question

financial planning has specific techniques that will be effective for every individual

answer

false

question

Increased demand for a product or service will usually result in lower prices for the item

answer

false

question

Inflation reduces the buying power of money

answer

true

question

lenders benefit more than borrowers in times of high inflation

answer

false

question

economics is the study of using money to achieve financial goals

answer

false

question

A decrease in the demand for a product or service may result in a decrease in wages for people producing that item

answer

true

question

higher inflation usually results in lower interest rates

answer

false

question

developing and using a budget is part of the "obtaining" component of financial planning

answer

false

question

a financial plan is another name for a budget

answer

false

question

planning to buy a house is an example of an intangible goal

answer

false

question

opportunity costs refer to what a person gives up when making a decision

answer

true

question

opportunity costs refer to time, money, and other resources that are given up when a decision is made

answer

true

question

time value of money refers to changes in consumer spending when inflation occurs

answer

false

question

interest on savings is calculated by multiplying the money amount times the opportunity cost times the annual interest rate

answer

false

question

present value is also referred to as compounding

answer

false

question

most decisions have only a few alternatives from which to choose

answer

false

question

risks associated with most financial decisions are fairly easy to measure

answer

false

question

developing financial goals is the first step in the financial planning process

answer

false

question

analyzing your current financial position is part of the first stage of the financial planning process

answer

true

question

Gross Domestic Product measures the total value of goods and services produced within a country's borders, excluding items produced with foreign resources

answer

false

question

trade balance is defined as the difference between a country's exports and its imports

answer

true

question

The main goal of personal financial planning is

answer

achieving personal economic satisfaction

question

higher prices are likely to result from

answer

increased spending by consumers without increased production

question

who is most likely to benefit from inflation

answer

borrowers

question

higher consumer prices are likely to be accompanied by

answer

higher interest rates

question

with an inflation rate of 9 percent, prices would double in about ____ years

answer

8 Rule of 72 -- 72/9=8

question

increased consumer spending will usually cause

answer

higher employment levels

question

higher interest rates can be caused by

answer

a lower money supply

question

The risk premium you receive as a saver is based in part on:

answer

the uncertainty associated with getting your money back and the expected rate of inflation

question

what would increase the risk of a loan?

answer

rising consumer prices

question

the stages that an individual goes through based on age, financial needs, and family situation is called the:

answer

adult life cycle

question

the study of how wealth is created and distributed is

answer

economics

question

The main economic influence that determines prices is:

answer

supply & demand

question

The Fed refers to:

answer

the Federal Reserve System

question

The main responsibility of The Fed is to:

answer

maintain an adequate supply of money

question

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:

answer

liquidity risk

question

what would cause prices to drop?

answer

increased production by business

question

Attempts to increase income are part of the ____________ component of financial planning.

answer

obtaining

question

A major activity in the planning component of financial planning is:

answer

allocating current resources for spending

question

The ability to convert financial resources into usable cash with ease is referred to as

answer

liquidity

question

The problem of bankruptcy is associated with poor decisions in the ______________ component of financial planning.

answer

borrowing

question

A question associated with the saving component of financial planning is:

answer

Do you have an adequate emergency fund?

question

A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends a direction for your financial activities is a(n):

answer

financial plan

question

When an individual makes a purchase without considering the financial consequences of that purchase, ignores the ______________ aspect of financial planning.

answer

spending

question

The success of a financial plan will be determined by:

answer

how resources are used

question

As Jean Tyler plans to set aside funds for her young children's college education, she is setting a(n) ____________ goal.

answer

long-term

question

____________ goals relate to personal relationships, health, and education.

answer

Intangible-purchase

question

Brad Johnson has a goal of "saving $50 a month for vacation." Brad's goal lacks:

answer

a time frame

question

Which of the following goals would be the easiest to implement and measure its accomplishment?

answer

Save $100 a month to create a $4,000 emergency fund

question

Opportunity cost refers to:

answer

what a person gives up by making a choice

question

An example of a personal opportunity cost would be:

answer

time comparing several brands of personal computers

question

The time value of money refers to:

answer

increase in an amount of money as a result of interest

question

The amount of interest is determined by multiplying the amount in savings by the:

answer

annual interest rate and time period

question

If a person deposited $50 a month for 6 years earning 8 percent, this would involve what type of computation?

answer

future value of a series of deposits

question

Which type of computation would a person use to determine current value of a desired amount for the future?

answer

present value of a single amount

question

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?

answer

24 years

question

When prices are increasing at a rate of 6 percent, the cost of products would double in about how many years?

answer

12 years

question

Future value calculations involve:

answer

compounding

question

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?

answer

future value of a single amount

question

The first step of the financial planning process is to:

answer

analyze your current personal and financial situation

question

____________ risk refers to the danger of lost buying power during times of rising prices.

answer

inflation

question

Example of opportunity cost

answer

saving money instead of taking a vacation

question

The changing cost of money is referred to as ____________ risk.

answer

interest-rate

question

The uncertainty associated with decision making is referred to as:

answer

risk

question

The financial planning process concludes with efforts to:

answer

review and revise your actions

question

Using the services of financial institutions will be most evident in your effort to:

answer

implement the financial plan

question

Changes in income, values, and family situation make it necessary to:

answer

evaluate and revise your actions

question

Which of the following is usually considered a long-term financial strategy?

answer

investing in a growth mutual fund to accumulate retirement funds

question

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?

answer

determine her current financial situation

question

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?

answer

developing her financial goals

question

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?

answer

identifying alternative courses of action

question

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?

answer

evaluating her alternatives

question

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?

answer

implementing her financial plan

question

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?

answer

reviewing and revising her financial plan

question

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?

answer

inflation risk

question

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?

answer

interest rate risk

question

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?

answer

income risk

question

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?

answer

liquidity risk

question

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?

answer

durable-products goal

question

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?

answer

consumable-products goal

question

Paul Carter is 43 years old, married and has three children, ages 13, 10 and 5. Which influence on financial planning does this demonstrate?

answer

Adult Life Cycle

question

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?

answer

spending

question

One aspect of financial planning is to control your use of credit. Which aspect of financial planning does this deal with?

answer

borrowing

question

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?

answer

managing risk

question

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?

answer

investing

question

When prices are rising at a rate of 3 percent, the cost of products and services would double in ______ years

answer

24

question

Sources for financial planning can be found from:

answer

- print and media. - digital sources. - financial institutions. - financial experts.

question

The annual price increase for consumer goods and services measured by the Bureau of Labor Statistics is called ________.

answer

the consumer price index

question

If you desire your money to double in 6 years, what rate of return would you need to earn?

answer

12 percent

question

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

answer

$43,720

question

The future value of $1,000 deposited a year for 5 years earning 4 percent would be approximately:

answer

1,000 x 5.416 = $5416

question

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%?

answer

$7,470

question

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?

answer

10,000 x 2.673 = $26,730

question

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:

answer

personal opportunity cost

question

During __________, even though prices decline spending slows because consumers expect prices to continue to decline.

answer

deflation

question

Financial intermediaries include the following:

answer

- bank. - credit unions. - insurance companies. - investment companies.

question

More recently, the annual price increase for most goods and services as measured by the consumer price index has been less than ____ percent.

answer

2

question

Increased home building results in:

answer

- increased job opportunities. - higher wages. - increased consumer spending. - overall economic expansion

question

Developing financial goals is the ______ step in the financial planning process.

answer

2nd

question

The following are examples of intangible goals, except:

answer

buying a house

question

Developing and using a budget is part of which component of financial planning?

answer

planning

question

Analyzing your current financial position is a part of which step in the financial planning process?

answer

first

question

Measuring risk associated with making most financial decisions is difficult because of what factor(s)?

answer

- inflation risk - Interest rate risk - Personal risk - Liquidity risk

question

A job tends to have less of a long-term commitment to a field than a career.

answer

true

question

Corporate culture refers to the methods used by an organization to determine the value of employee benefits.

answer

false

question

A possible opportunity cost associated with career advancement is a need to relocate your household

answer

true

question

An interest inventory measures a person's aptitudes.

answer

false

question

Certain careers increase and decrease in demand based on changes in interest rates.

answer

true

question

Increased technology can result in a reduction of employment in one industry while creating new jobs in other industries.

answer

true

question

Libraries usually have a variety of information sources for career planning and job exploration.

answer

true

question

Current business and economic news can be an indication of future job demand.

answer

true

question

The purpose of an informational interview is to obtain employment from a branch office of a major corporation.

answer

false

question

Government supported employment services can assist individuals with finding a job.

answer

true

question

A cafeteria-style employee benefits program allows workers to select the benefits they prefer based on their personal situations.

answer

true

question

A tax-exempt employee benefit is usually more advantageous than a tax-deferred benefit.

answer

true

question

Continuing career education can be in a formal or an informal setting

answer

true

question

A mentor is an experienced employee who serves as a teacher and counselor for a less experienced person in a career field.

answer

true

question

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.

answer

true

question

A list of grades received in school is commonly included on a resume.

answer

false

question

References are generally omitted from a resume.

answer

true

question

Functional resumes emphasize a person's skills and abilities in categories such as communications, research, and human relations.

answer

true

question

The purpose of a cover letter is to determine if a company has jobs available.

answer

false

question

A screening interview is reserved for only the finalists in a job search.

answer

false

question

An elevator speech is a short, persuasive, focused summary of your unique experiences and skills used when networking.

answer

true

question

A medical-spending account (MSA) allows people to pay health care costs with pretax dollars.

answer

true

question

It is legal for an interviewer to ask you about your marital status.

answer

false

question

Compared to a job, a career:

answer

demands regular updating of knowlege

question

A(n) ____________ is an employment position that is obtained mainly to earn money.

answer

job

question

a commitment to a profession that requires continued training and offers a clear path for occupational growth?

answer

career

question

The first step of the career planning process is to:

answer

assess your interests, abilities, and goals

question

The final step of the career planning process is to:

answer

plan for career development

question

In the career planning process, after identifying specific job opportunities, a person should:

answer

develop a resume and cover letter

question

A lack of willingness to accept a variety of employment positions is a common career planning mistake associated with a lack of:

answer

flexibility

question

Natural abilities that people possess are called

answer

aptitudes

question

Mathematical abilities, problem-solving skills, and physical dexterity are examples of:

answer

aptitudes

question

Which of the following trends is most likely to increase domestic career opportunities in manufacturing organizations?

answer

increased exports

question

Changes in the demand for goods and services are an example of a(n) ____________ influence on the job market.

answer

economic

question

Which of the following is an example of an industrial trend that could affect the job market?

answer

increased use of computers in manufacturing

question

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?

answer

The Wall Street Journal

question

The Occupational Outlook Handbook would be most useful for determining:

answer

expected employment in various career clusters

question

Which one of the following is a professional association that can assist in career planning for a specific career area?

answer

American Marketing Association

question

The purpose of an informational interview is to:

answer

gather information about a firm or for career planning

question

Kenton Greer wants to locate employment positions presently available in his career area. This information would be best obtained:

answer

professional contacts

question

To assess the current value of a lump-sum retirement benefit that will be received in 10 years, use the ____________ calculation.

answer

present value of a single amount

question

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:

answer

$694 500(1-.28)

question

Federal tax-deferred employee benefits are:

answer

taxed at some future time

question

Efficient work habits are an example of:

answer

an employee's initiative

question

A common criticism of including a career objective on a resume is that it:

answer

may be too vague

question

The education section of a resume should include:

answer

schools attended

question

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:

answer

obtaining financial planning and budgeting skills

question

A chronological resume sequences personal data based on:

answer

time

question

A ____________ resume presents a person's education, work experience, and other information in a reverse time-sequence.

answer

chronological

question

A functional resume is best for a person who:

answer

has diverse skills

question

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.

answer

functional

question

A ____________ resume is designed to obtain a specific job.

answer

targeted

question

For an entry-level position, a person's resume is likely to be:

answer

one page

question

Creative resumes or those with a gimmick are most appropriate for careers in:

answer

advertising

question

What is the purpose of a cover letter?

answer

express interest in a job

question

The purpose of the development section of a cover letter is to:

answer

highlight background that qualifies the applicant for a specific job

question

An interview designed to reduce the number of candidates for a position to a workable size is a(n) ____________ interview.

answer

screening

question

The purpose of a screening interview is to:

answer

reduce the number of applicants for a job

question

The finalists for a job position are invited for a(n) ____________ interview.

answer

selection

question

The purpose of a selection interview is to:

answer

question candidates for a job in detail

question

Which one of the following would likely lead to the most added income over an individual's working career?

answer

professional or doctorate degree

question

Which of the following would be a competency commonly associated with successful people?

answer

- 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

question

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.

answer

demographic trends

question

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.

answer

geographic trends

question

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.

answer

economic trends

question

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?

answer

assess personal goals and abilities

question

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?

answer

evaluate the employment market to identify specific employment opportunities

question

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?

answer

develop a resume and cover letter to apply for specific positions

question

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?

answer

interview for specific positions and assess the interview performanace

question

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?

answer

evaluate financial and other factors of positions offered

question

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?

answer

part-time employment

question

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?

answer

volunteer work

question

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?

answer

campus project

question

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?

answer

internship

question

making and using contacts in the business world for obtaining and updating career information and job possibilities

answer

networking

question

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.)

answer

a career fair

question

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.)

answer

cover letter

question

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

answer

vesting

question

Which of the following is a benefit on which you pay taxes at some future date?

answer

tax-deferred benefit

question

_________ is a benefit on which you pay no taxes.

answer

tax-exempt benefit

question

With completion of a bachelor's degree one can expect to earn _____ in income over a 40-year period.

answer

$2.5 million

question

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?

answer

$56,250

question

The term networking refers to:

answer

making and using contacts to obtain and update career information

question

Which one of the following is not an element of corporate culture?

answer

government regulations

question

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?

answer

$533.33 = $400/(1 - .25)

question

In addition to inflation and consumer demand, what is another factor that can affect career opportunities?

answer

interest rates

question

Having a relationship with a mentor can provide the following benefit(s):

answer

-personalized training. -access to influential people. -emotional support during difficult times. -growth in technical and social areas of a career.

question

an example of the type of information that you would not include on a resume unless it applies to specific job qualifications?

answer

height and weight

question

The following information is generally not included on a resume:

answer

references

question

A type of employee benefits program that allows workers to base their job benefits on a credit system and personal needs is called:

answer

cafeteria-style

question

In recent years, approximately what percent of new jobs in the U.S. economy occurred in companies with fewer than 100 employees?

answer

80

question

The main sources of networking include the following:

answer

- community organizations - professional associates - business contacts

question

Money management activities refer to long-term investment decisions.

answer

false

question

When one money management decision is made, an alternative must be given up.

answer

true

question

Opportunity costs are only associated with money management decisions involving long-term financial security.

answer

false

question

Financial records that are referred to on a regular basis should be kept in a safe-deposit box.

answer

false

question

budget is a specific plan of how a person or family will spend their money.

answer

true

question

A personal balance sheet reports your income and expenses.

answer

false

question

A person's net worth is the difference between the value of the items owned and the amounts owed to others.

answer

true

question

Furniture, jewelry, and an automobile are examples of liquid assets.

answer

false

question

insolvency is a result of having more liabilities than assets

answer

true

question

A personal cash flow statement presents income and outflows of cash for a given time period, such as a month.

answer

true

question

Take-home pay is a person's earnings after deductions for taxes and other items.

answer

true

question

If expenses for a month are greater than income, an increase in net worth will result.

answer

false

question

A personal cash flow statement can serve as the basis for the budget categories used by an individual or family.

answer

true

question

Definite financial obligations are referred to as variable expenses.

answer

false

question

Discretionary income is money left over after paying for housing, food, and other necessities.

answer

true

question

For many years, the United States has ranked highest among industrial nations in savings rate.

answer

false

question

In order to calculate savings ratio, the amount saved each month is divided by net income.

answer

false

question

Opportunity costs refer to:

answer

trade-offs associated with financial decisions

question

A home file should be used for:

answer

financial record for current needs

question

Which of the following financial documents would most likely be stored in a safe-deposit box?

answer

savings certificates

question

Which of the following would be an example of a personal and employment document?

answer

social security card

question

Which type of financial records includes stock and bond reports?

answer

investment

question

Warranties are commonly associated with ____________ purchases.

answer

consumer

question

Which of the following are considered to be personal financial statements?

answer

balance sheet and cash flow statement

question

A personal balance sheet presents:

answer

items owned and amounts owed

question

The current financial position (including net worth) of an individual or family is best presented with the use of a(n):

answer

balance sheet

question

A family with $45,000 in assets and $22,000 of liabilities would have a net worth of:

answer

$45,000 (assets) - $22,000 (liabilities) = $23,000 (net worth)

question

Items that you own with a monetary worth are referred to as:

answer

assests

question

The value of items owned minus the amounts owed to others equals:

answer

net worth

question

Liquid assets refer to:

answer

cash and other items that are easily converted to cash

question

An individual retirement account is an example of a(n) ____________ asset.

answer

investment

question

Liabilities are amounts representing:

answer

debts

question

Current liabilities differ from long-term liabilities based on:

answer

when the debt is due

question

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?

answer

current liabilities

question

Which of the following would be considered a long-term liability?

answer

mortgage

question

A person's net worth is computed by:

answer

subtracting total liabilities from total assests

question

Which one of the following illustrates an insolvent situation?

answer

$40,000 (assets) - $45,000 (liabilities) = -$5,000 (net worth) (insolvency occurs when liabilities exceed the value of assets)

question

A person's net worth would increase as a result of:

answer

reduced amounts owed to others

question

A cash flow statement reports a person's or a family's:

answer

current income and payments

question

Which one of the following presents a summary of income and outflows for a period of time?

answer

cash flow statement

question

Total earnings of a person minus the deductions for taxes and other items is called:

answer

take-home pay

question

A common deduction from a person's paycheck is for:

answer

taxes

question

Payments that do not vary from month to month are ____________ expenses.

answer

fixed

question

Ed Bostrom wants to reduce his fixed expenses. Which action would be appropriate?

answer

find a place to live with a lower rent

question

Which of the following payments would be considered a variable expense?

answer

water bill

question

A decrease in net worth could be the result of:

answer

expenses exceeding income for a month

question

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:

answer

$3,000 - (-$200) = $3,200

question

Improvements in a person's financial position are the result of:

answer

increased savings and investments

question

To determine a person's solvency, which financial document should be consulted?

answer

balance sheet

question

Which one of the following is the best example of a long-term goal for a young couple?

answer

income for retirement

question

Which one of the following should be budgeted first?

answer

fixed expenses

question

Changes in the cost of living are:

answer

different in various geographic areas

question

If a family planned to spend $370 for food during March but only spent $348, this difference would be referred to as a:

answer

variance

question

A budget deficit would result when a person's or family's:

answer

actual expenses are greater than planned expenses

question

When it comes to savings, most Americans:

answer

find saving difficult

question

Jennifer Rodrick uses a computer to help her record her spending each month. She updates her records weekly. This would be an example of:

answer

money management

question

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:

answer

an opportunity cost

question

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:

answer

a liquid asset

question

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:

answer

a balance sheet

question

A personal balance sheet:

answer

reports what an individual or a family owes and owns

question

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?

answer

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

question

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?

answer

Total assets = $850 + 1,200 + 98,000 + 12,000 + 3,300 + 12,500 + 5,500 + 38,550 = $171,900

question

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:

answer

net worth

question

A family has a net worth of $156,000 and liabilities of $167,000, what is the amount of their assets?

answer

Assets = $167,000 + 156,000 = $323,000

question

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?

answer

home file cabinet

question

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?

answer

safe deposit box

question

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?

answer

$850 + 1,200 = $2,050. These are the only liquid assets listed.

question

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?

answer

$98,000 is the market value of her home and the only real estate asset listed.

question

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?

answer

$12,000 + 3,300 + 12,500 = $27,800

question

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?

answer

$5,500 + 38,550 = $44,050

question

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?

answer

$850 + 1,200 + 98,000 + 12,000 + 3,300 + 12,500 + 5,500 + 38,550 = $171,900

question

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?

answer

$4,500 + 128,000 + 62,000 + 73,000 = $267,500

question

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?

answer

$7,500 + 98,000 = $105,500

question

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?

answer

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

question

This month, Ken Grossman has cash inflows of $3,100 and cash outflows of $2,950, resulting in a

answer

$3,100 - 2,950 = $150 surplus

question

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?

answer

$200/$2,500 = .08 (savings ratio)

question

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?

answer

$1,200 + 60 + 240 = $1,500; $1,500/$4,600 = .33 (× 100) = 33%

question

The Hernandez family budgets $420 a month for food. Last month they spent $413, which creates a:

answer

$420 - 413 = $7 surplus

question

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?

answer

mental budget

question

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?

answer

physical budget

question

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?

answer

written budget

question

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?

answer

computerized budget

question

An investment account that increases from $1,000 to $1,005 in a month is earning approximately __ percent annual interest.

answer

$1,005 - 1,000 = $5; $5 × 12 = $60; $60/$1000 = .06 or 6%

question

An investment account that increases from $3,000 to $3,271 in one year is earning approximately ___ percent annual interest.

answer

$3,271 - 3,000 = $271; $271/$3,000 = .09 (× 100) = 9%

question

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?

answer

fixed expenses

question

Which of the following is(are) typically considered to be a personal financial record

answer

-Birth certificate -Marriage license -Certificate of deposit -Social Security card

question

Most income tax documents should be kept for _____ year(s).

answer

7

question

Which of the following would most likely be classified as a current liability?

answer

monthly balance due on a credit card

question

Which of the following would be considered a fixed expense?

answer

mortgage payment

question

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.

answer

opportunity

question

For January, Bethany DeWeese had cash inflows of $4,200 and cash outflows of $4,750, resulting in a

answer

$4,200 - 4,750 = -$550 (a deficit for the month)

question

The value of the home you own would be included in which section of your balance sheet?

answer

real estate assets

question

Characteristics of successful budgets include that they are:

answer

- well-planned. - realistic. - flexible. - clearly communicated.

question

About what percent of Americans have no emergency fund?

answer

25

question

Calculate the debt ratio for an individual who has $90,000 in assets and $35,000 in liabilities.

answer

.64

question

An example of a liquid asset is:

answer

cash value of life insurance

question

The amount of income that a person or household has to spend after deductions for taxes and other items is called:

answer

take-home pay

question

Definite financial obligations are referred to as:

answer

fixed expenses

question

In order to determine net worth, you would create what kind of report?

answer

balance sheet

question

Which of the following items is something that would typically not be stored in a safety deposit box?

answer

checkbook

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