Personal Finance Test 2

Question 1

A forecast of future cast inflows and outflows

Answer 1

BUDGET

Question 2

a) identify cash inflows/outflows (salary vs expenses)
b) create cash flow statement

Answer 2

STEP 1: CREATE PERSONAL/CASH FLOW STATEMENT

Question 3

Forecast the next couple of months. Prepare for months that include: extra bills, vacation, holidays, tuition, insurance, emergency, etc.

Answer 3

STEP 2: TURN YOUR CASH FLOW STATEMENT INTO A BUDGET

Question 4

The budget is a great planning tool. It helps save $$$ for major purchases, unexpected expenses, and unexpected opportunities.

Answer 4

IMPROVING YOUR BUDGET

Question 5

Periodically check your forecasts and compare numbers. Logging every penny going in and out helps for future planning.

Answer 5

ACCURACY OF YOUR BUDGET

Question 6

The difference between what you forecast to happen & what actually happens.

Answer 6

FORECAST ERROR

Question 7

A financial statement that tells your financial position at specific point in time (summary of assets minus liabilities = net worth)

Answer 7

PERSONAL BALANCE SHEET

Question 8

Items of value that person owns

Answer 8

ASSETS

Question 9

Financial assets that are either cash or can be quickly & easy converted to cash without significant loss of value (ex. checking/savings accounts

Answer 9

LIQUID ASSETS

Question 10

Assets typically owned by a household (ex. cars, houses, furniture)

Answer 10

HOUSEHOLD ASSETS

Question 11

What something would be worth if you sold it today. When you create your personal balance sheet you need to evaluate the true market value today. (ex. cars, check Kelley blue book)

Answer 11

MARKET VALUE

Question 12

Represent amount of debt a person owes (two categories - current/long-term)

Answer 12

LIABILITIES

Question 13

Debts that must be paid off within 1 year (ex. credit cards.. when used properly you make payments monthly)

Answer 13

CURRENT LIABILITIES

Question 14

Debts that will take longer than 1 year to pay off (ex. student loans, car loans, mortgage, etc.)

Answer 14

LONG-TERM LIABILITIES

Question 15

Assets minus Liabilities =

Answer 15

NET WORTH

Question 16

Your personal balance sheet changes as you acquire new assets and/or new liabilities

Answer 16

CHANGES/ANALYSIS IN YOUR PERSONAL BUDGET SHEET

Question 17

a form completed by current and prospective college students (undergrad and grad) in the US to determine eligibility for student financial aid.

Answer 17

FAFSA

Question 18

A grant/payment made to support student’s education, awarded on basis of academic or other achievement.

Answer 18

SCHOLARSHIPS

Question 19

The most sought-out scholarships for college funding because they do not need to be repaid. Grants are highly competitive, so apply early to max chances of winning.

Answer 19

GRANT

Question 20

Federally funded program that provides funds for employment of students who demonstrate need as determined by FAFSA. Work no more than 20 hr/week in positions on campus or off campus in positions serving community where you attend school.

Answer 20

WORK STUDY

Question 21

Type of loan designed to help students pay for post-secondary education and associated fees (tuition, books, supplies, living expenses)

Answer 21

STUDENT LOANS

Question 22

Student loan originated by government and available to undergrad, grad, and professional students. These loans have fixed interest rates and can be subsidized or unsubsidized.

Answer 22

FEDERAL STAFFORD LOAN

Question 23

Are based on financial need and interest does not accrue while student is in college, as interest is paid by the federal government.

Answer 23

SUBSIDIZED LOANS

Question 24

The interest starts accruing the moment you or your school receive the loan funds. That means interest starts adding up the first day the payment is made.

Answer 24

UNSUBSIDIZED LOANS

Question 25

undergraduate =
1)
2)

Answer 25

1) ASSOCIATE’S DEGREE (2 years)
2) BACHELOR’S DEGREE (4 years)

Question 26

graduate =

Answer 26

MASTER’S DEGREE (1-2 years)
DOCTORAL DEGREE (5-7 years)

Question 27

Programs are offered at vocational schools and community colleges, although some national universities have also started conferring 2-year degrees.

Answer 27

ASSOCIATE’S DEGREE

Question 28

Are offered at all 4-year colleges and universities, from large public institutions to small private colleges

Answer 28

BACHELOR’S DEGREE

Question 29

There are 2 main types of: academic and professional

Answer 29

MASTER’S DEGREE

Question 30

The most common type of is the academic Doctor of Philosophy (Ph.D)

Answer 30

DOCTORAL DEGREE