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Money ManagementPractice Reading Review
Money ManagementEvery product or service you purchase each day requires sufficient funds to cover these
expenses. Expenses can range from your morning cup of coffee to major car repairs. You need to have
liquidity, or access to funds to cover any short-term cash needs. You can enhance your liquidity by using
money management and credit management.
Money management involves decisions regarding how much money to retain in a liquid form
and how to allocate the funds among short-term investments. If you do not have access to money to
cover cash needs, you may have insufficient liquidity. That is, you have the assets to cover your
expenses, but the money is not easily accessible. Finding an effective liquidity level involves deciding
how to invest your money so that you can earn a return, but also have easy access cash if needed. At
times, you may be unable to avoid cash shortages because of unanticipated expenses.
Credit management involves decisions about how much credit you need to support your
spending and which sources of credit to use. Credit is commonly used to cover both large and small
expenses when you are short on cash, so it enhances your liquidity. Credit should be used only when
necessary, however, as you will need to pay back borrowed funds with interest (and the interest
expenses may be very high).
Loans are typically needed to finance large expenditures, such as the payment of college
tuition or the purchase of a car or a home. The amount of financing needed is the difference between
the amount of the purchase and the amount of money you have available. Managing loans involves three
decisions. The first is to determine how much you can afford to borrow. The other two decisions are
deciding on the maturity (length of time) of the loan, and selecting a loan that charges a competitive
interest rate. (adapted from Madura, Jeff. Personal Finance, red. 5-6)
Money ManagementEvery product or service you purchase each day requires sufficient funds to cover these
expenses. Expenses can range from your morning cup of coffee to major car repairs. You need to have
liquidity, or access to funds to cover any short-term cash needs. You can enhance your liquidity by using
money management and credit management.
Money management involves decisions regarding how much money to retain in a liquid form
and how to allocate the funds among short-term investments. If you do not have access to money to
cover cash needs, you may have insufficient liquidity. That is, you have the assets to cover your
expenses, but the money is not easily accessible. Finding an effective liquidity level involves deciding
how to invest your money so that you can earn a return, but also have easy access cash if needed. At
times, you may be unable to avoid cash shortages because of unanticipated expenses.
Credit management involves decisions about how much credit you need to support your
spending and which sources of credit to use. Credit is commonly used to cover both large and small
expenses when you are short on cash, so it enhances your liquidity. Credit should be used only when
necessary, however, as you will need to pay back borrowed funds with interest (and the interest
expenses may be very high).
Loans are typically needed to finance large expenditures, such as the payment of college
tuition or the purchase of a car or a home. The amount of financing needed is the difference between
the amount of the purchase and the amount of money you have available. Managing loans involves three
decisions. The first is to determine how much you can afford to borrow. The other two decisions are
deciding on the maturity (length of time) of the loan, and selecting a loan that charges a competitive
interest rate. (adapted from Madura, Jeff. Personal Finance, red. 5-6)
So…what do we do?
One sentence summaries of
each paragraph
Paragraph 1
Every product or service you purchase
each day requires sufficient funds to cover
these expenses. Expenses can range from
your morning cup of coffee to major car
repairs. You need to have liquidity, or access
to funds to cover any short-term cash needs.
You can enhance your liquidity by using
money management and credit management.
Paragraph 1
Every product or service you purchase each
day requires sufficient funds to cover these
expenses. Expenses can range from your morning
cup of coffee to major car repairs. You need to
have liquidity, or access to funds to cover any
short-term cash needs. (You can enhance your
liquidity by using money management and credit
management.) this seems like a main idea/central point
We need liquid funds to cover our expenses and liquidity comes
from careful money and credit management.
definitiondefinition
Paragraph 2
Money management involves decisions regarding how much money to retain in a liquid form and how to allocate the funds among short-term investments. If you do not have access to money to cover cash needs, you may have insufficient liquidity. That is, you have the assets to cover your expenses, but the money is not easily accessible. Finding an effective liquidity level involves deciding how to invest your money so that you can earn a return, but also have easy access cash if needed. At times, you may be unable to avoid cash shortages because of unanticipated expenses.
Paragraph 2
Money management involves decisions regarding how much money to retain in a liquid form and how to allocate the funds among short-term investments. If you do not have access to money to cover cash needs, you may have insufficient liquidity. That is, you have the assets to cover your expenses, but the money is not easily accessible. Finding an effective liquidity level involves deciding how to invest your money so that you can earn a return, but also have easy access cash if needed. At times, you may be unable to avoid cash shortages because of unanticipated expenses.
Maintaining liquidity through money management
Paragraph 3
Credit management involves decisions about how much credit you need to support your spending and which sources of credit to use. Credit is commonly used to cover both large and small expenses when you are short on cash, so it enhances your liquidity. Credit should be used only when necessary, however, as you will need to pay back borrowed funds with interest (and the interest expenses may be very high).
Paragraph 3
Credit management involves decisions about how much credit you need to support your spending and which sources of credit to use. Credit is commonly used to cover both large and small expenses when you are short on cash, so it enhances your liquidity. Credit should be used only when necessary, however, as you will need to pay back borrowed funds with interest (and the interest expenses may be very high).
Credit management to maintain liquidity
Paragraph 4
Loans are typically needed to finance large
expenditures, such as the payment of college tuition
or the purchase of a car or a home. The amount of
financing needed is the difference between the
amount of the purchase and the amount of money
you have available. Managing loans involves three
decisions. The first is to determine how much you
can afford to borrow. The other two decisions are
deciding on the maturity (length of time) of the
loan, and selecting a loan that charges a competitive
interest rate.
Paragraph 4
Loans are typically needed to finance large expenditures, such as the payment of college tuition or the purchase of a car or a home. The amount of financing needed is the difference between the amount of the purchase and the amount of money you have available. Managing loans involves three decisions. The first is to determine how much you can afford to borrow. The other two decisions are deciding on the maturity (length of time) of the loan, and selecting a loan that charges a competitive interest rate.
Loans can increase liquidity and managing these loans involves three decisions.
Which sentence best states the
main idea of the passage?
A. Managing credit will depend upon spending habits
and sources of available
B. Money management involves decisions about the
liquidity of one's assets
C. Financing is often needed to pay for large
expenditures.
D. Liquidity of money can be improved through
money management and credit management.
Paragraph Summaries
1. We need liquid funds to cover our expenses and
liquidity comes from careful money and credit
management.
2. Maintaining liquidity through money management
3. Credit management to maintain liquidity
4. Loans can increase liquidity and managing these
loans involves three decisions.
Which sentence best states the
main idea of the passage?
A. Managing credit will depend upon spending habits
and sources of available
B. Money management involves decisions about the
liquidity of one's assets
C. Financing is often needed to pay for large
expenditures.
D. Liquidity of money can be improved through
money management and credit management.
The author's primary purpose is
to
A. discuss the dangers of not following a budget.
B. list the various decisions and issues for
managing liquidity.
C. explain the types of loans that are available.
D. describe the best way to invest extra money.
MI: Liquidity of money can be improved through
money management and credit management.
The author's primary purpose is
to
A. discuss the dangers of not following a budget.
B. list the various decisions and issues for
managing liquidity.
C. explain the types of loans that are available.
D. describe the best way to invest extra money.
MI: Liquidity of money can be improved through
money management and credit management.
"Credit should be used only
when necessary.”
This part of the sentence from paragraph
three is a statement of
A. fact
B. opinion
"Credit should be used only
when necessary.”
This part of the sentence from paragraph
three is a statement of
A. fact
B. opinion
The reader can infer from this
article that
A. Most people are poor managers of money.
B. Buying a house is an example of a short-term cash
need.
C. Most people should hire a financial consultant to
help them become better managers of their
money because the issues involved are very
complicated.
D. Surplus money is best invested in order to
grow, but everyone should plan for unanticipated
expenses and have available liquid assets to
handle them.
The reader can infer from this
article that
A. Most people are poor managers of money.
The author does not lead us to this inference with
any statements or judgements concerning how well
people manage their money. The passage is
concerned with information on how to manage
liquidity.
The reader can infer from this
article that
B. Buying a house is an example of a short-term cash
need.
Paragraph one states, “You need to have
liquidity, or access to funds to cover any short-term
cash needs.”
Paragraph four states, “Loans are typically needed
to finance large expenditures, such as the payment
of college tuition or the purchase of a car or a
home.”
A house is not a small purchase or a short term
cash need. One would not pay cash for a home.
The reader can infer from this
article that
C. Most people should hire a financial consultant to
help them become better managers of their
money because the issues involved are very
complicated.
There is no reference to hiring a financial
consultant nor to the issues being very complicated
The reader can infer from this
article that
D. Surplus money is best invested in order to
grow, but everyone should plan for unanticipated
expenses and have available liquid assets to handle
them.
Paragraph 2 states, “Finding an effective liquidity
level involves deciding how to invest your money so
that you can earn a return, but also have easy access
cash if needed.” This indicates investing money for
growth (interest) is best but that we should maintain
liquid assets for expenses.
The reader can infer from this
article that
A. Most people are poor managers of money.
B. Buying a house is an example of a short-term cash need.
C. Most people should hire a financial consultant to help them become better managers of their money because the issues involved are very complicated.
D. Surplus money is best invested in order to grow, but everyone should plan for unanticipated expenses and have available liquid assets to handle them.
Liquidity, as first mentioned in
line 3, most nearly means
A. money available for spending
B. amount of a loan
C. amount of large expenditures
D. one's credit rating
Liquidity, as first mentioned in
line 3, most nearly means
“You need to have liquidity, or access to
funds to cover any short-term cash needs.”
A. money available for spending
B. amount of a loan
C. amount of large expenditures
D. one's credit rating
Throughout the
passage, overall, which type of
support is offered to describe the
various issues involved in
managing money or credit?
A. Emotional
B. Objective
Throughout the
passage, overall, which type of
support is offered to describe the
various issues involved in
managing money or credit?
A. Emotional
B. Objective
Identify the relationship among these
sentences from paragraph four.
"Managing loans involves three decisions. The first
is to determine how much you can afford to
borrow. The other two decisions are deciding on
the maturity (length of time) of the loan, and
selecting a loan that charges a competitive interest
rate.
A. definition and example
B. comparison/contrast
C. listing
D. cause and effect
Identify the relationship among these
sentences from paragraph four.
"Managing loans involves three decisions. The first
is to determine how much you can afford to
borrow. The other two decisions are deciding on
the maturity (length of time) of the loan, and
selecting a loan that charges a competitive interest
rate.
A. definition and example
B. comparison/contrast
C. listing
D. cause and effect
As used in line 10, the phrase
"money is not easily accessible"
meansA. the purchaser does not have the money now, but
has the means to earn it.
B. the purchaser has money, but it is being used for
investments.
C. the purchaser cannot get to the bank quickly or
easily.
D. the purchaser does not have the money to buy an
item.
Look back in the paragraph…
“If you do not have access to money to cover cash
needs, you may have insufficient liquidity. That
is, you have the assets to cover your expenses, but
the money is not easily accessible.”
This means you do not have cash
or liquid funds
As used in line 10, the phrase
"money is not easily accessible"
meansA. the purchaser does not have the money now, but
has the means to earn it.
B. the purchaser has money, but it is being used for
investments.
C. the purchaser cannot get to the bank quickly or
easily.
D. the purchaser does not have the money to buy an
item.
Identify the relationship of the
parts within the following
sentence:
"At times you may be unable to avoid cash
shortages because of unanticipated expenses.”
A. Cause and effect
B. Classification
C. Comparison
D. Addition
So, what about my trick?
Uh oh! No punctuation mark to separate
the sentence parts!!
Where is the transition?
"At times you may be unable to avoid cash
shortages because of unanticipated
expenses.”
Because of = cause and effect
Identify the relationship of the
parts within the following
sentence:
"At times you may be unable to avoid cash
shortages because of unanticipated expenses.”
A. Cause and effect
B. Classification
C. Comparison
D. Addition
One reasonable conclusion that
can be drawn from the last
paragraph is
A. Wise money managers borrow as much money as
possible in order to have more liquidity.
B. Everyone will need a loan to finance a house or a
college education.
C. People who need a loan are able to borrow as
much as they need, as long as they pay it back.
D. Loan rates will vary depending upon the loan
amount, maturity length, and the loan company.
A. Wise money managers borrow as much
money as possible in order to have more
liquidity.
Loans are typically needed to finance large
expenditures, such as the payment of college tuition
or the purchase of a car or a home. The amount of
financing needed is the difference between the
amount of the purchase and the amount of money
you have available. Managing loans involves three
decisions. The first is to determine how much you
can afford to borrow. The other two decisions are
deciding on the maturity (length of time) of the
loan, and selecting a loan that charges a competitive
interest rate.
B. Everyone will need a loan to finance
a house or a college education.
Loans are typically needed to finance large
expenditures, such as the payment of college tuition
or the purchase of a car or a home. The amount of
financing needed is the difference between the
amount of the purchase and the amount of money
you have available. Managing loans involves three
decisions. The first is to determine how much you
can afford to borrow. The other two decisions are
deciding on the maturity (length of time) of the
loan, and selecting a loan that charges a competitive
interest rate.
C. People who need a loan are able to borrow
as much as they need, as long as they pay it
back.
Loans are typically needed to finance large expenditures, such as the payment of college tuition or the purchase of a car or a home. The amount of financing needed is the difference between the amount of the purchase and the amount of money you have available. Managing loans involves three decisions. The first is to determine how much you can afford to borrow. The other two decisions are deciding on the maturity (length of time) of the loan, and selecting a loan that charges a competitive interest rate.
We really aren’t given any information about how much they are able to borrow only how to figure out how much is needed.
D. Loan rates will vary depending upon
the loan amount, maturity length, and
the loan company.
Loans are typically needed to finance large expenditures, such as the payment of college tuition or the purchase of a car or a home. The amount of financing needed is the difference between the amount of the purchase and the amount of money you have available. Managing loans involves three decisions. The first is to determine how much you can afford to borrow. The other two decisions are deciding on the maturity (length of time) of the loan, and selecting a loan that charges a competitive interest rate.
One reasonable conclusion that
can be drawn from the last
paragraph is
A. Wise money managers borrow as much money as
possible in order to have more liquidity.
B. Everyone will need a loan to finance a house or a
college education.
C. People who need a loan are able to borrow as
much as they need, as long as they pay it back.
D. Loan rates will vary depending upon the loan
amount, maturity length, and the loan company.
What is the overall tone of this
passage?
A. reflective
B. neutral
C. persuasive
D. informative
What is the overall tone of this
passage?
A. reflective
B. neutral
C. persuasive
D. informative