Question 1

The cash flow statement reports a person's or family's

Accepted Answer

A)  net worth. 
B)  current income and payments. 
C)  plan for borrowing. 
D)  value of investments. 
A)  net worth. 
B)  current income and payments. 
C)  plan for borrowing. 
D)  value of investments.

Question 2

Your cash outflows are the same as your liabilities such as the amount you owe on your car or home.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following 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

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)  A 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)  A minimum investment is required. 
D)  The value of shares is reported in The Wall Street Journal.

Question 5

Analyzing your expected income and expenses over the coming 6 months is

Accepted Answer

A)  called budgeting and is worthwhile no matter your life stage. 
B)  generally not necessary early in your career. 
C)  not necessary until you are nearing retirement. 
D)  only necessary once a year. 
A)  called budgeting and is worthwhile no matter your life stage. 
B)  generally not necessary early in your career. 
C)  not necessary until you are nearing retirement. 
D)  only necessary once a year.

Question 6

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

Question 7

David's liquidity ratio is 3.0.He has $1,000 in current liabilities.Therefore,he has ________ worth of liquid assets.

Accepted Answer

A)  $3,000 
B)  $333 
C)  $4,000 
D)  $700 
A)  $3,000 
B)  $333 
C)  $4,000 
D)  $700

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

A budget will not do which of the following?

Accepted Answer

A)  Help determine if cash outflows will be sufficient to cover cash inflows 
B)  Anticipate cash shortages 
C)  Determine the excess you have to invest 
D)  Determine the additional payments you can make to reduce personal debt 
A)  Help determine if cash outflows will be sufficient to cover cash inflows 
B)  Anticipate cash shortages 
C)  Determine the excess you have to invest 
D)  Determine the additional payments you can make to reduce personal debt

Question 10

If your net cash inflows exceed your net cash outflows,you can increase your net worth by investing the difference in more ________.

Accepted Answer

The answer of If your net cash inflows exceed your...

Question 11

Jim has $1,000 of salary and $100 of dividend income this month.This month he also has rent and utilities of $300 and he spent $200 on groceries and $100 on clothing.What is Jim's 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 12

A family with $45,000 in assets and $22,000 in liabilities would have a net worth of

Accepted Answer

A)  $45,000. 
B)  $23,000. 
C)  $22,000. 
D)  $67,000. 
A)  $45,000. 
B)  $23,000. 
C)  $22,000. 
D)  $67,000.

Question 13

Salary or wages are the only cash inflows for working people.

Accepted Answer

A) True 
 B)False

Question 14

The primary goal of financial planning is to

Accepted Answer

A)  increase earnings. 
B)  maximize cash inflows. 
C)  maximize wealth. 
D)  minimize financial risk. 
A)  increase earnings. 
B)  maximize cash inflows. 
C)  maximize wealth. 
D)  minimize financial risk.

Question 15

At which time do cash inflows tend to be the highest?

Accepted Answer

A)  College 
B)  Retirement 
C)  20 years into a career 
D)  First job out of college 
A)  College 
B)  Retirement 
C)  20 years into a career 
D)  First job out of college

Question 16

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

Question 17

If Kim's current debt ratio is 45%,this means that ________ of Kim's assets are purchased on credit.

Accepted Answer

A)  55% 
B)  45% 
C)  50% 
D)  Not enough data to determine the answer 
A)  55% 
B)  45% 
C)  50% 
D)  Not enough data to determine the answer

Question 18

The main source of cash flow for most people is

Accepted Answer

A)  salary and wages. 
B)  dividends. 
C)  interest. 
D)  parents. 
A)  salary and wages. 
B)  dividends. 
C)  interest. 
D)  parents.

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

Allison anticipates an additional car expense two months from now of $400 for new tires that she has not previously budgeted for.What action should Allison take?

Accepted Answer

A)  Nothing; wait another month to consider the expense since she doesn't need the tires for another two months. 
B)  Plan to use her credit card to purchase the tires. Then she won't have to use her excess cash. 
C)  Revise her car expenses over the next two months to allow for the additional cost of the new tires. 
D)  Ask her parents for the money for the new tires. 
A)  Nothing; wait another month to consider the expense since she doesn't need the tires for another two months. 
B)  Plan to use her credit card to purchase the tires. Then she won't have to use her excess cash. 
C)  Revise her car expenses over the next two months to allow for the additional cost of the new tires. 
D)  Ask her parents for the money for the new tires.

Exam 2: Planning With Personal Financial Statements

The cash flow statement reports a person's or family's

Your cash outflows are the same as your liabilities such as the amount you owe on your car or home.

Which of the following will not increase your net worth?

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

Analyzing your expected income and expenses over the coming 6 months is

Which of the following is not a liquid asset?

David's liquidity ratio is 3.0.He has $1,000 in current liabilities.Therefore,he has ________ worth of liquid assets.

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

A budget will not do which of the following?

If your net cash inflows exceed your net cash outflows,you can increase your net worth by investing the difference in more ________.

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

A family with $45,000 in assets and $22,000 in liabilities would have a net worth of

Salary or wages are the only cash inflows for working people.

The primary goal of financial planning is to

At which time do cash inflows tend to be the highest?

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%?

If Kim's current debt ratio is 45%,this means that ________ of Kim's assets are purchased on credit.

The main source of cash flow for most people is

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

Allison anticipates an additional car expense two months from now of $400 for new tires that she has not previously budgeted for.What action should Allison take?

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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