01:220:110 Study Guide - Final Guide: Interest, Liquidity Risk, Interest Rate Risk
21 Dec 2016
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Economics 110 - personal finance and decision making. Financial decisions must be planned to meet specific needs and goals; factors such as age, income, household size, and personal beliefs influence spending and saving patterns. Personal financial planning - process of managing your money to achieve personal economic satisfaction, which allows you to control your financial situation. Inflation - rise in the level of prices, which decreases the buying power of the dollar; most harmful to people with fixed incomes (e. g. retired people) and money lenders. Opportunity cost - what a person gives up by making a choice: rule of 72 - to find out how fast prices or savings will double, divide 72 by the annual inflation or interest rate. Interest calculations: simple interest: amount in savings x annual interest rate x time period = interest. 500 x . 06 x = . Present value: formulas, time value of money tables, financial calculator, spreadsheet software, websites and apps.
