FHCE 3200 Final

If a corporation earns $1,000,000 in 2014, and has 20,000,000 shares of its stock outstanding, what is its earnings per share (EPS)? $0.00 $0.005 $1.00 $0.05

$0.05

How much would a home buyer expect to pay up front as a down payment on a $500,000 home? $0 $50,000 $100,000 $250,000

$100,000

Jessica and John Smith have a net worth of $120,000. They have total assets worth $220,000. How much total debt do they have? $340,000 $220,000 $100,000 None of the above

$100,000

Amelia files her taxes as a single filer. Amelia's taxable net income in 2018 was $97,000. Using the tax table shown below, compute Amelia's federal income tax. 2018 tax table $14,642 $17,570 $23,280 $24,000

$17,570

Not including certain exemptions such as the value of one's primary residence, approximately how low must someone's net worth be to qualify for government assistance for nursing home care? $2,500 $25,000 $250,000 There is no government assistant for nursing home care, further underscoring the need for Long Term Care Insurance

$2,500

Excluding certain exemptions such as charitable trusts, how high must a married couple's net worth be in order to be subject to the federal estate tax (also known as the "death tax")? $0 $11,200,000 $22,400,000 $44,800,000

$22,400,000

During the month of January, Vince has worked for a total of 200 hours. If Vince's employer pays him $15 per hour, how much will Vince pay in Social Security and Medicare taxes in January? $0 (Vince made less than the Standard Deduction of $12,200) $372 (12.4% of his income) $230 (7.65% of his income) None of the above: Social Security and Medicare taxes are only levied when individuals file their taxes in April of the following year

$230 (7.65% of his income)

The FDIC provides coverage up to at least _______ per account in case a bank was to go out of business. $50,000 $150,000 $250,000 $0 - FDIC insurance is for cases of fraud, not banks going out of business

$250,000

Let's say that you have a health insurance plan with the following characteristics: [A] $1,000 deductible, [B] $3,000 out-of-pocket maximum, and [C] 10 percent co-insurance. If you go to the emergency room and have a total bill of $18,000, how much of the bill must you pay? $1000 $2700 $2800 $3000

$2700

Jennifer works at a retail store and earns a base salary of $2400 per month. In addition this she earns a commission of 2% on every high end electronic item that she sells to the customers visiting the store. In 2015, Jennifer has sold over 40 large screen LED TVs and 29 laptops. The average price of the TVs was $1200, and the average price of the laptops was $1100. What was Jennifer's total income for 2015? $30,398 $31,796 $33,432 $37,332

$30,398

At her death, Melinda had the following assets: [A] $32,000 car, [B] $12,000 savings account, [C] $87,000 401(k) retirement plan with her sister named as the beneficiary, and [D] $50,000 term life insurance policy with her brother named as beneficiary. Based on this information, what is the most that will pass to heirs based on Melinda's will? $44,000 $45,000 $54,000 $55,000

$44,000

What will $200,000 grow to be in 9 years if it is invested to day in an account with an annual interest rate of 10%? $494,387 $439,359 $471,590 $473,280

$471,590

Sepna is 25 years old. She is a graduate from UGA. She is single and earns $75,000 per year. Emma also contributed $5000 to a 401k. What is her taxable income? (Hint: Standard deduction=$12,200) $57,800 $62,800 $70,000 $75,000

$57,800

Emma is 21 years old. She is a student at UGA. She is single and is not claimed as a dependent by her parents. She earned wages of $7,500. Emma also contributed $500 to a Traditional Individual Retirement Account. What is Emma's adjusted gross income? $0 (Assuming she claims the Standard Deduction of $12,200) $7,000 $7,500 $8,000

$7,000

If you wish to accumulate $200,000 in 10 years, how much must you deposit today in an account that pays an annual interest rate of 10%? FV: 200,000 N: 10 I/Y: 10% PV: ? $74,437 $77,109 $83,892 $87,924

$77,109

Tom was in a car accident that was his fault. Sally was driving the other car, which was totalled ($30,000), and she had medical bills of $85,000. Her passenger, Bill, had resulting medical bills of $15,000. Tom's liability coverage is 50/100/25. Ignoring any deductibles, how much will his insurance company pay for the losses that the wreck caused? $130,000 $125,000 $90,000 $75,000

$90,000

Amy is 19 years old. She is a student at UGA. She is single and is claimed as a dependent by her parents. Amy paid $4,000 in tuition, fee, and book expenses during the past year and used student loans to pay those expenses. She earned no wages and had no unearned income. What is Amy's Effective Income Tax Rate? 0% 10% The same as her parent's effective income tax rate. The same as her parent's marginal income tax rate.

0%

How long does a bankruptcy stay on a person's credit report? 1 year 5 years 10 years 20 years

10 years

If a stock is selling currently for $32, and its earnings per share is $2, what is its P/E ratio? 16 32 64 There is not enough information to answer this question

16

A stock is selling for $10 per share. Its book value is $6 per share. If a company declares $2 per share dividend for its shareholders, what is the dividend yield of this stock? 4% 2% 20% 33%

20%

While the exact number is up to debate (and the exact math a little more complicated), financial planners agree that a retiree can withdrawal approximately what percentage of their investment portfolio and never run out of money during their lifetime? 0.0% 1.3% 4.2% 7.0%

4.2%

On average, about how many years does it take to live in one place before it makes more sense to buy than to rent? 1 to 2 3 to 4 5 to 7 8 to 11

5 to 7

If you wish to accumulate $140,000 in 10 years, and you have $70,000 today, about what rate of return must you earn? 10.0% 6.5% 7.2% 100%

7.2%

According to the rule of 72, how long would it take for an investment of $1,000 to double in value if it is invested in an asset that generates 9 percent return annually? 9 years 8 years 7 years 72 years

8 years

Which of the following options would be associated with the LOWEST monthly payment? A 15 year mortgage with a large down payment A 15 year mortgage with a small down payment A 30 year mortgage with a large down payment A 30 year mortgage with a small down payment

A 30 year mortgage with a large down payment

What type of scam occurs when an investment manager claims they can guarantee good performance year over year but actually just uses the funds of new investors to pay off older investors? Phishing Identity theft A pyramid scheme A Ponzi scheme

A Ponzi scheme

Which of the following places to store your cash are most likely to charge a fee? A brick-and-mortar bank A credit union An online-only bank A mattress under which you can hide cash

A brick-and-mortar bank

Which of the following debts can be classified as bad debts, meaning that they cost a person more and more the longer they hold the debt? A credit card balance of $8,000 with an APR of 18% A primary residence mortgage of $800,000 with an APR of 2.75% A student loan with a balance of $8,000 and an APR of 4% All of the above are examples of bad debt

A credit card balance of $8,000 with an APR of 18%

A potential client is asking for help investing for the first time. During data collection, you notice that she has a balanced budget, an adequate emergency fund, and sufficient insurance coverage. According to the path to financial independence, what would you suggest? A diversified investment portfolio that takes advantage of the appropriate tax-advantaged retirement account Focusing on cutting her expenses to produce an even greater budget surplus Replacing her insurance policies with ones that will pay you a commission Increasing her emergency savings account to cover about 12 months of living expenses to prepare for sure market uncertainty

A diversified investment portfolio that takes advantage of the appropriate tax-advantaged retirement account

It is generally recommended an emergency fund include 4 to 6 months of living expenses. Some people should try to save more than others. Which of the following people should have an emergency fund with about 6 months (or more) of their living expenses covered? A tenured professor with no children A freelance photographer with two children and a family history of cancer A couple (a school teacher and a salaried engineer) with two children A college student still claimed as a dependent on her parents' income tax return

A freelance photographer with two children and a family history of cancer

High levels of credit card debt create many problems for individuals. All of the following are examples of these problems, EXCEPT FOR... A higher credit score Limited flexibility in achieving financial goals Reduced ability to secure new loans Increased cost for goods and services

A higher credit score

Select the best credit card offer from the options below: A high interest rate and small credit line A high interest rate and a large credit line A low interest rate and a small credit line A low interest rate and a large credit line

A low interest rate and a large credit line

Who is the best candidate for long-term care insurance? A 50 year old who will live only on Social Security when they retire A married couple of two 50 year olds who will live on Social Security and withdrawals from their $1 million portfolio A 30 year old single mother earning $120,000 a year An 85 year old widow with two children and five grandchildren

A married couple of two 50 year olds who will live on Social Security and withdrawals from their $1 million portfolio

Which of the following is most likely to make a graduating senior an attractive candidate to an engineering company? An additional engineering class A +0.10 increase in GPA Experience as a cashier at a fast food restaurant A paid summer internship at an engineering firm

A paid summer internship at an engineering firm

A tax system where higher income households have a higher marginal rate of tax is known as: A progressive system A regressive system A fair tax system A flat tax system

A progressive system

Which of the following people, assuming they desire having health insurance, is most likely to purchase their own policy? A full time student at a large university A salaried employee A person who qualifies for Medicaid A small business owner

A small business owner

Which of the following businesses is associated with unlimited liability for their owners?s A Fortune 500 corporation A 501(c)(3) non-profit A small business organized as an S-corporation A sole proprietorship

A sole proprietorship

Compared to a employee with identical income, a independent contractor must pay... About twice as much in FICA taxes About half as much in FICA taxes The same in FICA taxes Only corporations, and not employees or independent contractors, pay FICA taxes

About twice as much in FICA taxes

Which of the following is true of active vs. passive funds, after considering fees? Active funds outperform passive funds about 90% of the time Active funds outperform passive funds about 60% of the time Active funds underperform passive funds about 90% of the time Active funds underperform passive funds about 60% of the time

Active funds underperform passive funds about 90% of the time

According to most financial advisors, the right time to start investing in the stock market is after... Sufficiently funding an emergency savings account Paying off high interest debt, such as credit cards Understanding the risks associated with investing All of the above

All of the above

Even if a person has high risk tolerance, a financial planner must account for which of the following before recommending a stock-heavy investment portfolio? Time Horizon Risk Capacity Financial Goals All of the above

All of the above

Living paycheck to paycheck can mean paying more for... Access to credit Healthcare Food All of the above

All of the above

Pre-paid debit cards are growing in popularity. While they allow unbanked customers access to a new form of payment, they come with some downsides. These include... Activation fees No theft protection (vs. the $50 liability limit offered by credit cards) No opportunity to build credit All of the above

All of the above

Refinancing your student loans... Can lower the interest substantially Is generally only available to high-income borrowers Can help turn student loans from "bad" into "good" debt All of the above

All of the above

All of the following are actual bank fees, which you can find at at least one bank, EXCEPT... A fee for moving your money from savings to checking too many times in a month A fee for speaking with a human teller A fee for not having at least $10,000 in an interest-bearing checking account All of the above are actual bank fees

All of the above are actual bank fees

All of the following are benefits are being both an employee AND being self-employed with a side business EXCEPT... Additional opportunities for income Higher ceiling on how much money can be invested in tax-deferred retirement accounts Lower overall financial risk All of the above are advantages to being simultaneously an employee and self-employed

All of the above are advantages to being simultaneously an employee and self-employed

Which of the following factors is not associated with an individual's financial risk tolerance? Educational attainment Gender Wealth All of the above are associated with risk tolerance

All of the above are associated with risk tolerance

All of the following are benefits of using free budgeting apps EXCEPT... Cash flow statements All account information compiled into one location Monitor potential identity theft All of the above are benefits of using budgeting apps

All of the above are benefits of using budgeting apps

Paul and Mary are 30 and have twin girls, age 3. They have combined family income of $90,000 and a savings account with $45,000. They are saving $5,000/yr into Paul's 401(k) which has no employer match, and Mary is saving $2,000 per year into an IRA, and $10,000 into a brokerage account. Her employer's 401(k) offers a 100% match up to 6%. They did wills 5 years ago when they got married. Their only insurance is a $100,000 group policy on Mary through her employer and their auto and renter's policies. All of the following would be suggestions you should have for them EXCEPT: More risk protection (perhaps an umbrella liability policy, more life insurance for each of them, as well as disability insurance) Better utilization of investment accounts (perhaps redirect their savings to first maximize Mary's employer match in her 401(k), then to Paul's 401(k) and the IRA) Additional estate planning (perhaps updating their estate planning documents, including adding a guardianship clause to their wills.) All of the above are good suggestions.

All of the above are good suggestions.

At present, a Roth IRA allows people to save $5,500 a year toward retirement. In addition to providing tax free growth and withdrawals, these accounts help people to save for retirement because... They provide a SPECIFIC goal They provide an ACHIEVABLE goal They provide a TIME BOUND goal All of the above are true

All of the above are true

Richard is 25 years old, single and has an annual salary of $30,000. Richard has decided to save $120 every month specifically for his retirement. Which of the following is true regarding Richard's savings rate? If Richard has outstanding high-interest credit card debt, he may be saving too much and should focus on paying down his debt. By saving only ~5% of his income, Richard may not be saving enough to have enough money to retire on. By saving about 5% of his income, Richard is saving more toward retirement than a typical 25 year old American. All of the above are true.

All of the above are true.

Which of the following types of expenses NEVER trigger a refundable tax credit? Education Childcare Healthcare All of the above expenses may generate refundable tax credits

All of the above expenses may generate refundable tax credits

A renter can negotiate all of the following features of a lease EXCEPT... Term Rent House rules All of the above may be negotiated

All of the above may be negotiated

If I want to retire earlier, holding investment returns and goal costs constant, I will need to save more because: I have less time to save. I will need to accumulate more for retirement because I will be retired for longer. I benefit less from compound interest. All of the above.

All of the above.

If I have a question about my personal finances, I should consider... Going to the Aspire Clinic Hiring a fiduciary financial advisor Getting free help with the Financial Planning Association, an Accredited Financial Counselor, or any number of certified and licensed financial professionals who are legally required to put my interests first Any or all of the above

Any or all of the above

Which of the following will be considered a liability item for an individual's net worth statement? Annual income of $114,000 Credit card limit of $24,000 Auto loan of $14,000 Lottery win of $25,000

Auto loan of $14,000

A potential client asks for help with investing for the first time. During data collection, you notice that she has insufficient insurance, no emergency fund, and runs a budget deficit about every other month. Considering the "path to financial independence", which should she focus on first? Investing Buying additional insurance Building an emergency fund Balancing her budget to maintain a consistent surplus

Balancing her budget to maintain a consistent surplus

A client approaches you for help deciding which debt to focus paying down first. Assume that paying down debt is appropriate for his situation. His debts are... 1. A $120,000 mortgage with a 3.2% APR. His house has a fair market value of $175,000. 2. $20,000 in student loans with a 6.5% APR. 3. $13,500 in credit card debt with a weighted average APR of 18.5% Because the credit cards have the highest APR, he should focus on paying them down first Because the mortgage has the highest balance, he should focus on paying it down first Because the student loans have the smallest monthly payments due, he should focus on paying them down first All three debts are "good debts"; therefore, he should not worry about paying any of them down and should instead prioritize investing

Because the credit cards have the highest APR, he should focus on paying them down first

Which of the following is not considered to be a tax-advantaged investment option for individuals? 401K plans Brokerage accounts Roth IRA 457B plans

Brokerage accounts

What is the specific term used to describe the underlying growth over time in an investment such as a stock? Dividends Interest Capital gain Future value

Capital gain

A _______ is a written order to the bank to pay a third party. Bank statement Line of Credit Check Certificate of Deposit

Check

All of the following describe the "track every penny" budgeting strategy EXCEPT... Adopting this strategy - even if only temporarily - is an important first step in the path to financial independence Comparing to other strategies, this strategy has the highest adherence rates Recent technological developments have made tracking and categorizing every expense easily than ever A major drawback of this strategy is that you may know where you money is going, but not what you should be doing with your money.

Comparing to other strategies, this strategy has the highest adherence rates

The dollar value of the amount that the bond pays in periodic interest payments to the bond holders is known as: Dividends Coupon payments Periodic payments All of the above

Coupon payments

Which of the following debts are considered to be short term liabilities? Life insurance owned by the individual Primary residence of the individual Mortgage Credit card balance

Credit card balance

Which of the following is not considered to be a type of asset? Mutual funds Coin collection Primary Residence Credit card limit

Credit card limit

In a typical year, which will save you the most money? 1. Skipping your $4 coffee over the next 240 work days. 2. Cutting your rent by $100 a month. Cutting out coffee will save an extra $240 Cutting out coffee will save an extra $4 There is no difference between the two. Cutting down on rent will save an extra $240

Cutting down on rent will save an extra $240

Paul owns a car with a fair market value of $8,000. He also has an outstanding car loan with a $4,000 balance and a 5% interest rate. If Paul sells the car for its fair market value, his assets will ___________ while his liabilities will ___________. Increase by $8,000; decrease by $4,000 Increase by $4,000; decrease by $4,000 Decrease by $4,000; decrease by $4,000 Decrease by $8,000; increase by $4,000

Decrease by $4,000; decrease by $4,000

People's propensity to procrastinate on financial decisions can ironically be used to their benefit. Which of the following exemplifies this effect? Giving them numerous choices when they are trying to make a decision Designating a default option that generally leads to good outcomes Giving them complex puzzles to solve before they make the decision All of the above

Designating a default option that generally leads to good outcomes

Which of the following best describes the concept of the hedonic treadmill? It takes constant work to maintain even a minimal baseline of happiness Despite large temporary fluctuations, over time people tend to revert to a baseline level of happiness Happiness has inertia: happy people tend to become happier while sad people tend to become sadder People who must work to meet their basic needs are the happiest

Despite large temporary fluctuations, over time people tend to revert to a baseline level of happiness

For young and middle-aged people, future earnings are their greatest asset. And, the odds of not being able to work are five times the odds of dying before age 65. Yet very few people adequately protect themselves from this risk, as show by the relatively unpopularity of... Health insurance Life insurance Disability insurance Automobile insurance

Disability insurance

Before you decide to buy or rent, you should consider all of the following EXCEPT... Draining your savings account to qualify for housing assistance Checking your credit score and report Consulting a crime map Computing the commute times between the home and your work, a grocery store, and other places of interest

Draining your savings account to qualify for housing assistance

Which of the following are pooled investments that trade in the market like stocks? ETFs Mutual funds Treasury notes Hedge funds

ETFs

A way to maximize one's lifetime total Roth contribution limit is to... Simply contribute more than $5,500 to a Roth IRA Open multiple Roth IRAs in a given year, making sure no single account receives more than $5,500 in that year Even if a person is not ready to invest, they can open a Roth IRA around their emergency savings account; when they are ready to invest, they can roll over the prior year Roth IRAs into a new investment account None of the above - it is not possible to increase how much you can save in a Roth over your lifetime

Even if a person is not ready to invest, they can open a Roth IRA around their emergency savings account; when they are ready to invest, they can roll over the prior year Roth IRAs into a new investment account

When making recommendations for helping a client balance their budget, you should first consider how to reduce which expenses? Expenses with the smallest annual impact, because they are likely the easiest for a client to give up Expenses with the largest annual impact, because even small percentage reductions can have big effects on net cash flow "Variable want" expenses such as vacations and birthday parties, because any money spent on this type of expenses is essentially wasted "Variable need" expenses such as medical bills and car repairs because clients are better off saving their cash and simply declaring bankruptcy

Expenses with the largest annual impact, because even small percentage reductions can have big effects on net cash flow

Which of the following is not a credit rating agency? Experian Equifax Fidelity Trans Union

Fidelity

An individual's willingness to engage in a risky financial behavior is known as their Financial risk capacity Financial risk efficacy Financial risk awareness Financial risk tolerance

Financial risk tolerance

Which of the following types of expenses is somewhat "wasteful" because we habituate to them and they therefore don't tend to predict long term quality of life? Fixed wants Variable wants Fixed needs Variable needs

Fixed wants

People with a ____________ tend to prefer spending less money today and save more for the future. Future orientation Present orientation Status quo bias High risk tolerance

Future orientation

Which of the following is the most important first step when creating a business? Filing paperwork to officially organize as a sole proprietorship, C-Corp, LLC, etc. Having an evidence-based business model, vetted by your advisors Establishing a relationship with an underwriter to conduct an Initial Public Offering Calculating your profit margin

Having an evidence-based business model, vetted by your advisors

Which of the following pairings is correct? Out-of-pocket expenses - The amount that the insured individual has to pay before the health insurance company will pay any expenses Health Insurance - A financial tool that allows individuals to transfer the unpredictable and potentially catastrophic costs of health care Co Payment - The cost to purchase health insurance, must pay this price in order to maintain access to health insurers network of doctors and their prices Deductibles - The amount that an insured individual has to pay, excluding the cost of premiums, for health care

Health Insurance - A financial tool that allows individuals to transfer the unpredictable and potentially catastrophic costs of health care

Select the best combination of severity, frequency, and risk management strategy. High Severity of Risk + High Frequency of Risk = Strategy: Self-insurance (retain risk) Low Severity of Risk + High Frequency of Risk = Strategy: Avoid if possible Low Severity of Risk + High Frequency of Risk = Strategy: Purchase Insurance High Severity of Risk + Low Frequency of Risk = Strategy: Purchase Insurance

High Severity of Risk + Low Frequency of Risk = Strategy: Purchase Insurance

When expecting higher levels of returns from an investment, it is also expected that the investment has___________. Lower levels of risk Specific levels of risk Higher levels of risk Zero risk

Higher levels of risk

Financial capacity can be defined as: How well an individual understands financial information How well an individual can manage their finances based on their access to financial resources How well an individual understands accounting How well an individual can manage their finances based on their personality and psychology

How well an individual can manage their finances based on their access to financial resources

Asking for additional monetary compensation after being hired will likely... Result in your offer being rescinded Create tension in the workplace Be the only way you can improve the offer from the organization Increase your starting salary

Increase your starting salary

For many poorer people, positive changes to which aspect of their financial situation would produce the biggest boost to quality of life? Reduced spending on "fixed needs" Increased and more stable income Better investment returns More affordable long term care policies

Increased and more stable income

A "human capital" approach to net worth suggests that... We must estimate a person's future financial opportunities to include them on their present net worth statement. A person derives financial value from their relationships and social network. Investing in education and skills now can have considerable long-term value - even if it doesn't show up on a balance sheet now All of the above

Investing in education and skills now can have considerable long-term value - even if it doesn't show up on a balance sheet now

What is the amount that your insurance company will pay someone else if you are responsible for a auto accident? Liability coverage Collision coverage Comprehensive coverage All of the above

Liability coverage

What type of benefit provides a tax-free lump sum pay-out that can be used to pay final expenses, burial costs, and debts? Disability insurance Health insurance Correct Response ife insurance Home insurance

Life insurance

What type of disability policy kicks in after you cannot work for a minimum of 6 to 12 months? Most policies extend from a few years up until age 65 (at age 65 you can then enroll in Medicare). Long-term disability policy Short-term disability policy Variable disability policy Universal disability policy

Long-term disability policy

Investors usually demand (or accept) a _____________return from assets that have lower amounts of risk Lower Higher Equal Greater

Lower

All of the following are true regarding the relationship of money and happiness EXCEPT... Money CAN buy happiness, so long as people focus their spending on luxury cars, large homes, and other consumer goods Spending money on certain kinds of expenses (such as gifts and vacations) tends to increase happiness more than spending on other kinds of expenses (such as TV and rent). Happiness tends to increase with income until people earn around $70,000/year... further increases in income do not tend to predict additional happiness. All of the above are true

Money CAN buy happiness, so long as people focus their spending on luxury cars, large homes, and other consumer goods

Which of the following is a generally considered a "fixed expense"? A biweekly paycheck Monthly rent Emergency healthcare costs An "all inclusive" vacation package

Monthly rent

All of the following are potential consequences of having poor credit, EXCEPT... More difficult to find an apartment More difficult to find work More difficult to open an account with a credit union All of the above

More difficult to open an account with a credit union

Car loans are sometimes considered "bad debt" and other times "good debt". What is one reason why these loans may be considered "bad"? Most cars, and especially new cars, can depreciate in value quickly A car can help a person attain otherwise unavailable employment Cars may be a necessity for people who live in rural areas and suburbs Some car loans come with 0% APR financing for an introductory period

Most cars, and especially new cars, can depreciate in value quickly

Which of the following factors can harm an individual's credit score? Timely payment No incidence of bankruptcy or foreclosure Low debt to available debt ratio Multiple recent applications for credit cards

Multiple recent applications for credit cards

Which of following will occur when taxing authorities give households back more money than they have paid in taxes? Positive Effective Tax Rate Round off Tax Base Negative Effective Tax Rate Paltered Tax Base

Negative Effective Tax Rate

When preparing an individual's net worth and income & expenses statements, the individual's outstanding credit card balance is usually recorded in the: Income & Expenses statement Net worth statement In both places In neither place

Net worth statement

The ___________ is a current snapshot of a person's assets and liability. The ____________ is a current snapshot of how a person's net worth is changing from inflows and outflows. Net worth statement; Cash flow statement Cash flow statement; Net worth statement Net worth statement; Net worth statement Cash flow statement; Cash flow statement

Net worth statement; Cash flow statement

Which of the following factors can help increase credit score? Shorter credit history High debt to available debt ratio No delinquencies All of the above

No delinquencies

Amir is a 22 year old man in good health with no family history of illness. Considering only options that are available in the real world, which health insurance is likely most appropriate for him? One with low premiums and a low deductible. One with low premiums and a high deductible. One with high premiums and a low deductible. One with high premiums and a high deductible.

One with low premiums and a high deductible.

The foregone benefit that you would get from doing the next best thing is known as: Risk aversion Rate of time preference Risk tolerance Opportunity cost

Opportunity cost

The "time value of money" concept suggests that... People must compare job opportunities based on hourly pay, even if they are paid a salary or commission Because of compound growth, physical assets such as cars and furniture tend to increasingly grow in value over time Opportunity costs and inflation mean that people must compare the "present value" of money to its "future value" Inflation causes the value of a single dollar to grow over time

Opportunity costs and inflation mean that people must compare the "present value" of money to its "future value"

Many people make the mistake of believing that they will never experience painful losses. This mental fallacy is also known as: Loss aversion Confirmatory bias Status quo bias Optimism bias

Optimism bias

Which of the following types of mutual funds are *less* expensive to invest in? Passively managed funds Actively managed funds Actively and passively managed funds have similar fees International actively managed funds tend to be less expensive than international passively managed funds, while US actively managed funds tend to be more expensive than US passively managed funds

Passively managed funds

Hanna would like to increase her credit score. If she can only do one of the following, which should she focus on as a way to improve her score? Close a seldom-used credit card account. Apply for a new credit card account. Pay all bills and debt on time. Keep a small balance on her credit card rather than paying off the entire bill.

Pay all bills and debt on time.

According to most advisors, which of the following are LEAST important when considering which assets to fund an emergency savings account? Potential for long term growth Stability of principal Liquidity All of the above are considered essential when selecting assets for an emergency fund

Potential for long term growth

Unlike "bad debts", "good debts" tend to... Provide value greater than the cost of the debt Do not accrue interest Provide less and less value the longer they are held Be essential for moving along the "path to financial independence"

Provide value greater than the cost of the debt

The best resumes include which of the following features? A comprehensive list of every activity and experience Quantification of experiences and accomplishments Expansive, flowery language to conveys one's communication skills Only experiences for which one was paid

Quantification of experiences and accomplishments

Which of the following is an example of income derived from an investment? Quarterly stock dividends Credit card interest Unrealized capital gains The principal balance in an emergency savings account

Quarterly stock dividends

Which of the following describes the best kind of financial planning recommendations? Recommendations that will most increase the clients' net worth Recommendations that best reduce the clients' tax burden Recommendations that best allow clients to meet their goals Recommendations that are most likely to increase clients' happiness, according to behavioral finance research

Recommendations that best allow clients to meet their goals

Which of following descriptions is not correct? Refundable tax credits can increase an individual's assessed tax over zero. The Saver's Credit is awarded to low income filers who contribute to a retirement plan. Non-refundable tax credits can reduce an individual's assessed tax to zero, but cannot make it negative. Some tax credits are not available to all filers

Refundable tax credits can increase an individual's assessed tax over zero.

Withdrawals from which of the following accounts is tax free (assuming the withdrawal is made when a person is 60 years old)? Roth IRA Traditional IRA 401K plans ORP plans

Roth IRA

For a person just getting started on the path to financial independence, which is the most important savings goal? Saving for a down payment on a house Saving for a used car ]Saving for an emergency fund Purchasing long term care insurance

Saving for an emergency fund

Which of the following assets have high liquidity and low potential return? Stocks Certificates of Deposit Collectibles Savings accounts

Savings accounts

Which of the following best describes the relationship between self-employment (as a primary source of income) and financial risk? Self-employed people are generally less risk tolerant than employees Self-employed individuals generally must accept far more financial risk than most employees Because they have access to additional retirement planning vehicles, such as a SEP IRA, self-employed individuals generally face less financial risk than employees Self-employed professionals who can charge upwards of $100/hour for their services, such as lawyers and business consultants, are unique in that they generally do not face financial risks

Self-employed individuals generally must accept far more financial risk than most employees

An individual needs to invest his money in very safe assets when they have a__________financial planning horizon Short term Long term Medium term Universal

Short term

A preference for leaving things as they are is known as: Loss aversion Physical inertia Status quo bias Negative momentum

Status quo bias

Which of the following is an example of an investment asset? Clothing Home Mortgage Stocks All of the above

Stocks

The systematic structuring of transactions in a legal way to minimize the taxes Tax avoidance Tax evasion Tax penalty Tax concealment

Tax avoidance

When considering candidates for a job opening, which attribute do hiring managers think is most important? The candidate's past experiences The candidate's GPA in relevant courses The candidate's ability to bring value to the organization The candidate's major

The candidate's ability to bring value to the organization

Which of the following is a valid reason for cancelling a credit card? The card has an annual fee Having many open credit cards hurts your credit score While it's true that having a higher credit limit increases your credit score, the formula only takes into consideration your SINGLE HIGHEST CREDIT LIMIT and not the CUMULATIVE CREDIT LIMIT Almost everyone who has multiple credit cards tends to overspend and badly manage their finances

The card has an annual fee

Which statement best describes the relationship between savings rate and age as it pertains to retirement savings? The earlier a person begins to save, the higher their savings rate must be to have a comfortable retirement. The earlier a person begins to save, the lower their savings rate must be to have a comfortable retirement. The optimal savings rate changes with age, such that both young people and people nearing retirement should maintain a low savings rate while middle aged people should maintain a high savings rate. There is no meaningful relationship between savings rate and age.

The earlier a person begins to save, the lower their savings rate must be to have a comfortable retirement.

How does the psychology of the typical person affect investment returns? While some people are panicky investors, the typical person actually gets investment returns near the market average. The typical person does tend to "buy high and sell low", but this tendency only costs them a little bit off the typical market return The typical person suffers from a host of biases that reduce investment returns to less than half of the typical market return The typical person should, quite simply, never invest their own money, considering evidence that their average investment returns are actually slightly *negative*

The typical person suffers from a host of biases that reduce investment returns to less than half of the typical market return

Generally, financial advisors recommend Roth IRAs for people in lower tax brackets. But why may a person in a very low tax bracket opt for a Traditional IRA? They may be able to lower their Adjusted Gross Income enough to qualify for additional government benefits Unlike a Roth IRA, a Traditional IRA does not count towards a person's Total Net Worth for government benefit purposes A Traditional IRA is more liquid than a Roth IRA, and therefore provides a more ready source of emergency funds All of the above

They may be able to lower their Adjusted Gross Income enough to qualify for additional government benefits

Identify the goal below that is best stated. To achieve maximum lifetime happiness. To retire comfortably To have enough for a $50,000 down payment on a home saved by the time I am 28. To buy a sports car in a few years.

To have enough for a $50,000 down payment on a home saved by the time I am 28.

The Individual Retirement Account where pre-tax contributions can be made is known as: Traditional IRA Roth IRA 401k Brokerage account

Traditional IRA

A financial intermediary that helps other companies become publicly traded corporations is known as: Market maker Underwriter Broker Agent

Underwriter

`Typically, for how long will a short-term disability policy replace a portion of your salary? Up to 12 months Up to 18 months Up to 24 months Up to 60 months

Up to 12 months

What are the two major types of risks that investors generally face? Volatility and Inflation Unemployment and Debt Overconfidence and Regret Buying low and selling high

Volatility and Inflation

Which of the following is the most important question to ask when creating a financial plan? What is your goal? What is your net worth? What is your credit score? What is your income?

What is your goal?

What is a legal instrument that dictates a person's desires for distributing his or her property after death? Testament Contract Will Irrevocable life insurance trust

Will

All of the following circumstances would make you prefer to rent EXCEPT... You plan to live in a place for more than a few years A rent-or-buy calculator suggests you are paying less-than-market-rate rent You do not have very much cash on hand You have a very poor credit score

You plan to live in a place for more than a few years

All of the following are generally included in an objective statement on your resume and/or in a cover letter EXCEPT... Your desired a starting salary Your justification for why you're a good fit with the organization A narrative that frames your experiences into a coherent whole All of the above are generally included

Your desired a starting salary

A credit reporting bureau, such as Equifax or Transunion, is engaged primarily in the business to: help companies manage their use of credit. develop credit scores. compile credit usage information about consumers. help consumers pay off their debt.

compile credit usage information about consumers.

What is a person or institution called that is tasked with the responsibility of carrying out a will's directions and disposing of the deceased's property? trustee executor relative subjective representative

executor

If a person died unexpectedly, any property that was titled as [BLANK] will automatically transfer to the co-owner. joint beneficial right for survivorship joint tenants with right of survivorship unintentional bequest last will and testament

joint tenants with right of survivorship

Which of the following types of life insurance policies is NOT a cash value policy? whole life insurance level term life insurance variable life insurance universal life insurance

level term life insurance

What is a legal document that is used to direct a physician or hospital about the types of medical treatment someone wants or does not want? living will surviving will general will living contract

living will

A ________ is anything that directly causes a _______. In contrast, a ________ is a situation or condition that increases the probability of a ________. hazard, peril; hazard, risk peril, risk; hazard, peril risk, peril; hazard, risk risk, hazard; risk, peril

peril, risk; hazard, peril

Just like there is uncertainty associated with investing in stocks, there are also risks to your human capital. What is the single greatest risk to anyone's human capital? poor personal health financial illiteracy poor investment returns a down business cycle

poor personal health