personal finance virginia tech - final
You have total assets (monetary, investment, and tangible) of $20 comma 00020,000. Your total liabilities (current and non-current) are $55 comma 00055,000. Please calculate your Net Worth (or Owners Equity).
$ -35,000
Benito placed $11,500 in a mutual fund with a 3.5% front-end load. How much money did he actually invest in the fund after accounting for the load?
$11,097.50
Inflation represents a rise in prices over time - and that means your dollars won't buy as much in the future. As an example, assume that the average annual inflation rate is 22%. Your family currently has an annual living expense of $50 comma 00050,000. How much money will you need in 4040 years to have the equivalent lifestyle that costs $50 comma 00050,000 today? (End of Period)
$110,402
Frances invested $3 comma 0003,000 in her retirement account today. Her account earns an average rate of return of 77% compounded 1212 time(s) per year. How much will she have in her account after 2020 years? (Beginning of Period)
$12,116
Jana's home was recently appraised for $315,000 and she currently owes $161,000 on her mortgage. How much can Jana borrow using a home equity loan if the bank indicated they would loan up to 80% of the value of her equity?
$123,200
Ming is trying to balance her checkbook. Her ending statement balance is $1500. She had $500 in checks that have not cleared the bank and $650 of deposits that the bank has not processed yet. What should Ming's adjusted ending balance be for this statement period?
$1650
Tim and Autumn Davis Tim and Autumn Davis are trying to figure out their current financial health. They will pay off their car loan in three years, their gross household income is $5,700 per month, and they receive $95 per month in interest income from their investments. They have listed the following items from their most recent statements. Savings account: $3,200 Checking account: $1,800 Credit card balance: $3,000 Car loan balance: $18,000 Car market value: $15,000 Furniture market value: $4,000 Stocks and bonds: $15,000
$18,000
You want to invest $3 comma 0003,000/year into an account that earns 6.56.5% compounded annually. How much will you have in your account in 55 years? (Beginning of Period)
$18,191
Rasheed can afford a monthly car payment of $600600 for 33 years at an annual interest rate of 55 percent. Which of the following is closest to the amount he will be able to borrow for a new car? Remember, loans are END of period.
$20,019
D'Wayne wants to have $50 comma 00050,000 available in 1515 years for a down payment on a house. His account will earn 44% compounded annually. How much money does D'Wayne need to deposit into his account today to reach his goal? (Beginning of Period)
$27,763
Your adjusted gross income (line 8b of the form 1040) is $15,000. Your filing status is Single. Your standard deduction is $12,200. Using the 2019 Income Tax Rate Schedule, please calculate the amount of income taxes you will owe for the year. (use your 2019 Income Tax Rate Schedule that we used in class to answer this question)
$280.00
Kai invested $2 comma 5002,500 in her investment account today. Her account earns an average rate of return of 66% compounded 44 time(s) per year. She is in the 2020% marginal tax bracket. How much will she have in her account after 55 years after she accounts for income taxes? (Beginning of Period)
$3,174
Terrel is considering buying a car for $20,500 that he can finance for 5 years at 6%. How much will Terrel's monthly payment be if he buys the car?
$396.32
Suppose that Jacob's assets include a motorcycle worth $12,000 and a checking account with a $3,000 balance, while his liabilities include a credit card balance of $4,000 and a motorcycle loan balance of $7,000. What is his net worth?
$4,000
Toby just accepted a job offer that pays a gross annual salary of $60 comma 00060,000. Using Alex's rule of thumb, what is a good estimate of Toby's take-home pay?
$45,000
correct,Instructor-created question Your taxable income (line 11b of the form 1040) is $45,000. Your filing status is Married Filing Jointly. Using the 2019 Income Tax Rate Schedule, please calculate the amount of income taxes you will owe for the year. (use your 2019 Income Tax Rate Schedule to answer this question)
$5,012.00
Millie invested $3 comma 0003,000 in her retirement account today. Her account earns an average rate of return of 77% compounded annually. How much will she have in her account after 1010 years? (Beginning of Period)
$5,901
If a firm's most recent earnings were $4.32 a share and the firm's P/E ratio is 12, how much is the firm's stock price?
$51.84
You made a contribution of $4 comma 0004,000 into your Traditional IRA. You are in the 2020% marginal tax bracket. How much did you reduce your income taxes by making this Traditional IRA contribution?
$800
Jose just borrowed $4 comma 0004,000 to buy a used car. His loan is for 44 years with monthly payments. The interest rate on the loan is 66% APR. Calculate his monthly loan payments. (End of Period)
$93.94
What is the market price of a $1,000 face value bond quoted at 97 ½%?
$975.00
One of the easiest methods of determining if an asset is a tangible asset is to by answering which of the folliwng questions with "yes"?
Do I use it in everyday life?
Carrie has a credit card problem - she spends way too much with it and now she is having trouble making her minimum monthly payments. Which of the following is NOT a good solution to Carrie's financial problems?
Every 6 months open a new credit card that offers a 6-month teaser rate of 0% APR and regularly transferring her outstanding balances from the old card to the new cards.
True or False. You are in the 24% marginal tax bracket. You make a Roth IRA contribution of $5,000 for that tax year. This contribution will reduce your income taxes by $1,200 for the tax year.
False
Joe's checkbook register shows a balance of $1,000. His monthly bank statement shows an ending balance of $1,300. Jose has $200 of deposits that are not showing up on his bank statement. Which of the following must be true?
He has $500 in checks that have not cleared the bank as of the date of his bank statement
Financial planners have several ways of charging for their services. Kendall, a financial planner, will charge you an "Assets Under Management" fee for managing your money. Which of the following is a good description of how he might charge you for his financial services?
He will charge you an annual fee equal to 1.5% of the money you have invested with him.
Maria has 2 credit cards with a total credit limit of $5,000. She has had her credit cards for over 10 years. Maria typically uses her cards to pay her grocery bill, her utilities, and her car payment - this allows her to get the most "cash back points" from using her credit card. Her average monthly balance on her cards is $3,000. She tries to pay her balance in full each month. She has only been more than 30 days late one time over the past 7 years, and that was 5 years ago when she was changing jobs. Which of the following is hurting Maria's credit score the most?
Her credit utilization ratio (average balance/credit limit) is too high
Which of the following may be a disadvantage of an online savings account?
It may take a few days for you to actually get the funds when you need to make a withdrawal
Which of the following will have the biggest impact on improving your credit score?
Pay all of your bills on time and try to carry an average balance on your credit cards that is between 10-30% of your credit limit.
Which of the following can be listed as an itemized expense on Schedule A?
Property taxes on your home
An investment vehicle that pools investor funds and invests the proceeds in real estate or mortgages is known as a(n):
REIT
The final step of the financial planning process is what Alex referred to as a "post mortem" or "autopsy". This is the stage where you:
Review your progress and revise your plans to reach your goals
An individual retirement account (IRA) where contributions are made with after-tax income but earnings and withdrawals are tax free is known as a:
Roth IRA
One framework used to evaluate a firm by looking at opportunities, threats, weaknesses and strengths is known as:
SWOT analysis.
Which statement best describes the principle of "Pay Yourself First"?
Save or invest 5-10% of your paycheck (or as much as you can afford) as soon as you receive it
What distinguishes a "secured credit card" from an "unsecured credit card"?
Secured credit cards have a credit limit that is directly related to the amount of money you have in your secured credit card account.
When you are hired at a new job you will have to fill out several employment forms. One of these forms is called the W-4 Form. This form is used to:
Specify the amount of your salary you want to have withheld for federal income tax each pay period.
Maiko lost her job and she was forced to sell a rental property because she did not have other funds (liquid, emergency, etc) available to meet her financial obligations. What financial principle best applies to this situation?
Stuff happens, the importance of liquidity.
__________ risk is the only risk that matters to investors with broadly diversified portfolios.
Systematic
Which of the following would be the best example of systematic risk?
The Federal Reserve tightens the money supply to fight inflation which causes the interest rates to rise.
Your grandparents purchased $10,000 of EE Savings Bonds for you when you were born. Which of the following is the most accurate statement about these bonds?
The interest you earn on these bonds is not taxable if you use the funds for qualified educational expenses
What is the primary reason that Doc White suggests that students get a credit card while they are in college and hold onto it for the rest of their life?
Their credit score will rise over time due to the length of relationship with that credit card company
Which of these investments is an appropriate asset for a money market mutual fund to hold in its portfolio?
U.S. Treasury bills
Rank the bonds from lowest risk to highest risk.
U.S. Treasury bonds, municipal bonds, corporate bonds
Which of following is a legal and suggested method of reducing the annual federal income taxes for a married couple?
Using the larger of your standard deduction or itemized deduction
You are trying to decide whether to use the $12,200 standard deduction or your itemized deductions (Schedule A) for Line 9 on your Form 1040 income tax form. Here is your information: Your Marginal Tax Bracket 22% Adjusted Gross Income (line 8b) $80,000 Medical Expenses $12,000 Interest on Student Loan $2,000 Interest on Home Mortgage $3,000 Interest on Credit Cards $5,000 State and Local Income Taxes Paid $2,500 Charitable Gifts (in total) $1,000 What is the benefit of choosing the itemized deduction instead of the standard deduction?
You can reduce your taxable income by an additional $300 by using the itemized deductions instead of the standard deduction.
Doc White gave you his rules for using a credit card wisely. Which of the following is NOT one of these rules?
You should have at least 3 credit cards.
What should you do with your goals on a frequent basis throughout your lifetime?
all of the above
"Knowledge is power" is one of the main financial principles. Which of the following is a method of incorporating this principle into your financial life?
always use at least 3 sources of trustworthy information so that you get the "big picture".
Income-based repayment plans set payments based on a percentage of your discretionary income:
and not the amount owed
If a market is efficient it means that:
asset prices respond very rapidly to new information.
What is the minimum credit score that Doc White recommends that you try to attain?
at least 700
A(n) __________ fund will hold stocks, bonds and also preferred stock.
balanced
Another name for a single-payment loan is a(n):
balloon loan
One measure of a stock's price sensitivity to the overall market is:
beta.
A __________ fund invests primarily in long-term debt.
bond
A long-term debt instrument issued by a business or government to raise capital is known as a:
bond
When adversity hits, many households face financial problems. One way to minimize this risk to your household is to:
build an emergency fund of at least 3-6 months of living needs.
A __________ market is characterized by rising stock prices and a __________ market is characterized by falling stock prices.
bull; bear
You want to sell your car on CraigsList. Which of the following forms of payments is the least risky for you to accept from someone you do not know?
cashier's check
What type of check is paid using funds from your personal checking account, but the bank guarantees the payee that there is enough money in your account to cover the check?
certified check
The type of bankruptcy that is known as a wage earner's plan is:
chapter 13
Which of the following is NOT considered an investment?
collectibles
Diversification is the process of:
combining assets to reduce risk and/or increase returns.
Which of the following is NOT a form of open credit?
consumer loan
If you find that you are having difficulty paying your bills your first step should be to:
contact your creditors and try to work out a different payment plan.
Most retirement plans are tax-deferred which means:
contributions and earnings are not taxed until you withdraw them at retirement.
The actual rate of interest to be paid annually on a bond, calculated as a percentage of the par value, is known as the:
coupon interest rate
The present value of a bond's __________ determines the value of the bond.
coupon payment and maturity value
A common trait of preferred stock is__________.
cumulative dividends
A person with a very short-term time horizon may buy and sell stocks based purely on price trends with the expectation of reversing the position within hours or days. This practice is known as:
day trading.
As market interest rates increase, the value of a bond will __________ all other things equal.
decrease
As the number of retirement savings options increases the participation rate:
decreases
A traditional pension plan that pays a specific amount at retirement based on a formula payout is known as a:
defined-benefit plan.
The first step in retirement planning is to:
determine what you want to do in retirement.
Payments made by a corporation to the shareholders are known as:
dividends
Marcos invests $100 every month in an equity mutual fund. Some months his $100 buys more shares than others. This practice of purchasing a fixed dollar amount of some asset at equal intervals is known as:
dollar cost averaging.
ETFs can be bought and sold:
during normal trading hours just like a stock.
Once you have graduated and taken a job you may be able to claim your parents, grandparents, or any other relatives as dependents on your 1040 tax form. However, they must have lived with you for at least 3 months out of the year.
false
True or False. Your goal for income tax management should be to minimize the amount of income taxes you pay each year.
false
Through student loan __________, interest continues to accrue but you do not have to make payments.
forbearance
Collateralized loans, or secured loans, will __________ interest rate relative to unsecured loans.
have a lower
A high risk, largely unregulated investment fund for wealthy investors is called a:
hedge fund
Investors have a tendency to notice overall market trends and take a position designed to follow the market trend. This type of behavior is known as:
herd behavior
An investor that was convinced the stock market was rising should invest in a portfolio of:
high beta stocks.
All other things equal, a corporation will pay a __________ coupon rate on __________ bonds.
higher, higher risk
Which of the following is an example of a "stored value card"?
hokie passport
A diversified stock mutual fund will help you eliminate the risk associated with:
holding individual assets
A secured loan that uses the accumulated equity in your home as collateral is known as a:
home equity loan
For most Americans the single largest investment they make is in:
home ownership
Which one of the following is the "enemy" of compound interest and makes it very difficult to reach your financial goals?
inflation
Purchasing an asset with the expectation that it will generate a return is known as:
investing
Investment A offers a pre-tax return of 10%. Investment B is tax-free and offers a return of 7.5%. You are in the 30% marginal tax bracket. Which of these investments will provide you with the highest return after taxes are paid?
investment B
Assets that you purchase for the purpose of accumulating wealth to satisfy your financial goals are called
investment assets
The secondary market for stocks:
is well developed and easy to access.
Any bond that has a bond rating that is below investment grade is known as a speculative bond or:
junk bond
Installment loans require periodic payments of principal and interest at equal intervals and are commonly used to finance:
large purchases such as cars and boats.
A type of mutual fund that attempts to tailor its holdings to an investor's age and tolerance for risk is known as a(n):
life cycle fund.
The term that considers having money readily available when you need it is the concept of
liquidity.
A sales commission charge on a mutual fund is referred to as a(n):
load
The tendency for an investor to keep losing stocks and sell winning stocks can be attributed to:
loss aversion.
If you elect to receive all your retirement benefits in a single payment it is known as a:
lump-sum option.
Which of these is a leading cause of bankruptcy?
major illness
Mutual fund advisors are compensated by:
management fees
A type of brokerage account that allows you to borrow money from the broker to invest in stocks is called a:
margin account.
An order to purchase 100 shares of IBM stock at the prevailing price is called a:
market order.
How should a checking or savings account be listed on your balance sheet?
monetary asset
Your ________ include cash, checking and savings account balances, and money market funds.
monetary assets
What form of a check (or form of payment) can you get from the US Post Office or from many convenience stores, for a fee?
money order
A stock with a beta of 1.3 indicates that it has:
more risk than the overall market.
An investment vehicle that pools money from a number of investors and then invests those funds in stocks, bonds, or some financial asset is known as a(n):
mutual fund
A description of a specific mutual fund that lists the fund's objectives, risks and other information is known as a(n):
mutual fund prospectus.
A mutual fund that does not charge any sales commission is called a:
no-load fund
Market risk can also be called:
non-diversifiable risk.
Most defined-benefit plans are:
not adjusted for inflation.
If a publicly traded firm's management behaves unethically and the firm is sued and a large legal liability is incurred investors who own common stock in the firm can lose:
only the amount of their investment.
A type of mutual fund that can issue an unlimited number of mutual fund shares is known as a(n):
open end fund
If the inflation rate increases by 2%, the __________ of a Treasury Inflation-Protected Security will increase by 2%.
par value
Federal student loans that are subsidized mean that the student does not have to:
pay loan interest while still in school.
A company may elect to set aside money in a sinking fund that will be used to:
pay off a bond issue at maturity
What piece of advice might you give to someone for whom the act of saving is an afterthought?
pay yourself first
Which of these is a decision factor you should use when evaluating different mutual fund investments?
personal goals
One of the benefits of a buy-and-hold investing strategy is that it:
postpones capital gains taxes.
The interest rate that banks charge their most creditworthy customers for loans is known as the:
prime rate
According to old Doc White, what is the biggest enemy that most people have when it comes to improving their financial condition?
procrastination in their financial planning
Which of these is an advantage of mutual funds?
professional management
Chris is unable to attend the annual meeting of a corporation in which he is a shareholder. If he wishes to allow someone else to vote for him, he will need to sign a ______.
proxy
Under some __________ clause agreements, a lender can garnish your wages to satisfy the debt obligation.
recourse
Diversifying your investments into different industries will __________ your overall level of portfolio risk.
reduce
Which of these is considered to be a direct investment in real estate?
rental house
A call provision gives the bond issuer the:
right to force investors to sell the bond back to the firm.
Alex says that there are 3 main reasons you would like to have money in your hands today rather than waiting to hopefully receive money in the future. What causes money to have this "time value"?
risk, inflation, opportunity cost
A local investment company is offering an investment that is supposed to earn an annual return of 20%. They claim there is a "significant possibility" of losing your money with this investment. This is an example of which Key Financial Principle?
risk-return tradeoff
Investors resell existing stocks to each other in what type of market?
secondary market
Mutual funds that typically invest at least 2/3rds of their assets in a specific industry are known as:
sector funds.
When an investor wants to sell shares in an open-end mutual fund they:
sell them back to the mutual fund at net asset value.
Retirees in the lowest income brackets receive the majority of their retirement income from:
social security
Which of the following is one of the top bond rating firms?
standard and poor's
A firm's management may elect to enter the stock market and buy shares of its own stock. This buyback is also known as a:
stock repurchase.
Filing for bankruptcy does not eliminate:
student loan debt
Social Security is designed to:
supplement your retirement income.
After determining your goals a financial planner would recommend your first investing step should be to:
take full advantage of employer matches to retirement accounts.
You are in the 24% marginal tax bracket. You have the option of deducting $2,000 as an "adjustment to income" on the Schedule 1, or you can take a $600 tax credit on line 12 of the form 1040. Which option will reduce you taxes by the largest amount?
take the $600 tax credit
The most attractive feature of a municipal bond is:
tax exempt status
Financial planners suggest making retirement investments on a __________ basis.
tax-deferred
Payday loans are a predatory lending practice that commonly have APRs:
that are several hundred percent
Adjustable-rate preferred stock is a type of preferred stock:
that pays dividends that vary with the market rate of interest.
The risk-return tradeoff principle in finance is:
the expectation of receiving higher returns for higher risk investments.
You may decrease your credit score if you simply apply for several credit cards within a 3-4 month period (whether your applications are accepted or not) due to:
the increased number of inquiries on your credit history
A stock's holding period rate of return represents:
the total return earned over a specific period through buying and selling an asset.
Credit unions are popular banking institutions because:
they offer higher interest rates on savings accounts and lower interest rates on loans
Current liabilities are those that can typically be paid off in full within 12 months.
true
True or False. Checking your own credit history will not have an impact on your credit score.
true
While each person's financial plan is different, the following factors should be incorporated into all sound financial plans: flexibility, liquidity, protection, and maximizing what is left of your earnings after you pay your taxes.
true
One measure of a mutual fund's trading activity is the:
turnover ratio
If you have worked at a firm long enough to be eligible for a pension you are considered to be:
vested
Only Weird Old Doc White can relate Michael Jordan and Richard Petty to credit card payments. He told you about the Michael Jordan and Richard Petty Rules to help you understand:
why making just the minimum monthly payments on credit cards is such a bad financial move.
Jose and Katia have a Debt Payment/Gross Income ratio of 38%. Using Doc White's red, yellow, & green rating system, how would you rate their Debt Payment/Gross Income ratio?
yellow - not bad could be better
Your financial situation is insolvent when
your assets are less than your liabilities.
The concept of diversification is illustrated by the old saying:
"Don't put all your eggs in one basket."
Doc White told you to set a goal for your personal savings by the time you graduate. Your current monthly living expenses are $1,500 per month. What amount of money did Doc advise you to have in your savings account on the day you graduate?
$1,500-$3,000
Randy just invested $10,000 in a 5-year certificate of deposit (CD) that earns a return of 4% compounded quarterly. How much will he have in this CD at the end of 5 years? (beginning of period)
$12,200-$12,300
Cousin Brucie has a classic car (1963 Corvette) that is currently worth $60,000. Brucie expects the car to increase in value by 10% annually. How much should this car be worth after 15 years? (beginning of period)
$250,000-$255,000
Your adjusted gross income (line 8b of the form 1040) is $150,000. Your filing status is Single. Your standard deduction (Line 9) is $12,200. Using the 2019 Income Tax Rate Schedule, please calculate the amount of income taxes you will owe for the year. (use your 2019 Income Tax Rate Schedule that we used in class to answer this question)
$27,246.50
Most students graduate from college with an average of $35,000 in student loans. Assume the interest rate on student loans is 7% and the loan will be paid back over a 10-year period. Calculate the monthly payment on a $35,000 student loan at 7% for 10 years. (End of period)
$350-$450
Your adjusted gross income (line 8b of the form 1040) is $85,000. Your filing status is Married Filing Jointly. Your standard deduction is $24,400. Your itemized deductions from Schedule A are $26,000. Using the 2019 Income Tax Rate Schedule, please calculate the amount of income taxes you will owe for the year. (use your 2019 Income Tax Rate Schedule to answer this question)
$6,692.00
There are two main education tax credits available to students - the American Opportunities Credit and the Lifetime Education Credit. Which of the following situations will allow the person to claim the American Opportunities Credit?
Joachim, age 30, in his 4th year of his Bachelor's Degree after serving in the US Army, no one claims him as a dependent.
Walmart Stores Inc. just declared a 2-for-1 stock split. Assuming you own 800 shares of Walmart stock that are currently selling for $76 a share, how many shares will you own after the split and how much should the shares be selling for in the secondary market?
1,600; $38
Your favorite father figure, Doc White, gave you a personal goal for your savings account by the time you graduate. How much money does Old Doc want you to have in your savings account on the day you graduate from college?
1-2 months of living expenses
You just won the lottery and you will receive $10 comma 00010,000/year for the next 2020 years. You feel that your opportunity cost of money is 77% (your desired rate of return). What lump sum would you rather have today rather than waiting 2020 years to collect all of your winnings? (Beginning of period)
105,940
You want your money to double within the next 6 years. Using the Rule of 72, what approximate annual rate of return do you need to earn each year for your money to double in 6 years?
12%
You have the opportunity to invest $10 comma 00010,000 today in a fund that you hope will be worth $20 comma 00020,000 after 55 years. What approximate annual rate of return are you earning on this investment? (Beginning of Period)
14.4%
Kavita and Raj use the married, filing jointly tax status. Their combined taxable income is $180,000. What is the appropriate marginal tax bracket (%) for them to use when they are trying to determine the after-tax returns on their investments? (Use the 2019 Income Tax Rate Schedule to answer this question)
24%
How long does old Doc White suggest that you keep your federal and state income tax records?
3-7 years
Company X pays a dividend of $3 per share and it is currently trading at $80.50 per share. What is the dividend yield for Company X?
3.7%
The Dow Jones Industrial Average is a stock index that is based on the price movements of:
30 large industrial firms.
Rafael borrowed money using a home equity loan with an interest rate of 6.5%. What is the after-tax cost of this loan if he is in a 28% marginal tax bracket?
4.68%
A type of tax-deferred retirement plan offered by many large employers that allows employees to manage their own retirement plan is known as a:
401(k) plan.
What percent of your gross income does Doc White recommend that you try to save and/or invest each pay period?
5-10%
Your credit card has a credit limit of $2,000. What is the maximum outstanding balance you should have on your account so that your credit score will not be decreased?
600
For Americans born after 1960 the Social Security retirement age to receive full benefits is:
67
Individuals that are not self-employed will have a total of __________ withheld from the first $127,200 of gross salary in 2017.
7.65%
You purchased Hobo Hats stock last year for $60 a share. Today, you received $2 a share dividend and immediately sold the stock for $63. Your realized return, or holding period return, was _________.
8.33%
Mutual fund loads, or sales fees, can be as high as:
85%
Approximately __________ of all Americans are covered by Social Security.
95%
The primary difference between a savings account and a money market account is:
A money market account has more limitations than a savings account, but usually earns a higher rate of return than a savings account.
Hector's month's living expenses covered ratio is 0.25 months. He just broke his leg and will not be able to work for six weeks. Without a paycheck for six weeks, what will Hector most likely experience?
Both A and C are realistic possibilities.
A __________ is an investment plan that allows you to purchase additional shares in the same firm instead of receiving the dividend distribution.
DRIP
Which of the following financial statements did Doc White say was the most powerful piece of paper you'll ever use. He said it is like "a piece of cardboard" that helps you see where money is "leaking out of your wallet"?
Daily Expense Tracker
Doc White preaches about having an accurate monthly budget. What are the main uses of a monthly budget?
A. Figuring out how to reduce your spending without hurting your lifestyle too much B. Determining how much money you will be able to save & invest each month C. Estimating the maximum monthly car loan payment you will be able to afford D. All the above
Evaluating your financial health consists of
A. determining where your money comes from and where it goes. B. preparing a personal balance sheet. C. preparing a personal income statement. D. determining what you are worth. all of the above
The interest rate that factors in true cost of a loan including most of the up-front fees is called the:
APR
__________ are loans that have an interest rate that is tied to some market rate of interest such as T-bill rates.
Adjustable-interest-rate loans
Doc White gave you the "Babe Ruth Rule" for making better decisions. How does the Babe Ruth Rule apply to Step 3 of the Financial Planning Process?
Always develop 3 plans for achieving your financial goals
Which of the following is the website that is recommended to check your credit history because it is not trying to sell you any products or services?
AnnualCreditReport.com
Which of the following is the best description of systematic risk?
Any risk that will impact the value of all assets simultaneously.
Doc White gave you advice on getting your credit history started while you are a student. Which of the following did he say was usually the easiest, most convenient way to get your credit history started?
Ask your parents to list you as an authorized used on one of their credit cards
Which of the following cash management accounts is very useful for people who have a significant amount of money because it can link to their investments, their debt/credit cards, and earn slightly higher rates of return?
Asset Management or "sweeps account"
There are five basic steps to personal financial planning and their related tasks. Arrange these steps and examples of related tasks in the order of their presence during the financial planning process. A. Develop a plan of action (or 3). Develop a budget matching income and projected expenses for the remainder of this academic year. B. Evaluate your financial health. Record all expenses for a month to compare income and expenses. C. Review progress on the plan (post-mortem), reevaluate the plan, and revise the plan or start over with a new one. Based on this year, develop a revised budget for next year based on projected income and expenses. D. Define your financial goals. Pay off credit card(s) by the end of this school term. E. Implement the plan. Reduce expenses in problem areas so amounts do not exceed budgeted projections.
B→D→A→E→C
Which of the following is basically a "loan to a bank" for a specified period of time? For example, you write a check for $1,000 to the bank for this investment. They promise to pay you all of your original $1,000 plus a stated rate of return at the end of the investment's maturity (life).
Certificate of Deposit (CD)
You are trying to decide whether to use the $12,200 standard deduction or your itemized deductions (Schedule A) on your Form 1040, Line 9. Here is your information: Adjusted Gross Income $40,000 Medical Expenses $15,000 Interest on Student Loan $2,000 Interest on Home Mortgage $3,000 State and Local Income Taxes Paid $1,500 Charitable Gifts (in total) $1,000 Which deduction should you choose?
Itemized Deduction of $17,500
Which of the following is NOT a valid method of improving your credit score?
Keep your credit cards for 2-3 years, then cancel them and apply for new credit cards.
Which of following is NOT a legal method of reducing your federal income taxes?
Listing only 75% of your cash tips and wages as income
Which of the following is not a valid method of reducing your federal income taxes for this tax year?
Making contributions to your Roth 401(k)