I have attached some past exam questions, I wanna check if my answers were correct.

> MACQUARIE SEAT NUMBER: University ROOM: FAMILY NAME: This question paper must be returned. Candidates are not permitted to remove any part of it from the examination room. OTHER NAMES:...... STUDENT NUMBER: FORMAL EXAMINATION PERIOD: SESSION 3, JANUARY 2016 EXAMINATION DETAILS Unit Code: Unit Name: | Duration of Exam I (including reading time if applicable): Total No. of Questions: I total No. of Pages i (including this cover sheet): ! AFAS 300 Principles of Financial Literacy Two (2) hours plus 10 minutes reading time 40 Multiple Choice Questions 9 GENERAL INSTRUCTIONS TO CANDIDATES: Candidates are required to obey all instructions provided by the Final Examination Supervisor and must refrain from communicating in any way with another student once they have entered the final examination venue. Candidates may not write or mark the exam materials in any way during reading time. Candidates may only access authorised materials during this examination. A list of authorised material is available on this cover sheet. If it is alleged you have breached these rules at any time during the examination, the matter may be reported to a University Discipline Committee for determination. EXAMINATION INSTRUCTIONS: Answers to questions must be recorded on the General Purpose Answer Sheet provided. Use of a pencil preferred to completely fill the ovals with the correct answers, ease any mistakes fully. Write your students on details on the answer sheet and the exam paper. Both answer sheet and exam paper must be submitted at end of the exam. THIS EXAMINATION PAPER MUST NOT BE RETAINED BY THE CANDIDATE. MATERIALS PERMITTED/NOT PERMITTED: Dictionaries: No dictionaries permitted Calculators: Non-programmable calculators that do not have text retrieval capacity permitted. Financial calculators may be used. Other: Closed book - no notes or textbooks permitted Multiple Choice Questions (40 marks - 1 mark per question) Select the most appropriate response 1. A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends a direction for your financial activities is a(n) A. B. C. D. E. 2. The major function of a financial plan is to: A. B. C. D. E. 3. Reduce taxes. Increase savings. Achieve financial goals. Improve your credit rating. Obtain adequate insurance protection. An advantage of personal financial planning is: A. B. C. D. E. 4. Insurance prospectus. Financial plan. Budget. Investment forecast. Statement. The use of low-interest savings Increased impulse spending Increased control of financial affairs More credit card debt Less monitoring of investments Which of the following is incorrect? A. There is no substitute for researching a potential investment. B. Beginning investors sometimes worry that they won't know what the information they find about stocks really means. C. Some investors do not know where to get the information they need to evaluate potential investments. D. The amount of information available about stocks is limited. E. All of these statements are correct. 5. Who is most likely to benefit by inflation? A. B. C. D. E. Retired people Lenders Borrowers Low-income consumers Government 2 6. Lower consumer saving and investing is likely to be accompanied by A. B. C. D. E. 7. An investor should expect to receive a risk premium for A. B. C. D. E. 8. Expanded exports Lower consumer prices Higher uncertainty about getting his/her money back Reduced availability of investments Expected lower inflation Amanda wants to be part of the ownership for a corporation. She should invest in A. B. C. D. E. 9. Lower wages Lower interest rates Lower production costs Higher interest rates Higher exports Bonds. Common stock/shares. Dividends. A savings account. A proxy. How is an ETF similar to a closed-end fund? A. Shares are traded on a securities exchange or in the over-the-counter market. B. An investor can purchase as little as one share of a fund. C. Prices are determined by supply and demand and the value of stocks and other investments contained in the portfolio. D. Prices are determined by investor expectations. E. All of these are correct. 10. The net asset value is calculated as A. B. C. D. (Liabilities - Value of portfolio) + Number of shares outstanding. Number of shares outstanding/(Liabilities - Value of portfolio). (Liabilities - Value of portfolio)/Number of shares outstanding. (Current market value of portfolio - Liabilities)/Number of shares outstanding. E. Number of shares outstanding/(Value of portfolio - Liabilities). 3 11. Which of the following short-term goals is stated most clearly? A. B. C. D. E. 12. Which of the following long-term goals is stated most clearly? A. B. C. D. E. 13. Invest $2,000 a year for retirement. Reduce our debt payments. Save funds for an annual vacation. Save $100 a month to create a $4,000 emergency fund. Spend less each month. Opportunity cost refers to A. B. C. D. E. 15. Buy a car for less than $17,000 within 6 months Retire in 10 years at age 65 Purchase a house with a mortgage no greater than $150,000 within 3 years Set up an emergency fund Invest $50 per month for the next 18 years for my nephew's college fund Which of the following goals would be the easiest to implement and measure? A. B. C. D. E. 14. Buy a car for less than $17,000 within 6 months Retire in 10 years at age 65 with $2,000,000 in my 401 (k) account Purchase a house with a mortgage no greater than $150,000 within 5 years Set up an emergency fund Invest $50 per month for the next 18 years for my nephew's college fund Money needed for major consumer purchases. The trade-off of a decision. The amount paid for taxes when a purchase is made. Current interest rates. Evaluating different alternatives for financial decisions. To develop a financial plan, one should A. B. C. D. Set several general goals for the short-term Only set long-term goals after short-term goals have been accomplished Focus on intermediate goals first Identify specific, realistic goals that are measurable along with a time frame and an action plan E. Not worry about whether or not the goals can be achieved based on one's income and life situation 4 16. Which of the following is an example of opportunity cost? A. B. C. D. E. 17. Renting an apartment near school Saving money instead of taking a vacation Organizing income tax records Purchasing automobile insurance Using a personal computer for financial planning The time value of money refers to A. Personal opportunity costs such as time lost on an activity. B. Financial decisions that require borrowing funds from a financial institution. C. Changes in interest rates due to changes in the supply and demand for money in our economy. D. Increases in an amount of money as a result of interest earned. E. Changing demographic trends in our society. 18. Present value computations are also referred to as A. B. C. D. E. 19. Tim Calibe received a $500 gift from his grandparents. He wants to invest this money for the down payment of a house that he plans to purchase in 3 years. What type of computation should he use? A. B. C. D. E. 20. Discounting. Add-on interest. Compounding. Simple interest. An annuity. Present value of a single amount Future value of a single amount Simple interest Present value of an annuity Future value of an annuity If a $10,000 investment increases to $10,080 in one year, what is its rate of return? A. B. C. D. E. 0.8 percent 1.08 percent 8 percent 80 percent 108 percent 5 21. A personal balance sheet presents A. B. C. D. E. 22. The equation to calculate net worth is A. B. C. D. E. 23. Amounts budgeted for spending. Income and expenses for a period of time. Earnings on savings and investments. Items owned and amounts owed. Family financial goals. Assets - Cash outflows = Net worth. Cash inflows - Liabilities = Net worth. Cash inflows - Cash outflows = Net worth. Assets - Liabilities = Net worth. Cash inflows + Liabilities = Net worth. If overall interest rates in the economy rise, a corporate bond with a fixed interest rate will generally A. B. C. D. E. 24. Increase in value. Decrease in value. Remain unchanged. Become worthless. Be returned to the corporation. Which of the following statements is correct? A. For the corporation, interest paid on corporate bonds is not tax-deductible. B. Bond financing is seldom used to pay for a corporation's ongoing business activities. C. Bonds are a form of debt financing. D. Bonds do not have to be repaid at maturity. E. Interest payments to bondholders are at the discretion of the corporation. 25. Time is an important factor when evaluating a mutual fund for which of the following? A. B. C. D. E. The existence of the underlying index. The life of the companies in the fund. The length of time that the fund manager has been managing the fund. The status of the economy. None of these. 6 26. Timothy has $100 automatically invested in a stock each month. This way, he doesn't buy high and sell low. He is using a A. B. C. D. E. 27. Rebecca owns stock that pays a dividend. She does not want the cash now; instead she would prefer to have more shares of stock. She should use a A. B. C. D. E. 28. Buy-and-hold technique. Direct investment plan. Direct reinvestment plan. Dollar cost averaging technique. Margin technique. Buy-and-hold technique. Direct investment plan. Dividend reinvestment plan. Dollar cost averaging technique. Margin technique. Some of the advantages of companies include A. Flat tax rate at 30% B. The ability to split losses between family members C. Imputation credits can be passed onto shareholders through the payment of franked dividends D. Only options A & C are correct E. Options A, B & C are correct 29. What is an Australian taxpayer's taxable income? A. B. C. D. E. 30. Taxable income = Assessable Taxable income = Assessable Taxable income = Assessable Taxable income = Assessable None of the Above Income - Allowable Deductions Income - Allowable Deductions - Tax Offsets Income - Allowable Deductions + Tax Offsets Income - Tax Offsets Some of the superannuation contribution characteristics A. People aged