unit 1 - PFI 2301

pdf

School

Texas Tech University *

*We aren’t endorsed by this school

Course

2301

Subject

Finance

Date

Apr 3, 2024

Type

pdf

Pages

Uploaded by AmbassadorSnakePerson886

Which government agency is charged with collecting and enforcing tax laws? A. Internal Revenue Service (IRS). B. Consumer Financial Protection Bureau (CFPB). C. Securities and Exchange Commission (SEC). D. Federal Bureau of Investigation (FBI). A balance sheet includes: A. Income, expenses, and net worth B. Assets, liabilities, and expenses C. Income, liabilities, and net worth D. Assets, liabilities, and net worth Suppose that you were trying to determine how much income was available for future monetary needs as well as for investments. Which of the following ratios would you most likely use? A. Savings Ratio B. Debt Ratio C. Debt Service to Income Ratio D. Emergency Fund Ratio Which of the following describes information about a person's financial condition during a period of time? A. Balance Sheet B. Income and Expense Statement C. Statement of Net Worth D. Spending Plan Insolvency results from earning more than you spend. A. True B. False If you have a Debt Service to Income Ratio of 38%, is that above or below the recommended benchmark? A. Below B. Above Tom and Kelly McDonald have total assets valued at 97,000 and total debt of $135,000. What is Tom and Kelly's debt ratio? A. .7185 B. .5021 C. 1.3917 D. 1.2549

The life cycle chart tell us: A. How much our human capital will increase in the future because of more experience. B. How much financial assets we have at different ages. C. How much human capital we have at different ages. D. The transformation of human capital into financial capital through life. Life goals should depend on financial goals. A. TRUE B. FALSE A solid understanding of personal finance will: A. Enable you to protect yourself from an incompetent investment advisor. B. Allow you to take advantage of changes in the economy. C. Give you the ability to make intelligent investments. D. Help you understand the importance of planning for your financial future. E. All of the above. A solid understanding of personal finance will: A. It gives you the ability to manage risky investments. B. Enable you to protect yourself from an incompetent investment advisor. C. Will not allow you to take advantage of changes in the economy. D. Help you understand why you don't need to plan for your financial future. Once you have implemented your plan you are finished with the financial planning process. A. True B. False Financial plans should include objectives and goals in which of the following areas? A. Spending B. Risk management C. Capital accumulation D. All of these Paul invested $10,000 in a security that will double in value in ten years. Approximately what annual rate of return is this investment making? A. 10.00% B. 6.30% C. 7.20% D. 5.80%

Sam refuses to retire until his retirement account has a balance of at least $300,000. Sam won't make any more deposits in the account. The account currently has a balance of $200,000 and earns 5.9% per year, compounded semi-annually. If you want to figure out how long does Sam has before he will retire what would you put for the present value? A. -200,000 B. 200,000 C. -300,000 D. 300,000 E. 0 Miguel refuses to retire until his retirement account has a balance of at least $300,000. Miguel won't make any more deposits in the account. The account currently has a balance of $200,000 and earns 2.9% per year, compounded semi-annually. About how long does Miguel have before he will retire? A. 7 years B. 14 years C. 6.5 years D. 13 years SMART in SMART goals stands for: A. Satisfying, Measurable, Achievable, Rewarding, and Timely. B. Satisfying, Monitored, Achievable, Relevant, and Timely. C. Specific, Measurable, Achievable, Realistic, and Timely. D. Specific, Monitored, Attainable, Rewarding, and Timely Which of the following represents a timely goal? A. Have an income of $180,000 from personal savings, Social Security, and retirement plan assets. B. Retire at age 67 in Florida with an annual income of $80,000. C. Begin saving today to buy a beach house. D. Start saving $100 per month 5 years before you expect to need to buy a new car with a $6,000 down payment. Randy and Irene Jakes have a long-term goal of saving $28,000 for a down payment on a new home they would like to buy in three years. Which of the following is a short-term goal that is most consistent with this long-term goal? A. Purchase $2,000 worth of furniture next year. B. Save $9,000 this year. C. None are correct. D. Hope for a tax refund every year.

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Amelia currently has $1,000 in an account with an annual rate of return of 4.3%. She wants to have $3000 for a trip to Canada when she graduates in 4 years. How much will she have to save each month to afford her trip? A. $56.46 B. $46.03 C. $84.20 D. $34.68 Which of the following statements is correct? A. Adjusted gross income is always less than tax deductions. B. Gross income is always less than tax exclusions and adjustments. C. Adjusted gross income is always less than taxable income. D. Gross income is always greater than or equal to adjusted gross income. From her annual salary of $72,000, Kiersten has $5,700 automatically deducted for insurance on an annual basis. Additionally, $9,000 is deducted each year in taxes. When preparing her personal income statement, what figure should Kiersten enter for her income? A. $66,300 B. $66,000 C. $72,000 D. $57,300 Which of the following might be found on a cash flow statement? A. Wages and salaries B. Interest and dividends C. Income taxes paid D. All of the above This document refers to looking towards the future. A. Statement of Net Worth B. Balance Sheet C. Spending Plan D. Cash Flow Statement Taxable income is: A. Gross income reduced by tax deductions and credits B. Gross income reduced by adjustments C. Adjusted gross income reduced by adjustments D. Adjusted gross income reduced by tax deductions and credits

________ taxes are characterized by higher tax rates on higher levels of income. A. Impressive B. Regressive C. Progressive D. Digressive Which of the following is considered an adjustment? A. Contributions to your checking account B. Gambling losses C. Groceries D. Interest paid on student loans Life goals should depend on financial goals. A. TRUE B. FALSE Look at this graph: Suppose a 20 year old wants to take advantage of the high point in the blue line at age 50, how could she do this? A. Borrow B. Invest C. Save D. Steal Which of the following statements about financial literacy is correct? A. It is specific to all finance fields (corporate, personal, etc.). B. It is a form of human capital. C. All of these are not correct. D. It consists of your ability to apply yourself in personal finance topics.

Financial capital tends to decrease with age while human capital tends to increase with age. A. TRUE B. FALSE The primary resource of a young college student is likely to be: A. Durable goods B. Human capital C. None of these. D. Financial capital . A young person is likely to have more financial capital than human capital. A. TRUE B. FALSE If you put $1 in a savings account earning 10% annually, how much will it be worth in 100 years? A. $21,132.41 B. $13,780.61 C. $13,538.25 D. None are correct. Long-term goals are goals that last longer than 15 years. A. True B. False Sam refuses to retire until his retirement account has a balance of at least $300,000. Sam won't make any more deposits in the account. The account currently has a balance of $200,000 and earns 5.9% per year, compounded semi-annually. About how long does Sam have before he will retire? A. 7 years B. 6.5 years C. 13 years D. 14 years If you deposited $1,000. What annual rate will you need to earn if you plan to pull out $2,000 in 10 years? (Round to the nearest whole number) A. 9% B. 7% C. 8% D. 10%

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Alberto currently has $500 in an account that earns 20% APR, compounded monthly. Assuming he doesn't withdraw any of the funds, how much will his balance be in 6 years? A. $1,500.00 B. $1,643.72 C. $1,492.99 D. $1,678.78 Paul invested $10,000 in a security that will double in value in ten years. Approximately what annual rate of return is this investment making? A. 7.20% B. 10.00% C. 6.30% D. 5.80% To be considered a SMART goal, it should be: A. Satisfying and Measurable B. Rewarding and Attainable C. Timely and Specific D. Achievable and Monitored

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