MCS 2100 Final Exam Review
Questions with Correct Solutions
2025-2026 Updated.
Financial plan - Answer A formalized report that summarizes your current financial situation,
analyzes your financial needs, and recommends future financial activities.
Budget - Answer A specific plan for spending income.
Adult life cycle - Answer The stages in the family situation and financial needs of an adult.
Annuity - Answer A series of equal amounts (deposits or withdrawals) made at regular time
intervals.
Bankruptcy - Answer A set of federal laws that allow you to either restructure your debts or
remove certain debts.
Compounding - Answer A process that calculates interest based on previously earned
interest.
Economics - Answer The study of how wealth is created and distributed.
Future value - Answer The amount to which current savings will increase based on a certain
interest rate and a certain time period; typically involves compounding.
Inflation - Answer A rise in the general level of prices.
Life cycle approach - Answer The idea that the average person goes through four basic stages
in personal financial management.
Liquidity - Answer (1) The ability to readily convert financial resources into cash without a
loss in value;
(2) the ability to buy or sell an investment quickly without substantially affecting the
investment's value.
Opportunity cost - Answer What a person gives up by making a choice.
, Personal financial planning - Answer The process of managing your money to achieve
personal economic satisfaction.
Present value - Answer The current value for a future amount based on a certain interest
rate and a certain time period; also referred to as discounting.
Simple interest - Answer Interest computed on the principal, excluding previously earned
interest.
Time value of money - Answer Increases in an amount of money as a result of interest
earned.
Values - Answer Ideas and principles that a person considers correct, desirable, and
important.
6 steps in financial planning process: - Answer 1. Develop financial goal.
2. Determine your current financial situation.
3. Identify alternative courses of action.
4. Evaluate alternatives
5. Create and implement .financial plan.
6. Re-evaluate and revise the plan.
Common actions in the first step of financial planning. - Answer Analyze your values, attitude
towards money, and who is the core financial decision processor.
Common actions in the second step of financial planning. - Answer Preparing list of current
assets and debts by determining income, savings, living expenses, and debts.
Common actions in the third step of financial planning. - Answer Making decisions around
whether to:
1. continue same course of action
2. expand current situation
3. change the current situation
4. take new course of action.
Creativity is key, and not taking action is a dangerous alternative.
Common actions in the fourth step of financial planning. - Answer After decisions are made,
evaluation of consequences of choices will be seen. This is seen where opportunity cost and the
Questions with Correct Solutions
2025-2026 Updated.
Financial plan - Answer A formalized report that summarizes your current financial situation,
analyzes your financial needs, and recommends future financial activities.
Budget - Answer A specific plan for spending income.
Adult life cycle - Answer The stages in the family situation and financial needs of an adult.
Annuity - Answer A series of equal amounts (deposits or withdrawals) made at regular time
intervals.
Bankruptcy - Answer A set of federal laws that allow you to either restructure your debts or
remove certain debts.
Compounding - Answer A process that calculates interest based on previously earned
interest.
Economics - Answer The study of how wealth is created and distributed.
Future value - Answer The amount to which current savings will increase based on a certain
interest rate and a certain time period; typically involves compounding.
Inflation - Answer A rise in the general level of prices.
Life cycle approach - Answer The idea that the average person goes through four basic stages
in personal financial management.
Liquidity - Answer (1) The ability to readily convert financial resources into cash without a
loss in value;
(2) the ability to buy or sell an investment quickly without substantially affecting the
investment's value.
Opportunity cost - Answer What a person gives up by making a choice.
, Personal financial planning - Answer The process of managing your money to achieve
personal economic satisfaction.
Present value - Answer The current value for a future amount based on a certain interest
rate and a certain time period; also referred to as discounting.
Simple interest - Answer Interest computed on the principal, excluding previously earned
interest.
Time value of money - Answer Increases in an amount of money as a result of interest
earned.
Values - Answer Ideas and principles that a person considers correct, desirable, and
important.
6 steps in financial planning process: - Answer 1. Develop financial goal.
2. Determine your current financial situation.
3. Identify alternative courses of action.
4. Evaluate alternatives
5. Create and implement .financial plan.
6. Re-evaluate and revise the plan.
Common actions in the first step of financial planning. - Answer Analyze your values, attitude
towards money, and who is the core financial decision processor.
Common actions in the second step of financial planning. - Answer Preparing list of current
assets and debts by determining income, savings, living expenses, and debts.
Common actions in the third step of financial planning. - Answer Making decisions around
whether to:
1. continue same course of action
2. expand current situation
3. change the current situation
4. take new course of action.
Creativity is key, and not taking action is a dangerous alternative.
Common actions in the fourth step of financial planning. - Answer After decisions are made,
evaluation of consequences of choices will be seen. This is seen where opportunity cost and the
