personal finance

Which of the following is not an advantage of participating in your employer’s retirement plan? Tax-deductible contributions Employer’s matching contributions Tax-deferred growth Higher take home pay Higher take home pay
Which of the following economic indicators tends to move in the opposite direction of where the economy is headed? procyclical indicators employment rate gross domestic product counter cyclical indicators Counter cyclical indicators
Paying expenses with pretax dollars increases taxable income. increases take-home pay. increases after-tax income. is only a good idea for high income earners. Increases after-tax income
Why do rising interest rates generally depress stock prices? Businesses have to pay higher interest rates to borrow money, thus reducing their profits. Stock investors tend to take their money out of the stock market and invest in interest-paying investments. Future earnings will not be worth as much as today. All of these. All of these
Grandpa Rick received a $2,500 raise this year. This increased his salary as an associate TV producer from $45,000 to $47,500. What percentage increase in nominal income did Rick receive? 2.5 percent 5.3 percent 5.6 percent 7.8 percent 5.6 percent
Which of the following is a way to receive free money to deposit into a tax-sheltered retirement plan? Start early to boost your retirement. Take advantage of your employer’s “match.” Making early withdrawals from a tax-sheltered retirement plan. Opening an HSA. Take advantage of your employers “match”
Employer-sponsored retirement plans include all of the following EXCEPT 401(k). 403(b). 457. IRA. IRA
____ is the current value of an asset that will be received in the future. Present value Future value A benefit Inflation Present value
Jim spent $300 on some new clothes rather than using this money to going to his college team’s away game last weekend. The benefits of the trip are the ____ cost of buying the clothing. marginal utility opportunity present Opportunity
During a recession, people and business are likely to engage in ____________; meaning that their use of credit will decrease. leveraging. deleveraging. compounding. tax-sheltering. Deleveraging
If you receive tax-sheltered income, it means that you will never have to pay taxes on the income. the income has already been taxed. the taxes on the income will be deferred until a later date. taxes will be assessed on the state rather than federal level. the taxes on the income will be deferred until a later date
A nudge is a policy of employers and/or the government to help get consumers to do what is good for them. True False true
A method by which one can compare cash flows across time, either as what a future cash flow is worth today (present value) or what an investment made today will be worth in the future (future value) is called time-value of money. compounding. simple interest. marginal analysis. time-value of money
The rate of increase in prices of items purchased by a particular individual is called the federal funds rate. consumer confidence index. personal inflation rate. consumer price index personal inflation rate
A worker covered by a health care plan might have to pay the first $1000 of any health expenses during a year. This requirement is called the coinsurance use-it-or-lose-it rule. variance. deductible. deductible
In an employer-sponsored retirement plan, interest, dividends, and capital gains earned from the funds invested in the plan are taxed only after funds are withdrawn from the plan, if at all. with each payment. annually. on a quarterly basis. only after funds are withdrawn from the plan, if at all
The Great Recession that began in December, 2007 lasted eighteen months. lasted 4 years. continues to this day. lasted eighteen months
The U.S. government measures inflation using the gross domestic product. the index of leading economic indicators. the consumer price index. the consumer confidence index. the consumer price indicators
The statistic that measures the value of all goods and services produced in the United States is the consumer price index. index of leading economic indicators. federal funds rate. gross domestic product. gross domestic product
A financial planner who makes recommendations solely based on the best interest of the client regardless of the impact on the planner is said to adhere to a fiduciary standard. fee-only standard. commission-only standard. suitability standard fiduciary standard
A rising inflation rate is good news for stock investors. borrowers. savers. lenders. borrowers
Occasionally, the economy will dip into a trough before it has reached a new peak after a previous trough. This phenomenon is called a depression. recession. double dip recession. stagflation. double dip recession
An advantage of an employer-sponsored tax-sheltered retirement plan is the tax-deferred growth of contributions and earnings. True False true
The present value of an annuity is the ____ worth of a stream of payments to be received in the future inflated estimated previous current current
When you leave an employer, you have the right to continue your health insurance coverage for a specified period of time by paying the premiums yourself. True False true
Whenever you request that someone write a reference letter you should provide the person with your résumé. True False true
The _____ is a short, persuasive summary of your experiences and skills when networking. elevator speech job interview job application reference letter elevator speech
About 75% of employers review job applicants’ Facebook postings and credit reports when performing background checks. True False true
If you cash out $50,000 in your 401(k) when changing jobs, what will you need to pay?I $5,000 early-withdrawal penalty and $10,000 federal income tax withholdingII. 15% federal income tax withholding and 5% early withdrawal penaltyIII. income taxesIV. nothing II and III I and III III and IV IV I and III
It is especially important to use “key phrases” when preparing your résumé because many employers will be impressed with your vocabulary. you want to show that you are well educated. computer software is typically used to scan résumés in order to select better qualified candidates. it saves time when writing your résumé computer software is typically used to scan resumes in order to select better qualified candidates
Salaried employees are paid overtime, and the majority of college graduates have salaried positions. True False false
Which of the following is likely to be the largest cost of withdrawing the funds from an employer-based retirement plan when you change jobs prior to retirement? the ten percent penalty for early withdrawal the taxes you must pay on the withdrawal the lost future growth if the funds had been left on deposit the penalty assessed by the employer the lost future growth if the funds had been left on deposit
The law requires employers to do all of the following after hiring a new employee EXCEPT provide unemployment insurance. pay Social Security taxes to the federal government. pay all of the employee’s health care expenses. provide workers’ compensation benefits to employees injured on the job. pay all of the employee’s health care expenses
Prior to a job interview, you should learn how the company makes money, its operations and history, profitability, expansion plans, and other recent developments. You should also research the company’s competitors, and the industry. If you don’t do this for a position you really want, then Thad thinks you deserve to remain unemployed. True False true
Your collection of multiple investments in different assets chosen to meet your financial goals is your monetary assets. market basket. portfolio. net worth. portfolio
Which of the following investments has the lowest risk? T-bills Municipal bonds Income stocks Real estate T-Bills
The amount of risk premium desired by most investors is in the range of _____ percent. 1-2 3-6 7-8 9-12 3-6
The real rate of return on a taxable investment yielding 12 percent annually would be ____ percent if the investor were in the 25 percent marginal tax bracket and inflation were 3 percent. 6.00 percent 6.48 percent 8.64 percent 9.00 percent 6.00 percent
Investors who do not want to lose any of the money that they have invested are most interested in preservation of capital. income stocks. liquidity. leverage. preservation of capital
____ would be a reasonable investment for funds that could be invested less than two years. Stocks paying high dividends Short-term bonds Money market mutual funds Balanced mutual funds money market mutual funds
____ investors primarily seek capital gains. Ultraconservative Conservative Moderate Aggressive aggressive
Marc purchased 100 shares of LXM stock for $25 per share and sold this same stock two years later for $28 per share. He paid commissions of $50 when he purchased the stock and $55 when he sold the stock. No dividends were paid during the period he owned LXM. Marc’s current income from this investment is ____, and his capital gains were ____. $0; $195 $0; $300 $195; $0 $300; $0 $0; $195
When choosing among investment alternatives you want to focus on their current income. capital gains. interest. yields. yields
____ is (are) the portion of a company’s profits that the firm pays out to its shareholders. Rent Dividends Interest Net income dividends
Ownership investments generally offer a fixed rate of return. have a set maturity date. offer a limited return. produce capital gains. produce capital gains
____ income is not an example of current income from an investment. Capital gains Interest Dividend Rent capital gains
Of the following investment alternatives, which is highest on the investment pyramid? Growth stocks Municipal bonds Collectibles Aggressive-growth mutual funds collectibles
The real rate of return on a tax-free investment yielding 7 percent annually would be ____ percent if the investor were in the 35 percent marginal tax bracket and inflation were 4 percent. -0.55 percent 0.55 percent 3.00 percent 4.48 percent 0.55 percent
With a(n) ____ investment, the borrower agrees to pay the investor a specific rate of return for use of the principal. fixed maturity fixed income debt equity fixed income
You should sometimes avoid listing specific abilities, such as using Microsoft Office, in your résumé. False True true
Your ____ determine(s) the unique approach you take to working with and responding to your job requirements, surroundings, and associates. work-style personality values aptitudes interest inventory work-style personality
All of the following would be considered wise moves in career planning EXCEPT learning as much as possible about a company before your interview. transferring your 401(k) to your new employer’s plan when you change jobs. continued participation in your previous employer’s health care plan until you are covered by a new employer’s plan. assuming that your need for higher education is finished once you obtain a job in your chosen field. assuming that your need for higher education is finished once you obtain a job in your chosen field
According to the U.S. Census Bureau, getting an advanced degree has a bigger impact on annual income (as compared to a bachelor’s degree) than getting a bachelor’s degree (as compared to graduating from high school). True False true
When changing employers, the wisest option for the money you have in your current employer-sponsored retirement plan typically involve all of the following EXCEPT transferring the money to your new employer’s 401(k) plan. moving the balance to an IRA rollover account. leaving the money in your old employer’s plan. withdrawing and spending the money. withdrawing and spending money
According to the U.S. Census Bureau, adults (ages 25-34) with an advanced degree earn approximately $63,000 more per year than adults with only a high school diploma. True False true
Your résumé needs to be perfect or it’s going straight into a prospective employer’s trash can. True False true
Joelle purchased 100 shares of PAC stock for $20 per share and sold this same stock one year later for $25 per share. She paid commissions of $60 when she purchased the stock and $70 when she sold the stock. Dividends of $2 per share were paid during the year. The total rate of return on this investment was 9.71 percent 17.96 percent 28.50 percent 33.98 percent. 28.50 percent
People seeking moderate returns should consider investing in dividend-paying common stock. growth and income mutual funds. high-quality corporate bonds. (Any of these) (any of these)
Maria purchased 100 shares of JAX stock for $30 per share and sold this same stock one year later for $29 per share. She paid commissions of $50 when she purchased the stock and $45 when she sold the stock. Dividends of $2 per share were paid during the year. The capital loss on this stock transaction was $100. $145. $150. $195. $195
Which investment would not be an appropriate choice for a conservative investor? Aggressive-growth stocks Treasury bills Municipal bonds High-quality corporate bonds Aggressive-growth stocks
A conservative investor would be least likely to invest in blue-chip corporate stock. high-quality corporate bonds. balanced mutual funds. growth mutual funds. growth mutual funds
____ income is not an example of current income from an investment. Capital gains Interest Dividend Rent Capital gains
By investing in alternatives that are higher on the investment pyramid, one is exposed to ____ risk to his or her capital and ____ risk of loss. increasing; increasing increasing; decreasing decreasing; decreasing decreasing; increasing increasing; decreasing
The real rate of return on a taxable investment yielding 8 percent annually would be ____ percent if the investor were in the 15 percent marginal tax bracket and inflation were 2 percent. 6.80 percent 6.00 percent 4.80 percent 5.10 percent 4.80 percent
Market risk is also known as unsystematic risk. diversifiable risk. systematic risk. random risk. systematic risk
____ is an example of a lending investment. Preferred corporate stock Mortgage-backed bonds Common corporate stock Mutual fund shares Mortgage-backed bonds
The income received in return for someone’s use of your property is called interest. capital gains. dividends. rent. rent
Securities are made up of stocks. bonds. mutual funds. (All of these) (all of these)
The U.S. government measures inflation using the gross domestic product. the index of leading economic indicators. the consumer price index. the consumer confidence index. the consumer price index
Which of the following statements about job interviews is correct? The interview is the single most important part of your search for employment. The average length of an interviewing process is 6 to 30 days. You should focus on the company’s needs not yours. All of these are correct. All of these are correct.
Your résumé should include a complete list of functions and responsibilities that you had in your previous jobs. True False False
Nonsalary benefits are forms of compensation that result in the employee not having to pay out-of-pocket money for certain expenses: for example, tuition reimbursement, paid sick leave, and child care. True False true
Which of the following is likely to be the largest cost of withdrawing the funds from an employer-based retirement plan when you change jobs prior to retirement? the ten percent penalty for early withdrawal the taxes you must pay on the withdrawal the lost future growth if the funds had been left on deposit the penalty assessed by the employer the lost future growth if the funds had been left on deposit
A mentor is an experienced person, such as a senior coworker, who offers friendly career-related advice, guidance, and coaching to a less-experienced worker. True False true
Tyler is going to invest $2,000 in a money market mutual fund. He has narrowed his choices to a tax-free fund currently earning 2.8 percent and a taxable fund earning 4.1 percent. If Tyler is in the 28 percent marginal tax bracket, which of these funds would give him the highest after-tax yield? The tax-free fund The taxable fund They would both give him the same yield. Not enough information is given to answer the question. the taxable fund
Gary purchased 250 shares of PAC stock for $37 per share and sold this same stock one year later for $44 per share. He paid commissions of $15 when he purchased the stock and $10 when he sold the stock. Dividends of $1.50 per share were paid during the year. The total rate of return on this investment was 22.98 percent. 22.70 percent. 18.92 percent. 19.32 percent. 22.70 percent
XYZ Corporation has suffered a major downturn in business and will not be able to pay interest on its bonds. This is an example of ____ risk. financial interest rate market volatility marketability financial
A stock represents a share of ownership in a corporation. represents a debt owed by a business or organization. is a portfolio. an example of leverage. represents a share of ownership in a corporation
Investing goes beyond saving in that it requires that less be spent than you earn. involves increased risk. ignores current income. is something only few people should do. involves increased risk
If one is in the 25 percent marginal tax bracket, he or she will have an after-tax income of ____ from an investment that pays $1,500 in taxable income. $1,500 $1,125 $960 $420 $1,125
Investors want to earn a ____ for their willingness to make investments for which there is no absolute guarantee of future success. capital gain risk premium current income risk profit risk premium

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