FIN 2100 Chapter 3 Additional Questions

Phoebe has determined the following information about her own financial situation. Her checking account is worth $850 and her savings account is worth $1,200. She owns her own home that has a market value of $98,000. She has furniture and appliances worth $12,000 and a home computer and laptop worth $3,300. She has a car worth $12,500. She has recently purchased a 2 year certificate of deposit worth $5,500 and she has a retirement account worth $38,550. What is the value of her liquid assets? A. $2,050 B. $98,000 C. $27,800 D. $44,050 E. $171,900

A. $2,050

The Lopez family budgets $420 a month for food. Last month they spent $413, which creates A. a budget surplus of $7 B. a budget deficit of $7 C. a budget surplus of $420 D. a budget deficit of $413 E. a balanced budget

A. a budget surplus of $7

A budget deficit would result when a person's or family's A. actual expenses are less than planned expenses B. actual expenses are greater than planned expenses C. actual expenses equal planned expenses D. assets exceed liabilities E. net worth decreases

B. actual expenses are greater than planned expenses

Monica has determined that the value of her liquid assets is $4,500, the value of her real estate is $128,000, the value of her personal possessions is $62,000 and the value of her investment assets is $73,000. She has also determined the value of her current liabilities is $7,500 and the value of her long term liabilities is $98,000. What is Monica's net worth? A. $267,500 B. $105,500 C. $162,000 D. $205,500 E. $132,000

C. $162,000

Assume the following as monthly amounts: Gross Salary: $4,000 Take Home Pay: $2,600 Savings: $450 Credit Card Payments: $500 What would be your savings ratio? A. 10% B. 12% C. 11.25% D. 12.5%

C. 11.25%

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

D. Assets $40,000; liabilities $45,000

Current liabilities differ from long-term liabilities based on: A. the amount owed B. the financial situation of the creditor C. the interest rate charged D. when the debt is due E. current economic conditions

D. when the debt is due

A savings amount of $5,000 on deposit for 8 years at 4 percent interest (compounded annually) would earn about ______ in interest A. $ 200 B. $ 850 C. $1,370 D. $1,600 E. $1,840

E. $1,840

If expenses for a month are greater than income, an increase in net worth will result.

False

Current liabilities are amounts that must be paid within a short period of time, usually less than a year

True