Personal Finance Midterm

A person has a house worth $100,000, a mortgage of $90,000, savings of $5,000, a car valued at $10,000, a car loan at $7,000 and a $3,000 credit card in debt. This person's net worth is ____.

$15,000.

The best wau to protect against identiy theft is to ____.

Check credit bureau personal credit reports regularly and keep SS card and PIN information in a safe place.

When a person decides to use the services of a certified personal planner, the person will ____.

Check in regularly with the planner to review investment decisions.

Which of the following shows, in the correct order, the steps a person should take to organize his finanicial life?

Create a personal cash flow statement, create a budget, develop a personal balance sheet.

As a first step in selecting a career path, a person should ____.

Determine which career areas interest him.

A personal balance sheet ____.

Is a picture of a person's financial well-being at a point in time.

Which of the following statements about adjusted gross income tax is true?

It is the ammount used to determine what a person usually has to pay in taxes.

What is the business cycle?

It is the time that it takes a business to emerge from a recession or fall back into a depression.

Which of the following is a true statement about the US job market?

Jobs in health care occupations are expected to grow more and more in the coming years.

The reason that a person buys health or life insurance is to ____.

Limit the amount of financial loss if there is an illness, injury, or loss of life.

A persoon increases liquidity when he ____.

Makes weekly deposits in a bank savings account.

As a result of globalization ____.

More goods sold in America are produced in other parts of the world.

If a person is self-employed and earns $70,000 a year, the person ____.

Must pay estimated income taxes every quarter.

As protection from identity theft, many people to not want to recieve mail or phone calls offering preapproved credit card offers because it ____.

Prevents a thief from collecting valueble personal information.

The best description of cash inflow is money ____.

Received from different sources, such as salary and interest earned on bank accounts.

Creating a cash flow statement is a good way for a person to determine how much money the person ____.

Receives from various sources over the course of a month.

A career that requires a college degree and is expected to grow in employment in the coming year is ____.

Registered nurses.

Because of globalization, an individual may have to decide whether to ___.

Sell a house during a recession.

How does a person determine his net worth?

Subtract liabilites from assets.

Which of the following statements about taxes is true?

Takes are the major sources of revenue for the government.

The Occupational Outlook Handbook is a good source for finding information about ____.

The areas that will need more employees in the coming years.

Which is a true statement about the relationship between education and a person's earning power?

The average person with an ascoiates degree can expect to earn 20% more than a high school graduate earns each year.

If a college or university offers a nationally accredited nursing program, its most likely that ____.

The program has been cited by a nationaly recognixed nursing professional organization as meeting certain standards.

A person's resumé should not include ____.

Their current salary.

The following statement about financial advice on the internet is true.

There are a number of valueble sources of information on the Internet that can be used for financial planning.

"Good credit management" means ____.

Using credit to make purchases when the buyer knows he can quickly pay the amount owed.

A person increases his net worth by ____.

Increasing assets and decreasing liabilities.

The demographic trend that helps explain why there has been an increase in demand for health care workers is ____.

The graying of America.

Which is a true statement about a budget>

A budget should include both fixed and veriable expenses.

Which of the following is a true statement?

A certification is recognition that a person has acquired a certain level of knowledge or training in a particular area of study.

What decision illustrates the idea that a person's financial decisions are influenced by the overall economy?

A person switches the language she is studying in college from French to Spanish after she reads an article about how the population of the US is changing.

The best definion of personal finane planning is _____.

A process of mapping decisions for spending, borrowing, saving, and investing in order to acheive a financial goal.

What is a true statement about health insurance?

As the cost of insurance has risen, more companies are cutting back on employee coverage or requiring employees to pay a larger share of the premiums.

A financial plan does not include ____.

Bankruptcy.

A financial plan should ____.

Be evaluated periodically and revised as needed.

A financial plan is created like a ____.

Blueprint for building a house.

Which peron's goal is correctly matched with a sound financial plan to acheive a goal?

Buying a new computer for college in the fall: depositing 25% or more of weekly take-home pay in a bank savings account.

Which asset is correctly matched with its description?

Car : household asset

Which one of the following does not show a correct match?

Cash inflow : interest paid on a loan

Which is a valid statement about a dependednt?

For each dependent a person has, she is able to take a deduction from the amount of taxes she owes when filing her tax return.

The purpose of the IRS is to ____.

Enforce tax laws and carry out the federal tax system.

Usually the least expensive way for a person to obtain health insuracnce is by ____.

Enrolling in an employer-provided health care plan.

Which is a true statement about Amerians saving for retirement?

Fewer than half of Americans have a retirement account.

"Phishing" is the identity theft technique of ____.

Getting information from a person online by asking her to complete a survery or provide vertain information to win a free vacation or product.

When a person applies for a loan, the lender will review the person's balance sheet in order to find out if he ____.

Has enough assets to cover both current liabilities as well as debt created by the new loan.

The purpose of investing money is to ____.

Have an asset that will increase in value over time.

Which of the following is a correct statement?

If cash inflow exceeds cash outflow, a person has a surplus to save or invest.

Which of the following statement about taxes and financial planning is true?

In most cases it is possible for people to reduce their tax liability by adjusting their financial plan.

Why is insurance a method of managing risk?

Insurance limits a peron's financial loss if an asset is lost, stolen, or damaged.

Which is a true statement about goals?

Intermediate-term goals are those that can be accomplished in 1-5 years.

Money in an emergency fund should be used to pay for ____.

Necessary expenses when a person loses a job or is unable to wrok because of illness or injury.

Another term for take-home pay is ____.

Net pay

A person's cash outflow includes ____.

Payments by a person to a required account.

From the following, select the tax that is matched with it's correct explanation.

Payroll tax : money deducted from a person's salary that is sent to the government by the employer.

During a recession, it is notiecable that ____.

People are buying less and their are higher levels of unemployment.

The major purpose of the Equal Credit Opprotunity Act is to ____.

Prohibit creditors from using age, religion, or race to deny credit to a person.

The purpose of life insurance is to ____.

Provide funds to help a peron's beneficiaries maintain a certain standard of living should the policyholder die.

Which is the correct order for making financial decisions?

Set specific goals, put goals in writing, implement goals, rethink goals if necessary.

A 21 year old college graduate starting her first full-time job wants to buy a home at age 30. Why should she include this goal into her financial plan?

She is more likely to acheive her goal if she starts saving and investing now in order to have the down payment needed to buy the house.

National economic trends ____.

Should impact individual financial planning.

Which of the following is a true statement about inflation?

Some investments are able to grow at a rate greater than the rate of inflation: these investments, however, may carry greater risk.

Why do many employers say that a cover letter is as important as the resume that it accompanies?

The cover letter gives the writer a chance to explain why she believes that her skills and knwledge make her ideal for the position.

If the GDP is going up, it is a sign that ____.

The economy is gaining stregnth.

A person decides to bike to school rather than drive his car. The opprotunity cost related to this decision is ____.

The money that is saved by not buying as much gas for the car.

The information collected by credit bureaus such as Experian is accessable to ____.

The person's potential employers, landloards, and lenders.

Why might a person decide to take advantage of a noninstallment credit offer?

There is no interset charged on the loan if it's paid back in a short period of time.

How do economies measure inflation?

They compare the costs of a standard group of goods and services bought today to how much those goods cost a year ago.

The best definition of economics is that it is the study of ____.

Unlimited wants vs. limited resources.