Chapter 1 - ANSWERS TO CONCEPT CHECKS

Chapter 1 - ANSWERS TO CONCEPT CHECKS - ANSWERS TO CONCEPT...

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ANSWERS TO CONCEPT CHECKS, FINANCIAL PLANNING PROBLEMS AND QUESTIONS, AND CASES CONCEPT CHECK ANSWERS Concept Check 1-1 (p. 7) 1. What personal and economic factors commonly affect personal financial decisions? Personal financial decisions are affected by personal factors such as income, household size, age, and personal value. Economic factors that affect personal finance include global business activities, inflation, and interest rates. 2. For each of the following situations, indicate if the person would tend to “suffer” or tend to “benefit” from inflation. A person with money in a savings account suffer A person who is borrowing money. benefit A person who is lending money. suffer A person receiving a fixed income amount. suffer 3. Listed here are the eight the main components of personal financial planning. Describe an action for one or more areas that you might need to take in the next few months or years. Answers will vary. Concept Check 1-2 (p. 9) 1. What are some examples of long-term goals? Long-term goals are financial objectives more than just a few years off (usually more than five years), such as retirement savings, money for children’s college education, or other long- term savings goals. 2. What are the main characteristics of useful financial goals? Useful financial goals should (1) be realistic; (2) be stated in specific, measurable terms; (3) have a time orientation; and (4) imply the type of action to be taken. (pp. 8-9). 3. Match the following common goals to the life situation of the people listed. A. pay off student loans C A young couple without children B. start a college savings fund D An older person living alone C. increase retirement contributions A A person who just completed college D. financing of long-term care B A single mother with a pre-school daughter
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Concept Check 1-3 (p. 13) 1. What are some examples of personal opportunity costs?
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This note was uploaded on 04/29/2011 for the course FIN 1 taught by Professor Prakash during the Spring '11 term at IIT Bombay.

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Chapter 1 - ANSWERS TO CONCEPT CHECKS - ANSWERS TO CONCEPT...

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