Finance

If you are concerned about year-end tax payments, you may increase the amount withheld from each paycheck.

True

Personal financial planning is the process of managing your money to achieve:

personal financial goals.

Direct materials are $15 per unit; direct labor is $7 per unit and variable overhead costs are $2 per unit. If total product costs are $27, what are fixed costs per unit?

$3

Paula invested $370. The interest earned is 4%, compounded annually. At the end of two years, Paula will have about:

$400.

If you deposit $500 per year in an account for nine years at 6%, how much will you have in the account?

$5,746

According to the text, why is goal setting an important aspect for personal financial growth?

Goal setting assists with the financial decision-making process.

As a general rule, it may be wise to refinance when the interest rates on mortgages drop at least 1 percentage point below your current mortgage rate.

True

Being aware of zoning laws and restrictions on how a property in an area can be used can be useful in making your real estate buying decision.

True

Even if you do not use a real estate agent to sell your home, you should use an attorney or title company to close the transaction.

True

Factors that impact the asking price for a home include recent asking prices of comparable homes in your area.

True

Liquidity is the ability to buy or sell an investment quickly without substantially affecting the investments value.

True

Making needed repairs, painting the interior and exterior of the home and cleaning all rooms are strategies that can lead to a fast and financially favorable sale.

True

Opportunity cost is what you give up by making a choice.

True

People who are financially able to buy a home may still choose to rent to avoid the time and money commitment required to maintain a house.

True

Order the steps, from first to last, to take before signing a rental lease.

Verify lease facts such as starting date and costs.Discuss unclear clauses with a lawyer.Note condition of rental unit (in writing).

If you spent considerable time shopping around to compare brands for a major purchase, this time would be considered:

an opportunity cost.

Most companies prepare a(n) ______ budget that is separated into ______ budgets.

annual; quarterly or monthly

A series of equal deposits or payments is called a(n):

annuity.

Common sources of down payment funds to purchase a home include:

assistance from relatives., the sale of investments., personal savings.

All of the following are guidelines that should be followed for budgets to be a positive motivating force

budgets should be prepared using a top-down approach

Financial planning would _____ improve your quality of life by:

creating specific rules for how everyone should live., guaranteeing happiness., creating barriers to enjoying life.

Investors that are interested in receiving potentially decent current income will probably invest in _____.

dividend-paying stocks

Like many financial decisions, when making a housing decision, you should consider what you give up in time, _____, and money as a result of the decision.

effort

Long-term financial security begins with a regular savings plan to provide for:

emergencies., unexpected bills., replacement of major items.

Consumer spending is an economic factor that can predict the following changes in the economy:

employment, wage levels, consumer prices, interest rates

Factors such as the appearance of the neighborhood, the quality of landscaping, the condition of the driveway, and the outdoor lighting are part of the _____.

exterior facilities

Personal preferences are the foundation of a housing decisions, but _____ factors will modify the final choice.

financial

Determining your current financial situation regarding income, savings, living expenses, and debts is the _____ step in the financial planning process.

first

An adjustable-rate mortgage is also referred to as a _____ mortgage.

flexible-rate

Characteristics of budgets include: (Check all that apply.)

formal statement of a company's plans., expressed in dollars., typically cover a month, quarter or one year.

Potential home owners without children should evaluate school systems of the municipalities where they might live because:

good schools translate to rising property values.

Examples of opportunity costs do _____ include:

having enough money to fund retirement and pay for current expenses.

Generally speaking, the _____ the credit score the _____ the mortgage rate.

higher; lower

As a home owner versus a renter, you must be prepared to pay additional costs of home ownership, such as _____.

home improvements, maintenance, real estate taxes

Future value computations are often referred to as _____, as _____.

interest is earned on previously earned interest

Investing in financial instruments for long-term growth is a _____ financial strategy.

long-term

Investors who are interested in receiving an income stream will probably not invest much of their money in _____.

money market accounts paying next to nothing in interest, high-growth mutual funds, high-growth stocks that pay no dividends

An old adage that the three most important factors to consider when buying a home are location, location, and location means that the _____ plays an important part in determining market value. (Enter one word per blank.)

neighborhood

Examples of opportunity costs include:

not having as much money in savings because you purchased new appliances to save energy costs., taking home less pay now because you have increased tax withholdings to receive a larger tax refund., not getting a high yield because you have set aside funds in a low-risk investment.

A working mother of two children decides she wants to work less so she can spend more time with her children. This is an example of a(n):

opportunity cost.

An adjustable-rate mortgage usually has a rate cap and a _____ cap.

payment

Once you have determined what you can afford for a down payment, you should investigate mortgage _____ and apply for a loan.

rates

A number of factors can impact the amount you can spend on a home including current mortgage _____, the size of the down _____ you can make, and your income.

rates, payment

Many states require that your security deposit be returned within a _____ time.

reasonable

Approximately 35 percent of U.S. households live in _____.

rental units

One of the methods used to calculate future value is:

spreadsheet software.

A person that adheres to the same principles in all situations has:

strong values.

One of the reasons why renting offers fewer financial benefits than home ownership is that rent is not _____ deductible, while the interest on mortgage payments is.

tax

Despite the fact that conventional mortgages offer fixed payments, some borrowers will select an adjustable rate mortgage over a conventional mortgage because:

the adjustable rate mortgage has lower initial payments.

In order to qualify for a reverse mortgage, you must be at least age _____.

62

Paul needs to have $200 in two years. The interest earned on the account is 4%, compounded annually. How much does he need to invest today?

$185

Phillip has an investment of $200 that is expected to earn 10% annually. How much will the investment be worth at the end of the _____ year if the investment earns simple interest annually?

$240

If you deposit $500 per year in an account for six years at 9%, how much will you have in the account? Use the appropriate table in the appendix at the back of the chapter for the future value of an annuity. Round your answer to the nearest whole dollar amount.

$3,762

If direct materials per unit are $20, direct labor per unit is $10, variable overhead per unit is $2, and fixed overhead per unit is $1, total product cost per unit is $_____.

$33

Paula needs to have $400 in three years. The interest earned on the account is 6%, compounded annually. How much does she need to invest today? Use the appropriate table in the appendix to the chapter for the present value of $1 at the end of a given number of time periods.

$336

Private mortgage insurance (PMI) is required when the down payment is less than:

20%

According to the text, what are the benefits for most people to organizing their personal finances? (Select all that apply.)

A person can gain personal and financial satisfaction., A person can take control of his/her financial situation.

Place, in the order of occurrence, the following steps of a mortgage loan application process. Place the first step at the top.

Complete the mortgage application.Meet with lender, present evidence of job and income.Lender gets credit report, confirms financial aspects.Mortgage is approved or denied.

Housing starts are an economic factor that can predict the following changes in the economy:

Economic expansion, Employment, Consumer spending, Wage levels

Budgeted performance considers all of the following in relation to a benchmark: (Select all that apply).

Economic factors, Company factors, Industry factors

Home equity loan interest is only tax deductible as long as the proceeds are spent on education with the risk being that a default on the equity loan could mean foreclosure.

False

Bill recently created his financial plan after much thought and decision-making. He implemented his plan, and so far the plan is working. What must Bill do now?

He must maintain his financial plan. He must continue to review and revise his plan.

How could the tax benefit and risk of a home equity loan best be described?

Interest is tax deductible, but default could mean you lose the home.

List the individual budgets of the master budget in the order in which they are prepared, with the first on top.

Sales budgetProduction budgetDirect materials, Direct labor and Factory Overhead budgetsCash budgets

If you make an offer on a home, a counteroffer indicates:

a willingness to negotiate a price settlement.

Personal opportunity costs include using your time, in addition to or in place of money, to

achieve your goals., meet your needs., satisfy your personal values.

A(n) _____ is a formal statement of a company's plans in dollars.

budget

Payments of anywhere from 10 to 30 years are _____ for mortgages.

common

Financial planning is designed to:

create a better life.

Another name used for calculating the present value is _____.

discounting

Having a place to call your own, the stability of a residence and a personalized living space all contribute to a feeling known as _____ of ownership.

pride

In order to evaluate risk, people need:

reliable information.

Factors such as the size and arrangement of rooms, layout of kitchen, and the location of bedrooms, closets, and storage space should be considered when inspecting _____ of a home.

the interior design

Budgeting guidelines that help insure budgeting is a positive motivating force include: (Check all that apply.)

the opportunity to explain differences between actual and budgeted amounts., participatory budgeting., attainable goals.

An important personal opportunity cost involves the resources of money or _____.

time

Every time you save or spend you should consider the _____.

time value of money

An important security measure to take when selling your own home is to show the home when _____ or more adults are at home.

two

Just before closing on a house, you often do a _____ before accepting the property.

walk-through

For many apartments, one utility bill is included in the rent. Which one is it?

water

According to your text, when there are influences on personal financial planning, what three elements should be assessed?

your life situation, personal values, and economic factors