Finance Final

How much would you expect to have in 37 year(s) assuming you deposited $93,577 in an investment that will earn 7%. Round answer to the nearest penny.

1,143,849.51

If your friend will borrow $12,682 from you at a simple interest rate of 7% for 12 year(s) the interest he will owe is (Round to 2 Decimal Places):

10,652.88

How much will you need to invest today at an interest rate of 12% in order to have $21,520 at the end of 33 year(s). Round your answer to the nearest penny.

511.27

f your friend will invest $66,663 at an interest rate of 8% for 28 year(s) how much will she have when the investment matures. Round answer to the nearest penny.

575,108.79

f you borrow $16,841 at a simple interest rate of 13% for 19 year(s) the total amount you will owe is (round answer to 2 decimal places):

58,438.27

What is the value today of $85,765 that will be received at the end of 19 year(s) having earned an interest rate of 13% while invested? Round your answer to the nearest penny.

8,410.46

If interest rates in the overall economy increase, which of the following is most likely to be the market value of a $1,000 corporate bond with a fixed interest rate?

900

Which of the following presents a summary of income and outflows for a period of time?

A cash flow statement

What type of account would be considered the most liquid?

A checking account

Miranda Sellars pays off the balance on her credit card every month. What type of credit card user is she known as?

A convenience user

Martin Campbell wants to invest in mutual funds, but is also worried about diversification. Which fund would you recommend?

A fund of funds

What type of account would you expect to provide the poorest yield?

A passbook savings account

A loan based on the equity of the home that provides the homeowner with tax free income and which is paid back when the home is sold is:

A reverse mortgage

The use of legitimate methods to reduce one's taxes is tax ____________.

Avoidance

Savings compounded ____________ would have the highest effective yield.

Daily

Liabilities are amounts representing:

Debts

Paula Smith has been married for five years and plans on staying married. She wants to establish her own credit history. Which of the following is a step she should take?

Establish a separate credit card account in her own name.

A blue-chip stock is too speculative for most investors.

False

A general sales tax is also referred to as an excise tax.

False

A personal balance sheet reports your income and expenses.

False

At maturity, corporations must repay stockholders the money they invested in the company.

False

Corporate bonds are a form of equity financing that does not have to be repaid.

False

Opportunity costs are only associated with money management decisions involving long-term financial security.

False

Tax avoidance refers to illegal actions to reduce one's taxes.

False

The least expensive loans are available from finance companies and retailers.

False

There is no relationship between risk and safety.

False

The total dollar amount you pay to use credit is called the:

Finance Charge

Payments that do not vary from month to month are ____________ expenses.

Fixed

If your friend will invest $5000 at an interest rate of 10% for 8 years how much will she have when the investment matures?

Future Value

An individual retirement account is an example of a(n) ____________ asset.

Investment

Money received in the form of dividends or interest is ____________ income.

Investment

The amount of mortgage a person is eligible for would be increased by:

Lower interest rates

To calculate current yield, the annual income amount is divided by:

Market Value

A long-term investment objective is defined as one that will be accomplished within a period of?

More than five years.

To avoid high fees for loans, a person should not borrow from a:

Pawnshop

How much did your friend deposit in an investment earning an interest rate of 5% for five years if he will use the money for a $17,000 purchase in 6 years?

Present Value

When bonds are traded between investors, they are traded in the __________ market.

Secondary

How much was borrowed on a loan for 5 years that paid a total of $300 interest in annual equal increments at 20%?

Simple interest

Which of the following is not an advantage of a credit card?

The interest rate on credit cards can be higher than other sources of credit.

A budget is a specific plan of how a person or family will spend their money.

True

Asset allocation is the process of spreading your assets among several different types of investments to lessen risk.

True

Bondholders generally receive interest payments every six months.

True

Capital gains refer to profits from the sale of investments.

True

Credit unions frequently offer lower loan rates than other financial institutions.

True

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

True

During inflationary times, there is a risk that the financial return on an investment will not keep pace with the rate of inflation.

True

Higher returns on savings will usually result in less liquidity.

True

Investment growth means that investments will increase in value.

True

Liquidity is the ease with which an asset can be converted to cash without a substantial loss in dollar value.

True

Preferred stock is often referred to as a middle investment somewhere between common stock (an ownership position for the stockholder) and corporate bonds (a creditor position for the bondholder).

True

When one money management decision is made, an alternative must be given up.

True

You may be able to borrow at a lower interest rate if you accept a shorter-term loan.

True

Restrictions on how property in an area can be used are:

Zoning laws

The Hernandez family budgets $420 a month for food. Last month they spent $413, which creates

a budget surplus of $7.

Liquid assets refer to:

cash and other items that are easily converted to cash.

What is the number one reason for consumer default on loans?

excessive use of credit card and loss of income

Renting would be most appropriate for people who

have limited funds currently available

An advantage of U.S. savings bonds is:

interest earned is deferred for federal tax purposes.

Equity capital is money:

obtained from the owners of the business.

Which of the following investments offers the least amount of growth potential?

options

A cost associated with home buying would be:

property taxes