Personal Finance

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what is your fico payment history weighted at

35%

) What does money management affect? A. Liquidity B. Long term investments C. A and B D. None of the above

A

Identify a factor that does not affect cash inflows. A. The interest rate of student loans .B. The stage in your career path C.Your job skills D. Income

A

What is money management? Choose the best fit A. A series of decisions made over a short-term period regarding cash inflows and cash outflows* B. A series of decisions made over a long-term period regarding cash inflows and cash outflows C. A series of decisions made over a short-term period regarding credit inflows and credit outflows D. A series of decisions made over a long-term period regarding credit inflows and credit outflows

A

How is taxable income calculated

Adjusted gross income - deductions - exemptions

How to find how much a tax deduction will reduce taxes

Amount Taxes will be Reduced = Additional Tax Deduction x Marginal Tax Rate

How do utilities extend credit a; lending money to customers upon application and review of application. B. providing a service and billing at the end of the period. .C. accepting credit cards. D. helping borrowers negotiate with financial institutions.

B

The values of assets decline during a weak economy​ because: ​(Select the best answer​ below.) A. consumer demand is low under these conditions and this tends to result in lower prices. For​ example, the demand for homes increases when demand is​ low, causing sellers of homes to reduce their prices in order to entice potential buyers. B. consumer demand is low under these conditions and this tends to result in lower prices. For​ example, the demand for homes declines when demand is​ low, causing sellers of homes to reduce their prices in order to entice potential buyers. C. consumer demand is high under these conditions and this tends to result in lower prices. For​ example, the demand for homes declines when demand is​ high, causing sellers of homes to reduce their prices in order to entice potential buyers. D. consumer demand is low under these conditions and this tends to result in higher prices. For​ example, the demand for homes declines when demand is​ low, causing sellers of homes to increase their prices in order to entice potential buyers.

B

Using credit​ cards: A. can create the illusion of zero cost and ultimately result in lower levels of spending. B. can create the illusion of zero cost and ultimately result in higher levels of spending. C. allows you to spend an unlimited amount of money you​ don't have and bill your parents. D.can create the illusion of high cost and ultimately result in lower levels of spending.

B

Borrowing vs. Converting net worth to cash

Borrwing will impact net worth and cash flow converting net worth to cash will avoid any impact on cash flow

Six key components of a financial plan

Budgeting Managing Liquidity financing large purchases protecting asssets investing planning retirement

What is the definition of credit risk? A. The risk that the value of an investment could decline as a result of a change in interest rates B. The potential loss that could occur as a result of converting an investment into cash C. Risk that a borrower may not repay on a timely basis * D. None of the above

C

What might be one of the opportunity costs of spending​ $10 per week on the​ lottery A) The lottery winnings. B.The expected winnings. C.Reducing debt by an additional $ 40 per month D.The time spent buying the ticket.

C

Net cash flow is what

Cash inflow - Outflow

actors should you consider in determining your​ allocation in MMF?

Cash​ flows, timing of cash​ needs, and risk tolerance

Which type of account is the most liquid? A. Checking Account * B. Money Market Deposit Account C. Savings Account

Checking account

Which assets/accounts can be sold on a secondary market? A. Savings accounts? B. Now accounts? C. Checking accounts? D. Money market funds?

D

what are current liabilities A. equal to current assets B. debt that will take longer than a year to pay off C.debt that you will pay off within a month D.debt that you will pay off within a year

D

What does FICA stand for and who pays​ FICA?

Federal Insurance Contributions Act and these taxes are paid equally by the employer and the employee.

types of NON depository institutes

Finance comp. Securities comp. Insurance companies Mutual funds

Annual savings

Find annual cash inflow and subtract annual cash outflow

HIGHER LIQUIDITY USUALL MEANS WHAT

LOWER RETURN

How do you find liquidity ratio?

Liquid assets / Current liabilities IF > 1.00 you can cover short term deff. If less, you cannot

what are liquid assets

Liquid assets include​ cash, checking​ accounts, and savings accounts

Long term vs short term cap. gain tax

Long term taxed at 15% short term cap. gain taxed as ordinary income.

Five filing statuses are

Married filing separately Married filing jointly single Head of house (single w/ dependent) Widow

What two factors are considered in managing​ liquidity

Money management and credit management

Anna has just received a gift of ​450 for her​ graduation, which increased her net worth by ​$450 If she uses the money to purchase a tablet​ computer, how will her net worth be​ affected?

Net worth will not be affected because she is exchanging one asset for another

How does your choice of career impact your financial​ plan?

Since one of the primary determinants of your financial plan is income, it is extremely important to select a career that should generate enough income in order to achieve your goals

Two portions of the fica are

Social Security​ taxes, which are used to make payments to​ retirees, and Medicare​ taxes, which are used to provide payments to health care providers in the case of illness.

Itemized deductions are

Specific expenses deducted from taxable income ***itemized deductions may exceed standard ded. examples: charitable gifts, medical expenses

Which Account gives the highest returns out of the given? A. NOW Account B. T-Bills C. Money Market Funds D. Savings Account

T-Bills

What does tax filing status effect

Tax rates and standard deductions

What is net worth

The difference between assets ( what you​ own, including cash and physical​ assets) minus liabilities​ (what you​ owe, including loans and credit card​ debt).

Debt to Asset ratio

Total Liabilites / Total assets x 100

Cash inflows are moneys paid as

Wages and Interst

HMO vs PPO you should ask about what

any out of network benefits

Medical deduction

can claim med. ded. if expenses are more than 10% of adjusted gross income

Three major credit beauros

equifax,experian, trans union equeer expeer, trans

The personal cash flow statement determines the amount​ of

excess or deficient funds a person will have at the end of a period.

what is a standard deduction

fixed amount deducted from adjusted gross income to determine taxable income

indemnity health care plans do what

have a coinsurance provision in which the insurance company pays a percentage of the bill

Liquidity means

having sufficient funds to cover​ short-term cash deficiencies.

Risk premium

higher return - lower return

what does money management deal with

how much money to keep liquid vs how much to invest

what can lower car insurance pre.

lower repair costs

what should you consider when det. affordable down payment

market value of your assets

Long term Liabilities

more than a year to pay off (mortgage, car loan, student loans)

How to find investment gain

original investment + gain or interest

Per diem agreement for health care

paid per day of hospitalization

Fico based on waht

payment history and levels of debt

standaard home owners insurance covers

personal assets such as furniture and​ computers, up to​ one-half of the coverage of the dwelling.

what do premiums reflect

probability and size of a claim

Umbrella personal liability coverage provides whatq

provides additional liability coverage to auto and​ homeowner's insurance policies. becomes effective when auto homeowner ins. is exhausted

Two factors affecting return are

risk tolerance and the risk free rate

How to find savings rate

savings / disposable income x 100

Three types of depository instutions

savings institutitions: provide mortg. & personal loans to individuals commercial banks: checking/saving accounts to both commercial and personal client credit unions: non profit/ provide loans to their members

Its sees taxable gross income as any income from sources including:

scholarships that exceed tuition fees and book costs, income from rental property and prizes and awards

Monetary policy is

the act of controlling money supply ex. Fed reserve

the first step in risk management is

to decide wether or not to protect against risk

what is the role of an insurance underwriter

to decide what policies to offer

Why is it important to understand the tax consequences of your financial​ decisions?

to minimize your tax liability and ultimately increase your level of wealth

What steps should you take to determine the best allocation of your money market​ investments?

upcoming​ bills, estimate money needs in the near​ future, then invest remaining funds according to your risk tolerance.

Opportunity cost

what you forego as the result of a decision

Home inventory is a listing of what

your assets and their market value


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