Personal Finance Final Exam
After all of her expenses, Sara typically has $100 to $150 left over each month. Sara wants to decide how to spend this money. Which of the following tools would help Sara the most?
A Personal Balance Sheet
Interest
A charge on borrowed money
A powerful tool that can be used to help increase wealth but misused can lead to serious and long-lasting financial difficulties.
Credit
When you use _____, you are borrowing money
Credit
The process of a court taking over some of the finances of an individual who is unable to pay his or her bills.
Bankruptcy
A(n) _________ is a promise to repay a certain amount of money at some future time.
Bond
While a ________ tracks cash flow over time, a _________ shows an individual's financial position at a point of time.
Budget; Personal Balance Sheet
The process of forecasting future expenses and income is called _____________.
Budgeting
Saving for a down payment is most closely associated with which of the following long-term goals?
Buying a house
Which of the following is a long-term financial goal?
Buying a house
Which of the following is NOT a financial goal?
Enjoying your career
Which of the following refers to the amount of an asset that a person owns?
Equity
Before you can effectively make plans for your financial future, you need to _______.
Evaluate your current financial position
A(n) __________ is anything that an individual spends money on.
Expense
An individual's cash outflow.
Expense
A(n) _________ expense is an expense that remains the same for time period to time period often month to month.
Fixed
Monthly gym membership fee.
Fixed Expense
Monthly rent.
Fixed Expense
A projection about what will happen in the future.
Forecast
After keeping track of his income and expenses for two months, Ellis made predictions about his monthly cash inflow and outflow for the next years. Ellis made a(n) __________.
Forecasting
Christine is creating a personal balance sheet and has begun classifying her asset. Which of the following should Christine classify as a liquid asset?
Her Cashing Account
An object in the home that can be sold for market value?
Household Asset
The car you own and drive regularly is an example of a(n)__________.
Household Asset
To figure out your personal balance sheet, you would need to conduct research to estimate the market value of your _________.
Household Assets
For most US consumers, the biggest expense is ______.
Housing
Which of the following questions would you answer while establishing your net worth in the budgeting process?
How much money do I have in the bank now?
An individual's cash inflow
Income
Wages earned an allowance are two types of ____.
Income
Allowance Nicole receives from parents
Inflow
Interest Nicole earns from her savings account
Inflow
The tips Nicole makes waiting tables at a restaurant
Inflow
A good way to thick about _____ is paying rent on money borrowed.
Interest
Buy a motorcycle next year.
Intermediate Term Goal
A temporary, short term position to provide exposure to and training in a particular job.
Internship
A personal interaction between you and a potential employer designed to help the employer determined whether you are qualified for a job.
Interview
A(n) _______ is something that you acquire with the ultimate goal of making money.
Investment
What is a personal financial plan?
Is like a builder's blue print
A form provided by a potential employer to be filled out with your work-relevant information.
Job Application
A potential employer may ask you to fill out a(n) _______ with information about your work history or to write and submit a _______ that provides a snapshot of your qualifications.
Job Application; Resume
Your financial goals are most directly tied to your income, your _________, and your choice of career.
Level of education
_________ are anything we owe, or our debts.
Liabilities
Something you own that can be rapidly converted to cash without much risk or loss.
Liquid asset
If you find that you don't have enough money to cover your immediate needs, then you need more ________.
Liquidity
People without enough ______ often use _______ to cover immediate shortfall, but this approach can be very costly.
Liquidity; Credit
To determine the market value of your car, you would likely to use which of the following as a guideline?
Listing on the Kelley Blue Book Web site
Financial goals that will taken more than five years to accomplish should be categorized as _________ goals.
Long Term
Save $10,000 over six years for a down payment on a condo.
Long Term Goal
Risk is defined as the likelihood of _________.
Loss
A financial advisor's area of expertise should __________.
Match your needs
Income
Money coming in through wages earned or other sources
Which of the following is the best example of a variable expense?
Monthly grocery costs
Raising a child, including spending him or her to college, can be expecting to cost _________
More than $250,000
If you are unsure about investment selection and want the expertise of a professional portfolio manager, you should invest in ________.
Mutual Funds
Most ________ typically require a minimum investment ranging between $500 and $3,000
Mutual Funds
Which of the following types of investments offer an investor the most protection from a serve drop in the value of an investment?
Mutual Funds
The purpose of a budget is to plan your spending and saving, considering your income level, so that you can meet you _________.
Needs and wants
The best time to start investing money to reach your financial goals is ______.
Now
Tyra has to decide whether to work an extra shift at her job at the movie theater or take the evening off and go to a concert with her friends. To make her decision, Tyra add up what she could make by working the extra shift and what she will spend at the concert. Tyra is calculating her __________?
Opportunity Cost
Interest Nicole is charged on her credit card balance
Outflow
The amount that Nicole spends on gas for the cash each week
Outflow
The price of a ticket for a concert Nicole goes to
Outflow
Equity
Ownership
The set of financial issues that can affect an individual.
Personal Finances
A(n) _________ involves specifying financial goals and describing in detail the spending, financing, and investing pans needed to reach those goals
Personal Financial Plan
Planning your spending, borrowing, and saving are all aspects of ____.
Personal Financial Planning
The process of a court taking over some of the finances of an individual who is unable to pay.
Personal Financial Planning
A list of individuals a potential employer may contact to learn more about you
Personal Reference
Which of the following is NOT a step in creating a budget?
Prioritizing financial goals
The defining characteristic of a liquid asset is its ______.
Quick Availability
Liquidity
Readily available cash
Home, rental property, and farms are all examples of _____________.
Real Estate Investments
An overview of your job qualifications and relevant experience that you write and submit to a potential employer.
Resume
The likelihood of loss.
Risk
Without insurance on a major purchase, the owner assumes all of the ______.
Risk
Which of the following is NOT a common type of investment?
Saving Account
Which of the following is the best example of a long term goal?
Saving enough to fully pay for your children's college education
A powerful tool that, when used early in life, can help you build up large sums of money through relatively small monthly contributions.
Savings
Financial goals that you plan to accomplish within the next year should be categorized as ___________.
Short Term
Contribute $100 per month this year to your savings.
Short Term Goal
Market value refers to what something would be worth if you ________.
Sold it today
Asset
Something of value that an individual owns
Liability
Something that an individual owes
Understanding the opportunity costs of all your purchases is most likely to help you think about and change your ________.
Spending Habits
Establish your financial goal. (Financial Decision-Making Process)
Step 1
Establishing your net worth (Steps of Creating a Budget)
Step 1
Establishing your income (Steps of Creating a Budget)
Step 2
Evaluate your current financial position. (Financial Decision-Making Process)
Step 2
Identify and evaluate options for accomplishing your goals. (Financial Decision-Making Process)
Step 3
Identifying your expenses (Steps of Creating a Budget)
Step 3
Considering the impact of taxes (Steps of Creating a Budget)
Step 4
Pick the best plan. (Financial Decision-Making Process)
Step 4
Periodically evaluate your plan. (Financial Decision-Making Process)
Step 5
Revise your financial plan as necessary. (Financial Decision-Making Process)
Step 6
A(n) _________ represents fractional ownership of a company
Stock
People purchase _______ in a company in hope that the company will do well and their investment will increase in value
Stocks
Money taken from a paycheck by the government.
Taxes
What does the opportunity cost of a purchase tell you.
The cost of the purchase plus the cost of not doing or purchasing something else
A(n) _________ expense is an expense that changes form one time period to the next.
Variable
Money spent on entertainment in one month.
Variable Expense
Money spent on gas in one month.
Variable Expense
When is the best time to start saving for long-term financial goals?
When you are young and have fewer financial obligations
Which of the following is an example of a liquid asset?
Your checking and saving accounts
Which of the following is LEAST likely to influence your decision about how much money to spend and how much money to save in the next month?
Your geographic location
A written introduction of yourself to a potential employer
Cover Letter
Which of the following supports the argument that many Americans pay too little attention to their personal finances.
About half of Americans working full-time report having to live paycheck to paycheck
A(n) ________ is an official recognition that a school or program meets a certain standard.
Accreditation
Of the following, it is most important for your financial goals to be _________.
Achievable
You should be particularly careful about evaluating financial planning advice from the Web sites that _________.
Are trying to sell you a service
Retirement planning involves determining how much to save for retirement every year and how to invest that money. When should you start planning?
As early as possible
Net worth is determined by subtracting an individual's liabilities from his or her _________.
Assets
Which of the following is LEAST likely to be part of an individual's financial forecast?
Assets
_______ are anything we own, such as a car or a home.
Assets
You can increase your net worth by increasing your _______ and/or decrease your ________
Assets; Liabilities
Credit card financing is usually available _______ a borrower than longer term financing for a major purchase is.
At a higher cost to
Bankruptcy is a legal process in which a(n) ______ takes over some of the finances of a person who is unable to pay his or her .
Court
T0 make a financial forecast, it I most important to evaluate and make predictions about your ________.
Cash Flows
Which of the following is NOT a typical asset listed on a personal balance sheet?
Cash Inflows
Money that an individual spends is referred to as _________.
Cash Outflow
For individuals, _________ is referred to as income.
Cash inflow
Because of the dangers posed by the Internet, you should ________ for financial planning.
Cautiously use it
The first step in creating a budget is ________.
Determining net worth