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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)
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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)
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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)
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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)
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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
|
|
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
|
|
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
|
|
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)
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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 fiveCs? (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.
|
|
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
|
|
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)
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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)
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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.
|
|
22.
(TCO 5) _____
involves the analysis of future earnings in order to make investment
decisions. (Points : 4)
|
Fundamental
Technical
Efficient market
Chart
Plot
|
|
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
|
|
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%
|
|
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.
|
|
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%
|
|
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.
|
|
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.
|
|
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.
|
|
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
|
|
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
|
|
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
|
|
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.
|
|
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
|
|
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
|
|
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
|
|
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.
|
|
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.
|
|
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
|
|
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
|
|
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.
|
|
Solution: Multiple Choice Questions