Question 1

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
The most difficult approach to handling a budget deficit is to [ increase income  | liquidate investments ].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 2

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
The [ Fisher equation  | rule of 72 ] is a useful formula for estimating about how long it will take to double a sum at a given interest rate.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 3

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
Total assets on your personal balance sheet are $8,000 and liabilities are $2,000. Your solvency ratio is [ 75% | 25% ].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 4

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
A deficit on your income and expense statement will have [ an | no ] effect on your personal balance sheet.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 5

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
A [ savings account | retirement account ] would be an example of a liquid asset.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 6

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
[ Financial plans  | Budgets ] describe financial goals and provide the action plans to their achievement.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 7

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
Another term sometimes used for net worth is [ collateral | equity ].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 8

Josh wants to determine the rate of return he needs to earn in order to net a real rate of return of 7% when expected inflation is 4%. What nominal rate of return would Josh need to earn? (Show all work.)

Accepted Answer

The answer of Josh wants to determine the rate of...

Question 9

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
A personal balance sheet provides a statement of your financial [ position | performance ].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 10

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
Earnings received as wages, salaries, bonuses, commissions, interest and dividends, or proceeds from the sale of assets are known as [ income | equity ].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 11

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
Take-home pay represents the amount of [ gross | disposable ] income you receive from your employer.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 12

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
A(n) [ mutual fund | annuity ] is a fixed sum of money that occurs every period.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 13

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
The purpose of the debt service ratio is to show the amount of income needed to pay your [ current liabilities | monthly loan payments ].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 14

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
If your expenses exceed your income, the bottom line of your income and expense statement will show a cash [ surplus | deficit ].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 15

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
[ Present | Future ] value is the value today of an amount to be received in the future.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 16

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
A(n) [ auto loan balance  | insurance premium ] would be an example of a current liability.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 17

The Flemings will need $80,000 annually for 20 years during their retirement. How much will they have at retirement if they can earn a 4% rate of interest on their investment?

Accepted Answer

The answer of The Flemings will need $80,000 annually for...

Question 18

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
If you liquidate assets or borrow to make your budget balance, this will [ increase | decrease ] your net worth.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 19

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
Your gross income was $32,000; your net income was $25,000; you saved $1,000. Your savings ratio was [ 3% | 4% ].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 20

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
The balance sheet and income and expense statement provide a picture of your [ actual | projected ] financial position.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Quiz 2: Developing Your Financial Statements and Plans

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. A [ savings account | retirement account ] would be an example of a liquid asset.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. Another term sometimes used for net worth is [ collateral | equity ].

Josh wants to determine the rate of return he needs to earn in order to net a real rate of return of 7% when expected inflation is 4%. What nominal rate of return would Josh need to earn? (Show all work.)

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. A personal balance sheet provides a statement of your financial [ position | performance ].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. A(n) [ mutual fund | annuity ] is a fixed sum of money that occurs every period.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. [ Present | Future ] value is the value today of an amount to be received in the future.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. A(n) [ auto loan balance | insurance premium ] would be an example of a current liability.

The Flemings will need $80,000 annually for 20 years during their retirement. How much will they have at retirement if they can earn a 4% rate of interest on their investment?