Personal Finance Final Exam
You agree to deposit $500 at the end of every year for 3 years in an investment fund that earns 6%. How much money would you have at the end of 3 years?
$1,592
A family with $45,00 in assets and $22,000 of liabilities would have a net worth of :
$23,000
The future value of $1,000 deposited each year for 5 years earning 4 percent would be approximately:
$5,400
You borrow $389,000 now and repay it in 25 equal annual installments. The annual interest rate is 14% how much will your annual payments be?
$56,599
A person has $1,250 in liabilities, monthly savings of $200, and monthly gross income of $2,500. What is the savings ratio?
0.08
Declared bankruptcy, this may be reported by credit bureaus for __ years.
10 years
how many years will it take for $136,000 to grow to be $468,000 if it is invested in an account with an annual interest rate of 8%?
16 years
Experts suggest that you spend no more than __ of your net income on consumer credit payments.
20%
Adjustable Gross Income
AGI is gross income after certain reductions have been made
Tax credit
An amount subtracted directly from the tax owed
Current position of an individual or family is best presented with the use of a:
Balance sheet
This type of financial institution is known frequently offer lower fees and lower loan rates:
Credit union
Which of the following payments would be considered a variable expense?
Electricity bill
Which of the following is a credit bureau?
Experian
Capacity refers to the borrowers attitude towards his/her credit obligations
False
With open-end credit, you pay back one-time loans in a specified period of time in payments of equal amounts.
False
Financial service providers should be avoided, because interest rates can be over 100% a year?
Pawnshop
A persons net worth would increase as a result of:
Reduced amounts owed to others
A persons net worth is difference between the value of items owned and owed
True
College students are a prime target for credit cards
True
Which of the following illustrates an insolvent situation?
assets $40,000; liabilities $45,000
Emergency Fund Ratio
cash and cash equivalents / monthly non-discretionary cash flows; benchmark = 3-6 months
Savings Ratio
cash surplus/income after taxes; At least 10%
What is a CD
certificate of deposit
Current Ratio
current assets - current liabilities
mutual fund
fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets
The main purpose of taxes is to:
generate revenue for funding government activities
A retirement account is an example of a _____ asset.
investment asset
Balance Sheet
reports liabilities & assets
Income Statement
reports revenues and expenses
Four Types of Taxes
taxes on purchases, property, wealth, and earnings
Cash flow
the difference between cash coming in and cash going out of a business
Debt Ratio
total liabilities/total assets
Opportunity cost refer to:
trade-offs associated with financial decisions
Head of Household filing status
unmarried and have dependents