Question 1

If you buy a $10,000 par value,three-month T-bill priced at $9,800,what will your return (not annualized)on investment be?

Accepted Answer

A)  8.2% 
B)  6.5% 
C)  2.04% 
D)  4.08% 
A)  8.2% 
B)  6.5% 
C)  2.04% 
D)  4.08%

Question 2

On April 1,Alex deposited $2,000 in an MMDA that pays 3% interest.On July 1,Alex invested $3,000 in a six-month CD that pays 6% interest.How much total interest will Alex have earned by December 31?

Accepted Answer

A)  $90.00 
B)  $45.00 
C)  $135.00 
D)  $240.00 
A)  $90.00 
B)  $45.00 
C)  $135.00 
D)  $240.00

Question 3

________ risk is the potential loss from converting an investment into cash.

Accepted Answer

A)  Credit 
B)  Interest rate 
C)  Liquidity 
D)  Asset 
A)  Credit 
B)  Interest rate 
C)  Liquidity 
D)  Asset

Question 4

Describe the type of checking account you have or plan to have.List the advantages and disadvantages of your choice.

Accepted Answer

Advantages can include a debit card,mobi

Question 5

Treasury bills (T-bills)may be purchased by individuals,and require a minimum investment of $100 par value.

Accepted Answer

A) True 
 B)False

Question 6

What would be the annualized return to an investor who purchases a one-year $10,000 T-bill for $9,600 and sells it on the secondary market 90 days after the purchase for $9,750?

Accepted Answer

A)  3.5% 
B)  6.34% 
C)  10.14% 
D)  16.22% 
A)  3.5% 
B)  6.34% 
C)  10.14% 
D)  16.22%

Question 7

Financial advisors often advise having 4-6 months of income in "near cash" for rainy day funds.Which of these investments do not provide the necessary liquidity to meet this need?

Accepted Answer

A)  Bank money market fund 
B)  Stock market listed money market fund 
C)  High dividend paying blue chip stock 
D)  B and C do not provide the necessary liquidity 
A)  Bank money market fund 
B)  Stock market listed money market fund 
C)  High dividend paying blue chip stock 
D)  B and C do not provide the necessary liquidity

Question 8

Which of the following items will usually give you the highest return?

Accepted Answer

A)  One year CD 
B)  Savings account 
C)  NOW account 
D)  Checking account 
A)  One year CD 
B)  Savings account 
C)  NOW account 
D)  Checking account

Question 9

Money market funds (MMFs)that invest in commercial paper are insured by the FDIC.

Accepted Answer

A) True 
 B)False

Question 10

________ risk is the risk that an investment could decline as a result of a change in interest rates.

Accepted Answer

A)  Credit 
B)  Interest rate 
C)  Liquidity 
D)  Asset 
A)  Credit 
B)  Interest rate 
C)  Liquidity 
D)  Asset

Question 11

The secondary market for T-bills means that

Accepted Answer

A)  they cannot be sold before their maturity date with the help of a brokerage firm. 
B)  an individual may purchase T-bills that were owned by some other investor rather than from the government. 
C)  T-bills are less liquid than CDs. 
D)  All of the above. 
A)  they cannot be sold before their maturity date with the help of a brokerage firm. 
B)  an individual may purchase T-bills that were owned by some other investor rather than from the government. 
C)  T-bills are less liquid than CDs. 
D)  All of the above.

Question 12

Kayla deposits $1,500 into a NOW account that requires a minimum balance of $500 and offers an interest rate of 2.4%.How much interest will she earn in one year in the NOW account?

Accepted Answer

A)  $360 
B)  $24 
C)  $12 
D)  $36 
A)  $360 
B)  $24 
C)  $12 
D)  $36

Question 13

Money management has no relationship to the personal cash flow statement.

Accepted Answer

A) True 
 B)False

Question 14

Some investments are subject to credit risk.This means that the borrowers may not repay on a timely basis.

Accepted Answer

A) True 
 B)False

Question 15

When purchasing a certificate of deposit (CD),

Accepted Answer

A)  you are always better off to buy the longer-term CDs. 
B)  you will earn more interest percentage-wise on the lower dollar CDs. 
C)  the amount you invest is at risk, so choose carefully. 
D)  it is wise to shop around as rates vary among financial institutions. 
A)  you are always better off to buy the longer-term CDs. 
B)  you will earn more interest percentage-wise on the lower dollar CDs. 
C)  the amount you invest is at risk, so choose carefully. 
D)  it is wise to shop around as rates vary among financial institutions.

Question 16

Which of the following is not true regarding a savings account?

Accepted Answer

A)  It does not provide checking services. 
B)  It is less liquid than a checking account. 
C)  It pays lower interest than a checking account. 
D)  It is less convenient than a checking account. 
A)  It does not provide checking services. 
B)  It is less liquid than a checking account. 
C)  It pays lower interest than a checking account. 
D)  It is less convenient than a checking account.

Question 17

Your ability to cover any short-term cash deficiencies is called

Accepted Answer

A)  solvency. 
B)  wealth. 
C)  liquidity. 
D)  cash planning. 
A)  solvency. 
B)  wealth. 
C)  liquidity. 
D)  cash planning.

Question 18

Checking accounts may offer all of the following except

Accepted Answer

A)  account balance insurance in excess of $250,000. 
B)  stop payment services. 
C)  overdraft protection. 
D)  ATM privileges. 
A)  account balance insurance in excess of $250,000. 
B)  stop payment services. 
C)  overdraft protection. 
D)  ATM privileges.

Question 19

In comparing an MMDA to a NOW account,the MMDA does all of the following except

Accepted Answer

A)  the MMDA pays a higher interest rate. 
B)  the MMDA has a maturity date whereas a NOW account does not. 
C)  the MMDA provides more limited checking services. 
D)  the MMDA is less liquid. 
A)  the MMDA pays a higher interest rate. 
B)  the MMDA has a maturity date whereas a NOW account does not. 
C)  the MMDA provides more limited checking services. 
D)  the MMDA is less liquid.

Question 20

A money market deposit account (MMDA)requires a minimum balance,pays interest,and allows a limited number of checks to be written each month.

Accepted Answer

A) True 
 B)False

Exam 6: Managing Your Money

If you buy a $10,000 par value,three-month T-bill priced at $9,800,what will your return (not annualized)on investment be?

On April 1,Alex deposited $2,000 in an MMDA that pays 3% interest.On July 1,Alex invested $3,000 in a six-month CD that pays 6% interest.How much total interest will Alex have earned by December 31?

________ risk is the potential loss from converting an investment into cash.

Describe the type of checking account you have or plan to have.List the advantages and disadvantages of your choice.

Treasury bills (T-bills)may be purchased by individuals,and require a minimum investment of $100 par value.

What would be the annualized return to an investor who purchases a one-year $10,000 T-bill for $9,600 and sells it on the secondary market 90 days after the purchase for $9,750?

Financial advisors often advise having 4-6 months of income in "near cash" for rainy day funds.Which of these investments do not provide the necessary liquidity to meet this need?

Which of the following items will usually give you the highest return?

Money market funds (MMFs)that invest in commercial paper are insured by the FDIC.

________ risk is the risk that an investment could decline as a result of a change in interest rates.

The secondary market for T-bills means that

Kayla deposits $1,500 into a NOW account that requires a minimum balance of $500 and offers an interest rate of 2.4%.How much interest will she earn in one year in the NOW account?

Money management has no relationship to the personal cash flow statement.

Some investments are subject to credit risk.This means that the borrowers may not repay on a timely basis.

When purchasing a certificate of deposit (CD),

Which of the following is not true regarding a savings account?

Your ability to cover any short-term cash deficiencies is called

Checking accounts may offer all of the following except

In comparing an MMDA to a NOW account,the MMDA does all of the following except

A money market deposit account (MMDA)requires a minimum balance,pays interest,and allows a limited number of checks to be written each month.

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

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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