1. Anunemployment rate of 12 percentwouldbeindicativeof:
   1. Expansion.
   2. Recession.
   3. Recovery.
   4. Inflation.

1. As the rate of inflation increases,whichofthefollowingisnottrue:
   1. Stock prices increase.
   2. Interestratesincrease.
   3. Paychecks increase.
   4. Purchasingpowerincreases.

1. Thebalancesheet isa statementof financial:
   1. level.
   2. performance.
   3. position.
   4. assets.
   5. objective.

1. Thethreepartsofyourbalancesheetare:
   1. income,liabilities,balance.
   2. assets,expenditures,balance.
   3. assets,liabilities,balance.
   4. assets,liabilities,networth.
   5. income,liabilities,networth.

1. Thebalancesheetequationsis:
   1. TotalAssets/TotalLiabilities=Net Worth.
   2. TotalAssetsxTotal Liabilities=Net Worth.
   3. TotalAssets-TotalLiabilities=Net Worth.
   4. TotalAssets+Total Liabilities=Net Worth.
   5. TotalLiabilities-TotalAssets=Net Worth.

1. Whichofthefollowingistrueregardingtheincomeandexpense statement?
   1. Savingsincreasesincomeavailableforexpenses.
   2. Incomemayincludewages,alimony,andtax refunds.
   3. Anexample of a fixed expense includes entertainment.
   4. Anexample of a discretionary expense includes insurance premiums.

1. Aninflationrateof12percentwouldbeindicativeof:
   1. Expansion.
   2. Recession.
   3. Recovery.
   4. Inflation.

1. Timexpectstoreceive$75,000in5years.Hisopportunitycostis10%compoundedmonthly.Whatis this sum worth to Tim today?

N= I=PV=

PMT= FV=

1. Maggiewantstowithdraw$1,200atthebeginningofeachmonthforthenext5years.Sheexpectsto earn 10% compounded monthly on her investments.What lump sum should Maggie deposit today?

N= I=PV=

PMT= FV=

1. Margehasbeendollarcostaveraginginamutualfundbyinvesting$2,000atthebeginningofevery quarter for the past 7 years.She has been earning an average annual compound return of 11% compounded quarterly on this investment.How much is the fund worth today?

N= I=PV=

PMT= FV=

1. Whichofthefollowingstatementsconcerningriskis(are)correct?

1. Interestrateriskisthevariabilityinasecurity'sreturnsresultingfromchangesininterest rates.All things being equal, security prices increase when interest rates increase.
2. Inflationrisk,orpurchasingpowerrisk,isthevariabilityinreturnsonsecuritiescausedby the decline in the purchasing power of invested dollars.

1. I only.
2. II only.
3. BothIand II.
4. NeitherInorII.

1. Whichofthefollowingstatementsconcerningsystematicandunsystematicrisk(is)arecorrect?
2. Systematic risk represents that portion in the variability of a stock's total returns that is directlyassociatedwithoverallmovementsingeneraleconomic(orstockmarket)activity.
3. Unsystematicriskrepresentsthatportioninthevariabilityofastock'stotalreturnthatis not related to the variability in general economic (market) activity.

1. I only.
2. II only.
3. BothIand II.
4. NeitherInorII.

1. Whichofthefollowingstatementsconcerningtheuseofanactivestrategyincommonstock valuation is (are) correct?
2. Pursuitofanactivestrategyassumesthatinvestorspossesssomeadvantagerelativeto other market participants, such as superior analytical or judgmental skills.
3. Activestrategiesincludebuy-and-hold andthe use of indexfunds.

1. I only.
2. II only.
3. BothIand II.
4. NeitherInorII.

1. Allof the followingstatements concerningbondcharacteristicsarecorrectEXCEPT:
   1. Theparvalue(facevalue)istheredemption valueofabond paidatmaturity,typically $1,000.
   2. Thetypicalbondmatures(terminates)onaspecifieddateandistechnicallyknownasaterm bond.
   3. Couponbonds,wherecouponreferstotheperiodicinterestthattheissuerpaystotheholderof the bond, typically pay interest semiannually.
   4. Abondsoldwithnocouponsatadiscountandredeemedforfacevalueatmaturityiscalleda zero coupon bond
   5. Thelower the price paid for a couponbond,thelowertheeffectivereturn.

1. Allof the followingstatements concerningequitysecuritiesarecorrectEXCEPT:
   1. Equitysecuritiesprovideapreferentialclaimbeforepaymentofallobligationstofixed- income claimson the income and assets of a corporation.
   2. Therearetwoformsofequities,preferredstockandcommonstock.
   3. Preferredstockisanequitysecuritywithanintermediateclaim(betweenthebondholdersand the stockholders) on a firm's assets and earnings.
   4. Commonstock is an equity security representingthe ownership interest in a corporation.

Reply to each of the following questions.

1. Discussinterestratesandtheir importance.
2. Discuss Federal Reserve Bank, how it works and it's importance.
3. Discussdiversifying a portfolioandits importance.
4. Discusspersonal financial statementsand theuse in the planning process.