Question 1

Corporate stocks, government or corporate bonds, or mutual funds, are called

Accepted Answer

A)   liquid assets.
B)   household assets.
C)   investment assets.
D)   retirement assets.E) All of the above
F) A) and B)

Question 2

Health insurance and auto insurance premiums are not cash outflows because they prevent large expenditures which are outflows.

Accepted Answer

A) True 
 B)False

Question 3

All of the following affect cash outflows, except

Accepted Answer

A)   the size of your family.
B)   your age.
C)   your education level.
D)   your personal consumption behavior.E) None of the above
F) A) and C)

Question 4

Stocks are considered liquid assets since they are easy to sell without a loss in value.

Accepted Answer

A) True 
 B)False

Question 5

Property such as a person's home, car, and furniture are called

Accepted Answer

A)   liquid assets.
B)   household assets.
C)   major property assets.
D)   investment assets.E) B) and D)
F) None of the above

Question 6

Indicate whether the following are liquid assets or household assets by placing an L or H beside them.
________ Car
________ Home
________ Checking account
________ Furniture
________ Cash
________ Savings account

Accepted Answer

The answer of Indicate whether the following are liquid assets...

Question 7

You save the same dollar amount from each paycheck during your career. As your income increases, your savings rate will

Accepted Answer

A)   increase.
B)   decrease.
C)   stay the same.
D)   More information is needed to determine what effect this action will have.E) B) and C)
F) C) and D)

Question 8

Paying off a credit card with cash will have which of the following effects on net worth?

Accepted Answer

A)   Increase
B)   Decrease
C)   No effect
D)   Insufficient data to determine the answerE) B) and D)
F) A) and C)

Question 9

Cash inflows tend to increase as a person gets older since they tend to spend less once they have their education and home purchase behind them.

Accepted Answer

A) True 
 B)False

Question 10

Student loans, auto loans, and housing loans are good examples of

Accepted Answer

A)   long-term liabilities.
B)   current liabilities.
C)   short-term debts.
D)   personal obligations.E) A) and D)
F) A) and C)

Question 11

Which of the following statements about stocks is not true?

Accepted Answer

A)   Stocks represent partial ownership of a firm.
B)   Corporations issue stocks to obtain money for various projects.
C)   Investments in stocks are considered liquid assets.
D)   The market value of stocks changes daily.E) C) and D)
F) B) and D)

Question 12

If Jo Ann has $4,000 in liquid assets and $1,000 in current liabilities, her liquidity ratio is

Accepted Answer

A)   0.25.
B)   4.0.
C)   1,000.
D)   4,000.E) A) and D)
F) B) and C)

Question 13

The current financial position of an individual or family is best presented with the use of a

Accepted Answer

A)   budget.
B)   cash flow statement.
C)   balance sheet.
D)   bank statement.E) C) and D)
F) B) and D)

Question 14

One of the problems in making a monthly budget is that some expenses fluctuate quite a bit from month to month.

Accepted Answer

A) True 
 B)False

Question 15

Cash inflow can be increased by all of the following, except

Accepted Answer

A)   making credit card payments.
B)   working overtime.
C)   selling stock.
D)   getting a second job.E) B) and C)
F) A) and D)

Question 16

Why is it important to monitor your debt level?

Accepted Answer

A)   So it does not become so high that you cannot cover the monthly payments
B)   So that you maintain a liquidity ratio of at least 2.5
C)   In order to qualify for another credit card to capture the introductory points
D)   So that your total debt does not exceed your annual incomeE) None of the above
F) B) and C)

Question 17

Which of the following will not increase your liquidity?

Accepted Answer

A)   Selling a boat and depositing the proceeds in your checking account
B)   Selling a car in exchange for cash
C)   Selling stock in exchange for cash
D)   Using cash to purchase a home entertainment systemE) A) and B)
F) A) and C)

Question 18

Bill's annual savings rate is 9%. If Bill currently saves $6,750 annually, how much more will he need to save to increase his savings rate to 11%?

Accepted Answer

A)   $8,250
B)   $135
C)   $1,500
D)   More information is needed to determine the answer.E) None of the above
F) A) and B)

Question 19

Which of the following is not a true statement about mutual funds?

Accepted Answer

A)   They are managed by professional managers.
B)   Proceeds are only invested in stocks.
C)   A minimum investment is required.
D)   The value of shares is widely reported both online and in The Wall Street Journal.E) A) and B)
F) A) and C)

Question 20

Your net worth can change even if your net cash flows are zero.

Accepted Answer

A) True 
 B)False

Exam 2: Planning With Personal Financial Statements

Bill's annual savings rate is 9%. If Bill currently saves $6,750 annually, how much more will he need to save to increase his savings rate to 11%?

Correct AnswerverifiedShow Answer

Property such as a person's home, car, and furniture are called

Correct AnswerverifiedShow Answer

Health insurance and auto insurance premiums are not cash outflows because they prevent large expenditures which are outflows.

Correct AnswerverifiedShow Answer

Stocks are considered liquid assets since they are easy to sell without a loss in value.

Correct AnswerverifiedShow Answer

If Jo Ann has $4,000 in liquid assets and $1,000 in current liabilities, her liquidity ratio is

Correct AnswerverifiedShow Answer

The current financial position of an individual or family is best presented with the use of a

Correct AnswerverifiedShow Answer

Paying off a credit card with cash will have which of the following effects on net worth?

Correct AnswerverifiedShow Answer

Indicate whether the following are liquid assets or household assets by placing an L or H beside them. ________ Car ________ Home ________ Checking account ________ Furniture ________ Cash ________ Savings account

Correct AnswerverifiedShow Answer

Why is it important to monitor your debt level?

Correct AnswerverifiedShow Answer

One of the problems in making a monthly budget is that some expenses fluctuate quite a bit from month to month.

Correct AnswerverifiedShow Answer

Your net worth can change even if your net cash flows are zero.

Correct AnswerverifiedShow Answer

Which of the following will not increase your liquidity?

Correct AnswerverifiedShow Answer

Which of the following is not a true statement about mutual funds?

Correct AnswerverifiedShow Answer

Cash inflow can be increased by all of the following, except

Correct AnswerverifiedShow Answer

All of the following affect cash outflows, except

Correct AnswerverifiedShow Answer

Cash inflows tend to increase as a person gets older since they tend to spend less once they have their education and home purchase behind them.

Correct AnswerverifiedShow Answer

Which of the following statements about stocks is not true?

Correct AnswerverifiedShow Answer

Corporate stocks, government or corporate bonds, or mutual funds, are called

Correct AnswerverifiedShow Answer

You save the same dollar amount from each paycheck during your career. As your income increases, your savings rate will

Correct AnswerverifiedShow Answer

Student loans, auto loans, and housing loans are good examples of

Correct AnswerverifiedShow Answer

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Indicate whether the following are liquid assets or household assets by placing an L or H beside them. Car Home Checking account Furniture Cash Savings account

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