Personal Finance Chapter 2
Which of the following refers to a series of equal payments or deposits?
Annuity
Which of the following can be used for tracking?
computer spreadsheet, pen and paper, smartphone app, all of these answer choices are correct
which of the following is on the right side of the balance sheet?
liabilities
Which of the following refers to how quickly an asset can be converted to cash?
liquidity
If a risk is low, then the interest that your money earns is generally:
low
what happens to your net worth if you sell your car for more than you owe?
increase
Which of the following refers to the price paid for using money?
interest
Which of the following refers to what you owe?
liabilities
Which of the following refers to how much you think you will receive or spend in each category?
Projection
Which of the following provides an estimate of how long it will take you to double your money?
Rule of 72
Which ratio indicates the percentage of money that you are setting aside on a regular basis?
Savings ration
Which of the following is the first step of resource management?
Set and know your financial goals
Jorge has the opportunity to receive $12,000 now or $15,000 in 4 years. If Jorge can earn 6% on his investment, what is the present value of the $15,000?
$11,881
A grandmother just put $12,000 into an investment earning 6% a year for her granddaughters college education. Approximately, how much will be in the account in 10 years assuming that all the interest is left in the account?
$21,490
If you start with $2,500 today, how much will you have in 5 years if you can earn 4% each year?
$3,041
If Sean can earn 4%, what will his $3,000 in savings be worth in 10 years?
$4,440
If you start with $4,000 today, how much will you have in 8 years if you can earn 8% each year?
$7,404
Jorge has the opportunity to receive $10,000 now or $12,000 in 4 years if Jorge can earn 6% on his investment, what is the present value of the $12,000?
$9,505
If Mia can earn 6%, what will her 5,000 in savings be worth in 15 years?
11,983
How many years would it take your money to grow from $4,000 to $8,000 if you could earn 4% interest?
18
If you start with $2,000 today, how much will you have in 2 years if you can earn 6% each year?
2,247
Max has an opportunity to receive 15,000 now or 20,000 in 5 years. If Max can earn 6% on his investment, what is the present value of the 20,000
20,000
The Federal Deposit Insurance Corporation and the National Credit Union Administration protect savings deposits up to what amount?
250,000
What is the APR if a bank pays 0.25% interest monthly on savings?
3.0%
What is the Annual Percentage Rate (APR) if a bank bays 0.3% interest monthly on savings?
3.6%
What should you compare when comparing loans?
APR
Which of the following estimates how much current savings and investments will be worth at a certain date in the future?
FV of a lump sum
Which of the following estimates how much you will have in the future if you save or invest a set dollar amount on a regular basis
FV of an annuity
Which of the folliwng is the final step in creating a financial plan?
Formalize and implement your financial plan
Which of the following is the third step of resource management?
Track where your resources are being used
Which of the following refers to your assets minus your liabilities
net worth
Which of the following refers to a debt that is paid off within a year?
short term debt
Which of the following refers to having a financial score less than 10
some difficulty in managing financial behaviors
Which of the following means that you have planned well and have your money working for you?
surplus
Which ratio indicates what percentage of your income that you are using to pay all of your debts?
total debt to income ratio
Which of the following is an example of a short-term debt?
utility bill
Which of the following is the first step in creating a financial plan?
what is your goal?
Which of the filling refers to the ability to keep moving forward toward goal achievement even if you face a few financial challenges or emergencies along the way?
financial capability
Which of the following is/are fluid over time?
financial capacity and time horizon
Which of the following is an element of a financial plan
financial knowledge financial experience risk tolerance all of these answer choices are correct
Which of the following will provide you with a realistic understanding of your current risk tolerance, financial knowledge, and feelings of control?
financial score
Your financial document is a(n) _________ document
flexible
What interest rate would you need to earn in order to turn $3,500 into $7,000 over 5 years?
15%
How much money do you need today to ensure that you will have 12,000 in 3 years, assuming you can earn 4% on your savings?
10,668
How much money will you accumulate in your retirement account if you save 5,000 per year for 15 years and earn 6% on your investment
116,380
how many years would it take your money to grow from $5,000 to $10,000 if you earn 6% interest?
12
how long will it take for your money to double if the Annual Percentage Yield (APY) is 6%
12 years
How much money do you need today to ensure that you will have 16,000 in 4 years, assuming you can earn 6% on your savings?
12,674
What interest rate would you need to earn in order to turn $2,500 into $6,000 over 6 years
16%
How much money will you accumulate in your retirement account if you save 2,500 per year for 40 years and earn 5% on your investments
301,999
Emanuel invested $10,000 in a security that will double in value in 10 years. Approximately what annual rate of return is this investment making?
7.2%
What is the APR if a bank pays 0.4% interest monthly on savings?
4.8%
How much money will you accumulate in your retirement account if you save 1,000 per year for 39 years and earn 6% on your investments
79,058
How long will it take for your money to double if the APY is 8%
9 years
What interest rate would you need to earn in order to turn $6,500 into $13,000 over 8 years
9%
What should you compare when comparing savings options
APY
Which of the following refers to a payment of the same amount for a set number of months or years, such as in a car loan or mortgage?
Amortized payment
Which of the following refers to what you own?
Assets
Which of the following refers to investment gains earned in the first time period are put to work in the second time period to earn additional investment returns?
Compound growth
Which of the following means that your expenses exceed your income?
Deficit
Which of the following is the fourth step of resource management
Develop your own guidelines regarding the use of your resources
Which of the following refers to having a financial score greater than 20
Excellent job of managing financial behaviors
Which of the following is the fifth step in creating a financial plan?
How realistic is your time horizon?
Which of the following can you use to solve TVM problems?
Microsoft excel, a financial calculator, an app designed to solve these types of problems, all of these answer choices are correct
Which of the following estimates determines the current value of a future amount?
PV of a lump sum
Which of the following determines the current value of a regular series of equal payments occurring in the future?
PV of an annuity
Which of the following refers to the amount of money borrowed?
Principal
Which of the following is a rule that can help you grow your money?
The longer you let your money grow, the more you will have in the future (assuming the same interest rate), the more interest you earn, the more you will accumulate over time, the higher the interest rate you want, the more risk you must take. All of these are correct
Which of the folioing refers to an asset that decreases in value over time?
depreciating asset
What formulas and calculations are some of the most valuable external finance tools that allow you to consider financial goals in terms of money, time, and interest?
Time value of money (TVM)
Which of the filling is the second step of resource management?
Track where your resources come from
Which of the following is the fourth step in creating a financial plan?
What is your financial capacity
Which of the following is the third step in creating a financial plan?
What is your financial score?
Which of the following is the second step in creating a financial plan?
What is your starting point
Which of the following can affect the loan interest rate?
Your salary, purpose of the loan, your prior financial behaviors, all of these
which of the following refers to having a financial score of 11-15
acceptable job of managing financial behaviors
Which of the following refers to start saving money on a regular basis?
annuity
Which of the following refers to an asset that increases in fair market value over time
appreciating asset
Which of the following is on the left side of the balance sheet? `
assets
Which of the following refers to borrowing money to buy something that either depreciates quickly in value or is consumed immediately?
bad debt
Which of the following refers to a financial tool that helps you regulate how quickly and in what ways your money is being used so that you can stay focused on accomplishing your goals?
budget
Which of the following is an asset that would depreciate in value over time?
car, computer, bicycle, all of these answer choices are correct
Which ratio indicates whether you have sufficient resources in case of an emergency
emergency ratio
Which of the following refers to the difference between the asset and liability?
equity
Which of the following refers to having a financial score of 16-20
good job of managing financial behaviors
which of the following is an asset that would appreciate in value over time
house
Which of the following includes all resources that can be saved or spent
income
Which of the following does a budget include?
income and expenses
Which of the following is an element in a budget
income, fixed expenses, variable expenses, all of these answer choices are correct
Which of the following refers to the rate of return or discount rate used to determine future value (FV) or present value (PV)
interset
