Personal Finance Chap. 1-5
7. Current business and economic news can be an indication of future job demand. a) True b) False
a
A budget is a specific plan of how a person or family will spend their money. a) True b) False
a
A cafeteria-style employee benefits program allows workers to select the benefits they prefer based on their personal situations. a) True b) False
a
A person's birth date, sex, height, and weight should only be included on a resume‚ if that information relates specifically to qualifications for an employment position. a) True b) False
a
A _______ endorsement is especially useful when you are depositing checks. a) blank b) restrictive c) common d) special e) documented
b
A regular savings account usually offers a higher rate of return to savers than other savings plans. a) True b) False
b
The Occupational Outlook Handbook would be most useful for determining: a) jobs available in your community. b) current economic conditions. c) expected employment in various career clusters. d) interview questions for various careers. e) suggested resume formats for various career fields.
c
A savings account earns 4 percent. If the saver is in a 28 percent tax bracket, the after-tax savings rate of return would be ____ percent. a) 28.00 b) 16.72 c) 4.00 d) 2.88 e) 1.12
d
Tax-deferred retirement plans are a type of: a) exemption. b) itemized deduction. c) passive income. d) tax shelter. e) tax credit.
d
Which one of the following is the best example of a long-term goal for a young couple? a) A new car b) Reduction of amounts owed on credit cards c) Increased savings d) Income for retirement e) Funds for a vacation
d
____________ risk refers to the danger of lost buying power during times of rising prices. a) Trade-off b) Economic c) Personal d) Inflation e) Interest-rate
d
The main responsibility of The Fed is to: a) maintain an adequate supply of money. b) approve spending by Congress. c) set federal income tax rates. d) determine illegal business activities. e) maintain a balanced budget for the federal government.
a
The money market fund offered by investment companies is a relatively liquid financial service. a) True b) False
a
Trade balance is defined as the difference between a country's exports and its imports. a) True b) False
a
The current financial position (including net worth) of an individual or family is best presented with the use of a(n): a) budget. b) cash flow statement. c) balance sheet. d) bank statement. e) time value of money report.
b
The more frequent the compounding, the less a person will earn on a savings account. a) True b) False
b
The principal purpose of taxes is to control economic conditions. a) True b) False
b
The purpose of an informational interview is to obtain employment from a branch office of a major corporation. a) True b) False
b
The value of items owned minus the amounts owed to others equals: a) net assets. b) net worth. c) total liabilities. d) total income. e) budgeted expenses.
b
To assess the current value of a lump-sum retirement benefit that will be received in 10 years, use the ____________ calculation. a) present value of annuity b) present value of a single amount c) future value of an annuity d) future value of a single amount e) retained earnings
b
Two types of education savings plans are the Coverdell Education Savings Account and the: a) 401k. b) 529 plan. c) Keogh plan. d) traditional IRA. e) Roth IRA.
b
What type of account would you expect to provide the poorest yield? a) Certificate of deposit b) Passbook savings account c) Money market account d) Money market fund e) CD
b
Which is an advantage of investing in Series EE U.S. Savings Bonds? a) When a bond is cashed, the earned interest is exempt from federal income taxes. b) Interest is not taxed by the federal government until the bond is cashed. c) The interest rate on the bond is adjusted to keep up with inflation. d) Series EE Bonds can be sold at a profit on the open bond market. e) The rates on Series EE Bonds are usually higher than the rates offered on stocks or corporate bonds.
b
A certificate of deposit usually has: a) high interest-rate risk. b) low safety for savers. c) limited liquidity. d) a variable rate of return. e) no minimum deposit amount.
c
Compared to a job, a career: a) is often less financially rewarding. b) requires minimum training. c) demands regular updating of knowledge. d) has limited opportunities for advancement. e) is one who engages in for your lifetime.
c
Ed Bostrom wants to reduce his fixed expenses. Which action would be appropriate? a) Get a part-time job b) Eat more meals at home rather than in restaurants c) Find a place to live with a lower rent d) Save more money for the future e) Buy on credit items than might cost more later
c
Efficient work habits are an example of: a) on-the-job training. b) continuing education. c) an employee's initiative. d) cooperative education. e) seniority.
c
Elaine's Embroidery Emporium which is run out of Elaine's home is visited by an IRS agent who wants to verify the office expenses Elaine claims are valid. What type of IRS audit is this? a) Correspondence audit b) Office audit c) Field audit d) Detailed audit e) Research audit
c
Improvements in a person's financial position are the result of: a) increased liabilities. b) reductions in earnings. c) increased savings and investments. d) increased purchases on credit. e) lower amounts deposited in savings.
c
Most people pay federal income tax by: a) paying the total amount owed on April 15. b) filing quarterly tax payments. c) having amounts withheld from income. d) earning tax credits for various deductions. e) filing the 1040 EZ form.
c
The Truth-in-Savings law requires that financial institutions: a) provide insurance for savings accounts. b) send customers monthly bank statements. c) report annual percentage yield on savings. d) offer adjustable rate savings accounts. e) become members of the Federal Reserve System.
c
The purpose of a "special" endorsement is to: a) cash a check. b) deposit a check. c) transfer a check to another person. d) withdraw cash from your account. e) reduce the charge for service fees.
c
The rate of return on a savings account is also referred to as: a) liquidity. b) compounding. c) yield. d) opportunity cost. e) asset turnover.
c
Tim Bridges owns a bass fishing boat. His state imposes an annual 3.25 percent tax on the current value of this boat. What type of tax is this most likely to be? a) General sales tax b) Excise tax c) Personal property tax d) Income tax e) Estate tax
c
When an individual makes a purchase without considering the financial consequences of that purchase, ignores the ______________ aspect of financial planning. a) borrowing b) risk management c) spending d) retirement and estate planning e) obtaining
c
Which form would an individual use who has less than $100,000 in taxable income from wages, salaries, tips, unemployment compensation, interest, or dividends, and who is married and does not itemize deductions? a) Form 1040X b) Form 1040EZ c) Form 1040A d) Schedule A e) Schedule E
c
Which of the following would be an example of a personal and employment document? a) Budget b) Passbook c) Social Security card d) Property tax bill e) Lease
c
Which one of the following is not included in gross income? a) Tax credit b) Exemption c) Exclusion d) Earned income e) Portfolio income
c
Which one of the following people is least likely to have to file a federal income tax return? a) A U.S. citizen who is a resident of Puerto Rico b) A U.S. citizen living and working in a foreign country c) A person earning less than $9,000 d) A person over age 65 e) A college student
c
Which one of the following should be budgeted first? a) Variable expenses b) Vacation expenses c) Fixed expenses d) Unplanned living expenses e) Recreation expenses
c
Which type of tax is imposed on specific goods and services at the time of purchase? a) Estate b) Inheritance c) Excise d) General sales e) Value-added
c
Who is most likely to benefit from inflation? a) Retired people b) Lenders c) Borrowers d) Low-income consumers e) Government
c
A trust has the purpose of: a) solving a person's financial problems. b) obtaining low-interest loans. c) handling daily money management activities. d) managing the assets of a person. e) improving a person's budgeting skills.
d
An exemption affects a person's tax situation by: a) increasing the standard deduction. b) increasing the taxpayer's marginal tax rate. c) decreasing itemized deductions. d) reducing the taxpayer's taxable income. e) decreasing tax credits.
d
The problem of bankruptcy is associated with poor decisions in the ______________ component of financial planning. a) sharing b) saving c) obtaining d) borrowing e) protecting
d
The stages that an individual goes through based on age, financial needs, and family situation is called the: a) financial planning process. b) budgeting procedure. c) personal economic cycle. d) adult life cycle. e) tax planning process.
d
To determine a person's solvency, which financial document should be consulted? a) Cash flow statement b) Budget c) Debt consolidation statement d) Balance sheet e) Credit report
d
When prices are increasing at a rate of 6 percent, the cost of products would double in about how many years? a) 7.2 years b) 10 years c) 6 years d) 12 years e) 18 years
d
Which of the following financial documents would most likely be stored in a safe-deposit box? a) W-2 forms b) Personal financial statements c) Warranties d) Savings certificates e) Checking account statements
d
Which of the following is usually considered a long-term financial strategy? a) Creating a budget b) Using savings to pay off a loan early c) Renting an apartment to save for the purchase of a home d) Investing in a growth mutual fund to accumulate retirement funds e) Purchasing auto insurance to cover the needs of dependents
d
Which of the following is usually considered a long-term financial strategy? a) Creating a budget b) Using savings to pay off a loan early c) Renting an apartment to save for the purchase of a home d) Investing in a growth mutual fund to accumulate retirement funds e) Purchasing auto insurance to cover the needs of dependents
d
Which one of the following is a retirement plan sponsored by an employer? a) Roth IRA b) Education IRA c) Keogh Account d) 401(k) Plan e) Traditional IRA
d
Which one of the following is defined as a commitment to a profession that requires continued training and offers a clear path for occupational growth? a) Apprenticeship b) Job c) Internship d) Career e) Cooperative employment experience
d
A $200 savings account that earns $13 interest in a year has a yield of _______ percent. a) 6.00 b) 13.00 c) 7.00 d) 11.25 e) 6.50
e
A chronological resume sequences personal data based on: a) experience. b) education. c) areas or ability. d) career goal. e) time.
e
Characteristics of successful budgets include that they are: a) well-planned. b) realistic. c) flexible. d) clearly communicated. e) All of these
e
Checking accounts are frequently referred to as ____________ deposits. a) common b) time c) current d) loan e) demand
e
Having a relationship with a mentor can provide the following benefit(s): a) personalized training. b) access to influential people. c) emotional support during difficult times. d) growth in technical and social areas of a career. e) All of these.
e
Increased consumer spending will usually cause: a) lower consumer prices. b) reduced employment levels. c) lower tax revenues. d) lower interest rates. e) higher employment levels.
e
The amount of interest is determined by multiplying the amount in savings by the: a) annual interest rate. b) time period. c) number of months in a year. d) time period and number of months. e) annual interest rate and the time period.
e
The main economic influence that determines prices is: a) the stock market. b) interest rates. c) employment. d) government spending. e) supply and demand.
e
The risk premium you receive as a saver is based in part on: a) your credit rating. b) the amount of money you are borrowing. c) the uncertainty associated with getting your money back. d) the expected rate of inflation. e) the uncertainty associated with getting your money back and the expected rate of inflation.
e
What type of tax is imposed on the value of an individual's property at the time of his or her death? a) Inheritance b) Excise c) Gift d) Personal property e) Estate
e
Which of the following trends is most likely to increase domestic career opportunities in manufacturing organizations? a) Higher interest rates b) Reduced consumer spending c) Higher consumer prices d) Increased imports e) Increased exports
e
Which of the following would cause prices to drop? a) Increased taxes on business b) Higher levels of demand by consumers c) A demand for higher wages d) A reduction in the money supply e) Increased production by business
e
A personal cash flow statement presents income and outflows of cash for a given time period, such as a month. a) True b) False
a
A possible opportunity cost associated with career advancement is a need to relocate your household. a) True b) False
a
A state may impose a personal property tax. a) True b) False
a
All-in-one accounts may be used by financial institutions to simplify the maze of financial services and to attract customers. a) True b) False
a
An office audit requires that a taxpayer visit an IRS office to clarify some aspect of his or her tax return. a) True b) False
a
Analyzing your current financial position is a part of the first stage of the financial planning process. a) True b) False
a
Barb Hotchkins is in the 28 percent tax bracket. A tax-exempt employee benefit with a value of $500 would have a tax-equivalent value of: a) $694. b) $528. c) $500. d) $360. e) $140.
a
Certain careers increase and decrease in demand based on changes in interest rates. a) True b) False
a
Changes in the cost of living are: a) different in various geographic areas. b) the same for different locations. c) constant from month to month. d) the same for all goods and services. e) not a factor when preparing a budget.
a
Changes in the demand for goods and services are an example of a(n) ____________ influence on the job market. a) economic b) social c) political d) technological e) industrial
a
Credit unions frequently offer lower loan rates than other financial institutions. a) True b) False
a
Demand deposits are another term for checking accounts. a) True b) False
a
Higher returns on savings will usually result in less liquidity. a) True b) False
a
If a family planned to spend $370 for food during March but only spent $348, this difference would be referred to as a: a) variance. b) deficit. c) fixed living expense. d) budget reduction. e) contribution to net worth.
a
Increased technology can result in a reduction of employment in one industry while creating new jobs in other industries. a) True b) False
a
Opportunity cost refers to time, money, and other resources that are given up when a decision is made. a. True b. False
a
Savings and loan associations offer mortgages. a) True b) False
a
The changing cost of money is referred to as ____________ risk. a) interest-rate b) inflation c) economic d) trade-off e) personal
a
The main purpose of taxes is to: a) generate revenue for funding government programs. b) reduce the chances of inflation. c) create jobs. d) discourage use of certain goods and services. e) decrease competition from foreign companies.
a
Money management activities refer to long-term investment decisions. a) True b) False
b
Money received in the form of dividends or interest is commonly called "earned income." a) True b) False
b
Taxable income is used to compute a person's: a) exemptions. b) income tax. c) deductions. d) capital gains. e) exclusions.
b
Taxes are only considered as financial planning activities in April. a) True b) False
b
A decrease in the demand for a product or service may result in a decrease in wages for people producing that item. a. True b. False
b
A home file should be used for: a) storing all financial documents and records. b) financial records for current needs. c) documents that require maximum security. d) obsolete financial documents. e) records that are difficult to replace.
b
A person has $1,250 in liabilities, monthly savings of $200, and monthly gross income of $2,500. What is the person's savings ratio? a) 0.52 b) 0.08 c) 2.35 d) 0.16 e) 12.58
b
A(n) ____________ is an employment position that is obtained mainly to earn money. a) career b) job c) internship d) apprenticeship e) cooperative
b
Corporate culture refers to the methods used by an organization to determine the value of employee benefits. a) True b) False
b
Financial records that are referred to on a regular basis should be kept in a safe-deposit box. a) True b) False
b
In order to calculate savings ratio, the amount saved each month is divided by net income. a) True b) False
b
In recent years, membership in credit unions has: a) become more difficult due to higher taxes. b) continued to increase. c) been limited to government employees. d) declined due to poor credit union management. e) stayed at about the same level.
b
Interest on savings is calculated by multiplying the money amount times the opportunity cost times the annual interest rate. a. True b. False
b
Itemized deductions are recorded on: a) Form 1040A. b) Schedule A. c) Schedule B. d) Form 2106. e) Form 1040B.
b
Kenton Greer wants to locate employment positions presently available in his career area. This information would be best obtained: a) the Occupational Outlook Handbook. b) professional contacts. c) an informational interview. d) the Bureau of Labor Statistics. e) business and economic news reports.
b
Kyle Burroughs has decided to put $25 more per week in his savings account. He knows this will reduce his ability to go out to eat each week but thinks building his savings is important. This would be an example of: a) a budget variance. b) an opportunity cost. c) a balance sheet. d) an accounting error. e) a budget anomaly.
b
Lenders benefit than borrowers in times of high inflation. a. True b. False
b
