Final Personal Finance Chapter 1 – 3

The study of personal finance includes Financial & career planningrisk managementtax planningALL OF THE ABOVE
Financial objectives are rarely achieved without restraining… Current consumption
The preferred phase of the economic cycle is… expansion
Which of the following statements is correct? Long term interest rates are generally higher than short term interest rates
A good time to invest in stocks is when the economy is… in the trough of a recession
The statistic that measures the value of all goods and services produced in the US is the … Gross domestic product
Rick Palmer received a $2500 raise the 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? 5.6 %2500/45000 = 5.555
The US government measures inflation using … the consumer price index
If the consumer price index was 140 in 1993 and 150 in 1996, how much did prices increase during this time period? 7.1%10/140
If the consumer price index increases from 158 to 175, how much do prices increase during this period 11%
Why do rising interest rates generally depress stock prices? Businesses have to pay higher interest rates to borrow money, thus reducing their profit.Stock investors tend to take their money out of the stock market & invest in interest paying investments.Future earnings will not be worth as much as today.ALL OF THE ABOVE
Which of the following is the one key interest rate to focus on when trying to forecast interest rate trends in the future? Federal Funds rate
Dan just received a $2000 Christmas bonus from his employer. If he pays a 25% marginal tax rate for federal income taxes, his state is 5%, & the SS tax rate is 7.65%, approx. how much of the $2000 bonus will Dan have left to spend on Christmas presents? $12472000 x .25 = 5002000 x .05 = 1002000 x .0765 = 1532000 – 500 – 100 – 153 =1247
Amelia is in the 28% marginal tax bracket. She can earn $500 investing in a taxable bond, or $375 investing in a tax exempt bond, Which of these bonds will provide her with the most after tax income? The tax exempt bond
Grandmother Smith has just put $12000 into an investment earning 6% per year for her granddaughters college education. Approx. how much will be in the account in ten years, assuming all the interest is left in the account. $2149012000(1 + 0.06)^10
Better and Bill just won $10000 in the Pennslyvania state lottery. They decide to spend $3000 in an investment partying 7% compounded annually. If they use the money in that investment for a vacation in five years, approx. how much will they have available to spend on that vacation? 7000(1 + 0.07)^59800
Housing values are appreciating at the rate of 3% a year. Approx. how much will your $100000 house be worth in 10 years if this rate of appreciation continues? $134390100000(1 + 0.03)^10
___________ is the current value of an asset that will be received in the future. Present Value
The present value of an annuity is the ________________ worth of a stream of payments to be received in the future. current
Over the past few years, the price of houses has been increasing at an annual rate of 4% nationally. How many years will it take for costs to double at this rate? 18 years
In an employer-sponsored retirement plan, interest, dividends & capital gains from the qualified plans are taxed … only after funds are withdrawn from the plan
________________________ are topics & activities that at engage your attention. Professional interests
______________________ are the principles, standards, or qualities considered worthwhile. Values
All of the following are key steps to successful. career planning except… Aligning yourself with historical employment trends
All are examples of non-salary benefits exempt BONUS
After hiring an employee, the law requires employers to do all of the following except Pay all of the employee’s health care expenses.
To advance in your career, you should… both volunteer for new assignments and stay alert to what is happening in your career field.
Which of the following are resources that might be helpful in your job search? Classified advertisementsCareer fairsEmployment agenciesALL OF THE ABOVE
In preparation for a job interview, you should… compile some personal stories & anticipate interview questions and prepare responses
Which of the following goals is most clearly stated? Save $1000 in one year for a vacation to San Diego
The first step in budgeting process is … setting financial goals
Financial goals… Should be explicitly statedShould be consistent with your valuesBOTH OF THE ABOVEnone of the above
Disposable income is income… after all employer withholding including taxes
When estimated expenses exceed estimated income, the choices available are to create a combination of more income & fewer expenses
Jerry collins expects the following cash surpluses or deficits in the first 3 months of the year. The rest of the year, they expect cash surpluses. Their revolving savings fund should be at least …. $250
One of the crisis steps to take a budge deficit occurs repeatedly is to stop or reduce discretionary spending for luxuries such as…. Meals outClothingEntertainmentALL OF THE ABOVE
A surplus on your cash-flow statement indicates that you are…. managing your financial resources successfully
Values are … Beliefs
A balance sheet includes _______, ___________________, and ______________________. assets; liabilities and net worth
An income & expenses statement is also known as a ___________________ statement cash – flow
Which of the following would be included in the category of assets known as monetary assets Money market accounts
Which of the following would be classified as an investment asset? stocks
The formula for calculating net worth is… assets minus liabilities
Vincent paul has decided to pay off his $875 MasterCard debt by taking $875 out of his money market savings account. This transaction will …. Not change his net worth on his balance sheet.

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