Money Matters

For the values in the previous question, if you could only pay off one credit card right now and continue to make the minimum payments on the second, which would you choose?

#1 because the overall interest paid is higher than the second card

Without removing anything added in question 1: How much would you have to make every month if your federal tax is $100 and your state tax withholding is $50 and still saving $100 a month?

$1,000-$1,199

Without removing anything added in question 2: Now you want to buy a car with monthly payments that are $350, with $20 for insurance and $50 for gas and maintenance. How much would you have to make monthly to break even (No savings)?

$1,200-$1,399

Without removing anything added in question 4: Let's say you had an accident. How much would you be losing a month if you had $80 in credit card payments, $400 in medical bills and $10 of bank service charges, but you received $200 every month from your online calculator business?

$1-$99

At 18 years old, starting with $0, you begin saving $100 per month, with a 10% annual return. If you wait to start saving the same amount until you are 22 (after graduating college), how much less do you have at age 65?

$300,000 or more

If at age 18 you have $1,000 saved, and expect a 10% rate of return with a 3% inflation rate. How much do you need to save per month to have $1,000,000 by age 65 AFTER inflation?

$350-$399

With the same purchase values previously, but with your purchase price at $7500, what is your 15th principal balance for a 24 month term if your interest rate is 10%?

$5800+

If you had invested $100 in 1965 in the 500 stocks of the S&P500 Index, how much would you have had in 2011?

$6,072

Set everything to zero. If your house payment is $1000 per month and your home insurance is $100 per month, how much would you and your spouse each have to earn to cover your expenses and save a combined total of $200 every month? Assume that you and your spouse earn the same salary.

$600-$799 each

If you have the same budget as question 3 but the interest rate is 4% and taxable fees are now $500, what's the most you could afford to pay for your car if you want to have it paid off in 3 years? (Round to the nearest $1000)

$7000

What is the minimum monthly gross income you need to be able to afford the above and still save $100 a month? Set all to zero except: Medicare $100, Internet $50, telephone $50. Food $600.

$800-$999

Which should you choose and why? Option 1: $1,000 with an interest rate of 20% over 10 years or Option 2: $1,000 with an interest rate of 8% over 25 years. (With daily compounding)

1 because the total return is the same for a shorter period of time

If you start with nothing at age 17, but can start saving $200 a month, what rate of return do you need to have $1,000,000 by age 40?

20%-21.9%

How many companies are in the Dow-Jones Industrial Average?

30

The company Apple has how many shares outstanding?

5,575,000,000 shares

Assume you want to purchase a car for $10,000 at 6% interest rate, $1,000 cash down, $200 in fees (taxable), and a 5% sales tax. How many months will it take you to pay it off if you can afford $200 a month?

56-60 months

If you are 16 years old, have $0 in savings, save $100 a month and earn 8% return, how old will you be when you have a million?

70-74

What does a Balance Sheet represent?

A company's total assets and liabilities on a certain date

Which of the following is not a permissible use of a credit report?

A creditor looking to check any previous judgements against you after they have already given you a loan

What does a stock represent?

A percentage of ownership of a company including assets and profits

Which of the following account management services would not be provided by a bank?

A personal property inventory

What is a mutual fund?

A pool of securities you can buy as an investment

Why would you take an adjustable rate mortgage over a fixed rate?

Adjustable rates tend to have lower interest rates than fixed rates

Which of the following should you consider when choosing a password?

All of the above

What is an important factor to look for when shopping for a credit card?

All of these are important to look for

With an investment amount of $10,000 and an interest rate of 5% over 15 years, how much profit will you make if it is compounded quarterly?

Between $10,500 and $12,000

For a home with a purchase price of $250,000, interest rate 4%, term: 25 years, property tax: 1%, home insurance: 0.5% and maintenance fees: $500 and an annual amortization, cash on hand $10,000, loan origination: 1%, points paid: 0 and other closing costs: $1,000. With monthly rent payment of $1,250, income tax rate of 20.1%, expected inflation of 3%, and home appreciation at 3%: How much would your first net house payment be on a monthly basis?

Between $1000 and $2000

Assume you are buying a $15,000 car, with a 12 month loan at 5% interest, a net down payment of $2,500, and a $40 (non-taxable) fee with 6% in sales tax. What will be your monthly payment?

Between $1150 and $1200

Set all credit cards to 0 except for the first one. How much will it cost you in interest for $1000 on your credit card at 25% interest rate and a minimum payment of 10%, making the minimum payments?

Between $200 and $300

For a home with a purchase price of $250,000, interest rate: 4%, term: 25 years, property tax: 1%, home insurance 0.5% and maintenance fees: $500 and an annual amortization. Cash on hand $10,000, loan origination 1%, points paid 0 and other closing costs $1,000. With an after tax return of 6%, income tax rate of 40%, expected inflation of 3%, home appreciation at 3% and future sales commission of 4%. How much would your "monthly rent payment" have to be to equal your house payments?

Between $2000 and $2500

With an investment amount of $10,000 and an interest rate of 5% over 15 years, what is the difference in profit between the daily compounding and yearly compounding?

Between $300 and $500

If you want to be a millionaire by age 70, and you start saving $50 a month at age 18 (with no previous savings), what expected rate of return do you need to reach your goal?

Between 10% and 10.9%

For the same values: $1000 on your credit card at 25% interest rate and a minimum payment of 10%. How long will it take to pay off your credit card by making minimum payments?

Between 2 and 4 years

If you have $1000 on your first credit card at 25% interest rate with a minimum payment of 10%, and also $2000 on your second credit card at 10% interest rate with a minimum payment of 10% how long will it take to payoff both your credit cards if you start paying both at the same time, making the minimum payments?

Between 30 and 40 months

What was the most frequently traded security type in the early days of Wall Street?

Bonds

Which of the following should not be included in your personal property inventory?

Borrowed DVDs

What is the most common winning investment strategies for new beginners?

Buy what you know

What is the DJIA named after?

Charles Dow and his statistician Mr. Jones

Which of the following expenses would not be tax-deductible?

Clothes you choose to wear to work (not a uniform)

Which compounding should you choose given the choice of yearly, and daily and why?

Daily because my return will be higher

which of these is different between ETFs and mutual funds?

ETFs usually have lower fees than mutual funds

If I have a 10 year investment with a 5% rate of return and a $1000 initial investment, what will happen if my inflation rate is bigger than my rate of return?

I will have less money than I invested after controlling for inflation

What should you look for when buying stock of a company you know?

If their stores always seem busy

What is a danger of over diversification?

If your investments are spread thin, it is hard to beat the market

Which of these options will almost always minimize the break-even point between buying and renting?

Increase interest rate and Increase tax investment Return

Keep the same settings from question 1, but now let's say you also brought in your old car and received a $1,200 trade allowance for it. How does this affect your purchase?

It decreases the monthly payments

Why do investors pay close attention to income statements?

It is an accurate snapshot of a company's performance over a specific period of time

Why do investors use financial statements when conducting fundamental analysis?

It lets investors compare companies directly, apples to apples.

For a 10 year investment with a rate of return of 7%, initial investment of $10,000, annual investment of $1,000, expected inflation rate of 3% and tax rate of 25%, what is the compound interest?

Less than $2,000

Why does renting become more attractive when after-tax investment return goes up?

Money not used for a down payment can be used to invest

With an investment amount of $10,000 and an interest rate of 5% over 15 years, what is your final value if it is compounded daily?

More than $20,000

If there is a 20 year, 10% rate of return with 0 initial investment, $100 annual investment, expected inflation rate of 5%, how much money will I lose when accounting for inflation?

More than $3000

What is the highest Investment total I could achieve with a five year investment, rate of return of 10%, initial investment of $0 and a $100 annual investment? Will simple interest be greater than compound interest?

More than $650, Simple Interest > Compound Interest

For $10,000 on your credit card at 15% interest and a minimum payment of 5%, how long will it take to pay off your credit card by making the minimum payments?

More than 7 years

If you choose a passive investing strategy, how will your portfolio look with its first allocation?

Mostly ETFs of industries you think will grow

What is a disadvantage of mutual funds?

Mutual funds can have maintenance fees regardless of fund performance

What was the name of New York City when Wall Street was first built?

New Amsterdam

Where did traders in new york originally meet?

Outside near a buttonwood tree

What is a good way to stay diversified?

Re-balance your portfolio every 3 months

Where were stocks first created?

Rome

What is preferred stock?

Stock that gets paid dividends first

What was the biggest event leading to stocks being the most frequently traded security type on the exchange?

The Industrial Revolution

How can you find stock news about any company?

The Quotes page on HowTheMarketWorks

Which of these buildings have NOT been located on Wall Street?

The Supreme Court

what does a stock quote represent?

The last price a seller and buyer agreed to to make a trade

In the late 1800s, what factors led to the growth of the NYSE?

The need for funds to finance new companies and build railroads

What does "Break Even" mean in this context? How long it takes to:

The point where buying or renting a house is equally desirable

Which of these items can you find in a stock quote?

The stocks current daily volume

Which of the following would you need to claim a tax benefit of a tax-deductible purchase?

The tax-deductible item itself to show it is in your possession

What is a "Grace Period"?

The time between when you make a purchase and when interest is added

What is "Net Change"?

The total amount a stock's price has changed since the previous trading day

What does an Income Statement represent?

The total revenue and expenses a company used to do business over a period of time

What does it mean if a stock is near its resistance line?

The trend suggests the stock price will fall

Why would a lender want to see your credit report?

To assess how likely you are to pay back the loan

Which of these items would NOT appear on a balance sheet?

Total revenue from the previous year

What is an IPO?

When a company first sells shares of stock to the public

What is an advantage of a higher credit limit?

You are able to make larger purchases if you need to

what is one major advantages of mutual funds?

You have a fund manager so you do not need to constantly monitor your investments

What happens when you make the minimum monthly payments on your credit card?

You pay the greatest amount in interest for the life of the loan

Which tool can you use to keep financial records?

You will need to use all of these to have accurate reports of your finances

Which of the following would not be included in your credit report?

Your credit score

What is an index ETF

an ETF that tracks a stock index, like the S&P 500

who would be the most likely to buy an inverse ETF

an investor who normally is not able to short-sell in their portfolio

who would be the least likely to buy a leveraged ETF

an investor who thinks the underlying index will slowly go up over time

How many industry peers can you see in a list at once

as many as you want

what makes up a ticker symbol?

between 1 and 5 letters only

Which of the following does not appear in a sectors listing?

corporate bonds

What do "Prepaid Expenses" count towards?

current assets

What does it mean to diversity your portfolio

hold more than 1 stock, stocks to not be in the same area of the economy

Why would you want to diversity between sectors?

in case a sector wide event causes all stocks to drop

Which is a characteristic of open-ended mutual funds?

investors typically hold fractions of shares

why did investors start using ticker symbols?

it was faster to move news using telegraphs with short names

How do you buy an EFT

like a stock, with the price constantly updating

What is one difference between mutual funds and etfs

mutual funds cannot be day traded

What does the "Bottom Line" refer to?

net income

Over the last 30 years or so, which investment produced the highest percentage returns

stocks

Over the last 90 years, which investment produced the most volatile returns?

stocks

why would a stock have a ".A" at the end of its ticker symbol?

there are multiple classes of stock for this company

If you want to have most of my money by the end of your investment term to come from compound interest, what variables should you maximize?

time and initial investment

What is captial preservation?

to make sure you don't lose your initial investment