Tools For Your Financial Journey Chapter 2 1e Exam Questions

Introduction to Personal Finance, 1e (Grable)

Chapter 2 Tools for Your Financial Journey

1) Which of the following refers to the price paid for using money?

A) Interest.

B) Debt.

C) Principal.

D) Compound growth.

Diff: 1

LO: 2.1, Section 2.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

2) Which of the following refers to the amount of money borrowed?

A) Interest.

B) Debt.

C) Principal.

D) Compound growth.

Diff: 1

LO: 2.1, Section 2.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

3) Which of the following can affect the loan interest rate?

A) Your salary.

B) Purpose of the loan.

C) Your prior financial behaviors.

D) All of these answer choices are correct.

Diff: 1

LO: 2.1, Section 2.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

4) Which of the following refers to investment gains earned in the first time period that are put to work in the second time period to earn additional investment returns?

A) Interest.

B) Debt.

C) Principal.

D) Compound growth.

Diff: 1

LO: 2.1, Section 2.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

5) Which of the following is a rule that can help you grow your money?

A) The longer you let your money grow, the more you will have in the future (assuming the same interest rate).

B) The more interest you earn, the more you will accumulate over time.

C) The higher the interest rate you want, the more risk you must take.

D) All of these answer choices are correct.

Diff: 1

LO: 2.1, Section 2.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

6) The Federal Deposit Insurance Corporation and the National Credit Union Administration protect savings deposits up to what amount?

A) $250,000.

B) $350,000.

C) $450,000.

D) $500,000.

Diff: 1

LO: 2.1, Section 2.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

7) If risk is low, then the interest rate that your money earns is generally

A) high.

B) low.

C) doubled.

D) not affected.

Diff: 1

LO: 2.1, Section 2.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

8) What is the annual percentage rate (APR) if a bank pays 0.3% interest monthly on savings?

A) 1.8%.

B) 2.4%.

C) 3.6%.

D) 4.8%.

Diff: 2

LO: 2.1, Section 2.1

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

9) What is the APR if a bank pays 0.25% interest monthly on savings?

A) 2.4%.

B) 3.0%

C) 3.6%.

D) 4.8%.

Diff: 2

LO: 2.1, Section 2.1

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

10) What is the APR if a bank pays 0.4% interest monthly on savings?

A) 1.8%.

B) 2.4%.

C) 3.6%.

D) 4.8%.

Diff: 2

LO: 2.1, Section 2.1

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

11) Which of the following provides an estimate of how long it will take you to double your money?

A) Rule of 72.

B) Compounding interest.

C) APR.

D) APY.

Diff: 1

LO: 2.1, Section 2.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

12) How long will it take for your money to double if the annual percentage yield (APY) is 6%?

A) 12 years.

B) 12 months.

C) 10 years.

D) 10 months.

Diff: 2

LO: 2.1, Section 2.1

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

13) What should you compare when comparing loans?

A) Principal.

B) Interest rate.

C) APR.

D) APY.

Diff: 1

LO: 2.1, Section 2.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

14) What should you compare when comparing savings options?

A) Principal.

B) Interest rate.

C) APR.

D) APY.

Diff: 1

LO: 2.1, Section 2.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

15) How long will it take for your money to double if the APY is 8%?

A) 9 years.

B) 9 months.

C) 12 years.

D) 12 months.

Diff: 2

LO: 2.1, Section 2.1

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

16) What formulas and calculations are some of the most valuable external finance tools that allow you to consider financial goals in terms of money, time, and interest?

A) APR.

B) APY.

C) Rule of 72.

D) Time value of money (TVM).

Diff: 1

LO: 2.2, Section 2.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

17) Which of the following refers to a series of equal payments or deposits?

A) Annuity.

B) Future value.

C) Number of periods.

D) TVM.

Diff: 1

LO: 2.2, Section 2.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

18) Which of the following refers to the rate of return or discount rate used to determine future value (FV) or present value (PV)?

A) Principal.

B) Interest.

C) Rule of 72.

D) TVM.

Diff: 1

LO: 2.2, Section 2.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

19) Which of the following estimates how much current savings and investments will be worth at a certain date in the future?

A) FV of a lump sum.

B) PV of a lump sum.

C) FV of an annuity.

D) PV of an annuity.

Diff: 1

LO: 2.2, Section 2.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

20) Which of the following determines the current value of a future amount?

A) FV of a lump sum.

B) PV of a lump sum.

C) FV of an annuity.

D) PV of an annuity.

Diff: 1

LO: 2.2, Section 2.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

21) Which of the following determines the current value of a regular series of equal payments occurring in the future?

A) FV of a lump sum.

B) PV of a lump sum.

C) FV of an annuity.

D) PV of an annuity.

Diff: 1

LO: 2.2, Section 2.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

22) Which of the following estimates how much you will have in the future if you save or invest a set dollar amount on a regular basis?

A) FV of a lump sum.

B) PV of a lump sum.

C) FV of an annuity.

D) PV of an annuity.

Diff: 1

LO: 2.2, Section 2.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

23) If you start with $2,000 today, approximately how much will you have in 2 years if you can earn 6% each year?

A) $2,247.

B) $2,547.

C) $3,047.

D) $3,247.

Diff: 2

LO: 2.2, Section 2.2

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

24) If you start with $2,500 today, approximately how much will you have in 5 years if you can earn 4% each year?

A) $2,241.

B) $2,541.

C) $3,041.

D) $3,241.

Diff: 2

LO: 2.2, Section 2.2

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

25) If you start with $4,000 today, approximately how much will you have in 8 years if you can earn 8% each year?

A) $6,454.

B) $7,404.

C) $8,444.

D) $9,244.

Diff: 2

LO: 2.2, Section 2.2

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

26) Approximately, how many years would it take your money to grow from $4,000 to $8,000 if you could earn 4% interest?

A) 12.

B) 14.

C) 16.

D) 18.

Diff: 2

LO: 2.2, Section 2.2

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

27) Approximately, how many years would it take your money to grow from $5,000 to $10,000 if you could earn 6% interest?

A) 12.

B) 14.

C) 16.

D) 18.

Diff: 2

LO: 2.2, Section 2.2

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

28) Approximately what interest rate would you need to earn in order to turn $3,500 into $7,000 over 5 years?

A) 12%.

B) 15%.

C) 16%.

D) 18%.

Diff: 2

LO: 2.2, Section 2.2

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

29) Approximately, what interest rate would you need to earn in order to turn $2,500 into $5,000 over 6 years?

A) 12%.

B) 14%.

C) 16%.

D) 18%.

Diff: 2

LO: 2.2, Section 2.2

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

30) Approximately, what interest rate would you need to earn in order to turn $6,500 into $13,000 over 8 years?

A) 9%.

B) 10%.

C) 11%.

D) 12%.

Diff: 2

LO: 2.2, Section 2.2

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

31) A grandmother just put $12,000 into an investment earning 6% a year for her granddaughter's college education. Approximately, how much will be in the account in 10 years assuming that all the interest is left in the account?

A) $19,200.

B) $21,490.

C) $16,250.

D) $21,339.

Diff: 2

LO: 2.3, Section 2.3

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

32) Emanuel invested $10,000 in a security that will double in value in 10 years. Approximately, what annual rate of return is this investment making?

A) 10%.

B) 7.2%.

C) 6.3%.

D) 6%.

Diff: 2

LO: 2.2, Section 2.2

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

33) Jorge has the opportunity to receive $12,000 now or $15,000 in 4 years. If Jorge can earn 6% on his investment, what is the approximate present value of the $15,000?

A) $15,000.

B) $13,785.

C) $11,881.

D) $12,000.

Diff: 2

LO: 2.3, Section 2.3

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

34) Jorge has the opportunity to receive $10,000 now or $12,000 in 4 years. If Jorge can earn 6% on his investment, what is the approximate present value of the $12,000?

A) $10,000.

B) $9,505.

C) $11,881.

D) $12,000.

Diff: 2

LO: 2.3, Section 2.3

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

35) If Sean can earn 4%, approximately what will his $3,000 in savings be worth in 10 years?

A) $3,600.

B) $4,441.

C) $5,640.

D) $6,240.

Diff: 2

LO: 2.3, Section 2.3

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

36) If Mia can earn 6%, approximately what will her $5,000 in savings be worth in 15 years?

A) $8,983.

B) $9,983.

C) $10,983.

D) $11,983.

Diff: 2

LO: 2.3, Section 2.3

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

37) Approximately how much money do you need today to ensure that you will have $12,000 in 3 years, assuming you can earn 4% on your savings?

A) $10,668.

B) $11,224.

C) $11,668.

D) $12,668.

Diff: 2

LO: 2.3, Section 2.3

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

38) How much money do you need today to ensure that you will have $16,000 in 4 years, assuming you can earn 6% on your savings?

A) $10,674.

B) $11,274.

C) $11,674.

D) $12,674.

Diff: 2

LO: 2.3, Section 2.3

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

39) Approximately how much money will you accumulate in your retirement account if you save $5,000 per year for 15 years and earn 6% on your investments?

A) $101,668.

B) $111,224.

C) $116,380.

D) $121,668.

Diff: 2

LO: 2.3, Section 2.3

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

40) Approximately how much money will you accumulate in your retirement account if you save $2,500 per year for 40 years and earn 5% on your investments?

A) $201,668.

B) $254.889.

C) $289,464.

D) $301,999.

Diff: 2

LO: 2.3, Section 2.3

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

41) Approximately how much money will you accumulate in your retirement account if you save $1,000 per year for 30 years and earn 6% on your investments?

A) $72,468.

B) $79,058.

C) $86,380.

D) $91,668.

Diff: 2

LO: 2.3, Section 2.3

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

42) Which of the following can you use to solve TVM problems?

A) Microsoft Excel.

B) A financial calculator.

C) An app designed to solve these types of problems.

D) All of these answer choices are correct.

Diff: 1

LO: 2.3, Section 2.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

43) Max has the opportunity to receive $15,000 now or $20,000 in 5 years. If Max can earn 6% on his investment, what is the approximate present value of the $20,000?

A) $15,000.

B) $20,000.

C) $11,881.

D) $14,945.

Diff: 2

LO: 2.3, Section 2.3

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

44) Which of the following refers to a payment of the same amount for a set number of months or years, such as in a car loan or mortgage?

A) Amortized payment.

B) Compound interest.

C) Annuity.

D) Interest.

Diff: 1

LO: 2.2, Section 2.2

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

45) Which of the following refers to saving money on a regular basis?

A) Amortized payment.

B) Compound interest.

C) Annuity.

D) Interest.

Diff: 1

LO: 2.2, Section 2.2

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

46) Which of the following refers to what you own?

A) Assets.

B) Liabilities.

C) Net worth.

D) Principal.

Diff: 1

LO: 2.4, Section 2.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

47) Which of the following refers to what you owe?

A) Assets.

B) Liabilities.

C) Net worth.

D) Principal.

Diff: 1

LO: 2.4, Section 2.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

48) Which of the following refers to your assets minus your liabilities?

A) Assets.

B) Liabilities.

C) Net worth.

D) Principal.

Diff: 1

LO: 2.4, Section 2.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

49) Which of the following is on the left side of the balance sheet?

A) Assets.

B) Liabilities.

C) Net worth.

D) Principal.

Diff: 1

LO: 2.4, Section 2.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

50) Which of the following is on the right side of the balance sheet?

A) Assets.

B) Liabilities only.

C) Net worth only.

D) Liabilities and net worth.

Diff: 1

LO: 2.4, Section 2.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

51) What happens to your net worth if you sell your car for more than you owe?

A) Increase.

B) Decrease.

C) No change.

D) Cannot determine with the given information.

Diff: 2

LO: 2.4, Section 2.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

52) Which of the following refers to how quickly an asset can be converted to cash?

A) Liability.

B) Liquidity.

C) Fair market value.

D) Monetary asset.

Diff: 1

LO: 2.4, Section 2.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

53) Which of the following is an asset that would appreciate in value over time?

A) Car.

B) Computer.

C) House.

D) Bicycle.

Diff: 1

LO: 2.4, Section 2.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

54) Which of the following refers to an asset that increases in fair market value over time?

A) Depreciating asset.

B) Liquidity.

C) Liability.

D) Appreciating asset.

Diff: 1

LO: 2.4, Section 2.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

55) Which of the following refers to an asset that decreases in value over time?

A) Depreciating asset.

B) Liquidity.

C) Liability.

D) Appreciating asset.

Diff: 1

LO: 2.4, Section 2.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

56) Which of the following is an asset that would depreciate in value over time?

A) Car.

B) Computer.

C) Bicycle.

D) All of these answer choices are correct.

Diff: 1

LO: 2.4, Section 2.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

57) Which of the following is an example of a short-term debt?

A) Utility bill.

B) Car loan.

C) Student loan.

D) Mortgage.

Diff: 1

LO: 2.4, Section 2.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

58) Which of the following refers to a debt that is paid off within a year?

A) Short-term debt.

B) Long-term debt.

C) Liabilities.

D) Assets.

Diff: 1

LO: 2.4, Section 2.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

59) Which of the following refers to the difference between the value of an asset and any liability (debt) associated with that asset?

A) Equity.

B) Liquidity.

C) Appreciating asset.

D) Depreciating asset.

Diff: 1

LO: 2.4, Section 2.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

60) Which of the following refers to borrowing money to buy something that either depreciates quickly in value or is consumed immediately?

A) Good debt.

B) Bad debt.

C) Asset.

D) Liability.

Diff: 1

LO: 2.4, Section 2.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

61) Which of the following does a budget include?

A) Assets.

B) Income only.

C) Expenses only.

D) Income and expenses.

Diff: 1

LO: 2.5, Section 2.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

62) Which of the following is the first step of resource management?

A) Track where your resources come from.

B) Track where your resources are being used.

C) Set and know your financial goals.

D) Develop your own guidelines regarding the use of your resources.

Diff: 1

LO: 2.5, Section 2.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

63) In managing your household financial resources, what should you know in order to determine how much you're really earning and spending?

A) Where your money for day-to-day expenses is coming from and where it is going.

B) Where your longer-term goal implementation is coming from and where it is going.

C) Your cash flows, by systematically tracking your income and expenses.

D) All of these answer choices are correct.

Diff: 1

LO: 2.5, Section 2.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

64) After tracking where your resources come from and how they are used, what tool can be used to help you manage your financial resources?

A) A budget.

B) A cash flow statement.

C) An income & expense statement.

D) All of these answer choices are correct.

Diff: 1

LO: 2.5, Section 2.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

65) When setting your goals, which factors should you consider in order to make a meaningful decision?

A) Your personal attitudes.

B) Your personal perceptions.

C) Your personal preferences.

D) All of these answer choices are correct.

Diff: 1

LO: 2.5, Section 2.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

66) Which of the following can be used for tracking?

A) Computer spreadsheet.

B) Pen and paper.

C) Smartphone app.

D) All of these answer choices are correct.

Diff: 1

LO: 2.5, Section 2.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

67) Which of the following refers to a financial tool that helps you regulate how quickly, and in what ways, your money is being used so that you can stay focused on accomplishing your goals?

A) Budget.

B) Balance sheet.

C) Spreadsheet.

D) Net worth.

Diff: 1

LO: 2.5, Section 2.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

68) Which of the following is an element in a budget?

A) Income.

B) Fixed expenses.

C) Variable expenses.

D) All of these answer choices are correct.

Diff: 1

LO: 2.5, Section 2.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

69) Which of the following refers to how much you think you will receive or spend in each category?

A) Fair market value.

B) Projection.

C) Liquidity.

D) Budget.

Diff: 1

LO: 2.5, Section 2.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

70) Which of the following includes all resources that can be saved or spent?

A) Expense.

B) Income.

C) Variable asset.

D) Liability.

Diff: 1

LO: 2.5, Section 2.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

71) Which of the following means that you have planned well and have your money working for you?

A) Surplus.

B) Deficit.

C) Net worth.

D) Asset.

Diff: 1

LO: 2.5, Section 2.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

72) Which of the following means that your expenses exceed your income?

A) Surplus.

B) Deficit.

C) Net worth.

D) Asset.

Diff: 1

LO: 2.5, Section 2.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

73) Which ratio indicates the percentage of money that you are setting aside on a regular basis?

A) Consumer debt-to-income ratio.

B) Total debt-to-income ratio.

C) Savings ratio.

D) Emergency fund ratio.

Diff: 1

LO: 2.5, Section 2.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

74) Which ratio indicates what percentage of your income that you are using to pay all of your debts?

A) Consumer debt-to-income ratio.

B) Total debt-to-income ratio.

C) Savings ratio.

D) Emergency fund ratio.

Diff: 1

LO: 2.5, Section 2.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

75) Which ratio indicates whether you have sufficient resources in case of an emergency?

A) Consumer debt-to-income ratio.

B) Total debt-to-income ratio.

C) Savings ratio.

D) Emergency fund ratio.

Diff: 1

LO: 2.5, Section 2.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

76) Which of the following is an element of a financial plan?

A) Financial knowledge.

B) Financial experience.

C) Risk tolerance.

D) All of these answer choices are correct.

Diff: 1

LO: 2.6, Section 2.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

77) Which of the following is the first step in creating a financial plan?

A) What is your starting point?

B) What is your financial score?

C) What is your goal?

D) What is your financial capacity?

Diff: 1

LO: 2.6, Section 2.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

78) Which of the following is the third step in creating a financial plan?

A) What is your starting point?

B) What is your financial score?

C) What is your goal?

D) What is your financial capacity?

Diff: 1

LO: 2.6, Section 2.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

79) Which of the following will provide you with a realistic understanding of your current risk tolerance, financial knowledge, and feelings of control?

A) Credit score.

B) Net worth.

C) Surplus.

D) Financial score.

Diff: 1

LO: 2.6, Section 2.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

80) Which of the following refers to the ability to keep moving forward toward goal achievement even if you face a few financial challenges or emergencies along the way?

A) Financial literacy.

B) Financial capacity.

C) Financial score.

D) Financial ability.

Diff: 1

LO: 2.6, Section 2.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

81) Which of the following is fluid over time?

A) Financial knowledge.

B) Financial capacity.

C) Time horizon.

D) Feelings of control and time horizon.

Diff: 1

LO: 2.6, Section 2.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

82) Which of the following is the final step in creating a financial plan?

A) What is your starting point?

B) What is your financial score?

C) What is your goal?

D) Formalize and implement your financial plan.

Diff: 1

LO: 2.6, Section 2.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

83) Which of the following is the fourth step in creating a financial plan?

A) What is your starting point?

B) What is your financial score?

C) What is your goal?

D) What is your financial capacity?

Diff: 1

LO: 2.6, Section 2.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

84) Which of the following is the fifth step in creating a financial plan?

A) What is your starting point?

B) How realistic is your time horizon?

C) What is your goal?

D) What is your financial capacity?

Diff: 1

LO: 2.6, Section 2.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

85) Which of the following refers to having a financial score less than 10?

A) Excellent job of managing financial behaviors.

B) Good job of managing financial behaviors.

C) Acceptable job of managing financial behaviors.

D) Some difficulty in managing financial behaviors.

Diff: 1

LO: 2.6, Section 2.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

86) Which of the following refers to having a financial score of 11−15?

A) Excellent job of managing financial behaviors.

B) Good job of managing financial behaviors.

C) Acceptable job of managing financial behaviors.

D) Some difficulty in managing financial behaviors.

Diff: 1

LO: 2.6, Section 2.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

87) Which of the following refers to having a financial score of 16−20?

A) Excellent job of managing financial behaviors.

B) Good job of managing financial behaviors.

C) Acceptable job of managing financial behaviors.

D) Some difficulty in managing financial behaviors.

Diff: 1

LO: 2.6, Section 2.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

88) Which of the following refers to having a financial score greater than 20?

A) Excellent job of managing financial behaviors.

B) Good job of managing financial behaviors.

C) Acceptable job of managing financial behaviors.

D) Some difficulty in managing financial behaviors.

Diff: 1

LO: 2.6, Section 2.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

89) Your financial document is a(n) ________ document.

A) rigid

B) flexible

C) simple

D) unrealistic

Diff: 1

LO: 2.6, Section 2.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

90) Which of the following is the second step in creating a financial plan?

A) What is your starting point?

B) How realistic is your time horizon?

C) What is your goal?

D) What is your financial capacity?

Diff: 1

LO: 2.6, Section 2.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

91) What are the total current assets?

A) $16,000.

B) $21,500.

C) $31,000.

D) $55,000.

Diff: 2

LO: 2.4, Section 2.4

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

92) What are the total assets?

A) $400,000.

B) $415,000.

C) $464,000.

D) $479,000.

Diff: 2

LO: 2.4, Section 2.4

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

93) What are the total current liabilities?

A) $500.

B) $5,500.

C) $6,000.

D) $24,000.

Diff: 2

LO: 2.4, Section 2.4

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

94) What are the long-term liabilities?

A) $228,000.

B) $235,000.

C) $253,000.

D) $258,500.

Diff: 2

LO: 2.4, Section 2.4

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

95) What are the total liabilities?

A) $253,000.

B) $258,500.

C) $259,000.

D) $274,000.

Diff: 2

LO: 2.4, Section 2.4

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

96) What is the net worth?

A) $141,500.

B) $162,000.

C) $190,000.

D) $220,000.

Diff: 2

LO: 2.4, Section 2.4

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

97) What is the debt ratio?

A) 54.1%.

B) 59.1%.

C) 61.0%.

D) 64.6%.

Diff: 2

LO: 2.4, Section 2.4

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

98) What is the current ratio?

A) 1.68.

B) 2.29.

C) 2.67.

D) 3.91.

Diff: 2

LO: 2.4, Section 2.4

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

99) What is the total income?

A) $115,000.

B) $117,150.

C) $127,000.

D) $129,150.

Diff: 2

LO: 2.5, Section 2.5

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

100) What are the total fixed expenses?

A) $81,950.

B) $85,550.

C) $93,950.

D) $97,550.

Diff: 2

LO: 2.5, Section 2.5

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

101) What are the total variable expenses?

A) $19,700.

B) $23,300.

C) $31,700.

D) $35,300.

Diff: 2

LO: 2.5, Section 2.5

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

102) What are the total expenses?

A) $105,250.

B) $106,200.

C) $108,250.

D) $117,250.

Diff: 2

LO: 2.5, Section 2.5

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

103) What is the surplus or deficit?

A) −$2,000.

B) −$100.

C) $22,000.

D) $23,900.

Diff: 2

LO: 2.5, Section 2.5

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

104) What is the savings ratio?

A) 10.24%.

B) 10.33%.

C) 10.35%.

D) 10.43%.

Diff: 2

LO: 2.5, Section 2.5

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

105) What is the debt-to-income ratio?

A) 39.41%.

B) 43.45%.

C) 46.52%.

D) 53.69%.

Diff: 2

LO: 2.5, Section 2.5

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

106) What is the consumer debt-to-income ratio?

A) 10.50%.

B) 10.70%.

C) 39.41%.

D) 43.45%.

Diff: 2

LO: 2.5, Section 2.5

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

107) Jack and Jill are proud new parents. They met while students at Ivy University and already have visions of their new child attending their alma mater in 18 years. Total tuition, room, and board is about $70,000 today, where it was only $27,000 when they graduated 15 years ago. They can expect to receive a long-term average annual return of 8% in their investment portfolio. Approximately how much would they have to save monthly starting now to have the tuition, room, and board (4-year degree) for their new child by freshman year?

A) $1,513.

B) $1,830.

C) $2,330.

D) $2,539.

Diff: 3

LO: 2.3, Section 2.3

Bloom: S

AACSB / IMA: none; none

AICPA: FC: none

Min: 10

108) Bill is looking to purchase a $30,000 new car with 2% APR financing over 5 years. If he were to pay 20% out of pocket and finance the balance in equal monthly payments, what would be his approximate total cost of financing?

A) $1,240.

B) $1,447.

C) $3,233.

D) $3,772.

Diff: 3

LO: 2.3, Section 2.3

Bloom: S

AACSB / IMA: none; none

AICPA: FC: none

Min: 10

109) Which of the following is true about tracking your expenses?

A) Many spending habits are so routine that their cumulative impact is not fully recognized.

B) Tracking your expenses helps expose spending patterns and their impact.

C) Once you're fully aware of expenses, you can make changes that will save you money over time.

D) All of these answer choices are correct.

Diff: 1

LO: 2.5, Section 2.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

110) More trips to the store will typically result in ________ money spent.

A) less

B) more

C) no difference

D) There is not enough information to determine the answer.

Diff: 1

LO: 2.5, Section 2.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

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