Question 1

Which of the following items would not be included on a balance sheet?

Accepted Answer

A)  Balances owed on your utility bills 
B)  Balances owed on your credit card(s) 
C)  Mortgage payment paid 
D)  Automobile loan balance 
E)  Student loan balance 
A)  Balances owed on your utility bills 
B)  Balances owed on your credit card(s) 
C)  Mortgage payment paid 
D)  Automobile loan balance 
E)  Student loan balance

Question 2

Under what conditions should people hire a professional financial planner?

Accepted Answer

A)  When they need someone to improve or validate the plan they prepared themselves 
B)  When they start receiving late payment penalties from their creditors 
C)  When it is apparent their financial planning skills are limited 
D)  When they run into complex tax or legal issues 
E)  All of the above 
A)  When they need someone to improve or validate the plan they prepared themselves 
B)  When they start receiving late payment penalties from their creditors 
C)  When it is apparent their financial planning skills are limited 
D)  When they run into complex tax or legal issues 
E)  All of the above

Question 3

Insolvency results from earning more than you spend.

Accepted Answer

A) True 
 B)False

Question 4

As long as a financial planner is certified you need not worry about his ability to provide you with the correct financial plan for your situation.

Accepted Answer

A) True 
 B)False

Question 5

When measuring your current financial health it is important to create

Accepted Answer

A)  positive net worth. 
B)  a personal balance sheet. 
C)  an income statement. 
D)  positive net income. 
E)  both B and C. 
A)  positive net worth. 
B)  a personal balance sheet. 
C)  an income statement. 
D)  positive net income. 
E)  both B and C.

Question 6

The term "fair market value" refers to

Accepted Answer

A)  what an asset could be sold for today. 
B)  what you paid when you purchased an asset. 
C)  what an asset will be worth at some point in the future. 
D)  how the price of an asset has changed since its original purchase. 
A)  what an asset could be sold for today. 
B)  what you paid when you purchased an asset. 
C)  what an asset will be worth at some point in the future. 
D)  how the price of an asset has changed since its original purchase.

Question 7

Hector and Maria Montez
Hector and Maria Montez are trying to figure out their financial health. They will pay off their car loan in three years, their gross household income is $3,800 per month, and they receive $75 per month in interest income from their investments. They have listed the following items from their most recent statements.
Savings account: $1,200
Checking account: $800
Credit card balance: $1,000
Car loan balance: $12,000
Car market value: $8,000
Furniture; market value: $2,000
Stocks and bonds: $10,000
-What is their debt ratio?

Accepted Answer

A)  169 percent 
B)  1.69 times 
C)  0.59 percent 
D)  0.59 times 
E)  2 times 
A)  169 percent 
B)  1.69 times 
C)  0.59 percent 
D)  0.59 times 
E)  2 times

Question 8

Bradley went shopping today and used his American Express credit card to buy a new pullover sweater.He used his bank debit card to pay for a video game and bought some snack food with cash.Which of these purchases are difficult to track and monitor on his budget?

Accepted Answer

A)  The pullover sweater is difficult to track because it costs more than what he budgeted for clothing this month. 
B)  The video games are difficult to track because he did not add a budget category for electronics. 
C)  The snacks are difficult to track because cash transactions don't leave a paper trail. 
D)  Both A and B 
A)  The pullover sweater is difficult to track because it costs more than what he budgeted for clothing this month. 
B)  The video games are difficult to track because he did not add a budget category for electronics. 
C)  The snacks are difficult to track because cash transactions don't leave a paper trail. 
D)  Both A and B

Question 9

George and Betty
George and Betty, a middle-aged couple, have watched their savings account dwindle over the years. They both make good incomes and can't understand why they aren't saving more each month. Below is their financial information to complete an income statement.
Gross monthly income: $8,000
Income taxes withheld monthly: $2,300
Monthly interest income from investments: $100
Monthly insurance payments: $700
Monthly housing expenses: $4,500
Monthly food expenses: $800
Miscellaneous expenses: $400
-What is their current savings ratio?

Accepted Answer

A)  10.3 percent 
B)  negative 10.3 percent 
C)  zero 
D)  None of the above 
A)  10.3 percent 
B)  negative 10.3 percent 
C)  zero 
D)  None of the above

Question 10

Net income is used in calculating one's net worth.

Accepted Answer

A) True 
 B)False

Question 11

A debt ratio is aimed at determining if you have adequate liquidity to meet emergencies.

Accepted Answer

A) True 
 B)False

Question 12

Suppose that you were trying to determine how much income was available for future monetary needs as well as for investments.Which of the following ratios would you most likely use?

Accepted Answer

A)  Current ratio 
B)  Debt ratio 
C)  Savings ratio 
D)  Total asset turnover 
E)  None of the above 
A)  Current ratio 
B)  Debt ratio 
C)  Savings ratio 
D)  Total asset turnover 
E)  None of the above

Question 13

Having negative net income every once in a while is not such a bad thing as long as you have planned for it.

Accepted Answer

A) True 
 B)False

Question 14

Alysha has $500 in monetary assets and $5,000 in current liabilities.What is her current ratio?

Accepted Answer

A)  .100 percent 
B)  .10 times 
C)  100 percent 
D)  10 times 
A)  .100 percent 
B)  .10 times 
C)  100 percent 
D)  10 times

Question 15

Describe the three sections included in a personal balance sheet.

Accepted Answer

A personal balance sheet consists of thr

Question 16

Which of the following is a relevant question to ask a financial planner?

Accepted Answer

A)  What are your credentials and professional designations? 
B)  Would you provide us with references? 
C)  Would you show us a similar financial plan you have done for someone else? 
D)  Will you provide us with a written estimate of your services and their cost? 
E)  All of the above 
A)  What are your credentials and professional designations? 
B)  Would you provide us with references? 
C)  Would you show us a similar financial plan you have done for someone else? 
D)  Will you provide us with a written estimate of your services and their cost? 
E)  All of the above

Question 17

Sarah has $15,000 in monetary assets,$48,000 in annual living expenses,a $20,000 balance on her car loan,and $60,000 of equity in her house.What is her month's living expenses covered ratio?

Accepted Answer

A)  1.125 times 
B)  3.75 times 
C)  3.0 times 
D)  There is not enough information to answer this question. 
A)  1.125 times 
B)  3.75 times 
C)  3.0 times 
D)  There is not enough information to answer this question.

Question 18

How do you calculate the current ratio,debt ratio,and savings ratio?

Accepted Answer

Current ratio is calculated by dividing

Question 19

According to the Keown book,what are the three primary reasons for maintaining financial records?

Accepted Answer

First,without adequate records,it is ext

Question 20

Henry currently has $1250 in monetary assets and also has $1250 in current liabilities.What is his current ratio?

Accepted Answer

A)  1 time 
B)  100 percent 
C)  1 percent 
D)  0 
A)  1 time 
B)  100 percent 
C)  1 percent 
D)  0

Which of the following items would not be included on a balance sheet?

Under what conditions should people hire a professional financial planner?

Insolvency results from earning more than you spend.

As long as a financial planner is certified you need not worry about his ability to provide you with the correct financial plan for your situation.

When measuring your current financial health it is important to create

The term "fair market value" refers to

Bradley went shopping today and used his American Express credit card to buy a new pullover sweater.He used his bank debit card to pay for a video game and bought some snack food with cash.Which of these purchases are difficult to track and monitor on his budget?

Net income is used in calculating one's net worth.

A debt ratio is aimed at determining if you have adequate liquidity to meet emergencies.

Suppose that you were trying to determine how much income was available for future monetary needs as well as for investments.Which of the following ratios would you most likely use?

Having negative net income every once in a while is not such a bad thing as long as you have planned for it.

Alysha has $500 in monetary assets and $5,000 in current liabilities.What is her current ratio?

Describe the three sections included in a personal balance sheet.

Which of the following is a relevant question to ask a financial planner?

Sarah has $15,000 in monetary assets,$48,000 in annual living expenses,a $20,000 balance on her car loan,and $60,000 of equity in her house.What is her month's living expenses covered ratio?

How do you calculate the current ratio,debt ratio,and savings ratio?

According to the Keown book,what are the three primary reasons for maintaining financial records?

Henry currently has $1250 in monetary assets and also has $1250 in current liabilities.What is his current ratio?

The Financial Planning Process

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Student and Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters

Exam 2: Measuring Your Financial Health and Making a Plan

Which of the following items would not be included on a balance sheet?

Under what conditions should people hire a professional financial planner?

Insolvency results from earning more than you spend.

As long as a financial planner is certified you need not worry about his ability to provide you with the correct financial plan for your situation.

When measuring your current financial health it is important to create

The term "fair market value" refers to

Bradley went shopping today and used his American Express credit card to buy a new pullover sweater.He used his bank debit card to pay for a video game and bought some snack food with cash.Which of these purchases are difficult to track and monitor on his budget?

Net income is used in calculating one's net worth.

A debt ratio is aimed at determining if you have adequate liquidity to meet emergencies.

Suppose that you were trying to determine how much income was available for future monetary needs as well as for investments.Which of the following ratios would you most likely use?

Having negative net income every once in a while is not such a bad thing as long as you have planned for it.

Alysha has $500 in monetary assets and $5,000 in current liabilities.What is her current ratio?

Describe the three sections included in a personal balance sheet.

Which of the following is a relevant question to ask a financial planner?

Sarah has $15,000 in monetary assets,$48,000 in annual living expenses,a $20,000 balance on her car loan,and $60,000 of equity in her house.What is her month's living expenses covered ratio?

How do you calculate the current ratio,debt ratio,and savings ratio?

According to the Keown book,what are the three primary reasons for maintaining financial records?

Henry currently has $1250 in monetary assets and also has $1250 in current liabilities.What is his current ratio?

The Financial Planning Process

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Student and Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters