Business 12 Final – Flashcards

Which of the following is not an asset?
a. Home
b. Car
c. Student loan
d. Savings account

What does it mean when an asset appreciates?

What does it mean with an asset depreciates?

Which of the following circumstances reflects owning an asset?
a. Leasing a car
b. Renting an apartment
c. Making home mortgage payments
d. Renting a textbook

The Financial Well Being lectures suggested that all but one of the following should be included in calculating your financial net worth or wealth:
a. Cash
b. Owned real estate
c. Leased cars
d. Retirement saving accounts

Which legal act restricted banks from engaging in riskier financial services?

Which legal act allowed banks to engage in riskier financial services?

Which one of the following was NOT mentioned in the Financial Well Being lecture series as one of the four basic investment vehicles?
a. Cash or Cash Equivalents
b. Stocks
c. Real Estate
d. Mutual Funds

What are the building blocks to basic investing as stated in the Financial Well Being lecture series?

What best describes a corporate bond?

Which one of the following is NOT a basic source of bonds per the Financial Well Being lecture series?
a. Corporations
b. Federal Government
c. Non-profit Organizations
d. Municipalities

According to the Financial Well Being lecture series which of the following should you consider to be your first budgeting goal?
a. Building an emergency fund
b. Investing for retirement
c. Saving for college
d. Saving for your home

Which of the following items is NOT one of the four building blocks of personal budgeting?
a. Cash flow
b. Budgeting template
c. Spending for a good reason
d. Spending trade-offs

Given the following one month of financial information, what is the surplus or deficit generated for the month?
Net pay from your job – $4,500
Mortgage payment – $1,500
Car loan outstanding – $ 2,800
Food purchased – $500
Car gas purchased – $200
Credit card balance outstanding – $1,800
Credit card payment – $700

Which of the following items would typically be categorized as discretionary spending in a budget?
a. Car payments
b. Rent
c. Entertainment
d. Student loan payments

What data helps you predict your future spending for your budget?

What does the Financial Well Being lecture series suggest as a starting point when constructing your personal budgets?

Which one of the following was NOT mentioned in the Financial Well Being lecture series as an important step in constructing a personal budget?
a. Collect bank and brokerage statements for historical financial information
b. Categorize spending by type
c. Collect credit card statements to provide insight into historical spending
d. Ask others about their spending habits

What is the key tool mentioned in the Financial Well Being lecture series to manage your personal budget to achieve your budget objectives?

Which tool helps you manage your spending?

Buying stocks can be defined as:

John has assets valued at $45,000 and debts amounting to $35,000. Sally has assets valued at $20,000 with no debt. Given this information which of the following statements is true?
a. John has a higher financial net worth than Sally
b. Sally has a higher financial net worth than John
c. They have the same amount of financial net worth

In an auto insurance policy which section covers medical expenses of the other party?

Which of the following items typically is NOT used as collateral for a loan?
a. Home b. Car
c. Boat
d. iPhone

Which of the following is not a debt?
a. Home mortgage
b. Car loan outstanding
c. Insurance co-payment
d. Student loan outstanding

Which of the following two stock sectors are considered defensive?
a. Basic Materials and Retail
b. Consumer Staples and Utilities
c. Technology and Energy d. Health care and Telecom

From the Financial Well Being lectures;; which one of the following is not a “Deferred Tax Asset?”
a. IRA
b. 401k
c. Other qualified retirement accounts
d. Savings account

Which of the following is typically NOT a depreciating asset?
a. Car
b. Home
c. Computer
d. Boat

What is the FDIC?

Assets can increase your financial net worth by:

Which one of the following was NOT mentioned as a consideration when investing according to the Financial Well Being lecture series?
a. Time horizon
b. Investment risk
c. Taxes
d. Derivatives

The Financial Well Being lecture series mentioned which of the following as your primary source of investment funds?
a. Savings
b. Loans
c. Gifts from relative
d. Grants

Which of the following is NOT an investment tax advantage?
a. Unrealized gains are not taxed until the sale of the asset b. Municipal bond interest
c. Long-term gains versus short-term gains
d. Corporate bond interest is paid twice-a-year

Your use of financial leverage for investing purposes can best be described as:

What are the two primary types of life insurance?

According the Life Savings Model developed by Franco Modigliani, when should we be saving the most money?

Which one of the following medical plans uses its own doctors and hospitals?
a. HMO
b. PPO
c. HSA
d. Medicaid

What is your primary tool to manage your money?

A budget tracks:

Which of the following is NOT an aid to help you project your future cash outflow?
a. Your historical spending patterns
b. Your outstanding loans payments
c. An understanding of large future purchases
d. Your investment earnings

Which one of the following is NOT a disadvantage for buying a mutual fund?
a. A mutual fund typically charges you management fees b. Income tax timing may not align to change in fund value c. May underperform
d. A mutual fund helps you diversify your investment

What is the impact on your Financial Net Worth/Wealth from an appreciating asset?

Determine the financial net worth of James given his financial information:
– Checking account balance — $3,000
– Value of stocks owned — $7,000
– Value of his home — $550,000
– Home Mortgage — $450,000
– Car payment – $1,500
– Mortgage payment – $2,000
– Car insurance annual payment — $3,000
– Car loan outstanding – $6,000
– Unpaid Credit Card Balance – $12,000

What is the impact on your Financial Net Worth/Wealth from a depreciating asset?

Which one of the following represents additional personal liability insurance coverage?
a. Umbrella Policy
b. Overload Policy
c. Contingent Policy
d. Accidental liability Policy

Which one of the following insurance policies does NOT have some form of personal liability insurance?
a. Car insurance
b. Homeowner insurance
c. Renter insurance
d. Term Life insurance

What does “Principal” mean in lending terms?

If you refinance your home mortgage and your payment goes from $3,000 per month to $1,500 per month;; what is the refinancing impact on your monthly budget?

Which one of the following is NOT a basic rule of risk management according to the Financial Well Being lecture series?
a. Do not risk more than you can afford to lose
b. Consider the odds of something bad happening
c. Defer any risk
d. Don’t risk a lot for a little cost

The Risk versus Reward formula is:

Which one of the following is NOT a way to save money on your insurance?
a. Buy all your insurance from one broker or agent to receive bundle pricing
b. Buy an exotic sports car
c. Request a high deductible on your homeowner policy
d. Apply for good student discount

Which section in a budget is typically used the most for managing “spending trade-offs?”

Which one of the following is NOT a stock classification?
a. Blue Chip Stocks
b. Growth Stocks
c. Hybrid Stocks
d. Income Stocks

What is a Stock Symbol?

All things being the same except an unexpected medical expense of $2,000, what effect does this have on your budget?

Which of the following is the correct formula to determine your financial net worth?

What are the three building blocks of Financial Wealth according to the Financial Well Being lecture series?

Deferred tax assets will be reduced in value by which of the following at withdrawal:
a. Income taxes
b. Revaluation of the asset
c. Payment to the Social Security administration
d. Payment to Disability Fund

‘Amortization’ means:

What is collateral?

When is compounding your enemy?

Credit card interest is typically compounded:

Of the following;; who most likely would not check your credit score?
a. Mortgage lender
b. Banker providing a car loan
c. Employer
d. Admissions officer at SJSU

Which of the following items is not a good reason to manage your debt?
a. Debt is paid back with future earnings which has a negative impact on future cash flow. b. Debt or bad credit may affect your ability to get a job.
c. Typically the cost of debt is higher than the earnings on short-term investments.
d. None of the above.

The FDIC insures a single account per person and per bank up to:

What Legal Act restricted banks from entering high risk financial businesses and transactions?

Which one of the following home mortgages is the most dangerous?
a. Interest only mortgage
b. Negative amortization mortgage
c. Fixed rate fully amortized mortgage
d. Variable rate mortgage

A fixed rate fully amortized home mortgage includes all of the following characteristics except:
a. The interest rate is fixed during the entire loan period.
b. The monthly payment may change due to outstanding principal balance.
c. The mortgage is set for a specific time period.
d. The mortgage is completely paid-off at the end of the loan period.

Which one of the following may possibly be “good debt?”

If you borrow $10,000 from your parents and promise to pay $1,200 per month which includes an annual interest rate at 24% compounded monthly;; how long will it take you pay off the loan?

What is the relationship of Bond prices to interest rates?

What is the value of your $10,000 investment at the end of one year given the following information:
– Annual interest rate is 12%
– Interest Compounds Monthly

What is the value of your $10,000 investment at the end of the second year given the following information:
– Annual interest rate is 24%
– Interest Compounds Quarterly

Which one of the following is not someone who typically provides comprehensive personal financial planning services?
a. RFC® – Registered Financial Consultant
b. CFP® – Certified Financial Planner
c. RIA – Registered Investment Advisor
d. CFA – Chartered Financial Analyst

Which of the following items is NOT typically considered a high risk investment?
a. Raw Land
b. Collectibles
c. Money Market Mutual Fund
d. Options, Calls, or Puts

Who is the best person (per the lecture) to prepare your personal income taxes?

The process of dividing investments among different categories such as stocks, bonds, cash, and real estate, in order to maximize return and reduce risk, is typically called:

How long must you hold an investment for it to qualify for reduced taxes under Long-Term Capital Gain treatment?

The process of dividing investments among different categories, such as stocks, bonds, cash, and real estate, in order to optimize return given a certain risk tolerance is typically called:

What measurement term is used to reflect stock price volatility?

What is Stock Alpha?

Who typically issues a form 1099?
a. A company that pays for a contractor or non-employee b. A bank that pays dividends
c. A bond issuer that pays interest
d. All of the above

Which of the following is not one of the (3) building blocks of personal income taxes per the Personal Financial Well Being lectures?
a. Self-Assessment
b. The Tax Rules – IRC
c. How to reduce your taxes
d. Internal Revenue Audits

Which one of the following is the correct form to file your California state income tax?

If you file a Federal Tax Extension form 4868 – when is your tax payment due?

Which one of the following is the correct form to file your Federal income tax?
a. Form 540
b. Form 1040
c. Form 3885
d. Form D

Which one of the following taxes is typically not specifically broken out – hidden within the cost of an item?
a. Sale tax
b. Use tax
c. Excise tax
d. Gift tax

Which one of the following statements is true?
a. Tax avoidance is legal and tax evasion is not
b. Tax avoidance is illegal and tax evasion is legal
c. Tax avoidance and tax evasion are both legal
d. Tax avoidance and tax evasion are both illegal

Which one of the following items is typically not a deduction or withholding from your payroll check?
a. Federal income tax
b. State income tax
c. Property tax
d. Medicare contribution

Our tax dollars are used for which of the following items?
a. Pay for park maintenance
b. Pay for public schools
c. Pay for government employees
d. All of the above

Which of the following is not one of the (3) ways to avoid paying higher taxes per the Personal Financial Well Being lectures?T
a. Shift Income to lower tax entity
b. Ignore income earned on form 1099
c. Shift the tax timing
d. Change the Nature of the Income to a lower tax rate

Which one of the following behaviors is typically NOT addressed by our tax system?

Who collects taxes for the federal government?

What is form W-2?

Which one of the following items was not mentioned as part of the (3) leg stool to fund your retirement?
a. Your home equity
b. Social Security Payments
c. Your personal savings
d. Company retirement plans: 401K or Pension

What additional benefit(s) may come with a 401K versus an IRA?
a. Employers may “match” funds you contribute
b. You can contribute a greater tax deferred amount
c. Contributions are deducted directly from your paycheck
d. All of the above

What is a typical Annuity?

Which of the following is a “Defined Benefit Plan?”
a. IBM pension plan
b. GE 401K plan
c. AT&T incentive stock option plan
d. None of the above

Which of the following is a “Defined Contribution Plan?”
a. IBM pension plan
b. GE 401K plan
c. AT&T incentive stock option plan
d. None of the above

What impact will rising inflation have on your purchasing power when you retire?
a. Your purchasing power will not change – no impact
b. Your purchasing power will increase
c. Your purchasing power will decrease

Which one of the following conditions is not a requirement of a personal IRA?
a. The IRA account must be administered by a third party
b. Funds in an IRA cannot be co-mingled with non tax-deferred accounts
c. An individual must be at least 25 years of age before starting an IRA
d. Certain investments are not allowed

Which of the following statements about Medicare is not TRUE?
a. Medicare covers all your medical expenses
b. You can obtain Medicare at the age of 65
c. Medicare is a form of medical/health care insurance
d. Medicare can be taken before taking full retirement Social Security benefits

Which of the following statements is not TRUE about personal tax deferred retirement savings plans?
a. An IRA is a form of Personal tax deferred retirement savings plan
b. After reaching retirement age all withdrawals from your plan are tax-free
c. Earnings within a personal tax deferred retirement savings plan are not taxed until funds are withdrawn
d. A 10% penalty will be levied against you for early withdrawals – before the age of 59 1/2.

When electing to start your social security payments;; at what age will you receive the highest monthly payment amount?

Which of the following is not an advantage of investing in residential rental real estate per the Personal Financial Well Being lecture series?
a. Potential Asset Appreciation
b. Possible positive cash flow generation
c. Non-cash depreciation expense
d. Possible negative cash flow generation

Which one of the following is a tax advantage of owning a personal primary residence per the Personal Financial Well Being lecture series?

Which of the following is more likely to cause disease:
a. Running for your life
b. Having a pet cat
c. Constantly worrying
d. Working in the US Post Office

Which of the following is what the stress response “evolved from?”
a.Running in a foot race
b. Worrying
c. Anticipating Danger
d. Running from a predator

Stress is good when it is (best answer)
a. Short term
b. Moderate
c. Medium term
d. Both a and b are correct

Which of the following is considered a “modern” stressor?
a. Paying Taxes
b. The anticipation of paying taxes
c. Running from danger
d. Eating movie popcorn

Is less stress always better?

Exercise is shown to counter stress. Which type of exercise(s) is/are better for stress?

Which of the following items is typically NOT a sign of Long-Term Stress?
a. Constant worrying
b. Sleepless nights
c. Frequent frustration
d. Depression
e. Healthy eating habits

What is the best way to manage stress and live long?
a. exercise regularly
b. find meaning in your job
c. keep intellectually active
d. all of the above

Which of the following is NOT caused by stress?
a. Heavy breathing
b. Low blood sugar
c. Increased heart rate
d. High blood pressure

Which of the following is TRUE?
a. Rich families are happier than middle income families
b. Middle income families are happier than poor families
c. Money has no relationship to happiness
d. None of the above is true.

Which one of the following reasons is not why you should have an attorney help you prepare your legal Trust documents?
a. High likelihood your Trust document will hold up in court if questions arise
b. Your peace of mind the Trust documents are prepared properly
c. Your guarantee that your beneficiaries will all feel satisfied with the distribution of your assets
d. Only attorneys can provide legal advice and answer legal questions that may arise

Which document enables someone you designate to make decisions about your health care when you are unable to do so?

Which one of the following items is not a benefit or feature of a “Living Trust?
a. Avoids probate
b. Does not require court approval to distribute assets
c. Avoids paying any inheritance taxes
d. Typically includes a “pour-over will”

What is a Power of Attorney (Durable)?
a. A document that enables someone you designate to handle your personal finances if you are unable to do so
b. A document that enables someone you designate to handle your personal legal affairs if you are unable to do so
c. A document that enables someone you designate to act on your behalf
d. All of the above

What is a Last Will and Testament?