Financial Analysis Chapter 17 Quiz

Financial = Relating to the management of money Integration = Combining different components into a whole Monte Carlo analysis = A statistical method used to estimate outcomes Retirement needs = Financial requirements for post-work life

People prefer one clear figure to probabilities = a Effectively represents a 'guesstimated' risk-adjusted approach = b Assumes that the key factors are correlated with each other = c All of the above are disadvantages = d

Includes all assets and liabilities = e Includes financial assets and liabilities exclusively = f Includes only marketable assets and liabilities = g Both b and c = h

<p>Human assets = j House = k Pension assets = l All of the above are included = n</p> Signup and view all the answers

<p>Because the household is the sum of its separate assets less its liabilities = o Because the household is an operating enterprise in which the individual activities influence each other = p Because correlations measure the riskiness of individual assets and liabilities = q Both a and b = r</p> Signup and view all the answers

<p>Simple capital needs analysis = y Monte Carlo simulation = z Total Portfolio Management = a Both a and b = b</p> Signup and view all the answers

<p>Using all assets and liabilities, all cash flows, all household activities, and all future plans to arrive at decisions = a Including all current and future resources and information in decision making = b Making one decision at a time based strictly on the merits of that item = c Both a and b = d</p> Signup and view all the answers

<p>Total portfolio management = f Capital needs risk management = g Simple capital needs analysis = h Capital needs analysis incorporating risk = i</p> Signup and view all the answers

<p>It takes into account all current and projected income and expenses and assets and liabilities over our life cycle = k It takes into account projected income and expenses and assets and liabilities over our life cycle = l It takes into account current income and expenses and assets and liabilities = m It takes into account past income and expenses and assets and liabilities = n</p> Signup and view all the answers

<p>Avoid risky capital needs projections = p Use Monte Carlo simulation = q Be more conservative in our simple capital needs projections = r Both b and c = t</p> Signup and view all the answers

<p>You have no benchmark to determine how much to alter each calculation = u Errors associated with this approach will not change one's lifestyle = v It is easy to understand and to execute = w Both b and c = y</p> Signup and view all the answers

<p>a = Using all assets and liabilities, all cash flows, all household activities, and all future plans to arrive at decisions b = Including all current and future resources and information in decision making c = Making one decision at a time based strictly on the merits of that item d = Both a and b</p> Signup and view all the answers

<p>f = Total portfolio management g = Capital needs risk management h = Simple capital needs analysis j = All of the above are ways through which to make integrated financial decisions.</p> Signup and view all the answers

<p>k = It takes into account all current and projected income and expenses and assets and liabilities over our life cycle l = It takes into account projected income and expenses and assets and liabilities over our life cycle m = It takes into account current income and expenses and assets and liabilities o = None of the above</p> Signup and view all the answers

<p>p = Avoid risky capital needs projections q = Use Monte Carlo simulation r = Be more conservative in our simple capital needs projections t = Both b and c</p> Signup and view all the answers

<p>u = You have no benchmark to determine how much to alter each calculation v = Errors associated with this approach will not change one's lifestyle w = It is easy to understand and to execute y = Both b and c</p> Signup and view all the answers