CSR 34200 Quiz 1

Chris's bank statement says that the account balance is $900 and he wants to reconcile this with his own records. Since the statement closing date, he has written a check for $250 and made a deposit of $120. What is Chris's running balance? $650 $770 $1030 $780

$770

You created a budget for this year assuming that your variable expenses will be 4.00% higher than they were last year. If it turns out that inflation is actually 5.00% for the year, how much budget variance per month will this cause if your monthly variable expenses averaged $1600 per month last year? +$16 -$64 +$80 -$16

+$16 (plus = over budget)

An account that pays a nominal rate of 15% and compounds monthly will have an APY of 16.06%. 16.04%. 16.07%. 16.08%.

16.08%.

Sammy is evaluating a cash management account that is advertised at 23% and pays monthly interest. What is the annual percentage yield (APY)? 25.59% 28.18% 23.00% 22.77%

25.59%

Your bank pays a nominal rate of 4.80% interest on a savings account. If the interest is compounded daily (365 days), what is the annual percentage yield (APY) of this account? 4.96% 4.80% 5.20% 4.92%

4.92%

Calista has saved $20,000, which she plans to use for a down payment on a home within the next year. She would like to earn interest on her savings and she is concerned about the safety of her money. She is considering the following options. Which option would you recommend for Calista? A five-year certificate of deposit earning 2.15% A money market deposit account earning 1.11% A money market mutual fund earning 1.7% A series I savings bond that pays 1.5% above inflation

A money market deposit account earning 1.11%

Which of the following statements is true? a. Most people need and can afford a financial planner. b. A person with little accumulated wealth and relatively uncomplicated taxes would likely benefit from a financial planner c. Wealthy people need to have a financial planner to manage their finances d. You can choose to hire a financial professional just for special needs, such as drawing up legal documents or filing taxes

D. You can choose to hire a financial professional just for special needs, such as drawing up legal documents or filing taxes

Naomi is in the implementation stage of budgeting. She needs to reduce expenses by $100 so that her forecasted expenses do not exceed forecasted income. Of the following expenses, which is the easiest to reduce, assuming an individual has all of the categories in their budget? Entertainment Groceries Student loan payment Rent payment

Entertainment

Which is not a valid budget solution to buying stuff that you don't need? Stick to a budget Find lower interest credit cards Leave credit cards at home Stick to a "need" list

Find lower interest credit cards

Which of the following budget categories is a variable expense? Health club dues Mortgage payment Car loan payment Food costs

Food costs

Marie is estimating how much she will earn next year after she gets an anticipated raise. Which step in the budgeting process is she working on? Monitoring Reevaluating Forecasting Implementing

Forecasting

Janice's monthly expenses are $6,000, and she has $10,000 in checking and savings. Which of the following is true about her financial situation? Janice needs to try to reduce her spending. Janice needs to increase her emergency fund. Janice has too much in liquid assets. Janice should consider investing her $10,000 in a stock mutual fund to generate higher returns on her investment.

Janice needs to increase her emergency fund.

Of the following, which is not a depository institution? (Select any 2) Commercial bank Life insurance company Online bank Credit union Savings and loan association Mutual fund company

Life insurance company Mutual fund company

Which of the following budget categories is a fixed expense? Entertainment Mortgage payment Transportation Utilities

Mortgage payment

Which of the following is a fixed expense? (Select any three.) Entertainment Groceries Clothing Mortgage payment Car loan payment Health club dues Uninsured medical expenses

Mortgage payment Car loan payment Health club dues

You live in a college town and notice that a local financial institution is advertising "free checking" for students. After calling the bank, you find that the $10 per month service charge is waived as long as the account balance stays above $200 during the month. In addition, the number of checks is limited to 20 per month. Is this really a "free account"?

No

If your projected net cash flow is negative, which of the following should you do first? Save more so that you can build up your emergency fund. Apply for another credit card with a high credit limit. Make sure you have a large enough credit line to make up the difference. Take steps to reduce your discretionary spending or increase your cash inflows.

Take steps to reduce your discretionary spending or increase your cash inflows.

For a typical family, which of the following categories of regular expenses usually increases with inflation? (select 2) a. Food b. Mortgage payments c. Transportation d. Student Loan Payments

a. Food c. Transportation

Which is NOT a benefit of hiring a professional financial planner? a. Hiring a professional shortens the planning process by reducing the client involvement on goals, strategy development, and decision making b. Advice given by the planner may result in increasing investment earnings c. Advice given by the planner may result in reduced taxes d. Hiring a professional reduces the time and effort required to stay informed about financial matters such as investments, taxes, and insurance

a. Hiring a professional shortens the planning process by reducing the client involvement on goals, strategy development, and decision making

Which is not a necessary activity in establishing a firm foundation a. Protecting income and wealth from losses b. Acquiring necessary decision-making skills and tools c. Understanding the personal financial planning process d. Setting short-term and long-term goals

a. Protecting income and wealth from losses

Liquid assets are a. cash or near-cash assets that can be easily converted to cash without loss of value b. assets you can easily sell c. assets related to water and mineral rights d. assets that are used for investment purposes

a. cash or near-cash assets that can be easily converted to cash without loss of value

Which of the following factors should be considered in selecting a professional to help you with your personal finances? (select 3) a. education b. certifications c. fee structure d. personality e. location f. gender

a. education b. certifications c. fee structure

The Rule of 72 is used to a. estimate how long an investment will take to double in value at a given rate of interest b. estimate annual percentage yield of an investment c. calculate the amount of liquid assets to hold for emergencies d. calculate the interest rate required to double the value of an investment

a. estimate how long an investment will take to double in value at a given rate of interest

For an account that compounds interest more often than once per year, that annual percentage yield will be a. greater than the stated nominal yield b. either greater than or less than the statead nominal yield, depending on the current interest rate environment c. less than the stated nominal yield d. equal to the stated nominal yield

a. greater than the stated nominal yield

Which of the following is an asset? (select 2) a. house b. student loan c. jewelry d. unpaid bill

a. house c. jewelry

When you make decisions based on the additional benefit that will result, as compared with your current situation, rather than the total benefit, you are applying a. marginal reasoning b. opportunity costs c. sensitivity analysis d. rate of return

a. marginal reasoning

Young, single people with no children tend to take a. more risks than older, married people with children. b. less risks than older, married people with children c. the same risks as older, married people with children d. the same risks as married people with children

a. more risks than older, married people with children

A professional who has a CFP designation has a. passed a comprehensive examination covering all the topics considered necessary in the practice of financial planning, has at least three years' work experience in the field, and must adhere to a rigorous code of ethics and fulfill regular continuing education requirements b. passed a comprehensive examination covering all the topics considered necessary in the practice of financial planning c. has at least three years' work experience in the field d. passed a comprehensive examination covering all the topics considered necessary in the practice of financial planning and must adhere to a rigorous code of ethics and fulfill regular continuing education requirements

a. passed a comprehensive examination covering all the topics considered necessary in the practice of financial planning, has at least three years' work experience in the field, and must adhere to a rigorous code of ethics and fulfill regular continuing education requirements

A personal cash flow statement a. shows income and expenditures over a period of time b. shows income and expenditures at one specific point in time c. is necessary for calculating one's net worth d. uses the same information needed for the personal balance sheet

a. shows income and expenditures over a period of time

The savings ratio is a financial ratio that measures the percentage of a person's _ that is allocated to savings

after-tax income

If the reason you're exceeding your budget is that you're failing to control your discretionary spending in certain areas, you should evaluate your progress toward meeting your goals all these should be done weigh the benefits and costs of the purchases that are interfering with your plan take the time to review your financial goals

all these should be done

Credit unions are a unique type of depository institution because credit unions are insured by FDIC. are primarily mortgage lenders. tend to charge higher fees than commercial banks. are nonprofit.

are nonprofit.

In which step of the financial planning process will you work on creating your own personal financial statements? a. Organize your financial information and set goals b. Analyze your current financial status. c. Identify and evaluate alternative strategies for achieving your goals d. Implemenet your financial plan

b. Analyze your current financial status

Which of the following is not a reason people avoid financial planning? a. They arent interested b. They fear having too much money c. They are too busy d. They are overwhelmed with the quanitity of information and dont know where to start

b. They fear having too much money

An annuity is a series of _ payments made at _, for a period of time a. decreasing; regular intervals b. equal; regular intervals c. increasing; regular intervals d. equal; monthly intervals

b. equal; regular intervals

Borrowing at _ is a major reason for the _ standard of living in the US a. low interest rates; declining b. low interest rates; rising c. high interest rates; declining d. high interest rates; rising

b. low interest rates; rising

Which of the following is a nondepository institution? (select 2) a. savings and loan b. online payment processor c. mutual fund company d. local bank

b. online payment processor c. mutual fund company

Suppose that you choose to spend (x) on vacation, taking it out of your savings account. The reduction in your savings and the lost interest that you could have earned on the money are examples of a. marginal reasoning b. opportunity costs c. sensitivity analysis d. rate of return

b. opportunity costs

When the consumer price index (CPI) increases a. you can buy goods and services cheaper b. the prices of goods and services are more expensive c. the value of the dollar is high d. you will earn less on your investments

b. the prices of goods and services are more expensive

Which of the following is an asset? a. Home mortgage b. Student loans c. Automobile d. Credit card balance

c. Automobile

An effective financial plan must be adaptable to changing circumstances. Which would not be a reason to take you back to Step 1 of the financial planning process? a. Changes in economic conditions b. Birth of a child c. Purchase of life insurance d. marriage

c. Purchase of life insurance

You are a senior in high school, and you set a financial goal to "become a millionaire by age 30" This goal would not meet the SMART requirements because it is not (select 2) a. specific b. measurable c. attainable d. realistic e. time-specific

c. attainable d. realistic

_ a budget is the process of adjusting the budget for unexpected expenditures a. replacing b. reconciling c. revising d. revoking

c. revising

Manuel's monthly expenses are $2,500 per month, and his income is enough to cover his expenses each month. He has accumulated another $2,500 in his savings account. He has no other savings or investments. His ________ is low, and he needs to ___________. income; increase his investments savings; increase his investments cash reserve; increase his emergency fund liquidity; increase his emergency fund

cash reserve; increase his emergency fund

Critical to the success of building a comprehensive financial plan is that you approach its creation in a locial order. The steps, in the correct order, are as follows: a. secure basic needs, build and protect wealth, and establish a firm foundation b. secure basic needs, establish a firm foundation, and build and protect wealth c. Build and protect wealth, establish a firm foundation, and secure basic needs d. Establish a firm foundation, secure basic needs, and build and protect wealth.

d. Establish a firm foundation, secure basic needs, and build and protect wealth.

Andre graduated from college this year and obtained a well-paid job with a large accounting firm. Andre has developed the following goal: "save for retirement." This goal meets which criterial of the SMART goal model? a. Specific b. Measurable c. Time-specific d. None

d. None

Personal financial is a specialized area of study that focuses on individual and household financial decisions, such as a. budgeting, saving, and spending b. insurance and investments c. tax and retirement planning d. all of above

d. all of above

In order to determine how much, you would need to save annually to finance your child's college education in 10 years, you would use the a. present value of an annuity b. present value of a lumpsum c. future value of a lumpsum d. future value of an annuity

d. future value of an annuity

Which is not a necessary activity in securing your basic needs? a. making purchase and credit decisions b. managing cash for liquidity and emergencies c. selecting financial institutions for checking and savings accounts d. investing to achieve long-term goals

d. investing to achieve long-term goals

Because the present value will always be _ than its future value, we often use the word _ to describe the process of calculating the present value a. less; compounding b. more, compounding c. more, discounting d. less, discounting

d. less, discounting

Rosa graduated at the top of her high school class, and has set the following goal as part of her financial plan: "graduate from college with a B.S. in Business Management." Which aspect of the SMART goal model is missing from her goal? a. the goal is not specific b. the goal is not measureable c. the goal is not attainable d. the goal is not time-specific

d. the goal is not time-specific

Below are common reason that people tend to avoid financial planning except for: a. they lack confidence in their math and finance skills b. they expect someone else to take care of it. c. they are too busy d. they don't think it is important

d. they dont think it is important

Financial planners must have a a. college degree with an emphasis or major in business b college degree and two years of experience in finance c. securities license from the state of federal government d. willingness to provide financial advice

d. willingness to provide financial advice

Which of the following information is included on a household's personal balance sheet? (select 2) a. household expenses b. household budget c. the total annual debt payments d. household income e. the total annual earnings f. the amount of all debts owed to others g. the value of everything that the household owns

f. the amount of all debts owed to others g. the value of everything that the household owns

In a committed relationship, when one partner hides purchases from the other partner, or makes a major purchase without consulting the partner, it is called financial disregard financial disrespect financial hardship financial infidelity

financial infidelity

If a cash management account has limitations on how often you can make withdrawals, then it limits your

liquidity

Typically, ______ the risk of an investment and _________ the risk of the institution, the ________ interest is paid on the investment. higher; lower; lower lower; lower; higher lower; higher; lower lower; lower; lower

lower; lower; lower

Binh wants to earn interest on his savings account, and he is concerned about fees diluting his earnings. Of the four Ps, Binh is most concerned about products. price. people. place.

price.

A money market mutual fund is a mutual fund that invests in short-term debt securities issued by the federal government, federal agencies, and large public corporations. investment-quality corporate bonds. stocks of the 500 largest companies in the United States. long-term certificates of deposit.

short-term debt securities issued by the federal government, federal agencies, and large public corporations.

With respect to SMART guidelines for setting goals, the "S" stands for the goals that are

specific