Indicate the answer choice that best completes the statement
or answers the question.
1. The _____ environment of your country affects the interest
rates you pay on your mortgage and credit cards as well as those
you earn on savings accounts and bonds.
a.
economic
b.
political
c.
technological
d.
social
e.
legal
2. An economy will usually go into a(n) _____ after a
peak.
a.
convolution
b.
expansion
c.
contraction
d.
recovery
e.
prosperity
Enter the appropriate word(s) to complete the statement.
3. A carefully developed financial plan should save a portion
of _________ for deferred, future spending.
A. rental expense
B. tax expense
C. current income
D. future income
Indicate the answer choice that best completes the statement
or answers the question.
4. Salaries could vary across geographical areas because
of:
a.
legal costs.
b.
living costs.
c.
social costs.
d.
psychological costs.
e.
technological costs.
Enter the appropriate word(s) to complete the statement.
5. Your salary will be higher if you live in
a(n)._________area.
A. metropolitan
B. overpopulated
C. industrial
D. rural
Indicate the answer choice that best completes the statement
or answers the question.
6. A strong economy leads to:
a.
lower inflation.
b.
lower interest rates.
c.
higher employment.
d.
lower productivity.
e.
higher unemployment.
Indicate whether the statement is true or false.
7. Personal financial plans help individuals to have the same
standard of living across the country.
a.
True
b.
False
8. Financial planning can improve your standard of
living.
a.
True
b.
False
9. A person making $35,000 and spending $30,800 has an average
propensity to consume of 80%.
a.
True
b.
False
10. A balance sheet shows your financial condition as of the
time the statement is prepared
a.
True
b.
False
11. A budget is a financial report that forecasts your
current income as a percentage of your past earnings
a.
True
b.
False
12. Financial planning is necessary only if you earn a lot of
money.
a.
True
b.
False
Indicate the answer choice that best completes the statement
or answers the question.
13. A budget is a:
a.
plan that calculates the interest on a loan.
b.
schedule of personal investments.
c.
list of prepaid expenses.
d.
detailed financial forecast.
e.
set of personal financial objectives.
14. EasyThe main purpose of a budget is to help in:
a.
developing financial goals
b.
calculating discounted cash flow.
c.
giving feedback about the performance of the plan.
d.
monitoring and controlling financial outcomes.
e.
revising depreciation schedules.
15. Your _____ is an example of a liquid asset.
a.
home
b.
car
c.
checking account
d.
charge account
e.
life insurance proceeds
16. When there is a cash surplus on your income and expense
statement, your:
a.
net worth will be equal to zero
b.
total expense will be more than your total income .
c.
payments on debts will not be met.
d.
investment balance will be increased
e.
income and expense will be equal
Enter the appropriate word(s) to complete the statement.
17. Investment assets are required to _________.
A. be used in our everyday lives.
B. increase productivity.
C. provide a service.
D. earn a return.
18. A _________ is an example of a tangible asset.
A. house
B. certificate of deposit
C. copyright
D. trademark
Enter the appropriate word(s) to complete the statement.
19. The process of finding present value is called
_________.
A. discounting
B. calculating
C. compounding
D. computing
Indicate the answer choice that best completes the statement
or answers the question.
20. Elena purchased a stamp collection for $5,000 thirty
years ago. If its value is appreciated at 8% annually, what is it
worth today?
a.
$17,000
b.
$36,400
c.
$50,313
d.
$123,023
e.
$150,000
21. Jamil invested $9,500 in an account he expects will earn
5% annually. Approximately how many years will it take for the
account to double in value?
a.
8.8
b.
9.7
c.
10.8
d.
11.4
e.
14.4
Indicate whether the statement is true or false.
22. The gross income minus the tax exempt income equals the
adjusted gross income.
a.
True
b.
False
23. Qualified dividends are taxed at the highest capital gain
rates.
a.
True
b.
False
24. Russ and Lois got married on December 30. Even though
they were single for most part of the year, they can legally file
as married taxpayers in the year of the wedding.
a.
True
b.
False
25. A married couple filing a joint return has Ms. Cindy
Cook, a CPA, complete their return. The IRS will hold only Ms. Cook
responsible for any errors on the return.
a.
True
b.
False
Indicate the answer choice that best completes the statement
or answers the question.
26. Which of the following is subject to federal income
tax?
a.
The tax credit earnings on a Roth IRA
b.
Municipal bond interest
c.
Child care support
d.
Alimony received
e.
Personal exemptions
27. You would typically include _____ in your gross
income.
a.
child support payment
b.
life insurance death benefit payments
c.
municipal bond interest
d.
income from pensions
e.
personal exemptions
28. If you do not wish to itemize deductions, you can use
the:
a.
pay-as-you-go amount.
b.
bracket deduction.
c.
standard deduction.
d.
exemption.
e.
withholding allowance.
Indicate whether the statement is true or false.
29. Cash is the only kind of liquid asset.
a.
True
b.
False
30. Debit cards are a form of EFTS.
a.
True
b.
False
31. Your savings will grow faster with monthly interest
compounding than with quarterly interest compounding for a given
nominal interest rate.
a.
True
b.
False
32. Today, you can hold an account with a mutual fund that
allows you to write a limited number of checks.
a.
True
b.
False
33. Nondepository institutions are referred to as banks.
a.
True
b.
False
34. Compound interest means that a savings account earns
interest on the interest previously earned.
a.
True
b.
False
Indicate the answer choice that best completes the statement
or answers the question.
35. You have $450 in your checking account when your ATM card
and PIN are stolen. You could lose up to _____ if you report the
lost ATM card within 2 business days.
a.
$0
b.
$25
c.
$50
d.
$450
e.
$500
36. Mary has calculated her adjusted balance as $500. She
notices that her bank's service charges are $20 for this period.
Mary's ending balance is _____.
a.
$520
b.
$480
c.
$600
d.
$500
e.
$510
37. At maturity, a deposit of $6,000 in certificates of
deposit (CD) for 10 years at 3% will be worth: (Select the closest
answer.)
a.
$7,340.
b.
$7,800.
c.
$8,060.
d.
$8,678.
e.
$9,005.
38. John Anderson deposited $10,000 in certificates of
deposit (CD) for 3 years at 5%. At maturity, it will be worth: (Use
time value tables or a financial calculator. Select the closest
answer.)
a.
$10,500.
b.
$10,725.
c.
$11,400.
d.
$11,580.
e.
$12,400.
Enter the appropriate word(s) to complete the statement.
39. People who do not have checking accounts often use
_________.
A. a cashier's check
B. overdraft protection
C. a debit card
D. the checkbook ledger