Test 1

Question 1

What are three things that Dr. Hill wants us to know?

Answer 1

1) Life is hard… but you can do hard things
2) When life doesn’t go as planned, don’t get frustrated, make the best of it
3) Things take time (TTT)

Question 2

What are the primary purposes of this class?

Answer 2

1) To teach you to magnify your financial stewardship

2) Use prudent financial management so you can more fully bless yourself, your family, and others

Question 3

What is not a primary purpose for this class?

Answer 3

This class is not intended to teach you how to get rich or accumulate wealth

Question 4

The four “whys”

Answer 4

1. Spiritual: to bring us to Christ
2. Temporal: To help us become wise stewards
3. Individual: To accomplish your divine mission
4. Family: To return with your family back to Heavenly Father’s presence

Question 5

Time Value of Money

Answer 5

-How the value of money changes over time

Question 6

Compound interest

Answer 6

The eighth wonder of the world.

Question 7

Inflation

Answer 7

A general increase in prices and fall in the purchasing value of money

Question 8

What was the inflation rate of 2014?

Answer 8

In 2016, it was 0.8%

Question 9

What are the suggested assumptions of inflation for long term financial planning?

Answer 9

About 2.5% to 4.0%

Question 10

Interest

Answer 10

Any use of your money that results in a return on investment

Question 11

Investment (PV)

Answer 11

Current commitment of money with expectation of future returns (Present Value, PV)

Question 12

Compounding periods (n)

Answer 12

Frequency interest is applied to investment (daily, monthly, quartarly, annually, represented as n)

Question 13

Principal

Answer 13

Original amount of money

Question 14

Interest Rate (i)

Answer 14

Rate of return

Question 15

Nominal return

Answer 15

Rate of return before taking into account inflation and taxes

Question 16

Real return

Answer 16

Rate of return after taking into account inflation and taxes

Question 17

Six steps for creating a family financial plan

Answer 17

1. Decide what you are about
2. Evaluate your financial health
3. Define your specific family goals
4. Develop a plan of action
5. Implement your plan
6. Revise your plan as necessary

Question 18

SMART goals

Answer 18

S-specific
M-measurable
A-achievable
R-results oriented
T-time bound

Question 19

Formula for interest earned or interest paid

Answer 19

I=PRT

Question 20

Annuity

Answer 20

-Cash flow that takes place more than once

Question 21

Ordinary Annuity

Answer 21

-Payments take place at the end of each time period

Question 22

Annuity due

Answer 22

Cash flows at the beginning of the time period

Question 23

If the cash flow is leaving your hands…

Answer 23

Set the sign of PMT to negative

Question 24

If the cash flow is coming into your hands…

Answer 24

Set the sign of PMT to positive