quiz 1
(TCO 1) When a person faces a trade-off and must give up something by making a choice,
this is referred to as
taking out a loan.
opportunity cost.
the evaluation of alternatives.
a decision-making process.
a dilemma.
.
Question 2. Question :
(TCO 1) _____ is the ability to convert assets and financial resources into usable cash
relatively easily.
Bankruptcy
Solvency
Investing
Opportunity cost
Liquidity
Question 3. Question :
(TCO 1) The Federal Reserve has the responsibility to
monitor illegal business activities.
approve spending by Congress.
set federal income tax rates.
maintain an adequate supply of money.
maintain a balanced budget for the federal government.
Question 4. Question :
(TCO 1) The _____ refers to stages that an individual goes through based on age,
financial needs, and family situation.
financial planning process
financial
adult
personal economic
tax planning process
Question 5. Question :
(TCO 1) A family spends $40,000 on living expenses. With an annual inflation rate of
3%, they can expect to spend approximately _____ in 4 years.
$45,000
$41,200
$42,000
$43,700
$46,000
Question 6. Question :
(TCO 1) Higher employment levels can be attributed to
lower consumer prices.
reduced employment levels.
lower interest rates.
higher employment levels.
increased consumer spending.
Question 7. Question :
(TCO 1) The
personal opportunity costs such as
financial decisions that require borrowing funds from a financial institution.
increases in an amount of money due to earned interest.
the impact of inflation upon the dollar.
changing demographic trends in our society.
Question 8. Question :
(TCO 1) If a person wants to determine the current value of a desired amount for the
future, the following computation would be used.
Simple interest
Present value of a single amount
Future value of a series of deposits
Future value of a single amount
Present value of a series of deposits
Question 9. Question :
(TCO 1) Which goal below would be the easiest to implement and measure in terms of
accomplishment?
“Reduce our debt payments.”
Save $100 a month to create a $4,000 emergency fund.”
“Save funds for an annual vacation.”
“Invest $2,000 a year for retirement.”
Question 10. Question :
(TCO 1) If John Smith is making plans to make holiday purchases at the end of the year,
he is setting a(n) _____ goal.
intermediate
long-term
short-term
intangible
durable
Question 11. Question :
(TCO 1) In order to evaluate present value scenarios, _____ is/are needed.
multiplication
compounding
simple interest calculations
discounting
payment information
Question 12. Question :
(TCO 1) A commitment to a profession that requires continued training and offers a clear
path for occupational growth is a(n)
apprenticeship.
internship
employment.
cooperative employment experience.
career.
Question 13. Question :
(TCO 1) Personal financial statements would include
budget and credit card statements.
income tax forms and a cash flow statement.
a checkbook and a budget.
a balance sheet and a cash flow statement.
a bank statement and a savings passbook.
Question 14. Question :
(TCO 1) A _____ résumé would best be used by an employee who has worked in many
fields and has a variety of skills in a variety of work-related categories.
targeted
goal-oriented
chronological
functional
career change
Question 15. Question :
(TCO 1) A _____ résumé is designed to obtain a specific job.
functional
chronological
goal-oriented
targeted
data
Question 16. Question :
(TCO 1) A lack of _____ refers to a lack of willingness to accept a variety of employment
positions and is a common career planning mistake.
common sense
flexibility
training
communication
perseverance
Question 17. Question :
(TCO 1) A family with $66,000 in assets and $52,000 of liabilities would have a net worth
of
$66,000.
$52,000.
$118,000.
$14,000.
$41,000.
Question 18. Question :
(TCO 1) Personal balance sheets can be used to analyze
future income and expenses.
the net worth of an organization.
the cash flow of an individual or a family.
debt payment activities.
what an individual or family owes and owns.
Question 19. Question :
(TCO 1) Solvency can be assessed through the analysis of the following financial
document.
Cash flow statement
Debt consolidation statement
Personal income statement
Credit report
The balance sheet
Question 20. Question :
(TCO 1) If a person has a payment that does not vary from month to month, then this type
of payment is _____.
semivariable
current
variable
fixed
budgeted
quiz 2
(TCO 2) This type of tax is calculated based upon the value of land and buildings.
Personal
Real estate
Direct
Proportional
Regressive
Chapter 4, page 106
Points Received:
Comments:
Question 2. Question :
(TCO 2) Interest earnings of $2,400 from a taxable investment for a person in a 28% tax bracket would result in after-tax earnings of
$672.
$1,728.
$2,400.
$3,333.
$8,571.
Chapter 4, pages 108, 112–113
Points Received:
Comments:
Question 3. Question :
(TCO 2) _____ can reduce taxable income.
Portfolio income
Tax credits
Exclusions
Passive income
Earned income
Chapter 4, page 109
Points Received:
Comments: Exclusions
Question 4. Question :
(TCO 2) Whenever an individual takes on a personal effort and receives money, this is reported as _____ income.
passive
earned
portfolio
excluded
capital gains
Chapter 4, page 108
Points Received:
Comments:
Question 5. Question :
(TCO 2) George Washburn had earnings from his salary of $44,000, interest on savings of $800, a contribution to a traditional individual retirement account of $2,000, and dividends from mutual funds of $600. George’s adjusted income (AGI) would be
$43,400.
$44,000.
$45,400.
$42,000.
$42,800.
Chapter 4, page 108
Points Received:
Comments:
Question 6. Question :
(TCO 2) _____ can be calculated as a result of various items being subtracted from gross income, such as individual retirement account contributions and alimony payments.
Adjusted gross income
Taxable income
Earned income
Passive income
Total exclusions
Chapter 4, page 109
Points Received:
Comments:
Question 7. Question :
(TCO 2) When filing your taxes, a set amount on which no taxes are paid is called _____.
itemized deductions
withholding
an earned tax credit
the standard deduction
capital gains
Chapter 4, page 109
Points Received:
Comments: the standard deduction
Question 8. Question :
(TCO 2) Taxes owed can be reduced through _____.
the standard deduction
a tax credit
an itemized deduction
an exclusion
an exemption
Chapter 4, page 113
Points Received:
Comments: a tax credit
Question 9. Question :
(TCO 2) _____ would qualify a person for an exemption when computing taxable income.
Mortgage interest
A tax shelter
A dependent
Charitable contributions
Passive income
Chapter 4, page 111
Points Received:
Comments:
Question 10. Question :
(TCO 2) Generally, the way most people pay federal income tax is by
paying the total amount owed by April 15.
filing quarterly tax payments.
having amounts withheld from income.
earning tax credits for various deductions.
Chapter 4, page 116
Points Received:
Comments:
Question 11. Question :
(TCO 2) If you expect interest rates will decline over the next few months, you should use a(n) _____ to maximize your earnings.
regular savings account
interest-bearing checking account
5-year certificate of deposit
6-month certificate of deposit
money market fund
Chapter 5, page 144
Points Received:
Comments:
Question 12. Question :
(TCO 2) An example of a _____ deposit is a checking account.
common
current
loan
demand
Chapter 5, page 141
Points Received:
Comments:
Question 13. Question :
(TCO 2) When profits are generated by a mutual savings bank, they will go to the
creditors.
loan applicants.
stockholders.
depositors.
community in which it operates.
Chapter 5, page 145
Points Received:
Comments:
Question 14. Question :
(TCO 2) _____ are the major products offered by investment companies.
Interest-bearing checking accounts
Variable-rate loans
Credit card accounts
Savings bonds
Mutual funds
Chapter 5, page 148
Points Received:
Comments:
Question 15. Question :
(TCO 2) One of the characteristics of a certificate of deposit is that it can have
high interest-rate risk.
low safety for savers.
limited liquidity.
a variable rate of return.
no minimum deposit amount.
Chapter 5, page 150
Points Received:
Comments: limited liquidity.
Question 16. Question :
(TCO 2) A $325 savings account that earns $15 interest in a year has a yield of _____.
7.5%
4.8%
3%
15%
4.6%
Chapter 5, page 154
Points Received:
Comments:
Question 17. Question :
(TCO 2) Financial institutions must _____ as a requirement of the Truth in Savings Act.
provide insurance for savings accounts
send customers monthly bank statements
report annual percentage yield on savings
offer adjustable-rate savings accounts
become members of the Federal Reserve System
Chapter 5, page 155
Points Received:
Comments:
Question 18. Question :
(TCO 2) If a person wants to earn a relatively higher savings rate on his or her money, he or she may select a _____ at a commercial bank
regular savings account
regular checking account
share draft
money market account
Chapter 5, page 152
Points Received:
Comments:
Question 19. Question :
(TCO 2) When a person is presenting a check in order to obtain cash, a _____ endorsement would be used.
restrictive
common
special
blank
documented
Chapter 5, page 162
Points Received:
Comments:
Question 20. Question :
(TCO 2) The _____ is the rate that the Federal Reserve charges banks for loans.
prime rate
discount rate
mortgage rate
Treasury bond rate
corporate bond
Chapter 5, page 146
quiz 3
(TCO 3) _____ is a good example of a closed-end credit.
A credit card issued by a department store
A credit card issued by VISA or MasterCard
A mortgage loan
Using a cashier’s check to pay for a purchase
Using overdraft protection at a bank
: Chapter 6, page 175
Comments:
Question 2. Question :
(TCO 3) When obtaining open-end credit, you may see this being offered as
installment credit.
a box of credit.
convenience credit.
revolving credit.
a single lump-sum credit.
: Chapter 6, pages 176–177
Comments:
Question 3. Question :
(TCO 3) Which one of these agencies can provide a report about your past and present credit activity to a prospective creditor?
The Federal Reserve Bank in your district
The Audit Bureau of Circulation
The Federal Trade Commission
A debit bureau
A credit bureau
: Chapter 6, page 186
Comments:
Question 4. Question :
(TCO 3) Dividing monthly debt payments (not including house payments) by net monthly income will allow you to calculate your _____.
net-worth-to-debt ratio
debt-payments-to-income ratio
liability status
credit capacity status
income-to-liability ratio
: Chapter 6, page 183
Comments:
Question 5. Question :
(TCO 3) All of the following provide data to credit bureaus except
banks.
finance companies.
merchants.
court records.
the Internal Revenue Service.
: Chapter 6, page 186
Comments: the Internal Revenue Service
Question 6. Question :
(TCO 3) Personal bankruptcy can be reported to credit bureaus for _____ years.
5
7
10
15
25
: Chapter 6, page 187
Comments:
Question 7. Question :
(TCO 3) If a bank needs to examine the value of a specific asset when you are applying for a loan, this process refers to which aspect of the five Cs of lending?
Character
Capacity
Collateral
Capital
Conditions
: Chapter 6, page 192
Comments:
Question 8. Question :
(TCO 3) When a lender examines your job situation and the security of your employment, it is considering which area of lending?
Capacity
Character
Capital
Collateral
Conditions
: Chapter 6, page 192
Comments:
Question 9. Question :
(TCO 3) The first step you should take if you are denied credit is to
increase your income and decrease your spending.
check your credit file at the consumer bureau.
hire an attorney and file a suit against the creditor.
reapply for credit.
sue the credit bureau that provided the negative information.
: Chapter 6, page 194
Comments:
Question 10. Question :
(TCO 3) Mary Jones has obtained a loan that must be paid over the next 12 months and she will use this money for a vacation. What type of credit is being used?
Installment sales credit
Incremental credit
Single lump sum credit
Revolving credit
Installment cash credit
: Chapter 6, page 175
Comments:
Question 11. Question :
(TCO 3) As used in Chapter 7 of the text, float refers to
an interest charged for only a few days.
something one enjoys in a parade.
a home equity loan.
a period when no interest is charged.
a lump-sum loan from a credit union.
: Chapter 7, page 213
Comments:
Question 12. Question :
(TCO 3) Usually, medium-priced loans can be obtained from
parents or family members.
commercial banks and credit unions.
the Diners Club.
finance companies.
: Chapter 7, page 214
Comments:
Question 13. Question :
(TCO 3) Referring to trends in credit union membership, it can be observed that membership has been
restricted by the Tax Reform Act of 1986.
declining gradually.
static.
growing steadily.
restricted by state laws.
: Chapter 7, page 214
Comments: growing steadily.
Question 14. Question :
(TCO 3) Which one of the following is a signal of a potential debt problem?
Paying the maximum balance due each month
Borrowing money to pay old debts
Using savings to pay for major purchases
Receiving notice of prompt payment from creditors
Occasionally working overtime and moonlighting
: Chapter 7, page 235
Comments:
Question 15. Question :
(TCO 3) If Tony Jones knows he can get a car loan for up to 5 years at a credit union but decides that he can easily repay the loan in 3 years, and therefore gets a 3-year loan, how is Tony reducing the lender’s risk?
He is sharing the interest rate risk with his lender.
He is pledging valuable assets that can be seized if the loan is not repaid.
He is repaying the loan over a faster period of
He is taking a larger stake in the asset he is purchasing.
He is obtaining the loan from the credit union.
: Chapter 7, page 222
Comments:
Question 16. Question :
(TCO 3) Sarah Russell starts the month with a balance of $1,000 on her credit card. On the 10th day of the month, she purchases $200 in clothes with her credit card. On the 15th day of the month she makes a payment on her credit card of $500. The average daily balance for the month including the new purchase is $883. The average daily balance for the month excluding the new purchase is $750. Sarah’s interest rate is 1.5% for the month. Sarah’s bank calculates the finance charge on the credit card by using the average daily balance, excluding new purchases. What would Sarah’s finance charges be for the month?
$7.50
$13.25
$18.00
$15.00
$11.25
Comments:
Question 17. Question :
(TCO 3) If Jeff rushes to purchase a home by obtaining an interest-only loan, and the reason why he wants a home is because he wants to have a house just like the one that his parents had when he was a teenager, this is an example of which of the following?
Misunderstanding or lack of communication
The use of money to punish
Overindulgence of children
Keeping up with the Joneses
The expectation of instant comfort
Comments:
Question 18. Question :
(TCO 3) One day, Gary notices that is neighbor has purchased a new Land Rover and it is sitting in his driveway. Gary decides that he also needs a new car and goes out and purchases a Hummer with a 6-year loan on it. Which reason for indebtedness is this an example of?
Misunderstanding or lack of communication
Keeping up with the Joneses
The expectation of instant comfort
The use of money to punish
Overindulgence of children
: Chapter 7, page 234
Comments:
Question 19. Question :
(TCO 3) In terms of borrowing expenses, which of the following options would be relatively the cheapest?
Car dealer
Appliance store
Department store
Relative
Finance company
: Chapter 7, page 213
Comments:
Question 20. Question :
(TCO 3) If Tracy Sears borrows $1,250 for 1 year with an APR of 9% with no service fees, what is her total cost of credit?
$125
$112.50
$7.50
$9.38
$0
Comments:
quiz 4
(TCO 5) Which of the following statements is false?
No one is going to make you save the money; you need to start a program.
To be useful, investment objectives must be very specific.
Investment goals can be different for each individual.
Because investment objectives deal with the future, it is useful to plan more than 5 years in the future.
A long-term investment objective involves a time period of 2 years or less.
Question 2. Question :
(TCO 5) If an investment objective is considered to be long term, then this means the goal should be achieved in what
Less than 2 years
In 2–5 years
More than 5 years
Less than 1 year
None of the above
: Chapter 13, page 424
Question 3. Question :
(TCO 5) You currently hold a $1,000 corporate bond; however, if interest rates in the overall economy decrease, which of the following is most likely to be the market value of this bond?
The bond is worthless.
$1,000
$900
$1,100
It is impossible to determine whether the bond’s value will increase or decrease.
Question 4. Question :
(TCO 5) Gina has recently become a widow with two small children, and wants to make sure that both she and the children are taken care of in the future. She received a check for $350,000 from a life insurance company. Based on this information, Gina places a high degree of importance on
beta.
safety.
business failure.
market risk.
liquidity.
: Chapter 13, page 431
safety.
Question 5. Question :
(TCO 5) Which of the following statements is false?
When choosing an investment, it is necessary to consider the risk factor.
During inflationary times, there is a risk that the financial return on an investment will not keep pace with the rate of inflation.
The interest rate risk associated with investments in bonds is the result of changes in business conditions faced by companies.
The risk of business failure deals with changes in the value of stocks and bonds due to changes and risks within a business itself.
The prices of stocks, bonds, and other investments fluctuate in the market.
: Chapter 13, page 433
The interest rate risk associated with investments in bonds is the result of changes in business conditions faced by companies.
Question 6. Question :
(TCO 5) A $1,000 corporate bond pays 7.5% a year. What is the annual interest you will receive?
$1,075
$7.50
$0.75
$75.00
$0
: Chapter 13, page 433
Question 7. Question :
(TCO 5) Investments can be affected by all of the following risks except
inflation.
global risks.
individual selection.
business failure.
market risks.
: Chapter 13, pages 433-435
Question 8. Question :
(TCO 5) John Farmer recently received a legal form from the company where he owns stocks that list the issues to be decided at the annual stockholders’ meeting. The item asks that he signs something that allows someone else to vote for him. What has he received?
Equity
Proxy
Voting rights
Divi
