Personal Financial Management final

The NYSE is an example of a(n) A. Intermediary market. B. Investment bank. C. Primary market. D. Initial public offering. E. Securities exchange.

E. Securities exchange

The expected value of a vehicle at the end of a lease is called the A. Invoice price. B. Residual value. C. Set price. D. Sticker price. E. Capitalized cost.

B. Residual value

Which of the following situations describes a person who could be insolvent? A. Annual cash inflows $45,000; liabilities $50,000 B. Assets $40,000; liabilities $55,000 C. Assets $78,000; net worth $22,000 D. Assets $56,000; annual expenses $60,000 E. Liabilities $45,000; net worth $6,000

B. assets 40000; liabilities 55000

Victor read the fine print for a checking account he was thinking about using. The fine print said, "A minimum balance of $500 is required. If your balance falls below this level, you will be assessed a monthly fee of $10." Since Victor was planning to keep only a $50 balance in his account, how much could he be charged each year? A. $120.00 B. $60.00 C. $0.00 D. $50.00 E. $10.00

A. 120

Randy Hill wants to retire in 20 years with $1,000,000. If he can earn 10% per year on his investments, how much does he need to deposit each year to reach his goal? Round your answer to the nearest dollar. A. $17,460 B. $25,000 C. $5,727 D. $18,000 E. None of the above

A. 17460

The investments in the Already Been Counted Fund have a current market value of $600 million. The fund also has liabilities that total $40 million. If this mutual fund has 25 million shares, what is the net asset value per share? A. $22.40. B. $25.60. C. $24.00. D. None of these. E. $1.60.

A. 22.40

Paul borrowed $200 to be repaid in one year. He paid 10% interest and a service charge of $3.00. What is his finance charge? A. $23.00 B. $200.00 C. $223.00 D. $3.00 E. $20.00

A. 23.00

Using the following table, calculate the taxes for an individual with taxable income of $20,800. 10% up to 8500 15% 8500-34500 25% 34500-83600 28% 83600-174400 33% 174400-379150 35% over 379150 A. $2,695. B. $5,175. C. $20,800. D. $6,025. E. $850.

A. 2695

Patrick Guitman has a net worth of $145,000 and liabilities of $155,000. What are his total assets? A. $300,000 B. $155,000 C. $200,000 D. $145,000 E. $10,000

A. 300000

Given the following information, calculate the debt ratio percentage: Liabilities = $25,000 Liquid assets = $5,000 Monthly credit payments = $800 Monthly savings = $760 Net worth = $75,000 Take-home pay = $2,300 Gross income = $3,500 Monthly expenses = $2,050 A. 33.33 percent B. 30.00 percent C. 3.00 percent D. 3.20 percent E. 8.20 percent

A. 33.33 percent

A family with $100,000 in assets and $60,000 of liabilities would have a net worth of A. $40,000. B. $160,000. C. $100,000. D. $60,000. E. $20,000

A. 40000

A _____________ is an employer-sponsored retirement account, and participating in one is one of the easiest ways to begin an investment program. A. 401(k) account B. TRA account C. 321(a) account D. 509(re) account E. 301(a) account

A. 401(K) account

You are considering an investment in a municipal bond that has a yield of 4%. Your tax rate is 25%. What is your taxable equivalent yield? A. 5.33% B. 0.75% C. 4.25% D. 3.75% E. 4%

A. 5.33%

The major function of personal financial planning is to A. achieve personal economic satisfaction B. reduce taxes C. increase savings D. Obtain adequate insurance protection E. improve your credit rating

A. Achieve personal economic satisfaction

Before taking out a loan, you should ask yourself whether you can meet all of your essential expenses and still afford the monthly loan payments. This can be determined by A. Adding up basic monthly expenses and subtracting this total from take-home pay, plus figuring out what to give up to make the monthly loan payment. B. Multiplying your take-home pay by 50% and subtracting your current loan payments. C. Adding up basic monthly expenses then adding this total to take-home pay. D. Asking what you plan to purchase with the loan E. None of the above

A. Adding up basic monthly expenses and subtracting this total from take-home pay, plus figuring out what to give u to make the monthly loan payment

The formula "(Assets - Liabilities)/Number of Shares outstanding" equals A. Book value. B. Market value. C. Earnings per share. D. Price-earnings ratio. E. Dividend yield.

A. Book value

Which of the following is NOT a strategy for wise buying? A. Buying items on impulse B. Buying winter clothes on sale in mid- or late winter C. Using product comparison websites for comparing brands D. Using unit pricing to compare products E. Carefully considering buying alternatives at various purchase locations

A. Buying items on impulse

The money left over after paying for housing, food, and other necessities is called A. Discretionary income. B. Gross income. C. Take-home pay. D. Disposable income. E. Monthly savings.

A. Discretionary income

A debt ratio of 0.5 indicates A. For every dollar of net worth, debt equals $0.50. B. For every dollar of assets, monthly credit payments equal $0.50. C. For every dollar of take-home pay, monthly credit payments equal $0.50. D. For every dollar of debt, net worth equals $0.50. E. The balance on the mortgage = 50% of the value of the home

A. For every dollar of net worth, debt equals .50

If your main focus is to be able to buy or sell an investment quickly without substantially affecting the investment's value, you are most concerned with A. Liquidity. B. Business failure risk. C. Income. D. Growth. E. Market risk.

A. Liquidity

Shannon is working on her federal income tax form and wants to determine if she should itemize her deductions. She has identified several possible deductions. Which of the following is an acceptable deduction? A. Miscellaneous expenses that exceed 2% of AGI B. $10,000 gift to her cousin C. Moving expenses for a new job that is 25 miles from her old home D. Medical and dental expenses less than 10% of AGI E. Credit card interest

A. Miscellaneous expenses that exceed

Which of the following are two personal financial statements that you create yourself? A. Personal balance sheet and cash flow statement B. Bank statement and a balance sheet C. Budget and credit card statements D. Tax returns E. Checkbook and budget

A. Personal balance sheet and cash flow statement

As a result of being an armed services veteran, Dan should be eligible for a(n) A. VA loan. B. Negative amortization. C. Payment cap. D. ARM. E. FHA loan.

A. VA loan

Timothy Carter has net monthly income of $3,800. He has a monthly auto loan payment of $350, a student loan payment of $150, a mortgage payment of $1,200, and a credit card minimum payment of $45. What is his debtpayments-to-income ratio? A. 36.7% B. 14.3% C. 45.9% D. 13.2% E. 42.0%

B. 14.3%

Given the information here, what is the total cost of renting per year? -Annual rent payments 14400 -Annual renter's insurance 300 -Annual interest lost on security deposit 10 -Value of apartment 150000 A. $164,700 B. $14,710 C. $150,000 D. $14,700 E. $14,400

B. 14710

What is the APY for a savings account with a $250 balance that receives $9 interest for the year? A. 2.5% B. 3.6% C. 10.4% D. 20.8% E. 4.32%

B. 3.6%

Jordan earns an annual salary of $45,000. If a lender uses 33% of monthly gross income as a guideline for the maximum PITI (principal, interest, taxes, and insurance), what is the maximum mortgage that Jordan can apply for? A. $1,485.00 B. $3,750.00 C. $2,475.00 D. $1,237.50 E. $7,500.00

B. 3750

Rebecca Wilson budgeted $1,200 for housing and utilities in July. She actually spent $1,160. What is her budget variance? A. $60 deficit B. $40 surplus C. $1,160 deficit D. $1,160 surplus E. $40 deficit

B. 40 surplus

In general, which fees have doubled or tripled in price at some financial institutions for checking accounts? A. Overdraft fees. B. All of the above fees have increased. C. Stop-payment orders. D. Check printing. E. None of the above fees have increased.

B. All of the above fees have increased

Items with monetary value are referred to as A. Variable expenses. B. Assets. C. Liabilities. D. Net worth. E. Income.

B. Assets

Excessive buying and selling of securities to generate commissions is called A. Prospecting. B. Churning. C. Scamming. D. Marketing. E. Flipping.

B. Churning

Amanda wants to be part of the most basic form of ownership for a corporation. She should invest in A. Dividends. B. Common stock. C. A proxy. D. A savings account. E. Bonds.

B. Common stock

Rebecca owns stock that pays a dividend. She does not want the cash now; instead she would prefer to have more shares of stock. She should use a A. Margin technique. B. Dividend reinvestment plan. C. Dollar cost averaging technique. D. Direct investment plan. E. Buy-and-hold technique.

B. Divided reinvestment plan

A tax due on the purchase of gasoline is called a(n) A. Estate tax. B. Excise tax. C. Income tax. D. Real estate property tax. E. Inheritance tax.

B. Excise tax

When Paul completes his taxes, he can include all of the following as exemptions except A. His wife. B. His 20-year-old son who is working full-time and living in an apartment. C. His 22-year-old daughter who is a full-time student. D. Himself. E. His 12-year-old son.

B. His 20 year old son who is working full-time and living in an apartment

Which of the following risks reduces your purchasing power? A. Stock risk B. Inflation risk C. Market risk D. Business failure risk E. Interest rate risk

B. Inflation risk

When choosing an investment, you should consider risk. The four primary risk components are A. Buying power, inflation, interest rate, market. B. Inflation, interest rate, business failure, market. C. Business failure, inflation, buying power, stock. D. Market, bond, stock, inflation. E. Stock, interest rate, market, buying power.

B. Inflation, interest rate, business failure, market

The inability to pay debts when they are due because liabilities far exceed the value of assets is called A. Cash flow. B. Insolvency. C. Liabilities. D. Liquid assets. E. Net worth

B. Insolvency

Devin wants to purchase DEF stock for a specified price of $40.00 or less, and he understands this request will be executed after all previously received orders have been fulfilled. He should use a A. Current sale order. B. Limit order. C. Market order. D. Stop order. E. Stop-loss order.

B. Limit order

Using the following information, what is the cost to buy a car? -Down payment 3000 -Monthly loan payment 350 per month for 6 years -Opportunity cost of down payment 3000 x loan period (years) x 2% interest -Estimated value of vehicle at end of ownership period 4000 A. $3,000. B. $25,200. C. $24,560. D. $28,200. E. $21,200.

C.

Hannah has liabilities totaling $30,000 (excluding her mortgage of $100,000). Her net worth is $45,000. What is her debt-to-equity ratio? A. 1.30 B. .75 C. .67 D. .45 E. 1.00

C. .67

Using the information given here, what is the price-earnings ratio for DEF Company? • After-tax income = $180,000 • Number of shares outstanding = 60,000 • Price per share = $30 • Book value per share = $10 • Earnings per share = $3.00 A. $4.00 B. $20.00 C. $10.00 D. $7.50 E. $3.00

C. 10.00

Acme Home Lending offers home equity loans up to 80% of the home value for its customers. If Sally Johnson has a home valued at $200,000 and a current mortgage of $50,000, how much can she borrow in a home equity loan from Acme? A. $50,000 B. $150,000 C. $110,000 D. $80,000 E. $160,000

C. 110000

A fee charged to defray the costs of advertising and marketing a mutual fund is called a ____ fee. A. 403(b) B. 3c C. 12b-1 D. 14c-2 E. 401(k)

C. 12b-1

The Anderson Balanced mutual fund charges a sales load of 4.85%. If you invest $15,000, how much of your investment will actually be used to purchase shares in the fund? A. $15,000.00 B. $14,400.00 C. $14,272.50 D. $14,250.00 E. $14,485.00

C. 14272.50

On July 3, 2009, Devin purchased 100 shares of CDEF stock at a cost of $30 per share. His commission was $29. He sold his shares on July 6, 2011, at a price of $45 per share less another $29 commission. During the time he held the stock, he earned dividends of $2.50 per share. What was his total return on his investment? A. $1,492 B. $1,721 C. $1,692 D. $250 E. $1,750

C. 1692

Given the information here, what is the annual cost of owning? -Home value 300000 -Annual mortgage payments 19200 -Annual property taxes -Annual homeowner's insurance 1200 -Estimated maintenance and repairs 1% of home value -Growth in equity 3000 -Tax savings (mortgage interest and property tax) 2800 -Estimate annual appreciation 1.5% of home value A. $38,500 B. $28,200 C. $17,900 D. $300,000 E. $338,500

C. 17900

Using the following information, what is the cost to lease a car? -Security deposit 300 -Monthly lease payment 300 per month for a 5-year lease -Opportunity cost of down payment 300 x loan period (years) x 2% interest A. $18,000 B. $18,560 C. $18,530 D. $19,030 E. $18,830

C. 18530

If Jack was in a 25% tax bracket and received a $1,000 tax deduction, by how much would his taxes be reduced? A. $50 B. $500 C. $250 D. $1,000 E. $25

C. 250

FICO scores generally range from A. 450 to 650. B. 100 to 1000. C. 350 to 850. D. 200 to 700. E. 500 to 1000.

C. 350 to 850

Assume that you purchase a $1,000 bond issued by GE that pays 5% interest each year. What is the annual interest amount? A. $1,000 B. $25.00 C. $50.00 D. $40.00 E. $5.00

C. 50

If you want $1,000 three years from now and you earn 4 percent on your savings, how much do you need to deposit? A. $1,000 B. $1,040 C. $889 D. $1,030 E. $885

C. 889

Which of the following is a disadvantage of a car lease? A. You can usually obtain a more expensive vehicle than with an outright purchase. B. Monthly lease payments are usually lower than monthly financing payments. C. At the end of the lease, you have no ownership interest in the vehicle. D. The capitalized cost is usually lower than the list price. E. A large down payment is required.

C. At the end of the lease, you have no ownership interest in the vehicle.

The tax based on the total tax due divided by taxable income is called the A. AMT. B. Income tax rate. C. Average tax rate. D. Total tax rate. E. Marginal tax rate.

C. Average tax rate

Vesting is the right to receive the A. Employee's contributions each pay period. B. Employee of the month award at a company that makes life jackets. C. Employer's contributions to a pension plan even if the employee leaves the company before retiring. D. 401(k) contributions made by the employee. E. Portable employee benefits from a defined-benefit plan.

C. Employer's contributions to a pension plan even if the employee leaves the company before retiring

Stephen wanted to become one of the owners of GHI Corp. when it initially became available to the general public. He participated in the A. Securities exchange. B. Investment bank. C. Initial public offering. D. Secondary market. E. Primary market.

C. Initial public offering

Which of the following is an advantage of a car lease? A. At the end of the lease, you have no ownership interest in the vehicle. B. The capitalized cost is usually higher than the list price. C. Monthly lease payments are usually lower than monthly financing payments. D. The total cost of a lease may be higher than a purchase. E. A large down payment is required.

C. Monthly lease payments are usually lower than monthly financing payments

A debt security issued by a state or local government is known as a A. Federal agency bond. B. Subordinated bond. C. Municipal bond. D. Corporate bond. E. Treasury bond.

C. Municipal bond.

A legal form that requests that stockholders transfer their voting rights to individual(s) is called a A. Bond. B. Dividend. C. Proxy. D. Savings account. E. Common stock.

C. Proxy

Which of the following is a disadvantage of renting? A. Renters have fewer responsibilities than home owners. B. Renting can be more convenient for those who move frequently. C. Tenants cannot take tax deductions for mortgage interest and property taxes. D. Taking possession of a rental unit is less expensive than buying a home. E. Renters usually do not have to be concerned with maintenance and repairs.

C. Tenants cannot take tax deductions for mortgage interest and property taxes

Mary Sue owns 1,000 shares of QRS Moving Company. QRS pays a yearly dividend of $1.00 per share. What is the total annual dividend that Mary Sue will receive? A. $500.00. B. $.50. C. $250.00. D. $1,000.00. E. $2.00.

D. 1000

If a $10,000 investment earns a 4 % annual return, what should its value be after one year? A. $100 B. $10,000 C. $400 D. $10,400 E. $4,000

D. 10400

If Melinda Miller estimates that her $100 weekly grocery bill will increase at an annual inflation rate of 4%, what should her weekly grocery bill be in 3 years? A. $112.00 B. $114.00 C. $121.60 D. $112.49 E. $100.00

D. 112.49

George Franklin paid taxes of $4,375 on a taxable income of $32,000. What was his average tax rate? A. 10% B. 28% C. 25% D. 13.7% E. 15%

D. 13.7%

Fredrick received a $1,400 loan from the bank for a new appliance. The bank is using the simple interest formula for this two-year, 8% loan. What is his total interest? A. $112 B. $1,416 C. $80 D. $224 E. $16

D. 224

If you bought stock using dollar cost averaging as listed here, what was your average cost? - June 15 50 1.75 shares -July 15 50 1.65 shares -August 15 50 2.00 shares A. $27.50 B. $28.57 C. $30.00 D. $27.78 E. $27.96

D. 27.78

Opal earned 6% in her savings account. If she is in the 25% tax bracket, what is her after-tax savings rate of return? A. 25% B. 2.5% C. 7.5% D. 4.5% E. 2%

D. 4.5%

Nicholas earned 8% in his savings account. If he is in the 28% tax bracket, what is his after-tax savings rate of return? A. 7.2% B. 2.5% C. 28% D. 5.76% E. 3.6%

D. 5.76%

The process of spreading your assets among several different types of investments to lessen risk is called A. Asset riskiness. B. Asset combination. C. Asset investments. D. Asset allocation. E. Asset returns.

D. Asset allocation

The potential return on any investment should A. Not have any relationship to the risk of any investment. B. Be inversely related to the risk of the investment. C. Be inversely related to the risk the investor assumes. D. Be directly related to the risk the investor assumes. E. Be guaranteed.

D. Be directly related to the risk the investor assumes

The problem of bankruptcy is associated with overuse and misuse of credit in the ________ component of financial planning A. sharing B. savings C. obtaining D. borrowing E. protecting

D. Borrowing

Which of the following risks deals with the possibility that bad management, unsuccessful products, or other factors will cause the business to be less profitable than originally anticipated? A. Market risk B. Inflation risk C. Stock risk D. Business failure risk E. Interest rate risk

D. Business failure risk

Which type of fund has the prices determined by factors of supply and demand like the prices of a stock? A. No-load fund B. SEC government fund C. Open-end fund D. Closed-end fund E. Net asset value fund

D. Closed-end fund

Intestate is A. The process of validating a will. B. The selection of a trust. C. A type of trust. D. Dying without a valid will. E. A written will.

D. Dying without a valid will

A joint account with Sara and John allows A. Only Sara to write checks. B. All of these. C. Sara or John to complete a signature card. D. John and Sara to both write checks on the account. E. Only John to write checks.

D. John and Sara to both write checks on the account

The amount you would have left if all assets were sold and all debts were paid in full is called your A. Total liabilities. B. Total income. C. Budgeted expenses. D. Net worth. E. Net assets.

D. Net worth

Which of the following expenses is NOT usually incurred by a tenant? A. Renter's insurance. B. None of these are incurred. C. Utilities (other than water). D. Property taxes. E. Security deposit.

D. Property taxes.

. A cash advance A. On some cards has a lower interest rate than on purchases B. Is a loan billed to your bank account. C. Involves a grace perod on most cards D. Requires you to pay interest every day until you repay the cash advance E. Is less expensive than charging a purchase to your credit card

D. Requires you to pay interest every day until you repay the cash advance

A standard measurement used to compare the prices of packages of different sizes is A. Coupons. B. Warranty. C. Rebates. D. Unit pricing. E. Open dating.

D. Unit pricing

The rule of 72 is: A. the number of steps required to complete a financial plan B. used to calculate interest rates for savings C. the legal code for requiring companies to provide a match on retirement savings D. used to estimate how fast prices will double using a given annual inflation rate E. A tool to determine the number of years until retirement for an employee

D. Used to estimate how fast prices will double using a given annual inflation rate

You may be required to make estimated tax payments if A. You do not have interest income from savings. B. You receive a paycheck with taxes withheld. C. You have no pension payments. D. You are an independent contractor. E. You have no royalties.

D. You are an independent contractor

Sam and Diane are completing their federal income taxes for the year and have identified the amounts listed here. How much can they rightfully deduct? • AGI: $80,000 • Medical and dental expenses: $9,000 • State income taxes: $3,500 • Mortgage interest: $9,500 • Charitable contributions: $1,000 A. $57,000. B. $14,000. C. $20,000. D. $23,000. E. $15,000.

E. 15000

If a $10,000 investment earns a 7% annual return, what should its value be after 6 years? A. $10,700 B. $10,000 C. $15,100 D. $15,000 E. $15,007

E. 15007

If you begin saving $2,000 a year at 5% (from age 22 to age 30 or 9 years), what will these funds grow to in this time period? A. $30,500 B. $2,000 C. $11,970 D. $18,000 E. $22,053

E. 22053

Given the information here, what should Jason's adjusted checkbook balance be? Bank balance: 600 Outstanding checks: 260 Deposit in transit: 100 ATM fees: 50 Interest earned: 10 Checkbook balance: 480 A. $113 B. $242 C. $171 D. $300 E. $221

E. 221

Evan had three accounts as listed below. In 2014, how much was his total insurance coverage by the FDIC? • Bank A: $150,000 • Bank B: $50,000 • Bank C: $350,000 A. $150,000 B. $200,000 C. $350,000 D. $550,000 E. $450,000

E. 450000

What is the APY for a one-year $4,000 certificate of deposit with $280 interest? A. 8% B. 5.8% C. 9% D. 11.2% E. 7%

E. 7%

Gwendolyn Francis is interested in buying a bond that pays $70 annually. The current price of the bond is $800. What is her current yield? A. 7% B. 8% C. 3.5% D. 4% E. 8.75%

E. 8.75%

The main purposes of personal financial statements are to A. Maintain information about your financial activities. B. Provide data for preparing tax forms or applying for credit. C. Measure your progress toward financial goals. D. Report your current financial position. E. All of the above are correct

E. All of the above are correct

The Equal Credit Opportunity Act (ECOA) prohibits a lender from discriminating based on A. Age. B. Nationality. C. Sex. D. Race. E. All of these are prohibited.

E. All of these are prohibited

A service contract A. Is included automatically with the purchase of a vehicle. B. Is better than an extended warranty. C. Is an agreement to cover repair during the implied warranty period. D. Usually does not cover the engine cooling system. E. Covers the repair costs of a product.

E. Covers the repair costs of a product

Which of the following is a profitability ratio that uses the number of outstanding shares in the calculation? A. Price per share B. Dividend yield C. Net income D. Capital gain E. Earnings per share

E. Earnings per share

Steve bought a laptop that was defective. This laptop will be fixed or replaced by the manufacturer as long as he returns it in a reasonable amount of time. What type of warranty does he have on his laptop? A. Implied warranty B. Limited warranty C. Express warranty D. "As-is" warranty E. Full warranty

E. Full warranty

Which of the following is correct about inflation? A. If you earn 5% and inflation is 10%, your buying power will increase. B. As the inflation rates increases, the interest rates offered to savers decrease. C. If inflation is 7% and your rate of return in your savings account is 4%, you will experience an overall gain in buying power. D. Inflation does not affect interest rates for savings accounts. E. In order to increase buying power, you need to earn a rate higher than the rate of inflation.

E. In order to increase buying power, you need to earn a rate higher than the rate of inflation

Patrick sold his GE shares using his online broker. One can say that he sold them A. At a Securities exchange. B. In the Primary market. C. At an Initial public offering. D. Through an Investment bank. E. In the Secondary market.

E. In the secondary market

Speculative investments include all of the following except A. Commodities. B. Options. C. Precious metals. D. Precious stones. E. Savings accounts.

E. Savings accounts

Which of the following ratios shows the relationship between gross income and money saved? A. Current ratio B. Liquidity ratio C. Debt payments ratio D. Debt ratio E. Savings ratio

E. Savings ratio

Perhaps the greatest disadvantage of using credit is A. The increased satisfaction during present and future income periods. B. The convenience offered instead of using cash. C. The float from using credit. D. The increase in total purchasing power. E. The temptation to overspend.

E. The temptation to overspend

Opportunity cost refers to A. Money needed for major consumer purchases. B. Current interest rates. C. Evaluating different alternatives for financial decisions. D. The amount paid for taxes when a purchase is made. E. The trade-off of a decision.

E. The trade-off of a decision

Patrick Guitman recently graduated from college with $20,000 in student loans and $5,000 in credit card debt. He usually makes minimum payments on his debt and he has been late with three payments in the last year. He wants to buy a new car but was told that his interest rate on a loan would be very high. What is the most likely reason this might be so? A. He already has a student loan outstanding B. Recent graduates are not allowed to have more than $25,000 in debt outstanding C. General interest rates are very low D. Interest rates must be tied to the CPI E. His credit rating is poor which results in a higher interest rate

E. his credit rating is poor which results in a higher interest rate