1.
(TCO 1) After a lengthy job search, Judy Smith has found a place of employment; however, it is demanding and she is required to work long hours during the week and even on weekends, leaving little time for outside interests. Her decision to work at this job is an example of (Points : 4) |
deflation.
financial opportunity cost.
personal opportunity cost.
time value of money.
inflation.
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2.
(TCO 1) Marinda Smart is interested in purchasing new appliances for her kitchen that collectively will cost her approximately $5,000. She knows that she could obtain financing for her purchase, but recently heard rumors that there may be layoffs where she works and is concerned about her employment. What type of risk is Marinda concerned about? (Points : 4) |
Inflation risk
Interest rate risk
Income risk
Personal risk
Liquidity risk
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3.
(TCO 1) Which step in the financial planning process is demonstrated by a situation in which Royanne partially retires and travels to Europe using less costly transportation in order to save more money for the trip? (Points : 4) |
Developing her financial goals
Identifying alternative courses of action
Evaluating her alternatives
Implementing her financial plan
Reviewing and revising her financial plan
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4.
(TCO 1) When retirement contributions made on your behalf where you work fully belong to you even if you leave the company, this is called the point of (Points : 4) |
networking.
vesting.
a tax-deferred benefit.
a tax-exempt benefit.
break even.
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5.
(TCO 1) When you take the time to review a variety of job search websites and find 10 potential employment opportunities that fit your skills and abilities, which step in the career planning process have you completed? (Points : 4) |
Assess and research personal goals and abilities.
Evaluate the employment market to identify specific employment opportunities.
Develop a resume and cover letter to apply for specific positions.
Interview for specific positions and assess the interview performance.
Evaluate financial and other factors of positions offered.
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6.
(TCO 1) A family has a net worth of $175,000 and liabilities of $123,000. What is the amount of its assets? (Points : 4) |
$52,000
$123,000
$175,000
$298,000
$421,000
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7.
(TCO 1) _____ would an example of a fixed expense. (Points : 4) |
An electric bill
A cell phone bill on a plan without unlimited minutes
A mortgage payment
A gas bill
Medical expenses
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8.
(TCO 1) An example of _____ is a situation in which you would use a software program to help track your spending each week. (Points : 4) |
money management
an opportunity cost
a balance sheet
creative accounting
electronic analysis
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9.
(TCO 2) The _____ tax is an additional tax that many taxpayers with high incomes and high amounts of deductions must pay. (Points : 4) |
deferred
bonus
excess
capital gains
alternative minimum
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10.
(TCO 2) A _____ is an employer-sponsored program that allows a taxpayer to cover medical and child care costs. (Points : 4) |
tax credit
tax deduction
flexible spending account
tax-deferred investment
tax-exempt investment
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11.
(TCO 2) Your bank statement shows a balance of $870. Your checkbook register shows a balance of $362. You earned interest of $5 and had a service charge of $10. There are no outstanding deposits. What is the amount of outstanding checks? (Points : 4) |
$357
$870
$513
$508
$151
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12.
(TCO 2) A drawback of a money market fund from an investment company is that there is (Points : 4) |
a penalty if money is withdrawn early.
a lower rate of interest if redeemed within the first 5 years.
a minimum required holding period.
a lack of FDIC insurance.
a higher rate of taxation than other alternative investments.
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13.
(TCO 3) All of the following are examples of closed-end credit except a(n) (Points : 4) |
home mortgage.
installment loan to purchase new furniture.
line of credit from your bank.
automobile loan.
single lump sum credit loan due in 90 days.
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14.
(TCO 3) If a bank is attempting to evaluate the trade-in value of a 2006 SUV when Anna McFarland is applying for a used car loan, the bank is examining which of the five
Cs? (Points : 4) |
Character
Capacity
Capital
Collateral
Conditions
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15.
(TCO 3) An example of a credit bureau would be (Points : 4) |
Equitron.
Transexpress.
the Better Business Bureau.
Experian.
FICO.
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16.
(TCO 3) An example of a _____ is General Motors Acceptance Corporation. (Points : 4) |
credit union
payday advance company
finance company
department store
commercial bank
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17.
(TCO 3) Newton Jones made a 20% down payment of $15,000 on a new car. This is an example of _____ in order to reduce lender risk. (Points : 4) |
sharing the interest rate risk with his lender
pledging valuable assets that can be seized if the loan is not repaid
taking a larger stake in the asset he is purchasing
repaying the loan over a faster period of time
None of the above
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18.
(TCO 3) You should immediately_____ if you find that you are having difficulty making credit payments. (Points : 4) |
skip town
declare personal bankruptcy
borrow from a loan shark to make the payment
let the borrower go to a collection agency
contact your creditors and try to work out a modified payment plan with them
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19.
(TCO 5) All of the following statements are false but which? (Points : 4) |
When establishing an investment program, you should begin by monitoring your investments.
When you are choosing an investment, you should examine only the interest rate risk factor associated with each investment.
When establishing an investment program, you should examine the potential return offered by different investment alternatives.
Leave the financial planning to the professionals.
There is no need to monitor your investments after you have made your investment decision.
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20.
(TCO 5) If Robert is concerned about the location of an investment, most likely he is interested in purchasing (Points : 4) |
common stock.
preferred stock.
a corporate bond.
real estate.
a mutual fund.
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21.
(TCO 5) All of the following statements are false except (Points : 4) |
investors should put all of their eggs in one basket.
individuals can ignore their tolerance for risk when selecting specific investments.
diversification is one way to lessen systematic risk.
the amount of time a specific investment has to work is an important consideration when developing an investment portfolio.
younger investors should invest a large percentage of their portfolio in income-producing securities.
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22.
(TCO 5) _____ involves the analysis of future earnings in order to make investment decisions. (Points : 4) |
Fundamental
Technical
Efficient market
Chart
Plot
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23.
(TCO 5) All of the following statements are false except (Points : 4) |
an investment bank is a financial firm that assists organizations in raising funds.
a corporation often deposits excess cash in an investment bank.
an investment bank provides checking services for large corporations.
most investment banks help investors buy and sell a corporation's stock.
under current laws, an investment bank provides services to individuals but cannot provide banking services to corporations.
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24.
(TCO 5) ABC Corporation has assets that total $15 million and liabilities that total $4 million. It also has 500,000 shares of stock outstanding. What is ABC's book value per share? (Points : 4) |
$8
$38
$22
$8
$30
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25.
(TCO 5) Scott Turner has a bond with 10 years to maturity, a face value of $1,000, an 8% interest rate, and a market price of $800. What is the yield to maturity on this bond? (Points : 4) |
4.00%
11.11%
8.00%
10.00%
6.67%
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26.
(TCO 5) An example of a junk bond is a(n) (Points : 4) |
Treasury bond.
bond rated B by Standard & Poor's.
bond rated AAA by Standard & Poor's.
insured municipal bond.
Treasury bill.
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27.
(TCO 5) What is the current yield for a $1,000 corporate bond that pays 8% and has a current market value of $800? (Points : 4) |
4.00%
8.10%
8.0%
10.00%
11.00%
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28.
(TCO 3) If Damian Clowder has researched the price of a car online and then decides to go negotiate with a local dealership, Damian is involved in which step of the purchasing process? (Points : 4) |
Problem identification
Information gathering
Evaluating alternatives
Determining the purchase price
Postpurchase activities
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29.
(TCO 1) If Brian Wilson obtains a document that he can mail to the manufacturer of the product he just purchased that allows him to get part of his purchase price back, he is most likely eligible for a (Points : 4) |
coupon.
rebate.
warranty.
indenture.
service contract.
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30.
(TCO 3) A credit purchase with 24 monthly payments of $80 and a down payment of $125 would have a total cost of (Points : 4) |
$2,000.
$1,795.
$2,045.
$1,920.
$1,085.
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31.
(TCO 3) When a loan is made based on the equity value of a home and the loan provides a homeowner with tax-free income until the home is sold (to pay back the loan), this is called a(n) (Points : 4) |
conventional mortgage.
growing equity mortgage.
second mortgage.
reverse mortgage.
adjustable-rate mortgage.
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32.
(TCO 4) Your home insurance policy has a $250 deductible. If hail causes $1,500 damage to your home, what amount of the claim would the insurance company pay? (Points : 4) |
$1,750
$1,250
$1,500
$250
$0
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33.
(TCO 4) John Brown owns a home in Oakland, California and because of the risk of earthquakes, he decides to purchase _____ to cover potential losses. (Points : 4) |
building and other structures
additional living expenses
personal property
personal liability
specialized coverage
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34.
(TCO 4) Angela has a policy that includes a $250 deductible and a coinsurance provision requiring her to pay 20% thereafter. Her medical bills total $5,500. What amount is she required to pay personally? (Points : 4) |
$1,050
$300
$5,500
$5,500
$1,300
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35.
(TCO 4) Medigap insurance is sold and serviced by (Points : 4) |
the federal government.
state governments.
both federal and state governments.
private insurance companies.
both the government and private insurance companies.
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36.
(TCO 4) If Mary Lou applies for a life insurance policy and lies about her age, a _____ provision will state that her benefits will be what her premium would have bought if she had been truthful about her age. (Points : 4) |
policy loan
grace period
true age
guaranteed insurability
misstatement of age
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37.
(TCO 4) If Frank has a term life insurance policy that is _____, this means that he can obtain additional years of protection at the end of the initial term without the need for a medical examination. (Points : 4) |
straight
renewable
convertible
decreasing
accelerated
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38.
(TCO 6) The Capitalist Mutual Fund's net asset value is $27.25. The fund has liabilities of $1.4 million and 1,600,000 shares have been issued. What is the value of the fund's portfolio? (Points : 4) |
$43.6 million
$45 million
$38.2 million
$40 million
$16 million
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39.
(TCO 6) A mutual fund that invests in companies with a market capitalization of less than $2 billion is called a(n) (Points : 4) |
socially responsible fund.
sector fund.
small-cap fund.
index fund.
growth fund.
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40.
(TCO 6) A benefit associated with an investment in a real estate limited partnership is that the investor (Points : 4) |
does not have to worry about capital gains tax.
does not have to pay federal income tax.
does not have to pay state income tax.
can invest in a shopping center or large building by investing as little as $5,000.
faces an investment that is very liquid.
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41.
(TCO 6) Roy Jacobs received several pieces of rare artwork from his uncle. This artwork is an example of an investment in (Points : 4) |
direct investment in real estate.
indirect investment in real estate.
precious metals.
collectibles.
gems.
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42.
(TCO 6) All of the following present characteristics of a defined benefit plan except (Points : 4) |
employer contributions.
formula-based benefits.
investments managed by plan officials.
limited government-guaranteed benefits.
employee-required contributions.
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43.
(TCO 6) Chuck owns a home worth $140,000, a car valued at $30,000, and miscellaneous assets worth $7,500. He owes $75,000 on the home and $12,000 on the car, and has no other debts. His retirement account, in which he is fully vested, contains $17,500 in mutual funds. He is insured with a $250,000 term life insurance policy. What is his net worth? (Points : 4) |
$83,000
$108,000
$195,000
$358,000
$445,000
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44.
(TCO 7) The benefits of establishing a trust include the fact that (Points : 4) |
it can reduce or provide payment for estate taxes.
it can allow you to avoid probate and transfer assets immediately to beneficiaries.
it can free you from managing your assets, while providing you a regular income.
it can ensure that your property serves a desired purpose after you die.
All of the above
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45.
(TCO 7) Samantha has been designated as the recipient of her sister's assets in the event of her death. This means that Samantha is her sister's (Points : 4) |
executor.
trustee.
guardian.
beneficiary.
agent.
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