Finance – Test 1

financial planning has specific techniques that will be effective for every individual
false
Increased demand for a product or service will usually result in lower prices for the item
false
Inflation reduces the buying power of money
true
lenders benefit more than borrowers in times of high inflation
false
economics is the study of using money to achieve financial goals
false
A decrease in the demand for a product or service may result in a decrease in wages for people producing that item
true
higher inflation usually results in lower interest rates
false
developing and using a budget is part of the “obtaining” component of financial planning
false
a financial plan is another name for a budget
false
planning to buy a house is an example of an intangible goal
false
opportunity costs refer to what a person gives up when making a decision
true
opportunity costs refer to time, money, and other resources that are given up when a decision is made
true
time value of money refers to changes in consumer spending when inflation occurs
false
interest on savings is calculated by multiplying the money amount times the opportunity cost times the annual interest rate
false
present value is also referred to as compounding
false
most decisions have only a few alternatives from which to choose
false
risks associated with most financial decisions are fairly easy to measure
false
developing financial goals is the first step in the financial planning process
false
analyzing your current financial position is part of the first stage of the financial planning process
true
Gross Domestic Product measures the total value of goods and services produced within a country’s borders, excluding items produced with foreign resources
false
trade balance is defined as the difference between a country’s exports and its imports
true
The main goal of personal financial planning is
achieving personal economic satisfaction
higher prices are likely to result from
increased spending by consumers without increased production
who is most likely to benefit from inflation
borrowers
higher consumer prices are likely to be accompanied by
higher interest rates
with an inflation rate of 9 percent, prices would double in about ____ years
8

Rule of 72 — 72/9=8

increased consumer spending will usually cause
higher employment levels
higher interest rates can be caused by
a lower money supply
The risk premium you receive as a saver is based in part on:
the uncertainty associated with getting your money back and the expected rate of inflation
what would increase the risk of a loan?
rising consumer prices
the stages that an individual goes through based on age, financial needs, and family situation is called the:
adult life cycle
the study of how wealth is created and distributed is
economics
The main economic influence that determines prices is:
supply & demand
The Fed refers to:
the Federal Reserve System
The main responsibility of The Fed is to:
maintain an adequate supply of money
Some savings and investment choices have the potential for higher earnings. However, these may also be difficult to convert to cash when you need the funds. This problem refers to:
liquidity risk
what would cause prices to drop?
increased production by business
Attempts to increase income are part of the ____________ component of financial planning.
obtaining
A major activity in the planning component of financial planning is:
allocating current resources for spending
The ability to convert financial resources into usable cash with ease is referred to as
liquidity
The problem of bankruptcy is associated with poor decisions in the ______________ component of financial planning.
borrowing
A question associated with the saving component of financial planning is:
Do you have an adequate emergency fund?
A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends a direction for your financial activities is a(n):
financial plan
When an individual makes a purchase without considering the financial consequences of that purchase, ignores the ______________ aspect of financial planning.
spending
The success of a financial plan will be determined by:
how resources are used
As Jean Tyler plans to set aside funds for her young children’s college education, she is setting a(n) ____________ goal.
long-term
____________ goals relate to personal relationships, health, and education.
Intangible-purchase
Brad Johnson has a goal of “saving $50 a month for vacation.” Brad’s goal lacks:
a time frame
Which of the following goals would be the easiest to implement and measure its accomplishment?
Save $100 a month to create a $4,000 emergency fund
Opportunity cost refers to:
what a person gives up by making a choice
An example of a personal opportunity cost would be:
time comparing several brands of personal computers
The time value of money refers to:
increase in an amount of money as a result of interest
The amount of interest is determined by multiplying the amount in savings by the:
annual interest rate and time period
If a person deposited $50 a month for 6 years earning 8 percent, this would involve what type of computation?
future value of a series of deposits
Which type of computation would a person use to determine current value of a desired amount for the future?
present value of a single amount
If inflation is increasing at 3 percent per year, and your salary increases at the same rate, how long will it take your salary to double?
24 years
When prices are increasing at a rate of 6 percent, the cost of products would double in about how many years?
12 years
Future value calculations involve:
compounding
If you put $1,000 in a saving account and make no further deposits, what type of calculation would provide you with the value of the account in 20 years?
future value of a single amount
The first step of the financial planning process is to:
analyze your current personal and financial situation
____________ risk refers to the danger of lost buying power during times of rising prices.
inflation
Example of opportunity cost
saving money instead of taking a vacation
The changing cost of money is referred to as ____________ risk.
interest-rate
The uncertainty associated with decision making is referred to as:
risk
The financial planning process concludes with efforts to:
review and revise your actions
Using the services of financial institutions will be most evident in your effort to:
implement the financial plan
Changes in income, values, and family situation make it necessary to:
evaluate and revise your actions
Which of the following is usually considered a long-term financial strategy?
investing in a growth mutual fund to accumulate retirement funds
Lynn Roy will retire in the next year and has $675,000 in savings and investments and owns her own home that is worth $250,000. Which step in the financial planning process does this situation demonstrate?
determine her current financial situation
Lynn Roy wants to travel after she retires as well as pay off the balance of the loan she has on the home she owns. Which step in the financial planning process does this situation demonstrate?
developing her financial goals
Lynn Roy wants to travel around the world. Lynn Roy has several options she can pursue. She can continue to work full time to earn the money she needs for her trip. She can work part time so that she can still earn some money but have the time necessary to complete her trip. She can take full retirement so that she has all the time necessary to complete her trip. Which step in the financial planning process does this scenario demonstrate?
identifying alternative courses of action
Lynn Roy knows that if she continues to work full time, it will be difficult for her to get the time off she needs to be able to travel around the world. However, if she continues to work full time she will more easily earn the money she needs to take her trip and still have money left for her living expenses after she gets back from her trip. Which step in the financial planning process does this scenario demonstrate?
evaluating her alternatives
Lynn Roy has decided to take retirement from her job and use the time she has earned to travel around the world. She has decided to start her trip around the world in Europe by train and bus and will use her savings to pay for her trip. Which step in the financial planning process does this scenario demonstrate?
implementing her financial plan
Lynn Roy’s goal has been to travel around the world. She has now been traveling for six months and she has decided she is a little tired of living out of a suitcase. She has decided to go home, look for a part time job and take shorter trips to locations around the world that appeal to her. Which step in the financial planning process does this scenario most likely demonstrate?
reviewing and revising her financial plan
John Gleason is interested in purchasing a 46″ rear projection TV for his living room. John knows that right now the TV will cost approximately $1500. John is not sure he can afford this TV right now but is worried that if he waits, the cost of the TV will rise to $1800. Which type of risk is John worried about?
inflation risk
John Gleason is interested in purchasing a 46″ rear projection TV for his living room. He knows that right now the TV will cost approximately $1500. John wants to borrow the money to purchase the TV but is a little concerned because he thinks interest rates are going to fall in the future. He is worried that he might get stuck with a loan at a high interest rate. What type of risk is John worried about?
interest rate risk
John Gleason is interested in purchasing a 46″ rear projection TV for his living room. He knows that right now the TV will cost approximately $1500. However, John is a little concerned about his job. John is a pilot for Delta Airlines and he thinks it is possible that he could be laid off in the near future. What type of risk is John worried about?
income risk
Mary Sheets is considering investing in 30 year Corporate Bonds issued by Duke Energy Company. She knows that she will earn an interest rate of 8% by purchasing these bonds. However, she is concerned because she might need to take her money out of this investment in a year and she has heard that she might have to sell the bonds at a significantly lower price than she will purchase them for. What type of risk is Mary concerned about?
liquidity risk
John Dean has just moved into a new house and needs a lawn mower since he has always lived in apartments and now he has a lawn to mow. What type of goal would this be for John?
durable-products goal
Melanie Walsh likes to go to the movies once a week. When she is at the movies, she generally gets large popcorn and a drink. Melanie wants to be sure that she sets aside money each week so she can continue going to the movies. What type of goal would this be for Melanie?
consumable-products goal
Paul Carter is 43 years old, married and has three children, ages 13, 10 and 5. Which influence on financial planning does this demonstrate?
Adult Life Cycle
One aspect of financial planning is to make wise decisions as to what to purchase and when to purchase it. Which aspect of financial planning does this deal with?
spending
One aspect of financial planning is to control your use of credit. Which aspect of financial planning does this deal with?
borrowing
One aspect of financial planning is to make sure you maintain adequate insurance coverage for your needs. Which aspect of financial planning does this deal with?
managing risk
One aspect of financial planning is to buy stocks, bonds and mutual funds with the potential for long term growth. Which aspect of financial planning does this deal with?
investing
When prices are rising at a rate of 3 percent, the cost of products and services would double in ______ years
24
Sources for financial planning can be found from:
– print and media.
– digital sources.
– financial institutions.
– financial experts.
The annual price increase for consumer goods and services measured by the Bureau of Labor Statistics is called ________.
the consumer price index
If you desire your money to double in 6 years, what rate of return would you need to earn?
12 percent
A family spends $40,000 on living expenses. With an annual inflation rate of 3 percent, they can expect to spend approximately _______ in three years
$43,720
The future value of $1,000 deposited a year for 5 years earning 4 percent would be approximately:
1,000 x 5.416 = $5416
You are planning to buy a house in five years. How much do you need to deposit today to have a $10,000 down payment if your investment will make 6%?
$7,470
John is planning to go to graduate school in a program that will take three years. John wants to have available $10,000 available each year for his school and living expenses. If he earns 6% on his investments, how much must be deposited at the start of his studies for him to withdraw $10,000 a year for three years?
10,000 x 2.673 = $26,730
Mary Sander’s new job is very demanding. She regularly works long hours and on the weekends. As a result, Mary has not had much time for her family and friends. This is an example of:
personal opportunity cost
During __________, even though prices decline spending slows because consumers expect prices to continue to decline.
deflation
Financial intermediaries include the following:
– bank.
– credit unions.
– insurance companies.
– investment companies.
More recently, the annual price increase for most goods and services as measured by the consumer price index has been less than ____ percent.
2
Increased home building results in:
– increased job opportunities.
– higher wages.
– increased consumer spending.
– overall economic expansion
Developing financial goals is the ______ step in the financial planning process.
2nd
The following are examples of intangible goals, except:
buying a house
Developing and using a budget is part of which component of financial planning?
planning
Analyzing your current financial position is a part of which step in the financial planning process?
first
Measuring risk associated with making most financial decisions is difficult because of what factor(s)?
– inflation risk
– Interest rate risk
– Personal risk
– Liquidity risk
A job tends to have less of a long-term commitment to a field than a career.
true
Corporate culture refers to the methods used by an organization to determine the value of employee benefits.
false
A possible opportunity cost associated with career advancement is a need to relocate your household
true
An interest inventory measures a person’s aptitudes.
false
Certain careers increase and decrease in demand based on changes in interest rates.
true
Increased technology can result in a reduction of employment in one industry while creating new jobs in other industries.
true
Libraries usually have a variety of information sources for career planning and job exploration.
true
Current business and economic news can be an indication of future job demand.
true
The purpose of an informational interview is to obtain employment from a branch office of a major corporation.
false
Government supported employment services can assist individuals with finding a job.
true
A cafeteria-style employee benefits program allows workers to select the benefits they prefer based on their personal situations.
true
A tax-exempt employee benefit is usually more advantageous than a tax-deferred benefit.
true
Continuing career education can be in a formal or an informal setting
true
A mentor is an experienced employee who serves as a teacher and counselor for a less experienced person in a career field.
true
A person’s birth date, sex, height, and weight should only be included on a resume‚ if that information relates specifically to qualifications for an employment position.
true
A list of grades received in school is commonly included on a resume.
false
References are generally omitted from a resume.
true
Functional resumes emphasize a person’s skills and abilities in categories such as communications, research, and human relations.
true
The purpose of a cover letter is to determine if a company has jobs available.
false
A screening interview is reserved for only the finalists in a job search.
false
An elevator speech is a short, persuasive, focused summary of your unique experiences and skills used when networking.
true
A medical-spending account (MSA) allows people to pay health care costs with pretax dollars.
true
It is legal for an interviewer to ask you about your marital status.
false
Compared to a job, a career:
demands regular updating of knowlege
A(n) ____________ is an employment position that is obtained mainly to earn money.
job
a commitment to a profession that requires continued training and offers a clear path for occupational growth?
career
The first step of the career planning process is to:
assess your interests, abilities, and goals
The final step of the career planning process is to:
plan for career development
In the career planning process, after identifying specific job opportunities, a person should:
develop a resume and cover letter
A lack of willingness to accept a variety of employment positions is a common career planning mistake associated with a lack of:
flexibility
Natural abilities that people possess are called
aptitudes
Mathematical abilities, problem-solving skills, and physical dexterity are examples of:
aptitudes
Which of the following trends is most likely to increase domestic career opportunities in manufacturing organizations?
increased exports
Changes in the demand for goods and services are an example of a(n) ____________ influence on the job market.
economic
Which of the following is an example of an industrial trend that could affect the job market?
increased use of computers in manufacturing
Bill Evans is concerned about the effect of current economic conditions on various career fields. Which one of the following would be most useful to Bill as he addresses his concerns?
The Wall Street Journal
The Occupational Outlook Handbook would be most useful for determining:
expected employment in various career clusters
Which one of the following is a professional association that can assist in career planning for a specific career area?
American Marketing Association
The purpose of an informational interview is to:
gather information about a firm or for career planning
Kenton Greer wants to locate employment positions presently available in his career area. This information would be best obtained:
professional contacts
To assess the current value of a lump-sum retirement benefit that will be received in 10 years, use the ____________ calculation.
present value of a single amount
Barb Hotchkins is in the 28 percent tax bracket. A tax-exempt employee benefit with a value of $500 would have a tax-equivalent value of:
$694

500(1-.28)

Federal tax-deferred employee benefits are:
taxed at some future time
Efficient work habits are an example of:
an employee’s initiative
A common criticism of including a career objective on a resume is that it:
may be too vague
The education section of a resume should include:
schools attended
Tom Husson recently coordinated a fund raising project for an organization that assists homeless youth. This would most likely be an example of experience in:
obtaining financial planning and budgeting skills
A chronological resume sequences personal data based on:
time
A ____________ resume presents a person’s education, work experience, and other information in a reverse time-sequence.
chronological
A functional resume is best for a person who:
has diverse skills
A person who has worked in many fields and has a variety of skills in categories such as communications, research, and personnel administration would probably be best served with the use of a ____________ resume.
functional
A ____________ resume is designed to obtain a specific job.
targeted
For an entry-level position, a person’s resume is likely to be:
one page
Creative resumes or those with a gimmick are most appropriate for careers in:
advertising
What is the purpose of a cover letter?
express interest in a job
The purpose of the development section of a cover letter is to:
highlight background that qualifies the applicant for a specific job
An interview designed to reduce the number of candidates for a position to a workable size is a(n) ____________ interview.
screening
The purpose of a screening interview is to:
reduce the number of applicants for a job
The finalists for a job position are invited for a(n) ____________ interview.
selection
The purpose of a selection interview is to:
question candidates for a job in detail
Which one of the following would likely lead to the most added income over an individual’s working career?
professional or doctorate degree
Which of the following would be a competency commonly associated with successful people?
– An ability to work well with others in a variety of settings
– A desire to do tasks better than they have to be done
– An ability to solve problems creatively in team settings
– Well-developed written and oral communication skills
Ned Turner has done some research and has found that the population in the U.S. is aging which means there will be an increased need for health care professionals in the future. This is an example of __________________ influencing jobs in the future.
demographic trends
Jeremy Irons has done some research and has discovered that the states with the largest population growth are Colorado and Arizona. Based on his findings, Jeremy believes these states will experience greater job growth as a result. This is an example of _____ influencing jobs in the future.
geographic trends
Blake Edwards has done some research and has discovered that economists believe interest rates will rise significantly over the next two years. Blake believes that this will lead to fewer homes being sold and fewer jobs in the banking and mortgage industries. This is an example of __________________ influencing jobs in the future.
economic trends
Billy Freniere has gone to the career placement center at his university. He has taken both an interests test and a personality test and has found careers where his interests and personality are well suited. Which step in the career planning process has Billy completed?
assess personal goals and abilities
Brock Trotter has gone to monster.com as well as his local newspaper and has found five job possibilities that he feels fit his abilities and interests. Which step in the career planning process has Brock completed?
evaluate the employment market to identify specific employment opportunities
Austin Guess has written his resume and had it checked by his career placement center for errors. He plans on sending it to three companies he has identified as having job openings. Which step in the career planning process is Austin completing?
develop a resume and cover letter to apply for specific positions
Kyle Burroughs has purchased a suit and has interviewed with three companies through the career placement center at his university. He was surprised by some of the questions asked and does not feel he answered them well. He has developed some answers that he feels are better answers and better reflects his abilities and aptitudes. Which step in the career planning process has Kyle completed?
interview for specific positions and assess the interview performanace
Jason Liang has gotten three job offers. He is now looking at the benefits packages of all three to see what he likes and doesn’t like. Which step in the career planning process is Jason completing?
evaluate financial and other factors of positions offered
Jennifer Ryan wants to gain some employment experience so when she is ready to start a career she has something to offer a company. She has decided to work 20 hours a week for a local accounting firm answering the phone and assisting the partners in completing tax returns. Which of the following employment experience strategies is she pursuing?
part-time employment
Tara Guest wants to gain some needed experience so when she is ready to start a career she has something to offer a company. She has decided to help the Edmond Historical Society present programs to local school children. Which of the following employment experience strategies is she pursuing?
volunteer work
Lisa Trotter wants to gain some needed experience so when she is ready to start a career she has something to offer a company. She has decided to help with the homecoming parade for the University of Central Oklahoma where she goes to school full-time. Which of the following employment strategies is she pursuing?
campus project
Lori Burroughs wants to gain some needed experience so when she is ready to start a career she has something to offer a company. She has talked to the career placement center at her university. They tell her she can get a job with a local company for the summer and earn college credit while working. Which of the following employment strategies is she pursuing?
internship
making and using contacts in the business world for obtaining and updating career information and job possibilities
networking
Which of the following is an opportunity to contact several firms in a short time span? (Hint: It is often held at local universities or convention centers.)
a career fair
Which of the following is sent to a company to indicate your interest in a position and to obtain an interview? (Hint: It is generally accompanied by your resume.)
cover letter
the point at which retirement contributions made on your behalf by the company belong to you even if you no longer work for the company
vesting
Which of the following is a benefit on which you pay taxes at some future date?
tax-deferred benefit
_________ is a benefit on which you pay no taxes.
tax-exempt benefit
With completion of a bachelor’s degree one can expect to earn _____ in income over a 40-year period.
$2.5 million
Caroline lives in City A and earns $50,000 per year. The cost of living index in City A is .8. She is considering a move to City B which has a cost of living index of .9. How large a salary will she require in City B to maintain her current standard of living?
$56,250
The term networking refers to:
making and using contacts to obtain and update career information
Which one of the following is not an element of corporate culture?
government regulations
Joseph is eligible for a nontaxable life insurance benefit with an annual premium of $400 paid entirely by his employer. Assuming Joseph is in a 25% bracket, how much would he have to earn to pay for this benefit with after-tax dollars?
$533.33 = $400/(1 – .25)
In addition to inflation and consumer demand, what is another factor that can affect career opportunities?
interest rates
Having a relationship with a mentor can provide the following benefit(s):
-personalized training.
-access to influential people.
-emotional support during difficult times.
-growth in technical and social areas of a career.
an example of the type of information that you would not include on a resume unless it applies to specific job qualifications?
height and weight
The following information is generally not included on a resume:
references
A type of employee benefits program that allows workers to base their job benefits on a credit system and personal needs is called:
cafeteria-style
In recent years, approximately what percent of new jobs in the U.S. economy occurred in companies with fewer than 100 employees?
80
The main sources of networking include the following:
– community organizations
– professional associates
– business contacts
Money management activities refer to long-term investment decisions.
false
When one money management decision is made, an alternative must be given up.
true
Opportunity costs are only associated with money management decisions involving long-term financial security.
false
Financial records that are referred to on a regular basis should be kept in a safe-deposit box.
false
budget is a specific plan of how a person or family will spend their money.
true
A personal balance sheet reports your income and expenses.
false
A person’s net worth is the difference between the value of the items owned and the amounts owed to others.
true
Furniture, jewelry, and an automobile are examples of liquid assets.
false
insolvency is a result of having more liabilities than assets
true
A personal cash flow statement presents income and outflows of cash for a given time period, such as a month.
true
Take-home pay is a person’s earnings after deductions for taxes and other items.
true
If expenses for a month are greater than income, an increase in net worth will result.
false
A personal cash flow statement can serve as the basis for the budget categories used by an individual or family.
true
Definite financial obligations are referred to as variable expenses.
false
Discretionary income is money left over after paying for housing, food, and other necessities.
true
For many years, the United States has ranked highest among industrial nations in savings rate.
false
In order to calculate savings ratio, the amount saved each month is divided by net income.
false
Opportunity costs refer to:
trade-offs associated with financial decisions
A home file should be used for:
financial record for current needs
Which of the following financial documents would most likely be stored in a safe-deposit box?
savings certificates
Which of the following would be an example of a personal and employment document?
social security card
Which type of financial records includes stock and bond reports?
investment
Warranties are commonly associated with ____________ purchases.
consumer
Which of the following are considered to be personal financial statements?
balance sheet and cash flow statement
A personal balance sheet presents:
items owned and amounts owed
The current financial position (including net worth) of an individual or family is best presented with the use of a(n):
balance sheet
A family with $45,000 in assets and $22,000 of liabilities would have a net worth of:
$45,000 (assets) – $22,000 (liabilities) = $23,000 (net worth)
Items that you own with a monetary worth are referred to as:
assests
The value of items owned minus the amounts owed to others equals:
net worth
Liquid assets refer to:
cash and other items that are easily converted to cash
An individual retirement account is an example of a(n) ____________ asset.
investment
Liabilities are amounts representing:
debts
Current liabilities differ from long-term liabilities based on:
when the debt is due
Ben Chase needs to pay off some of his debts over the next few months. Which item on his balance sheet would help him decide what amounts are due in the near future?
current liabilities
Which of the following would be considered a long-term liability?
mortgage
A person’s net worth is computed by:
subtracting total liabilities from total assests
Which one of the following illustrates an insolvent situation?
$40,000 (assets) – $45,000 (liabilities) = -$5,000 (net worth) (insolvency occurs when liabilities exceed the value of assets)
A person’s net worth would increase as a result of:
reduced amounts owed to others
A cash flow statement reports a person’s or a family’s:
current income and payments
Which one of the following presents a summary of income and outflows for a period of time?
cash flow statement
Total earnings of a person minus the deductions for taxes and other items is called:
take-home pay
A common deduction from a person’s paycheck is for:
taxes
Payments that do not vary from month to month are ____________ expenses.
fixed
Ed Bostrom wants to reduce his fixed expenses. Which action would be appropriate?
find a place to live with a lower rent
Which of the following payments would be considered a variable expense?
water bill
A decrease in net worth could be the result of:
expenses exceeding income for a month
During the past month, Jennifer Ernet had income of $3,000. During the month, her net worth declined by $200. If no other financial activities occurred, this means Jennifer’s payments for the month were:
$3,000 – (-$200) = $3,200
Improvements in a person’s financial position are the result of:
increased savings and investments
To determine a person’s solvency, which financial document should be consulted?
balance sheet
Which one of the following is the best example of a long-term goal for a young couple?
income for retirement
Which one of the following should be budgeted first?
fixed expenses
Changes in the cost of living are:
different in various geographic areas
If a family planned to spend $370 for food during March but only spent $348, this difference would be referred to as a:
variance
A budget deficit would result when a person’s or family’s:
actual expenses are greater than planned expenses
When it comes to savings, most Americans:
find saving difficult
Jennifer Rodrick uses a computer to help her record her spending each month. She updates her records weekly. This would be an example of:
money management
Kyle Burroughs has decided to put $25 more per week in his savings account. He knows this will reduce his ability to go out to eat each week but thinks building his savings is important. This would be an example of:
an opportunity cost
Nick Boss has a savings account with $550 in it. He knows that he can withdraw this money whenever he wishes. This would be an example of:
a liquid asset
Karen Price has created a financial statement for herself that lists all of the assets she owns as well as the debts she owes. This would be an example of:
a balance sheet
A personal balance sheet:
reports what an individual or a family owes and owns
Patricia McDonald has determined that the value of her liquid assets is $4,500, the value of her real estate is $128,000, the value of her personal possessions is $62,000, and the value of her investment assets is $73,000. She has also determined the value of her current liabilities is $7,500 and the value of her long term liabilities is $98,000. What is Patricia’s net worth?
Total assets = $4,500 + 128,000 + 62,000 + 73,000 = $267,500;
Total liabilities = $7,500 + 98,000 = $105,500;
Net worth = $267,500 – 105,500 = $162,000
Patricia McDonald has determined the following information about her own financial situation. Her checking account is worth $850 and her savings account is worth $1,200. She owns her own home that has a market value of $98,000. She has furniture and appliances worth $12,000 and a home computer and laptop worth $3,300. She has a car worth $12,500 and owes $7,800 on her auto loan. She has also purchased some stock worth $5,500 and she has a retirement account worth $38,550. What is the total value of her assets?
Total assets = $850 + 1,200 + 98,000 + 12,000 + 3,300 + 12,500 + 5,500 + 38,550 = $171,900
Kathy Stumbaugh has determined that the value of her assets is $46,000 and the value of her debts is $32,000. The difference between these two is $14,000. The $14,000 could be referred to as her:
net worth
A family has a net worth of $156,000 and liabilities of $167,000, what is the amount of their assets?
Assets = $167,000 + 156,000 = $323,000
Sean Carter needs to store monthly statements from his bank, his credit card company and from his savings and loan. Where is the most appropriate place for Sean to store this information?
home file cabinet
Jerry Allison needs to store the title to his car and his house. Where is the most appropriate place for Jerry to store this information?
safe deposit box
Katherine Kocher has determined the following information about her own financial situation. Her checking account is worth $850 and her savings account is worth $1,200. She owns her own home that has a market value of $98,000. She has furniture and appliances worth $12,000 and a home computer and laptop worth $3,300. She has a car worth $12,500. She has recently purchased a 2-year certificate of deposit worth $5,500 and she has a retirement account worth $38,550. What is the value of her liquid assets?
$850 + 1,200 = $2,050. These are the only liquid assets listed.
Katherine Kocher has determined the following information about her own financial situation. Her checking account is worth $850 and her savings account is worth $1,200. She owns her own home that has a market value of $98,000. She has furniture and appliances worth $12,000 and a home computer and laptop worth $3,300. She has a car worth $12,500. She has recently purchased a 2-year certificate of deposit worth $5,500 and she has a retirement account worth $38,550. What is the value of her real estate assets?
$98,000 is the market value of her home and the only real estate asset listed.
Katherine Kocher has determined the following information about her own financial situation. Her checking account is worth $850 and her savings account is worth $1,200. She owns her own home that has a market value of $98,000. She has furniture and appliances worth $12,000 and a home computer and laptop worth $3,300. She has a car worth $12,500. She has recently purchased a 2-year certificate of deposit worth $5,500 and she has a retirement account worth $38,550. What is the value of her personal assets?
$12,000 + 3,300 + 12,500 = $27,800
Katherine Kocher has determined the following information about her own financial situation. Her checking account is worth $850 and her savings account is worth $1,200. She owns her own home that has a market value of $98,000. She has furniture and appliances worth $12,000 and a home computer and laptop worth $3,300. She has a car worth $12,500. She has recently purchased a 2-year certificate of deposit worth $5,500 and she has a retirement account worth $38,550. What is the value of her investment assets?
$5,500 + 38,550 = $44,050
Katherine Kocher has determined the following information about her own financial situation. Her checking account is worth $850 and her savings account is worth $1,200. She owns her own home that has a market value of $98,000. She has furniture and appliances worth $12,000 and a home computer and laptop worth $3,300. She has a car worth $12,500. She has recently purchased a 2-year certificate of deposit worth $5,500 and she has a retirement account worth $38,550. What is the total value of her assets?
$850 + 1,200 + 98,000 + 12,000 + 3,300 + 12,500 + 5,500 + 38,550 = $171,900
Jamie McFarland has determined that the value of her liquid assets is $4,500, the value of her real estate is $128,000, the value of her personal possessions is $62,000, and the value of her investment assets is $73,000. She has also determined the value of her current liabilities is $7,500 and the value of her long term liabilities is $98,000. What is the total value of her assets?
$4,500 + 128,000 + 62,000 + 73,000 = $267,500
Jamie McFarland has determined that the value of her liquid assets is $4,500, the value of her real estate is $128,000, the value of her personal possessions is $62,000, and the value of her investment assets is $73,000. She has also determined the value of her current liabilities is $7,500 and the value of her long term liabilities is $98,000. What is the total value of her debts?
$7,500 + 98,000 = $105,500
Jamie McFarland has determined that the value of her liquid assets is $4,500, the value of her real estate is $108,000, the value of her personal possessions is $62,000 and the value of her investment assets is $73,000. She has also determined the value of her current liabilities is $9,500 and the value of her long term liabilities is $68,000. What is Jamie’s net worth?
Total assets = $4,500 + 108,000 + 62,000 + 73,000 = $247,500; Total liabilities = $9,500 + 68,000 = $77,500; Net worth = ($247,500 – 77,500) = $170,000
This month, Ken Grossman has cash inflows of $3,100 and cash outflows of $2,950, resulting in a
$3,100 – 2,950 = $150 surplus
A person has $1,250 in liabilities, monthly savings of $200, and monthly gross income of $2,500. What is the person’s savings ratio?
$200/$2,500 = .08 (savings ratio)
When preparing her monthly budget, Marge Kent has a total spending allowance of $4,600. Each month she pays $1,200 in rent, $60 for cable television and Internet service, and $240 for her auto loan. What percentage of her budget goes for these fixed expenses?
$1,200 + 60 + 240 = $1,500; $1,500/$4,600 = .33 (× 100) = 33%
The Hernandez family budgets $420 a month for food. Last month they spent $413, which creates a:
$420 – 413 = $7 surplus
Samuel Jackson has developed a budget that he follows each month. This is a budget that he keeps in his head. He does not write anything down, nor does he use a computer to keep track of this budget. What type of budget has Samuel created?
mental budget
Jonathan Wynn has developed a budget that he follows each month. Jonathan has an envelope for each type of expenditure. After he cashes his paycheck, he puts the amount of cash in each envelope that he plans to spend on that category each month. What type of budget has Jonathan created?
physical budget
Amy Farmer has developed a budget that she follows each month. She went to the office supply store and purchased a spiral notebook. Each month she pens in what she wants to spend in the various categories. At the end of the month, she pens the amount that she actually spent in each of these categories and compares the results. What type of budget has Amy created?
written budget
Jeff Willis has a budget that he follows each month. He has used Microsoft’s Money to help him determine what he wants to spend each month. At the end of the month, Money automatically compares what he budgeted with what he spent. Jeff can also graph these results if he wants to. What type of budget has Jeff created?
computerized budget
An investment account that increases from $1,000 to $1,005 in a month is earning approximately __ percent annual interest.
$1,005 – 1,000 = $5; $5 × 12 = $60; $60/$1000 = .06 or 6%
An investment account that increases from $3,000 to $3,271 in one year is earning approximately ___ percent annual interest.
$3,271 – 3,000 = $271; $271/$3,000 = .09 (× 100) = 9%
Allen Arnold has determined that the amount of money he spends on his mortgage payment, car insurance payment, and cable bill totals $1,200 each month. What type of expenses has Allen determined with this calculation?
fixed expenses
Which of the following is(are) typically considered to be a personal financial record
-Birth certificate
-Marriage license
-Certificate of deposit
-Social Security card
Most income tax documents should be kept for _____ year(s).
7
Which of the following would most likely be classified as a current liability?
monthly balance due on a credit card
Which of the following would be considered a fixed expense?
mortgage payment
Your Aunt gives you some money for your birthday and you decide to put it into your savings account instead of spending it. The trade-off of not being able to spend the money now is this decision’s ________ cost.
opportunity
For January, Bethany DeWeese had cash inflows of $4,200 and cash outflows of $4,750, resulting in a
$4,200 – 4,750 = -$550 (a deficit for the month)
The value of the home you own would be included in which section of your balance sheet?
real estate assets
Characteristics of successful budgets include that they are:
– well-planned.
– realistic.
– flexible.
– clearly communicated.
About what percent of Americans have no emergency fund?
25
Calculate the debt ratio for an individual who has $90,000 in assets and $35,000 in liabilities.
.64
An example of a liquid asset is:
cash value of life insurance
The amount of income that a person or household has to spend after deductions for taxes and other items is called:
take-home pay
Definite financial obligations are referred to as:
fixed expenses
In order to determine net worth, you would create what kind of report?
balance sheet
Which of the following items is something that would typically not be stored in a safety deposit box?
checkbook