Question 1

Student loans,car 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 2

A person's net worth would increase as a result of

Accepted Answer

A) reducing amounts owed to others. 
B) reducing earnings. 
C) decreasing the value of assets. 
D) increasing spending on current living expenses. 
A) reducing amounts owed to others. 
B) reducing earnings. 
C) decreasing the value of assets. 
D) increasing spending on current living expenses.

Question 3

Cash outflows are also called

Accepted Answer

A) assets. 
B) expenses. 
C) income. 
D) liabilities. 
A) assets. 
B) expenses. 
C) income. 
D) liabilities.

Question 4

Cash flow can be increased by all of the following except

Accepted Answer

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

Question 5

A high debt ratio indicates an excessive amount of debt and should be reduced over time to avoid any debt repayment problems.

Accepted Answer

A) True 
 B)False

Question 6

Careful budgeting and controlled spending lead to self-reliance and a feeling of financial freedom.

Accepted Answer

A) True 
 B)False

Question 7

Cash outflows represent your liabilities such as the pay-off on your car or home.

Accepted Answer

A) True 
 B)False

Question 8

If your monthly disposable income equals $1,500 and you currently save $500/month,your savings rate is ________.

Accepted Answer

The answer of If your monthly disposable income equals $1,500...

Question 9

Which of the following would increase your liquid assets?

Accepted Answer

A) Buying a new car 
B) Making regular deposits to a savings account at your bank 
C) Buying rental property 
D) Putting more of your salary in a 401(k) 
A) Buying a new car 
B) Making regular deposits to a savings account at your bank 
C) Buying rental property 
D) Putting more of your salary in a 401(k)

Question 10

Which of the following is not an appropriate approach to solving the problem of an annual budget deficit?

Accepted Answer

A) Liquidate enough savings or investments to make up the deficit 
B) Increase short-term,flexible expenditure items 
C) Renegotiate terms for long-term expense items 
D) Increase income by getting an additional part-time job 
A) Liquidate enough savings or investments to make up the deficit 
B) Increase short-term,flexible expenditure items 
C) Renegotiate terms for long-term expense items 
D) Increase income by getting an additional part-time job

Question 11

Which of the following is not a cash inflow?

Accepted Answer

A) Interest received 
B) Dividend income 
C) Car payment 
D) Salary 
A) Interest received 
B) Dividend income 
C) Car payment 
D) Salary

Question 12

The best measure of a person's or family's wealth is

Accepted Answer

A) the amount of salary earned annually. 
B) net worth. 
C) the total dollar value of investment assets. 
D) the market value of real estate including the personal home. 
A) the amount of salary earned annually. 
B) net worth. 
C) the total dollar value of investment assets. 
D) the market value of real estate including the personal home.

Question 13

Your current liquidity ratio is 2.0.If you take money out of your savings account to pay off a credit card your liquidity ratio 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 14

Budgeting is a starting point for developing your financial plan.A good understanding of cash inflows and outflows,or what you make and spend is essential.Describe one way to increase your cash inflows and one way to decrease your personal outflows.

Accepted Answer

Increase inflows through more income suc

Question 15

Liabilities can be calculated by

Accepted Answer

A) adding assets plus net worth. 
B) subtracting net worth from assets. 
C) adding assets plus income. 
D) subtracting expenses from assets. 
A) adding assets plus net worth. 
B) subtracting net worth from assets. 
C) adding assets plus income. 
D) subtracting expenses from assets.

Question 16

A personal balance sheet summarizes

Accepted Answer

A) income and expenses. 
B) cash inflows and outflows. 
C) assets,net worth,and income. 
D) assets,liabilities,and net worth. 
A) income and expenses. 
B) cash inflows and outflows. 
C) assets,net worth,and income. 
D) assets,liabilities,and net worth.

Question 17

When a person owns corporate stocks,government or corporate bonds,or mutual funds,these 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 18

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

Accepted Answer

A) True 
 B)False

Question 19

Another term for your wealth calculated by deducting money that you owe from the value of the things you own is

Accepted Answer

A) gross income. 
B) net income. 
C) net property. 
D) net worth. 
A) gross income. 
B) net income. 
C) net property. 
D) net worth.

Question 20

A personal cash flow statement is usually the starting point for an individual's or family's budget.

Accepted Answer

A) True 
 B)False

Exam 2: Planning With Personal Financial Statements

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

A person's net worth would increase as a result of

Cash outflows are also called

Cash flow can be increased by all of the following except

A high debt ratio indicates an excessive amount of debt and should be reduced over time to avoid any debt repayment problems.

Careful budgeting and controlled spending lead to self-reliance and a feeling of financial freedom.

Cash outflows represent your liabilities such as the pay-off on your car or home.

If your monthly disposable income equals $1,500 and you currently save $500/month,your savings rate is ________.

Which of the following would increase your liquid assets?

Which of the following is not an appropriate approach to solving the problem of an annual budget deficit?

Which of the following is not a cash inflow?

The best measure of a person's or family's wealth is

Your current liquidity ratio is 2.0.If you take money out of your savings account to pay off a credit card your liquidity ratio will

Budgeting is a starting point for developing your financial plan.A good understanding of cash inflows and outflows,or what you make and spend is essential.Describe one way to increase your cash inflows and one way to decrease your personal outflows.

Liabilities can be calculated by

A personal balance sheet summarizes

When a person owns corporate stocks,government or corporate bonds,or mutual funds,these are called

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

Another term for your wealth calculated by deducting money that you owe from the value of the things you own is

A personal cash flow statement is usually the starting point for an individual's or family's budget.

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

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