1. (TCO 1) Which aspect of financial planning deals with the purchase of long-term growth funds such as stocks? (Points : 4) Borrowing Spending Managing risk Investing Retirement and estate planning

Question 2. 2. (TCO 1) Jack Johnson is interested in purchasing new furniture that currently costs $2,000. He is not sure if he can afford the furniture now, but is afraid the cost of the furniture will increase to $3,000 in 6 months. Which type of risk is Jack worried about? (Points : 4) Inflation risk Interest rate risk Income risk Personal risk Liquidity risk

Question 3. 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

Question 4. 4. (TCO 1) When you only have to pay taxes on an investment at a future point in time, this is referred to as a(n) (Points : 4) cafeteria-style benefit. vesting. tax-deferred benefit. tax-exempt benefit. exclusion.

Question 5. 5. (TCO 1) Through research, Martin Jones has learned that the housing market will begin to pick up over the next few years, creating the need for more real estate agents. This is an example of _____ influencing jobs in the future. (Points : 4) demographic trends economic conditions industry trends geographic trends educational trends

Question 6. 6. (TCO 1) This month, Ken Grossman has cash inflows of $3,500 and cash outflows of $2,350, resulting in a (Points : 4) balanced budget. surplus of $1,150. deficit of $1,150. surplus of $3,500. deficit of $2,350.

Question 7. 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

Question 8. 8. (TCO 1) When formulating a budget, _____ should be the very first item taken into account. (Points : 4) variable expenses vacation expenses fixed expenses unplanned living expenses recreation expenses

Question 9. 9. (TCO 2) An example of _____ would involve a situation in which Judy Smith and Tom Smith each write their daughter a check for $12,500 for graduation, instead of giving her one $25,000 check, so they will not have to pay a gift tax. (Points : 4) fraud tax evasion tax exclusion tax avoidance tax-deferred income

Question 10. 10. (TCO 2) Megan McMillan has just won a Mega Millions lottery. This income would be classified as (Points : 4) earned income. investment income. passive income. other income. deferred income.

Question 11. 11. (TCO 2) A savings account earns 3.5%. If the saver is in a 28% tax bracket, the after-tax savings rate of return would be _____. (Points : 4) 3.5% 2.52% 4.00% .98% 2.25%

Question 12. 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.

Question 13. 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.

Question 14. 14. (TCO 3) If Cheryl Calvert is applying for a bank loan and the financial institution learns that she has been late in making payments on past loans, the bank is examining which of the five Cs? (Points : 4) Character Capacity Capital Collateral Conditions

Question 15. 15. (TCO 3) When a financial institution evaluates your credit report, it also knows that the credit bureau will use that information to calculate your (Points : 4) debt-to-equity ratio. FICO credit score. debt-payment-to-income ratio. liquidity ratio. long-term capitalization ratio.

Question 16. 16. (TCO 3) A _____ will tend to work more with a borrower if he or she is facing legitimate payment problems. (Points : 4) credit union payday advance company finance company department store commercial bank

Question 17. 17. (TCO 3) When Sarah went through a loan approval process for a car, she decided to accept a loan term of 48 months instead of 60. In terms of reducing lender risk, this is an example of (Points : 4) sharing the interest rate risk with the lender. pledging valuable assets that can be seized if the loan is not repaid. taking a larger stake in the asset she is purchasing. repaying the loan over a faster period of time. None of the above

Question 18. 18. (TCO 3) _____ is/are the primary reason(s) why consumers default on their debts. (Points : 4) Medical expenses Defective goods and services Excessive use of credit Fraudulent use of credit Consumer fraud

Question 19. 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.

Question 20. 20. (TCO 5) If Hugh is considering a risky investment that can provide him with a large profit in a short amount of time, most likely, he is interested in investing in (Points : 4) U.S. Treasury bills. certificates of deposit. low-growth stocks. speculative stocks. low-risk bonds.

Question 21. 21. (TCO 5) The purpose of asset allocation is to (Points : 4) reduce risk. increase growth. lower liquidity. provide a high return. increase income.

Question 22. 22. (TCO 5) _____ involves the analysis of future earnings in order to make investment decisions. (Points : 4) Fundamental Technical Efficient market Chart Plot

Question 23. 23. (TCO 5) A(n) _____ market is one in which previously issued financial securities are traded among investors. (Points : 4) technical fundamental efficient secondary primary

Question 24. 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

Question 25. 25. (TCO 5) Scott Turner has a bond with 10 years to maturity, a face value of $1,000, a 7% interest rate, and a market price of $800. What is the yield to maturity on this bond? (Points : 4) 8.00% 11.00% 7.00% 10.00% 11.11%

Question 26. 26. (TCO 5) A _____ is created when bonds are issued, and it allows the issuer to set aside money periodically for the purpose of redemption. (Points : 4) serial default sinking fund low coupon convertible

Question 27. 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%

Question 28. 28. (TCO 3) Lori Walker purchased a new car 9 months ago, and decides to take it in for servicing under the warranty. Lori is involved in which step of the purchasing process? (Points : 4) Problem identification Information gathering Evaluating alternatives Determining the purchase price Postpurchase activities

Question 29. 29. (TCO 1) If Bradley Smith gives a cashier a document at a point of purchase with the expectation of obtaining a discount, he is using a (Points : 4) coupon. rebate. warranty. receipt. promissory note.

Question 30. 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.

Question 31. 31. (TCO 3) The _____ is considered to be the assessed value of your home. (Points : 4) value used to calculate property taxes estimated current market value price you paid to purchase the home amount of money a buyer has offered to purchase the home cost basis assigned to your home by your insurance company

Question 32. 32. (TCO 4) Your home insurance policy has a $500 deductible. If a windstorm causes $2,500 of damage to your home, what amount of the claim would the insurance company pay? (Points : 4) $2,000 $1,000 $1,500 $500 $2,500 Question 33. 33. (TCO 4) If Sheila's family's home is damaged by a fire, the _____ part of the family's homeowners insurance policy would cover the cost of temporary housing. (Points : 4) buildings and other structures additional living expenses personal property personal liability specialized coverage Question 34. 34. (TCO 4) Martina has a policy that includes a $500 deductible and a coinsurance provision requiring her to pay 10% thereafter. Her medical bills total $5,500. What amount is she required to pay personally? (Points : 4) $1,500 $500 $1,000 $5,000 $5,500 Question 35. 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. Question 36. 36. (TCO 4) A(n) _____ is an addendum to a life insurance policy that can add additional benefits, such as an accidental death benefit payable to a beneficiary. (Points : 4) accelerated benefits clause policy dividend guaranteed insurability clause second-to-die rider double indemnity rider Question 37. 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 Question 38. 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 Question 39. 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. Question 40. 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. Question 41. 41. (TCO 6) If Wilson Fischer has purchased 10 rare silver coins from a broker, he is investing in (Points : 4) direct investment in real estate. indirect investment in real estate. precious metals. ceramics. gems. Question 42. 42. (TCO 6) Sarah makes individual retirement account contributions that are not tax deductible. However, her earnings will accumulate tax free. This is an example of a(n) _____ investment. (Points : 4) traditional IRA Roth IRA spousal IRA education IRA 401(k) Question 43. 43. (TCO 6) Jasmine owns a vehicle worth $25,000 and a home worth $225,000. She has a checking account balance of $500, a savings account balance of $1,500, and a mutual fund worth $85,000. Her personal assets are worth $90,000. She still owes $10,000 on her car, $100,000 on her home, and $1,000 on her credit card. What is Jasmine's net worth? (Points : 4) $316,000 $427,000 $536,000 $111,000 $136,000 Question 44. 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 Question 45. 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.

Question 4. 4. (TCO 1) When you only have to pay taxes on an investment at a future point in time, this is referred to as a(n) (Points : 4) cafeteria-style benefit. vesting. tax-deferred benefit. tax-exempt benefit. exclusion. Question 5. 5. (TCO 1) Through research, Martin Jones has learned that the housing market will begin to pick up over the next few years, creating the need for more real estate agents. This is an example of _____ influencing jobs in the future. (Points : 4) demographic trends economic conditions industry trends geographic trends educational trends Question 6. 6. (TCO 1) This month, Ken Grossman has cash inflows of $3,500 and cash outflows of $2,350, resulting in a (Points : 4) balanced budget. surplus of $1,150. deficit of $1,150. surplus of $3,500. deficit of $2,350. Question 7. 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 Question 8. 8. (TCO 1) When formulating a budget, _____ should be the very first item taken into account. (Points : 4) variable expenses vacation expenses fixed expenses unplanned living expenses recreation expenses Question 9. 9. (TCO 2) An example of _____ would involve a situation in which Judy Smith and Tom Smith each write their daughter a check for $12,500 for graduation, instead of giving her one $25,000 check, so they will not have to pay a gift tax. (Points : 4) fraud tax evasion tax exclusion tax avoidance tax-deferred income Question 10. 10. (TCO 2) Megan McMillan has just won a Mega Millions lottery. This income would be classified as (Points : 4) earned income. investment income. passive income. other income. deferred income. Question 11. 11. (TCO 2) A savings account earns 3.5%. If the saver is in a 28% tax bracket, the after-tax savings rate of return would be _____. (Points : 4) 3.5% 2.52% 4.00% .98% 2.25% Question 12. 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. Question 13. 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. Question 14. 14. (TCO 3) If Cheryl Calvert is applying for a bank loan and the financial institution learns that she has been late in making payments on past loans, the bank is examining which of the five Cs? (Points : 4) Character Capacity Capital Collateral Conditions Question 15. 15. (TCO 3) When a financial institution evaluates your credit report, it also knows that the credit bureau will use that information to calculate your (Points : 4) debt-to-equity ratio. FICO credit score. debt-payment-to-income ratio. liquidity ratio. long-term capitalization ratio. Question 16. 16. (TCO 3) A _____ will tend to work more with a borrower if he or she is facing legitimate payment problems. (Points : 4) credit union payday advance company finance company department store commercial bank Question 17. 17. (TCO 3) When Sarah went through a loan approval process for a car, she decided to accept a loan term of 48 months instead of 60. In terms of reducing lender risk, this is an example of (Points : 4) sharing the interest rate risk with the lender. pledging valuable assets that can be seized if the loan is not repaid. taking a larger stake in the asset she is purchasing. repaying the loan over a faster period of time. None of the above Question 18. 18. (TCO 3) _____ is/are the primary reason(s) why consumers default on their debts. (Points : 4) Medical expenses Defective goods and services Excessive use of credit Fraudulent use of credit Consumer fraud Question 19. 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. Question 20. 20. (TCO 5) If Hugh is considering a risky investment that can provide him with a large profit in a short amount of time, most likely, he is interested in investing in (Points : 4) U.S. Treasury bills. certificates of deposit. low-growth stocks. speculative stocks. low-risk bonds. Question 21. 21. (TCO 5) The purpose of asset allocation is to (Points : 4) reduce risk. increase growth. lower liquidity. provide a high return. increase income. Question 22. 22. (TCO 5) _____ involves the analysis of future earnings in order to make investment decisions. (Points : 4) Fundamental Technical Efficient market Chart Plot Question 23. 23. (TCO 5) A(n) _____ market is one in which previously issued financial securities are traded among investors. (Points : 4) technical fundamental efficient secondary primary Question 24. 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 Question 25. 25. (TCO 5) Scott Turner has a bond with 10 years to maturity, a face value of $1,000, a 7% interest rate, and a market price of $800. What is the yield to maturity on this bond? (Points : 4) 8.00% 11.00% 7.00% 10.00% 11.11% Question 26. 26. (TCO 5) A _____ is created when bonds are issued, and it allows the issuer to set aside money periodically for the purpose of redemption. (Points : 4) serial default sinking fund low coupon convertible Question 27. 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% Question 28. 28. (TCO 3) Lori Walker purchased a new car 9 months ago, and decides to take it in for servicing under the warranty. Lori is involved in which step of the purchasing process? (Points : 4) Problem identification Information gathering Evaluating alternatives Determining the purchase price Postpurchase activities Question 29. 29. (TCO 1) If Bradley Smith gives a cashier a document at a point of purchase with the expectation of obtaining a discount, he is using a (Points : 4) coupon. rebate. warranty. receipt. promissory note. Question 30. 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. Question 31. 31. (TCO 3) The _____ is considered to be the assessed value of your home. (Points : 4) value used to calculate property taxes estimated current market value price you paid to purchase the home amount of money a buyer has offered to purchase the home cost basis assigned to your home by your insurance company Question 32. 32. (TCO 4) Your home insurance policy has a $500 deductible. If a windstorm causes $2,500 of damage to your home, what amount of the claim would the insurance company pay? (Points : 4) $2,000 $1,000 $1,500 $500 $2,500 Question 33. 33. (TCO 4) If Sheila's family's home is damaged by a fire, the _____ part of the family's homeowners insurance policy would cover the cost of temporary housing. (Points : 4) buildings and other structures additional living expenses personal property personal liability specialized coverage Question 34. 34. (TCO 4) Martina has a policy that includes a $500 deductible and a coinsurance provision requiring her to pay 10% thereafter. Her medical bills total $5,500. What amount is she required to pay personally? (Points : 4) $1,500 $500 $1,000 $5,000 $5,500 Question 35. 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. Question 36. 36. (TCO 4) A(n) _____ is an addendum to a life insurance policy that can add additional benefits, such as an accidental death benefit payable to a beneficiary. (Points : 4) accelerated benefits clause policy dividend guaranteed insurability clause second-to-die rider double indemnity rider Question 37. 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 Question 38. 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 Question 39. 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. Question 40. 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. Question 41. 41. (TCO 6) If Wilson Fischer has purchased 10 rare silver coins from a broker, he is investing in (Points : 4) direct investment in real estate. indirect investment in real estate. precious metals. ceramics. gems. Question 42. 42. (TCO 6) Sarah makes individual retirement account contributions that are not tax deductible. However, her earnings will accumulate tax free. This is an example of a(n) _____ investment. (Points : 4) traditional IRA Roth IRA spousal IRA education IRA 401(k) Question 43. 43. (TCO 6) Jasmine owns a vehicle worth $25,000 and a home worth $225,000. She has a checking account balance of $500, a savings account balance of $1,500, and a mutual fund worth $85,000. Her personal assets are worth $90,000. She still owes $10,000 on her car, $100,000 on her home, and $1,000 on her credit card. What is Jasmine's net worth? (Points : 4) $316,000 $427,000 $536,000 $111,000 $136,000 Question 44. 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 Question 45. 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.