Question 1

A family with $45,000 in assets and $22,000 in liabilities would have a net worth of
(a)$45,000.
(b)$23,000.
(c)$22,000.
(d)$67,000.

Accepted Answer

(b)$45,000 - $22,000 = $23,000

Question 2

Which of the following actions will not increase your net worth?

Accepted Answer

A) Country club dues paid monthly 
B) Contributions to a mutual fund paid monthly 
C) Car payments paid monthly 
D) Home mortgage payments paid monthly 
A) Country club dues paid monthly 
B) Contributions to a mutual fund paid monthly 
C) Car payments paid monthly 
D) Home mortgage payments paid monthly A

Question 3

Which of the following is not a liquid asset?

Accepted Answer

A) Cash in your pocket 
B) Money in a savings account 
C) Corporate stock you own outright 
D) Money in your checking account 
A) Cash in your pocket 
B) Money in a savings account 
C) Corporate stock you own outright 
D) Money in your checking account C

Question 4

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) Minimum investment is required 
D) The value of shares is reported in The Wall Street Journal 
A) They are managed by professional managers 
B) Proceeds are only invested in stocks 
C) Minimum investment is required 
D) The value of shares is reported in The Wall Street Journal

Question 5

Jeff has a $1,000 salary and a $100 dividend income this month.This month Jim has rent and utilities of $300 and he spent $200 on groceries and $100 on clothing.What is his net cash flow this month?

Accepted Answer

A) $400 
B) $600 
C) $500 
D) $1,100 
A) $400 
B) $600 
C) $500 
D) $1,100

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Nancy has $40,000 of annual disposable income and saves $8,000 a year.Her savings rate is

Accepted Answer

A) 5%. 
B) 12%. 
C) 17%. 
D) 20%. 
A) 5%. 
B) 12%. 
C) 17%. 
D) 20%.

Question 8

Long-term liabilities are debts that will be paid at least three years into the future.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not considered an asset for a family?

Accepted Answer

A) Cash in a checking account 
B) A mortgaged home 
C) A leased car 
D) Furniture 
A) Cash in a checking account 
B) A mortgaged home 
C) A leased car 
D) Furniture

Question 10

If you sell stock from your portfolio to pay off your car loan,your debt ratio of 0.5 will

Accepted Answer

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

Question 11

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

Question 12

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

Accepted Answer

H Car H Home L Check

Question 13

In the balance sheet,a(n)________ in assets ________ net worth.

Accepted Answer

A) increase; increases 
B) decrease; increases 
C) Both A and D are correct. 
D) decrease; decreases 
A) increase; increases 
B) decrease; increases 
C) Both A and D are correct. 
D) decrease; decreases

Question 14

If spending exceeds the amount of your income over a period of time,your best option is probably to

Accepted Answer

A) reduce your spending. 
B) sell some of your assets. 
C) increase your work hours. 
D) get a second job. 
A) reduce your spending. 
B) sell some of your assets. 
C) increase your work hours. 
D) get a second job.

Question 15

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 16

Which of the following will not increase your liquidity ratio?

Accepted Answer

A) Purchasing a stereo on credit 
B) Paying off a credit card 
C) Selling stock for a gain 
D) More data needed 
A) Purchasing a stereo on credit 
B) Paying off a credit card 
C) Selling stock for a gain 
D) More data needed

Question 17

Liquid assets refers to

Accepted Answer

A) the earnings on savings. 
B) the ease of converting a financial resource into cash without a loss in value. 
C) the amount of insurance coverage a person has. 
D) a person's inability to pay his or her debt. 
A) the earnings on savings. 
B) the ease of converting a financial resource into cash without a loss in value. 
C) the amount of insurance coverage a person has. 
D) a person's inability to pay his or her debt.

Question 18

Paying cash for an Alaskan cruise would

Accepted Answer

A) increase assets. 
B) decrease assets. 
C) increase net worth. 
D) decrease liabilities. 
A) increase assets. 
B) decrease assets. 
C) increase net worth. 
D) decrease liabilities.

Question 19

Which cash inflow will probably be discontinued after retirement?

Accepted Answer

A) Dividend and interest received from investments 
B) Pension payments 
C) Salary 
D) Social Security benefits 
A) Dividend and interest received from investments 
B) Pension payments 
C) Salary 
D) Social Security benefits

Question 20

Paying off a credit card with cash will have the following effect on net worth.

Accepted Answer

A) Increase 
B) Decrease 
C) No effect 
D) Insufficient data 
A) Increase 
B) Decrease 
C) No effect 
D) Insufficient data

Exam 2: Planning With Personal Financial Statements

A family with $45,000 in assets and $22,000 in liabilities would have a net worth of (a)$45,000. (b)$23,000. (c)$22,000. (d)$67,000.

Which of the following actions will not increase your net worth?

Which of the following is not a liquid asset?

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

Jeff has a $1,000 salary and a $100 dividend income this month.This month Jim has rent and utilities of $300 and he spent $200 on groceries and $100 on clothing.What is his net cash flow this month?

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

Nancy has $40,000 of annual disposable income and saves $8,000 a year.Her savings rate is

Long-term liabilities are debts that will be paid at least three years into the future.

Which of the following is not considered an asset for a family?

If you sell stock from your portfolio to pay off your car loan,your debt ratio of 0.5 will

If you save the same dollar amount from each paycheck during your career as your income increases,your savings rate will

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

In the balance sheet,a(n)________ in assets ________ net worth.

If spending exceeds the amount of your income over a period of time,your best option is probably to

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

Which of the following will not increase your liquidity ratio?

Liquid assets refers to

Paying cash for an Alaskan cruise would

Which cash inflow will probably be discontinued after retirement?

Paying off a credit card with cash will have the following effect on net worth.

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

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

In the balance sheet,a(n) in assets net worth.