Question 1.1. (TCO 1) Jacob has moved into a home with a large acreage and is now finding that his smaller lawnmower is no longer functional. He needs to purchase a riding mower. How would you categorize Jacob's goal? (Points : 4)

Consumable-products goal

Durable-products goal

Intangible goal

Intermediate goal

Long-term goal

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) Tracey has been unemployed for almost a year. However, after extensive research, she has found that the industry in which she would like to work will begin to experience job growth in California. This is an example of _____ influencing jobs in the future. (Points : 4)

technology trends

economic conditions

industry trends

geographic trends

educational trends

Question 6.6. (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

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 tax _____ would be a situation in which Michael Franklin claimed a neighborhood child whom he had not cared for on his tax return in order to reduce his tax bill. (Points : 4)

avoidance

acceleration

evasion

delaying

deferment

Question 10.10. (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

Question 11.11. (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

Question 12.12. (TCO 2) The account in which you would expect to obtain the poorest yield and return would be a (Points : 4)

certificate of deposit.

passbook savings account.

money market account.

money market fund.

CD.

Question 13.13. (TCO 3) One disadvantage of a store-based gift card is that it (Points : 4)

looks nothing like typical debit cards.

has decreased in popularity since the mid-1990s.

works the same as a credit card.

may be eroded by fees and eventually expire.

is currently being used for very limited purposes.

Question 14.14. (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

Question 15.15. (TCO 3) An example of a credit bureau would be (Points : 4)

Equitron.

Transexpress.

the Better Business Bureau.

Experian.

FICO.

Question 16.16. (TCO 3) A _____ would require that Jessica writes a check for $125 in order to obtain a loan for $100. (Points : 4)

credit union

payday advance company

finance company

department store

commercial bank

Question 17.17. (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

Question 18.18. (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

Question 19.19. (TCO 5) When researching current price information for a bond or stock investment, the most readily available source of information for most consumers can be found within (Points : 4)

the daily newspaper.

government publications.

corporate reports.

investor newsletters.

business periodicals.

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) Last year, High-Tech Electronics earned $1.50 per share. If the current market value for a share of stock is $60, what is the firm's P/E ratio? (Points : 4)

0.04

1.50

40.00

44.00

60.00

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 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.

Question 30.30. (TCO 3) Isabel would spend $250 per week on groceries for her family if she did not use coupons. Her coupons save her 10% of that amount. She puts the amount saved into her savings account. How much will she have in her savings account at the end of the first year? Ignore interest earnings. (Points : 4)

$250

$300

$2,040

$13,000

$1,300

Question 31.31. (TCO 3) The _____ is considered to be the appraised 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 remaining after the down payment

Question 32.32. (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

Question 33.33. (TCO 4) If Deloris Johnson hires a housekeeper who breaks her leg when she trips on stairs, this loss would be covered under _____ as a part of her homeowners insurance policy. (Points : 4)

buildings and other structures

additional living expenses

personal property

personal liability

specialized coverage

Question 34.34. (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

Question 35.35. (TCO 4) _____ is a healthcare institution that directly contracts with specific medical care specialists in order to provide healthcare services in exchange for a fixed, prepaid monthly premium. (Points : 4)

Blue Cross

Blue Shield

A PPO

Medicaid

An HMO

Question 36.36. (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

Question 37.37. (TCO 4) If Larry has a term life insurance policy that is _____, this means that the payments to his beneficiaries would become smaller over time. (Points : 4)

straight

renewable

convertible

decreasing

accelerated

Question 38.38. (TCO 6) The Capitalist Mutual Fund's net asset value is $28.25. The fund has liabilities of $3 million and 1,600,000 shares have been issued. What is the value of the fund's portfolio? (Points : 4)

$42 million

$45.2 million

$48 million

$48.2 million

$3 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) If a person is interested in investing in real estate, but wants to be assured that there will be some level of diversification, he or she will want to consider (Points : 4)

a single-family dwelling.

an apartment building.

raw land.

a second mortgage.

a real estate investment trust (REIT).

Question 41.41. (TCO 6) Judith recently inherited several pieces of diamond jewelry from her aunt. This jewelry is an example of (Points : 4)

a direct investment in real estate.

an indirect investment in real estate.

an investment in precious metals.

an investment in collectibles.

an investment in gems.

Question 42.42. (TCO 6) If Jeremiah's employer makes nontaxable contributions to a plan in his name and his salary is reduced by the same amount, Jeremiah has a (Points : 4)

money-purchase pension plan.

stock bonus plan.

profit-sharing plan.

defined benefit plan.

403(b) plan.

Question 43.43. (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

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) Marion would be acting in the capacity of a(n) _____ if she is selected to manage the assets of her 16-year-old niece until the niece reaches the age of 21. (Points : 4)

executrix

trustee

guardian

beneficiary

administrator