called a(n) ______ ______.

 

Marie will be receiving $300 per year for the next six years. The interest on the account is 5%, compounded annually. What is roughly the present value of this annuity? Use the appropriate table in the appendix at the back of the chapter for the present value of an annuity.

 

Two methods that will NOT help develop long-term successful financial habits are:

 

Obtaining monetary resources is the foundation of personal ______ planning.

 

Long-term financial security begins with a regular savings plan to provide for:

 

Financial planning would NOT improve your quality of life by:

 

True or false: A financial plan is a formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities.

 

Three methods that help develop successful financial habits are:

 

A working father of two children decides he wants to work less so she can spend more time with her children. This is an example of a(n):

 

Bill recently created his financial plan after much thought and decision making. He implemented his plan, and so far the plan is working. What must Bill do now?

 

What are three main elements that affect overall financial planning?

 

What is the definition of the adult life cycle?

 

What type of cost do you indirectly incur if you decide to go to school and not work?

 

The ________ environment includes various institutions, including businesses, labor, and government, that work together to satisfy needs and wants. (Enter one word per blank.)

 

True or false: When creating a financial plan, it is a simple, static process that is easy to implement and requires little maintenance moving forward.

 

According to your text, when there are influences on personal financial planning, what three elements should be assessed?

 

The different stages of the financial and family needs of an adult is called the:

 

You have developed a savings plan and will be setting aside money for the next one year to make an investment. You plan to use the return from this investment to make down payment to purchase a home after three years. What are key time frames for this goal? Look at the timing of goals in the chapter.

 

Jason is a portfolio manager at a private investment company. He finds three very lucrative investments. They are oil contracts, construction contracts and an Initial Public Offering of a company's stock. What is the opportunity cost if Jason invests all of the money with the construction contracts?

 

What is the definition of economics as described in this text under economic factors?

 

According to the text, why is goal setting an important aspect for personal financial growth?

 

Your life situation, personal values, and economic factors influence what?

 

Rachel has been shopping for a new refrigerator over the course of three days instead of being at work. This is an example of:

 

An important personal opportunity cost involves the resources of money or ______.

 

Liquidity is the ability to buy or sell an investment quickly without substantially affecting the investments value.



Which term is a set of federal laws that allows you to either restructure your debts or remove certain debts?

 

The ability to buy or sell an investment quickly without substantially affecting the investments value is called:

 

The legal status of a person who is not able to pay debts owed is called

 

What is the term often used when an individual creates an organized process to achieve financial and personal satisfaction?

 

Specific advantages of personal financial planning include:

 

Place the steps of the financial planning process in order.

 

According to the text, what are the benefits for most people to organizing their personal finances?

 

One advantage of personal financial planning is

 

What is the next step of the financial planning process after reviewing and revising your financial plan? Look at the exhibit on the financial planning process in the text.

 

What are the four courses of action when making decisions?

 

What are the consequences of "No Action" as an alternative?

 

The three elements that affect personal financial planning are your life situation, personal values, and current ____ conditions

 

Select the four possible alternative courses of action when making decisions.

 

Examples where "no action is an action" will usually have an adverse outcome are:

 

What a person gives up by making a choice is defined as:

 

Which of the following do not influence personal financial planning, as shown in the fourth step of the financial planning process?

 

Opportunity costs when not measured in dollars are sometimes called the:

 

A married couple are going to purchase a car that is five years old. Should the couple make their decision using sources that are five years old or updated sources?

 

If you spent considerable time shopping around to compare brands for a major purchase, this time would be considered:

 

True or false: Seminar courses are good information sources for the financial planning process.

 

Austin is a full-time employee at a local bank. He wants to purchase a newer vehicle. If he waits to purchase his vehicle, the price could go up. What type of risk should he consider?

 

You are thinking of investing and you are concerned about the risk involved. Which of the following can be used to evaluate the risk that is involved?

 

True or False: Relevant information is required at every stage of the decision-making process.

 

You are thinking of purchasing a home. You want to educate yourself about the financial aspects of purchasing a home. What would be good sources of information?

 

Kyle is a government contracted employee. His job is secure. He keeps good health and has healthy habits. He is going to invest all of his savings in a certificate of deposit for a 60-month period. He is not a financial expert but thinks the current interest rates are going to decrease over the next quarter. Kyle should consider what two types of risk?

 

Amy is creating and implementing her new financial action plan. As a result she asks for more hours at work and she begins to save more money. Why is she doing this?

 

Ideally, you should review your financial plan at least:

 

Financial plans should be reviewed periodically to:

 

What are the situational influences for financial decisions?

 

Personal ______ have a direct influence on such decisions as spending now versus saving for the future.

 

Personal ______ are the ideals and principles that a person considers correct, desirable, and important

 

True or false: People in their 50s spend money exactly like people in their 20s.

 

How do personal values affect your financial plan?

 

What is the Federal Reserve doing when it lends more money, buys government bonds, and changes interest rates?

 

The purpose of the Federal Reserve System is to:

 

A person that adheres to the same principles in all situations has:

 

When the level of exports of U.S.-made products is lower than imported goods, this will typically cause the domestic money supply to:

 

American consumers spend dollars on goods and services. The goods and services are manufactured or offered by American companies and companies from other countries. This is an example of:

 

How is the money supply maintained by the Federal Reserve?

 

The Fed has indirect control over interest rates. This will have an influence on which of the following items:

 

Decreased money supply will generally cause ______ interest rates.

 

Reports show that five billion dollars worth of products are being imported while three billion dollars worth of products are being exported. What does this mean for the U.S. money supply?

 

Which economic factor measures the difference between a country's exports and imports?

 

What type of global influence does American consumption have on foreign companies?

 

Consumer spending is an economic factor that can predict the following changes in the economy:

 

When there is a decreased money supply, what typically increases?

 

Which economic factor measures demand for goods and services?

 

When planning your financial goals, what role does the economy play?

 

What type of financial goal is the infrequent purchases of things, such as a car or kitchen appliances?

 

An example of an intangible-purchase goal is:

 

A refrigerator is considered a(n):

 

When setting goals, SMART stands for:

 

True or false: Intangible-purchase goals all deal with very similar areas of focus.

 

How does a rapidly increasing unemployment rate influence a person with a job?

 

Which are well-structured financial goals that follow the SMART guidelines?

 

True or false: Personal opportunity costs relating to health may include illness and time away from school or work.

 

Choices we make that can influence PERSONAL opportunity costs are

 

True or false: Liquidity needs vary based upon a person's age, health and family situation.

 

Carl has decided to stop using credit. This will mean that there will be:

 

Spending less than you earn is the only way to achieve ______-term financial security.

 

Liquidity needs vary based upon which of the following items?

 

One of the most commonly overlooked type of insurance is (found in the discussion of managing risk):

 

Sandra continues to have challenges keeping her debt at a reasonable level. This will mean that there will be:

 

One essential element of personal financial planning is:

 

Investors who are interested in receiving an income stream will probably not invest much of their money in:

 

Retirement planning typically does NOT include:

 

True or false: The most commonly overlooked type of insurance is disability insurance.

 

True or false: Appropriate insurance coverage is an essential part of personal financial planning.

 

Investors that are interested in receiving potentially decent current income will probably invest in:

 

Two long-term financial planning activities include:

 

Retirement planning includes housing decisions, recreational choices, and part-time work options.

 

Three short-term financial planning activities include:

 

What is the typical time frame for an intermediate goal?

 

The first step in the Financial Planning Process is to determine your current financial situation. This includes reviewing all of the following, except:



How would a decrease in the interest rate effect the future value of a lump sum, single amount problem (all other variables remain the same)?

 

A goal that would be considered measurable would be:

 

The variables in a present value of an annuity problem include all of the following, except:

 

The variable that you are solving for in a present value of an annuity problem is:

 

How would an increase in the interest rate effect the present value of an annuity problem (all other variables remain the same)?

 

The variables in a present value of a lump sum problem include all of the following, except:



The variable that you are solving for in a present value of a lump sum problem is:

 

How would a decrease in the interest rate effect the present value of a lump sum, single amount problem (all other variables remain the same)?

 

If the providers in the financial system dramatically change their behavior by significantly reducing their savings, this has the potential to:

 

The primary goal of the Users in the financial system is to:

 

Financial intermediaries' main goal is to:

 

In 2013, selected automobiles had an average cost of $16,000. The average cost of those same automobiles is now $24,000. What was the rate of increase for these automobiles between the two time periods?

 

What would be the yearly earnings for a person with $6,000 in savings at an annual interest rate of 2.5 percent?

 

True or false: Developing and using a budget is part of the "obtaining" component of financial planning.

 

William Davis has a goal of "saving $60 a month for vacation." William's goal lacks:

 

The first step of the financial planning process is to:

 

____________ risk refers to the danger of changes in buying power during times of rising or falling prices.

 

Sophia Martin's goal has been to travel around the world. She has now been traveling for six months and she has decided she is a little tired of living out of a suitcase. She has decided to go home, look for a part time job, and take shorter trips to locations around the world that appeal to her. Which step in the financial planning process does this scenario most likely demonstrate?

 

Paul Carter is 42 years old, married and has three children, ages 15, 13 and 8. This discussion is a demonstration of what factor in personal financial planning?

 

You are planning to buy a house in five years. Approximately how much do you need to deposit today to have a $10,000 down payment if your investment will make 6%?

 

Types of risks associated with financial decisions may include:

 

When identifying alternative courses of action, possible courses of action include:

 

What is required at each stage of the decision-making process?

 

What are the three decision areas involved in personal financial activities? This is found near the beginning of the chapter.

 

What is definition of the adult life cycle? This is found in the discussion of life situation and personal value.

 

Personal___have a direct influence on such decision as spending now versus saving for the future.

 

If you are going to get a raise in your salary next month, what factor will usually determine how you will spend or use your money?

 

What type of financial goal is he infrequent purchases of things, such as a car or kitchen appliances? This is found in the discussion of goals for different financial needs.

 

True or false: Intangible-purchase goals all deals with similar areas of focus.

 

Which are well-structured financial goal that follow the SMART guidelines?

 

The stages in the family situation and financial needs of an adult is called the:

 

When computing time value of money using two different techniques, such as formulas and the tables, you may have slightly different answer due to:

 

Spending money from saving account would mean:

 

What are some of the methods that cannot be used to compute time value of money?

 

What are the two things that are necessary for achieving your financial goals?

 

Match the goal with action required to meet the goal.

 

The ability to readily convert financial resources into case without a loss in value is called:

 

Which term is a set of federal laws that allows you to either reconstruction your debts or remove certain debts?

 

What are ways to improve your knowledge of personal finance?

 

What is the best option for a recent college graduate who has a large amount of school loans during a recession when yields are low in the market?

 

What do people begin to asses when global markets and economics begin to slow?

 

Hannah has made her decision about which investment to choose. After making her decision, she is relieved and vowed to "never look at the stock until retirement." Is this a wise decision?

 

When Mark is developing his financial plan, what three things should he consider?

 

What are two ways a person can implement their financial action plan to achieve financial goals?

 

The Fed influences the money supply by:

 

The reason so many Americans have money problems is

 

Spending _____ you earn is the only way to achieve long-term financial security.