Personal Finance Test 1 (ch 1-4)

Personal fina nce test

89 cards   |   Total Attempts: 193
  

Cards In This Set

Front Back
Personal finance
The process of planning your spending financing investinf so as to optomize your financial situation
Personal finance plan
Plan that specifies your financial goals and describes the spending financing and investing plans that are intended to achieve those goals
Opportunity cost
What you give up as a result of a decision
Benifits from personal finance
1- make own financial decisions2-all spending has opp cost3-judge advice of fin advisors4-become fin advisor
Budget planning
The process of forecasting future expenses and savings
Assets=
What you own
Liabilities
What you owe
Net worth=
Value of assets-liabilities
Liquidity
Access to funds to cover any short term cash deficiencies
Money mangement
Decisions regarding how much money to retain in a liquid form and how to allocate the funds among short term investment intruments
Credit management
Decisions regarding how much credit to obtain to support your spending and which sources of credit to use
Insufficient liquidity
No access to money to cover cash needs; have assets to cover cash needs but $ not accessable
Effective liquidity
Investing money to incur a return + easy access to needed cash
Insurance planning
Determine types and amt of insurance needed to protect assets
Risk
Uncertainty surrounding the potential return on an investment