Influences on Financial Goals and Decisions

University of Phoenix            Damian Rodriguez

1. Concept: Influences on financial goals and decisions

1. The stages that an individual goes through based on stages in the family and financial needs is called the

1. Financial planning process
2. Budgeting procedure
3. Adult life cycle
4. Personal economic cycle

2. The Rule of 72 is

1.  A tool to determine the number of years until retirement for an employee
2. Used to estimate how long it takes for prices to double using a given annual inflation rate 
3. The legal code for requiring companies to provide a match on retirement savings
4. Used to calculate interest rates for savings

3. Which is NOT an influence in financial goals?

1. Global influences
2. Economic conditions
3. Interest rates
4. Financial intimacy with a partner 

4. Which is NOT an identifiable financial goal?

1. Retirement and estate planning
2. Risk management
3. Living on a fixed income 
4. Saving

5. Attempts to increase income are part of the __________ component of financial planning.

1. Obtaining 
2. Planning
3. Saving
4. Spending

1.2 Concept: Develop personal financial goals

6. SMART Goals contain all of the following except:

1. Specific – knowing exactly what the goals are and how to attain them
2. Action Oriented – the bases for the goals
3. Manageable – to be able to understand the written goals
4. Time based – the time frame needed to reach the goal

7. Short-term goals are:

1.  Goals to be attained within a year or so
2.  Contain college plans for children
3.  Creating an estate plan
4.  Making a big purchase

8. Long-term goals are:

1. Goals to be attained within two years
2. Uses short-term goals to attain certain goals in five or more years 
3. Create a Christmas fund
4. Plan for summer vacation

9. Which of the following intermediate goals is stated most clearly?

1. Buy a car for less than $17,000 within six months.
2. Retire in ten years at age 65 with $2,000,00 in my 401(k) account.
3. Purchase a home with a mortgage no greater than $150,000 within three years.
4. Set up an emergency fund.

10. Fran has a goal of “saving $25 per month for a TV.” Fran’s goal lacks

1. Measurable terms
2. A realistic perspective
3. A specific objective
4. A time frame

1.3 Concept: Calculate time value of money for financial decisions

11. Opportunity cost can be defined as

1. A trade-off of a decision 
2. Failing at goals
3. Creating financial wisdom
4. The amount paid for taxes when a purchase is made

12. Which of the following is an example of opportunity cost?

1. Renting an apartment near a school
2. Saving money instead of taking a vacation
3. Purchasing automobile insurance
4. Using a personal computer for financial planning

13. To calculate the time value of money, we need to consider all of the following except the

1. Amount of the savings
2. Annual interest rate
3. Length of time the money is invested
4. Type of investment

14. What is the correct formula for future value

1. Time period X present interest rate
2. Investment in savings X interest rate X period of time
3. Time X interest
4. None of these

15. Which statement best explains the purpose of present value