1. (TCO 1) The stages that an individual goes through based on age, financial needs, and family situation is called the: (Points: 5)

financial planning process

budgeting procedure

personal economic cycle

adult life cycle

tax planning process

2. (TCO 1) A lack of willingness to accept a variety of employment positions is a common career planning mistake associated with weak: (Points: 5)

common sense. 

communication. 

training. 

flexibility. 

perseverance. 

3.(TCO 1) The abilities to work well with numbers, possess problem-solving skills, and have physical dexterity are examples of: (Points: 5)

interests. 

survival skills. 

aptitudes. 

occupational attitudes. 

on-the-job training

4.(TCO 1) Which of the following situations is a person who could be insolvent? (Points: 5)

Assets $56,000; annual expenses $60,000 

Assets $78,000; net worth $22,000 

Liabilities $45,000; net worth $6,000 

Assets $40,000; liabilities $45,000 

Annual cash inflows $45,000; liabilities $50,000 

5.(TCO 1) Payments that do not vary from month to month are ____________ expenses. (Points: 5)

fixed

current

variable

luxury

budgeted

6.(TCO 2) Reductions from gross income for such items as individual retirement account contributions and alimony payments will result in: (Points: 5)

adjusted gross income.

taxable income.

earned income.

passive income

total exclusions.

7.(TCO 2) Tax-deferred retirement plans are a type of: (Points: 5)

exemption.

itemized deduction

passive income

tax shelter

tax credit

8.(TCO 2) A deduction from adjusted gross income for yourself, your spouse, and qualified dependents is: (Points: 5)

the standard deduction

a tax credit

an itemized deduction

an exclusion

an exemption.

9.(TCO 2) A tax credit of $50 for a person in a 28 percent tax bracket would reduce a person’s taxes by: (Points: 5)

$10

$28

$14

$50

$35

10.(TCO 2) The rate of return on a savings account is also referred to as: (Points: 5)

liquidity

compounding

yield

insolvency

asset management

11.(TCO 2) A $200 savings account that earns $13 interest in a year has a yield of ____________ percent. (Points: 5)

6

13

7

11.25

6.5

12.(TCO 3) Dave’s take home pay per month is $2200. What is the maximum dollar amount of debt payments he should have? (Points: 5)

$880

$440

$330

$220

$0

13.(TCO 3) If you have incorrect information in your credit file: (Points: 5)

you can’t really do much about it

you have no legal remedies

credit bureaus are not required to change it

there are legal remedies available to you

don’t worry much because you will still get the credit

14.(TCO 3) Gordon Carey uses his Visa card to purchase a new digital camera and lens. What type of credit did Gordon use? (Points: 5)

installment sales credit 

installment cash credit 

single lump sum credit 

revolving credit 

incidental credit 

15.(TCO 3) Which bankruptcy allows a debtor with a regular income to extinguish his or her debts from future earnings or other property over a period of time? (Points: 5)

Chapter 7

Chapter 11 

Chapter 13

Chapter 15

16.(TCO 3) Gary Simpson notices that his neighbor has a brand new Ford F150 truck parked in the driveway. Gary decides that he needs a new car and goes out and purchases a Hummer with a six year loan on it. Which reason for indebtedness is this an example of? (Points: 5)

misunderstanding or lack of communication 

the use of money to punish 

the expectation of instant comfort 

keeping up with the Joneses 

overindulgence of children 

17.(TCO 3) Which of the following would likely be the least expensive place to borrow? (Points: 5)

Car dealer

Appliance store

Relative

Department store

Finance company

18.(TCO 5) An intermediate-term investment objective is defined as one that will be accomplished within a period of? (Points: 5)

Less than two years

Two to five years

More than five years

None of the choices

19.(TCO 5) Which of the following is a true statement? (Points: 5)

When choosing an investment, it is not necessary to consider the risk factor

During inflationary times, there is a risk that the financial return on an investment will not keep pace with the rate of inflation

The interest rate risk associated with investments in bonds is the result of changes in business conditions faced by companies

The risk of business failure deals with changes in the value of stocks and bonds due to changes in interest rates in the market

The price of stocks, bonds, and other investments never fluctuates in the market

20.(TCO 5) Matt Dannon just bought the stock of a company. He knows that with this stock comes the responsibility to approve major actions taken by the company. What gives Matt this responsibility? (Points: 5)

Equity

Proxy

Voting rights

Dividends

None of the choices

21.(TCO 5) Nancy Groom owns one $1,000 corporate bond issued by Chevron. The bond pays 8.5 percent. If interest is paid semiannually, what is the amount of the check that Ms. Groom will receive at the end of each six-month period? (Points: 5)

$4.25

$42.50

$85

$850

$1,000

22.(TCO 5) A corporate bond that is secured by various assets of the issuing firm is called a(n) ____________ bond. (Points: 5)

debenture 

mortgage 

indenture

preemptive 

treasury 

23.(TCO 5) Today bond ownership records are maintained using a process called: (Points: 5)

certified registration

book entry

revenue recognition process

coupon registration

general obligation process

24.(TCO 4) A personal opportunity cost associated with a consumer purchase refers to: (Points: 5)

buying on credit.

selecting a commonly known brand

the influence of advertising on consumers. 

time used to compare prices

government regulation of deceptive business-government activities in an effort to prevent consumer fraud

25.(TCO 4) A 32-ounce package selling for $1.60 would have a unit price of: (Points: 5)

$1.60

$2.00 a pound

5¢ an ounce 

80¢ a quart 

12¢ an ounce 

26.(TCO 4) Which of the following information is required on food labels? (Points: 5)

open dating 

unit pricing 

a generic name 

common product name 

27.(TCO 4) Federal Trade Commission regulations require that: (Points: 5)

all used cars be sold with a warranty

used car buyers be informed if the vehicle comes with a warranty

used cars over 100,000 miles cannot be sold

major repairs must be made on all used cars offered for sale

the seller must pay for one-half of major repairs on a defective used car. 

28.(TCO 4) Negative amortization is the result of: (Points: 5)

a lower amount owed on the mortgage

a higher amount owed on the mortgage

a lower escrow account

lower interest rates

a lower down payment

29.(TCO 4) Most health insurance policies in the United States are sold to: (Points: 5)

victims of communicable diseases

individuals with families

single individuals with no dependents

employees and their dependents

employers, who in turn offer the benefits to employees

30.(TCO 6 and 7) A mutual fund in which no sales charge is paid by the individual investor is called a(n) ____________ fund. (Points: 5)

closed-end

open-end 

load

no-load 

convertible fund

31.(TCO 6 and 7) A mutual fund that invests in companies outside the United States is called a(n) ____________ fund. (Points: 5)

growth-income 

income 

international 

industry 

global market 

32.(TCO 6 and 7) A handwritten will is called a(n): (Points: 5)

holographic will

formal will

statutory will

letter of last instruction

informal will