FIN Final Practice 1

A family with $50,000 in assets and $22,000 of liabilities would have a net worth of:

$28,000.

You purchase a bond for $1,200 dollars which pays you $120 per year in interest and hold the bond for ten years, at which time you sell the bond for $1,100. What is the dollar amount of your return for this investment? _______

?

Common long-term liabilities include:

Auto loans.

Jeff Goldblum has just purchased a security which has no maturity date and no promised dividend payments. He can recoup his investment by either selling the security to another individual. What type of security did Jeff purchase?

Common stock.

James Green just bought a stock which he expects will provide him with a quarterly cash payment, although that payment is not guaranteed. In fact, he expects the amount of the payment to vary over time. What type of payment is he expecting to receive?

Dividend.

Which category of a home file includes stock and bond purchase documents?

Investment records.

A personal balance sheet presents:

Items owned and amounts owed.

Lindsey Holt owns stock in the Galloway Gems Company. She knows in advance that the dividend on this stock is a $1.50 per share. Given this, you know for sure that she purchased which type of stock?

Preferred.

Inflation reduces the buying power of the dollar.

True

The main goal of personal financial planning is managing your money to:

achieve personal economic satisfaction.

A major activity in the planning component of financial planning is:

anticipating spending through budgeting.

The following are examples of intangible-purchase goals, except:

buying a house.

Future value calculations involve:

compounding.

Higher consumer prices are likely to be accompanied by:

higher interest rates.

If a family planned to spend $400 for food during April but only spent $350, this difference would be referred to as a:

surplus.

The amount of income that a person or household has available to spend after deductions for taxes and other items is called

take-home pay.

To finance their business activities, many corporations prefer selling common stock because:

the money obtained from stockholders does not have to be repaid.

A budget is a spending plan that outlines how you will spend available income.

true

Opportunity cost refers to:

what a person gives up by making a choice.

Current liabilities differ from long-term liabilities based on:

when the debt is due.

Beverly Frickel purchased 100 shares of Gleason Systems stock for $32.50 per share. Her commission for this purchase was $25. She sold the stock two years later for $45 per share and a commission of $40. What was Beverly's total dollar return on this stock?

$1,185 ( [(100 × $45) - $40] - [($32.50 × 100) + $25] = $4,460 - $3,275 = $1,185 )

Patricia McDonald has determined the following information about her own financial situation. Her checking account is worth $545 and her savings account is worth $1,000. She owns her own home that has a market value of $119,000. She has furniture and appliances worth $8,500 and a laptop worth $1,200. She has a car worth $9,700 and owes $8,200 on her auto loan. She has also purchased some stock worth $5,500 and she has a retirement account worth $27,655. What is the total value of her assets?

$173,100 (Total Assets = $545 + $1,000 + $19,000 + $8,500 + $1,200 + $9,700 + $5,500 + $27,655 = $173,100.)

The study of how wealth is created and distributed is:

economics.

Higher interest rates can be caused by:

lower money supply.

The main responsibility of The Fed is to:

maintain an adequate supply of money.