Personal Finance Exam 1

Samuel Jackson has developed a budget that he follows each month. This is a budget that he keeps in his head. He does not write anything down, nor does he use a computer to keep track of this budget. What type of budget has Samuel created?

!Mental budget Physical budget Written budget Computerized budget None of these

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?

A. Determining her current financial situation b. Developing her financial goals c. Identifying alternative courses of action d. Evaluating her alternatives e. Implementing her financial plan

If you think that your bill is wrong, you should first:

A. contact the local credit bureau and inform it of the billing error. b. complain to the Better Business Bureau. c. contact your state consumer protection agency. d. call the creditor to discuss the error. e. contact your attorney to settle the matter.

The most commonly purchased type of credit insurance is:

A. credit life insurance. credit accident insurance. credit health insurance. credit property insurance. credit disability insurance.

The Rule of 78s demonstrates that a borrower pays:

A. more interest at the beginning of the loan period. b. more interest at the end of the loan period. c. more interest in the middle of the loan period. d. less interest than indicated by the APR. e. equal amounts of interest throughout the loan.

Which one of the following illustrates an insolvent situation?

Assets $56,000; annual expenses $60,000 Assets $78,000; net worth $22,000 Liabilities $45,000; net worth $6,000 !Assets $40,000; liabilities $45,000 Annual cash inflows $45,000; liabilities $50,000

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 and advancement process is Jason completing?

a. Assess and research personal goals, abilities, and career fields. b. Research the employment market and identify specific employment opportunities. c. Develop a resume and cover letter to apply for available positions. d. Interview for available positions and assess interview performance. E. Evaluate financial and other factors of positions offered.

Which one of the following is an advantage of using credit?

a. Potential bankruptcy b. Spending beyond your budget C. Funding an emergency expense d. Committing future income to pay for current purchases e. Incurring interest charges

Consumer credit:

a. is a privilege of the affluent. B. dates back to colonial times. c. carries no finance charge. d. is not a major force in our economy. e. use has been declining in recent years.

Which of the following is true of the baby boom generation?

a. represents about 30% of the population b. holds nearly 60% of the outstanding debt c. extensively uses debt d. born between 1946 and 1964 E. all of these

Which of the following is not a valid reason for using credit?

to pay for a medical emergency to purchase a car for a homemaker returning to the workforce to purchase an item now for less money than it will cost later ! to pay for everyday living expenses to pay for a college education