Question 1

If Jo Ann has $4,000 in liquid assets and $1,000 in current liabilities, her liquidity ratio is

Accepted Answer

A)  0.25. 
B)  4.0. 
C)  1,000. 
D)  4,000. 
A)  0.25. 
B)  4.0. 
C)  1,000. 
D)  4,000.

Question 2

The current financial position of an individual or family is best presented with the use of a

Accepted Answer

A)  budget. 
B)  cash flow statement. 
C)  balance sheet. 
D)  bank statement. 
A)  budget. 
B)  cash flow statement. 
C)  balance sheet. 
D)  bank statement.

Question 3

Stocks are considered liquid assets since they are easy to sell without a loss in value.

Accepted Answer

A) True 
 B)False

Question 4

Cash inflows tend to increase as a person gets older since they tend to spend less once they have their education and home purchase behind them.

Accepted Answer

A) True 
 B)False

Question 5

One of the problems in making a monthly budget is that some expenses fluctuate quite a bit from month to month.

Accepted Answer

A) True 
 B)False

Question 6

Cash inflow can be increased by all of the following, except

Accepted Answer

A)  making credit card payments. 
B)  working overtime. 
C)  selling stock. 
D)  getting a second job. 
A)  making credit card payments. 
B)  working overtime. 
C)  selling stock. 
D)  getting a second job.

Question 7

Property such as a person's home, car, and furniture are called

Accepted Answer

A)  liquid assets. 
B)  household assets. 
C)  major property assets. 
D)  investment assets. 
A)  liquid assets. 
B)  household assets. 
C)  major property assets. 
D)  investment assets.

Question 8

Student loans, auto loans, and housing loans are good examples of

Accepted Answer

A)  long-term liabilities. 
B)  current liabilities. 
C)  short-term debts. 
D)  personal obligations. 
A)  long-term liabilities. 
B)  current liabilities. 
C)  short-term debts. 
D)  personal obligations.

Question 9

Corporate stocks, government or corporate bonds, or mutual funds, are called

Accepted Answer

A)  liquid assets. 
B)  household assets. 
C)  investment assets. 
D)  retirement assets. 
A)  liquid assets. 
B)  household assets. 
C)  investment assets. 
D)  retirement assets.

Question 10

Which of the following is not a true statement about mutual funds?

Accepted Answer

A)  They are managed by professional managers. 
B)  Proceeds are only invested in stocks. 
C)  A minimum investment is required. 
D)  The value of shares is widely reported both online and in The Wall Street Journal. 
A)  They are managed by professional managers. 
B)  Proceeds are only invested in stocks. 
C)  A minimum investment is required. 
D)  The value of shares is widely reported both online and in The Wall Street Journal.

Question 11

Your net worth can change even if your net cash flows are zero.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following will not increase your liquidity?

Accepted Answer

A)  Selling a boat and depositing the proceeds in your checking account 
B)  Selling a car in exchange for cash 
C)  Selling stock in exchange for cash 
D)  Using cash to purchase a home entertainment system 
A)  Selling a boat and depositing the proceeds in your checking account 
B)  Selling a car in exchange for cash 
C)  Selling stock in exchange for cash 
D)  Using cash to purchase a home entertainment system

Question 13

You save the same dollar amount from each paycheck during your career. As your income increases, your savings rate will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  stay the same. 
D)  More information is needed to determine what effect this action will have. 
A)  increase. 
B)  decrease. 
C)  stay the same. 
D)  More information is needed to determine what effect this action will have.

Question 14

Health insurance and auto insurance premiums are not cash outflows because they prevent large expenditures which are outflows.

Accepted Answer

A) True 
 B)False

Question 15

All of the following affect cash outflows, except

Accepted Answer

A)  the size of your family. 
B)  your age. 
C)  your education level. 
D)  your personal consumption behavior. 
A)  the size of your family. 
B)  your age. 
C)  your education level. 
D)  your personal consumption behavior.

Question 16

Which of the following statements about stocks is not true?

Accepted Answer

A)  Stocks represent partial ownership of a firm. 
B)  Corporations issue stocks to obtain money for various projects. 
C)  Investments in stocks are considered liquid assets. 
D)  The market value of stocks changes daily. 
A)  Stocks represent partial ownership of a firm. 
B)  Corporations issue stocks to obtain money for various projects. 
C)  Investments in stocks are considered liquid assets. 
D)  The market value of stocks changes daily.

Question 17

Bill's annual savings rate is 9%. If Bill currently saves $6,750 annually, how much more will he need to save to increase his savings rate to 11%?

Accepted Answer

A)  $8,250 
B)  $135 
C)  $1,500 
D)  More information is needed to determine the answer. 
A)  $8,250 
B)  $135 
C)  $1,500 
D)  More information is needed to determine the answer.

Question 18

Indicate whether the following are liquid assets or household assets by placing an L or H beside them.
________ Car
________ Home
________ Checking account
________ Furniture
________ Cash
________ Savings account

Accepted Answer

The answer of Indicate whether the following are liquid assets...

Question 19

Paying off a credit card with cash will have which of the following effects on net worth?

Accepted Answer

A)  Increase 
B)  Decrease 
C)  No effect 
D)  Insufficient data to determine the answer 
A)  Increase 
B)  Decrease 
C)  No effect 
D)  Insufficient data to determine the answer

Question 20

Why is it important to monitor your debt level?

Accepted Answer

A)  So it does not become so high that you cannot cover the monthly payments 
B)  So that you maintain a liquidity ratio of at least 2.5 
C)  In order to qualify for another credit card to capture the introductory points 
D)  So that your total debt does not exceed your annual income 
A)  So it does not become so high that you cannot cover the monthly payments 
B)  So that you maintain a liquidity ratio of at least 2.5 
C)  In order to qualify for another credit card to capture the introductory points 
D)  So that your total debt does not exceed your annual income

Exam 2: Planning With Personal Financial Statements

If Jo Ann has $4,000 in liquid assets and $1,000 in current liabilities, her liquidity ratio is

The current financial position of an individual or family is best presented with the use of a

Stocks are considered liquid assets since they are easy to sell without a loss in value.

Cash inflows tend to increase as a person gets older since they tend to spend less once they have their education and home purchase behind them.

One of the problems in making a monthly budget is that some expenses fluctuate quite a bit from month to month.

Cash inflow can be increased by all of the following, except

Property such as a person's home, car, and furniture are called

Student loans, auto loans, and housing loans are good examples of

Corporate stocks, government or corporate bonds, or mutual funds, are called

Which of the following is not a true statement about mutual funds?

Your net worth can change even if your net cash flows are zero.

Which of the following will not increase your liquidity?

You save the same dollar amount from each paycheck during your career. As your income increases, your savings rate will

Health insurance and auto insurance premiums are not cash outflows because they prevent large expenditures which are outflows.

All of the following affect cash outflows, except

Which of the following statements about stocks is not true?

Bill's annual savings rate is 9%. If Bill currently saves $6,750 annually, how much more will he need to save to increase his savings rate to 11%?

Indicate whether the following are liquid assets or household assets by placing an L or H beside them. ________ Car ________ Home ________ Checking account ________ Furniture ________ Cash ________ Savings account

Paying off a credit card with cash will have which of the following effects on net worth?

Why is it important to monitor your debt level?

Overview of a Financial Plan

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

Indicate whether the following are liquid assets or household assets by placing an L or H beside them. Car Home Checking account Furniture Cash Savings account