ECO-3041 Calhoun Final

For your graduate degree, where you earn the degree is not as important as the degree itself.

False

Forecasting for more than a month at a time is not helpful because you can't plan for unexpected expenses in the future.

False

Income earned from the sale of an asset for more than you paid for it is classified as an income gain.

False

Nine out of ten millionaires are college graduates.

False

Since rates and fees differ only slightly between all national banks, there is little need to consider these when choosing your financial institution.

False

The Fed conducts expansionary monetary policy by buying bonds and decreasing the money supply.

False

The larger the number of payments in an annuity used in determining a future value, the smaller the future value at the end of the period.

False

The simple interest rate includes any fees charged by the creditor.

False

You should invest in risky investments instead of paying off your credit card debt because the return might be higher than the cost of financing.

False

Your financial plan should include a plan for protecting your assets and income through insurance coverage.

True

You want to know how much you need to save today to have $5,000 in five years. Which of the following calculations should you complete? Present value of a single amount. Present value of an ordinary annuity. Future value of a single amount. Future value of an ordinary annuity.

Present value of a single amount.

Which of the following describes the opportunity cost of attending an economics class? The value of the time it takes to get to campus every day. The cost of the gasoline needed to drive a car to campus. The value of the highest valued alternative that must be forgone because of attending the class. Transportation costs plus the cost of tuition and textbooks for the course.

The value of the highest valued alternative that must be forgone because of attending the class.

Compared to indemnity plans, managed health care plans impose more restrictions on the specific health care providers.

True

Credit should be used only when necessary, since it usually involves borrowed funds that you will need to pay back with interest.

True

Different tax rates are associated with each filing status such as single, married filing jointly, and head of household.

True

Federal direct unsubsidized student loans are made to eligible undergraduate, graduate, and professional students, but eligibility is not based on financial need.

True

Health insurance protects net worth by minimizing the chance that you will have to reduce savings or incur debt when you require medical attention.

True

If you find that you will not be able to make credit payments on time, the best course of action is to immediately notify the creditor.

True

If your calculated tax is less than your withholding tax, you will receive a tax refund.

True

Insurance can protect your existing net worth and also increase the likelihood that you will be able to increase your net worth in the future.

True

Interest paid on student loans is adjusted from gross income to calculate a taxpayer's adjusted gross income.

True

Nondepository institutions are financial institutions that provide various financial services, but their deposits are not federally insured.

True

One advantage of budgeting several months in advance is that you will be warned of potential deficiencies and can determine how to cover them.

True

One method of managing risk is to limit your exposure to a financial loss.

True

One of the six components of your financial plan should be managing your liquidity.

True

Taxpayers can have more than the minimum amount of required income tax withheld from each pay.

True

Term insurance will provide most of a young family's life insurance coverage due to its affordable cost.

True

The federal income tax is part of Article I in the U.S. Constitution.

True

The present value becomes lower as the number of years increases.

True

When calculating how much of a healthcare bill you need to pay, the deductible is always applied first.

True

You should claim the standard deduction if: itemized deductions exceed the standard deduction. the standard deduction exceeds itemized deductions. itemized deductions exceed exemptions. itemized deductions exceed tax credits.

the standard deduction exceeds itemized deductions.

After your financial plan is developed it should be: locked in a safe for keeping so it isn't stolen reviewed every 5 years monitored and updated annually sold to others

monitored and updated annually.

The time value of money implies that a dollar received today is worth ________ a dollar received tomorrow.

more than

The larger the amount used in determining a future value,: the smaller the future value at the end of the period. the greater the future value at the end of the period. the smaller the present value at the beginning of the period. none of these—the amount has no effect on the future value.

the greater the future value at the end of the period.

It is a good practice to review your credit card statement online as often as daily or weekly in order to: make sure there are no fraudulent charges. make sure there are no duplicate or erroneous charges from merchants. monitor your spending patterns. A, B and C are all correct.

A, B and C are all correct.

Term life insurance is: often available in group policies through employers. less expensive when you renew it. pure insurance with no savings feature. Both A and C are correct

Both A and C are correct

Which of the following is not one of the three primary credit bureaus? Equifax Experian TransUnion Fair Isaac Corporation

Fair Isaac Corporation

A good strategy to avoid identity theft is to carry all important financial documents with you to prevent them from being stolen at home.

False

All reportable income from any source is called earned income.

False

An annuity is a stream of equal payments that are received or paid at random periods of time.

False

Because interest is usually tax deductible and payments are deferred until you graduate, it is good advice to take out the maximum student loan for which you can qualify.

False

Which of the following statements about student loans is not true? If you don't complete your education, you will not have to pay back your student loan. A school's financial aid office is a good source of information on student loans. Both the federal government and private financial institutions offer student loans. Interest is often deferred and there can be tax savings on the interest paid on student loans.

If you don't complete your education, you will not have to pay back your student loan.

The highest tax rate a taxpayer is charged on his or her federal tax return is called the ________ rate.

Marginal

You are opening a new savings account today that returns 3% annual interest and want it to grow to $500 in 2 years. What is the missing variable you need to solve this problem? Present value Future value Interest rate Payment

Payment

You want to know how much you need to save every year to amass $15,000 in five years at a 5% interest rate. What are you calculating? Future value Present value Payment Interest rate

Payment

What is the core purpose of buying insurance? Protect your wealth and assets. Make sure you make money on any claim. Insurance is an expense a careful investor needs to minimize. Make sure you leave an estate when you are gone.

Protect your wealth and assets.

A dollar's worth of tax credits is more valuable than a dollar's worth of deductions.

True

A good strategy to prevent identity theft is to close browser tabs after visiting financial web sites.

True

A person with a college degree is likely to earn over $1 million more in lifetime earnings than a person with only a high school degree.

True

A person's need for life insurance varies quite a bit over his or her lifetime.

True

Which of the following decisions would require calculating the future value of an ordinary annuity? Your cousin buys your car and offers to pay you $1,500 now or $3,000 in three years. You win the lottery and are offered a lump-sum payment today of $100,000 or $15,000 a year for 10 years. Your grandparents wish to deposit enough money on the date of your college graduation to enable you to take a $6,000 vacation 5 years after college. You want to have $1,000,000 in order to retire at age 70, but need to know how much you will need to deposit each year from now until your 70th birthday.

You want to have $1,000,000 in order to retire at age 70, but need to know how much you will need to deposit each year from now until your 70th birthday.

The concept of time value of money is important to financial decision making because: it emphasizes earning a return of interest on the money you invested. it recognizes that $1 today has more value than $1 received a year from now. it can be applied to future cash flows in order to compare different streams of income. all of these

all of these

Present and future values concepts are applied in all of the following decisions except: purchase of a home. calculation of withdrawals needed during retirement. calculation of savings for a large purchase. annual cash inflows.

annual cash inflows

The opportunity cost of an activity depends on the individual's subjective values and opinions. is the same for everyone. must be calculated and known before undertaking that activity. is irrelevant to decision making. is not influenced by time costs.

depends on the individual's subjective values and opinions

Financial institutions that accept deposits (that are insured up to a maximum level) from individuals and provide loans are called: finance companies. depository institutions. investment companies. nondepository institutions.

depository institutions.

Going through documents discarded by your bank to obtain information in order to access your bank account is an example of: shoulder surfing. dumpster diving. pretexting. skimming.

dumpster diving.

When interest rates rise, individuals who make deposits will earn a ________ rate of interest, while individuals who need to borrow funds will have to pay a ________ rate.

higher; higher

As the interest rate decreases, the present value of the amount

increases

The cost of health care has risen dramatically in recent years due to all of the following, except: people living longer and requiring attention for longer periods of time. the high cost of technology in health care. reduced litigation costs. the bureaucratic processes of reimbursement and claim handling.

reduced litigation costs.

If a stock was purchased for $5,000 in January 2015 and is sold in December 2015 for $3,000, a ________ of $2,000 results. long-term capital gain short-term capital gain long-term capital loss short-term capital loss

short-term capital loss