Financial Math Final Exam Sem 1

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What are liquid assets?

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Liquid assets are cash or assets that can be quickly converted into cash without significant loss of value. Examples include cash, savings accounts, and checking accounts.

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How do you calculate total liquid assets?

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Total liquid assets are calculated by adding all cash and cash-equivalent assets. For example, if you have $1,450 in savings and $670 in checking, your total liquid assets would be $2,120.

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What is opportunity cost?

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Opportunity cost is the value of the next best alternative that is forgone when making a decision. It represents the benefits you could have received by taking an alternative action.

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How do you calculate the opportunity cost of a daily expense?

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To calculate the opportunity cost of a daily expense, multiply the cost of the expense by the number of days it occurs. For example, a $1 soda every school day for 36 weeks (180 days) costs $180.

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What is the formula for calculating savings over time?

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The formula for calculating savings over time is: Total Savings = Weekly Income x Savings Rate x Number of Weeks. For example, saving 20% of $150 weekly for 104 weeks results in $3,120.

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How do you determine savings from a change in expenses?

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To determine savings from a change in expenses, subtract the new expense from the old expense and multiply by the number of months. For example, saving $40 a month for 18 months results in $720.

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What is the significance of budgeting?

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Budgeting helps individuals plan their finances, track spending, and ensure they can save for future goals. It allows for better financial decision-making.

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How do you calculate the number of hours needed to work for a savings goal?

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To calculate the number of hours needed to work for a savings goal, divide the total savings goal by the hourly wage. For example, to save $2,000 at $8/hour, you need to work 250 hours.

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What is a savings rate?

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A savings rate is the percentage of income that is saved rather than spent. It is a key factor in determining how much money will accumulate over time.

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What is the difference between fixed and variable expenses?

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Fixed expenses are costs that do not change month to month, such as rent. Variable expenses fluctuate, such as groceries or entertainment.