FCS 233 1st EditionExam # 1 Study GuideFCS 233 - Exam 1 Study GuideThe exam will be 40 questions M/C – 2 points eachChapter 11. Which approaches to wealth would be considered “ethical” and which would be less ethical – examplesEthical approaches are pursue a career path and invest to get there, Inherit it, Marry it, Win it(lottery), manage budget and save it. Less Ethical approaches are fraudulent activities (carding cards, rob bank, stealing)2. What is the difference between income statements, balance sheets, budgets, and cash flow projections?Income statements is how much you/ or your household makes. Balance sheets are what is your assets (possessions/ what you have) vs liabilities (your debts/ what you owe). Cash flow projections are your future money issues change. 3. What are the 3 main decision areas to financial planning?Spending, Saving, Sharing4. Be able to identify examples of short term goals and long term goalsLong term goals is like paying off college debt, financially stable, being able to buy a houseShort term goals are buying a car and pay off car note. 5. What are the 4 options to alternative courses of action?Continue same course of action, Expand the current plan, Change the current situation, and take a new course of action6. What are the types of financial risk? What is the difference between them?Inflation risk (rising/falling prices can affect buying power), Interest rate (affects what you can barrow or how much you ca save), Income risk (what is your job security), Personal risk (health, safety, additional costs with certain choices), and Liquidity risk (may be potential for higher earnings, but cash availability may be challenge)7. What is a cash flow planning challenge?These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.When you have the money but living pay check to pay check and not able to pay your bills on time. 8. Usually the higher the r_____ the higher the r_______ with investmentsHigher the risk, the higher the reward9. What is commonly purchased to protect oneself from various life risks?InsuranceDeveloping a plan of action to achieve goals, saving planned, purchases plan, risk protection plan, investment options chosen. 10. What are the 2 main factors that affect financial goals?Time frame and type of financial need11. What is the difference between consumable purchases, durable purchases, and intangible purchases?Consumable purchases are usually short term (food, clothing, fuel, entertainment). Durable purchases are infrequent purchases (furniture, car, house, TVs, computers). Intangible purchases are often over looked (personal relationships, health, education, vacations, gym membership) 12. What does the acronym SMART stand for when setting goals? S-SPECIFIC, M-MEASUREABLE, A-ACTION, R-REALISTIC, T-TIME13. What was the identified adult life cycle stages discussed? Be able to select an example activity tofit eachGraduation, Engagement/ Marriage or Divorce, Birth/Adoption of children, Career change/ moveto new region (state farm, in army) Children leaving home (downsizing), Health changes/ challenges, Retirement, Death of spouse or family member. 14. What were the 4 “economies” at work that affect consumers on a day to day basis?Global economy, U.S. Economy, Local, Family/ Personal Economy15. What is inflation? Who calculates it? How often is it calculated?Inflation is a general rise of prices. Government calculates the rate and it is calculated every month. 16. Which adult life cycle stage may be most affected by inflation?Retirement age 17. About what is the current rate of inflation? How high has it gone in past hundred years?Current rate of inflation is 0.8%. In the past hundred year on average is 3.4%18. Be able to identify each of these terms from a M/C example – consumer prices, consumer spending, interest rates, money supply, unemployment, housing starts, GDP, trade balanceConsumer Prices- Measuring the buying power of a dollar. Consumer Spending- demand for goods and services by spender. Interest Rates- the cost of borrowing moneyMoney Supply- dollars available in the economyUnemployment- Number of people without employment and willing/ able to workHousing Starts- Number of new homes being builtGross Domestic Product (GDP) – total value of goods and services produced within a countryTrade Balance- difference between import and exportsStock Market- other market indexes19. Comparing the value of money today with the value into the future is called the t____ v____ of m_____.Time Value of Money20. What are the key components needed to calculate TVM?Principal, Interest rate and time. 21. Be able to identify which equation would be used with several TVM scenarios22. Be able to tell me the r, nper, PV, FV amounts from a scenario listed. [you won’t have to solve anycompounding problems!]R- INTEREST RATE, NPER- TIME/ HOW LONG, PV- PRESENT VALUE, FV- FUTURE VALUE23. What is the difference between simple and compounded interest?Simple interest is generally applied once a year. Compound interest is applied 12 times a year 24. You may need to calculate a simple interest problem either for a full year or a partial year using exact SI.25. What is the difference between compounding and discounting?Compounding is when you move all cash flows to common future point which is future value. Discounting is when you move all flows to equivalent amount today which it their present value. 26. How does the “rule of 72” work?Divide 72 by the periodic interest to find the number of periods required to double the amount. Ex. At 6% compounded annually, take 76/6=12 years to double the amount. Chapter 227. What is the difference between a job and a career?A job is an employment position obtained mainly to earn money and a career is commitment to a profession that requires continued training and a path for occupational. 28. What were the examples relating to common “tradeoffs” and careers?Challenging with personal scarification vs making the most money, Refuse transfer or promotionrequiring moving families or reducing leisure time, opt for part time employment or flexible hours to allow time with children, and give up secure job to prefer to operate their own business.29. What is social intelligence?Social intelligence are traits that are needed to demonstrate adaptability n the work place.30. What is an aptitude?Aptitude is