Name: Hour: Date: Unit 4 ReviewKey Financial Decision Making/Financial Statements. **Highlight the correct answer.

Transcription

1 Name: Hour: Date: Unit 4 ReviewKey Financial Decision Making/Financial Statements **Highlight the correct answer. 1) The amount of money you have left over each month is most directly related to your plans to manage. ) fixed expenses ) liquidity C) investments D) long-term savings 2) Money that an individual spends is referred to as. ) cash inflow ) liquidity C) investment D) cash outflow 3) Which of the following questions would you be most likely to ask when creating a plan for investing? ) What expenses should I anticipate? ) Should I use a credit card for cash shortfalls? C) How much risk can I tolerate? D) How much money should I keep in my savings account? 4) When creating a plan for, you would likely ask yourself what expenses you anticipate and what regular debt payments you need to make. ) managing your income ) financing C) protecting your assets D) investing 1

2 **/ Please type T or F and highlight your answer for the following questions. 5) Financial plan questions about cash inflows and cash outflows taper off as an individual begins his or her career. 6) Cash inflow refers to money received from income but not other sources. 7) Cash outflow refers to money that an individual spends. 8) Cash plays a central role in your financial plan. 9) Each stage of creating a financial plan involves asking yourself challenging questions and making challenging decisions. 10) The effects of financial decisions are typically easy to anticipate. 11) Turning a personal cash flow statement into a budget for an entire year requires precision and accuracy. 12) It is possible to adjust your budget once you have started to use it. 13) Your budget should help you anticipate future cash shortfalls. 14) To assess the accuracy of your budget, you should compare cash flow forecasts for each month. Identify each example as Nicole's cash inflow or cash outflow. ) outflow ) inflow 15) allowance Nicole receives from her parents 16) interest Nicole earns from her savings account 17) interest Nicole is charged on her credit card balance 18) the price of a ticket for a concert Nicole goes to 19) the amount that Nicole spends on gas for her car each week 20) the tips Nicole makes waiting tables at a restaurant 2

3 **Please show all work on math problems 21) ndrew is evaluating his current financial position by totaling his monthly cash inflows and outflows. His cash inflows each month are $60 in allowance and $240 in wages from his parttime job working at the pet store. His cash outflows each month are $170 for his car payment, $70 in entertainment, and $45 for gas and food. How much, if anything, does ndrew have left over each month? nswer: ndrew's monthly cash inflows are $60 + $240 = $300. ndrew's monthly cash outflows are $170 + $70 + $45 = $285. t the end of the month, ndrew should have $300 - $285 = $15 left over. **Highlight the correct answer below. 22) Which of the following suggestions for financial goal setting would you be LEST likely to find on a reputable financial planning Web site? ) Have a plan of action to accomplish your goals. ) Set general rather than specific goals. C) e realistic in both your long-term and short-term goals. D) Put your goals in writing. 23) Which of the following is NOT a typical asset listed on a personal balance sheet? ) investments ) liquid assets C) cash inflows D) household assets 24) Christine is creating a personal balance sheet and has begun classifying her assets. Which of the following should Christine classify as a liquid asset? ) her checking account ) her car C) her real estate investments D) her mutual fund 25) The defining characteristic of a liquid asset is its. ) ability to earn interest ) market value C) quick availability D) diversification 3

4 26) To figure your personal balance sheet, you would need to conduct research to estimate the market value of your. ) stocks ) bonds C) liquid assets D) household assets 27) Financial goals that you plan to accomplish within the next year should be categorized as goals. ) immediate ) short-term C) intermediate-term D) long-term 28) Financial goals that will take more than five years to accomplish should be categorized as goals. ) life-long ) short-term C) intermediate-term D) long-term 29) s your financial goals become more involved, you will need a more financial plan. ) general ) creative C) standard D) specific 30) Of the following, it is most important for your financial goals to be. ) long-term ) varied C) achievable D) demanding 31) To make a financial forecast, it is most important to evaluate and make predictions about your. ) assets ) debt C) cash flows D) wages 4

5 Identify each example as a fixed expense or variable expense. ) fixed expense ) variable expense 32) monthly rent 33) money spent on entertainment in one month 34) money spent on gas in one month 35) money spent on a car loan payment in one month 36) monthly gym membership fee 37) money spent on clothing in one month **Please show all work on Math Problems. 38) Justyna is working on a personal balance sheet. She has $575 in a checking account, $650 in a savings account, $500 in government bonds, and $1,400 in stocks. How much does Justyna have in investments? nswer: Justyna's investments are her bonds and stocks; the savings and checking accounts are liquid assets. Justyna has investments totaling $500 + $1,400 = $1, ) Sal has invested in two different stocks over the past few years. He has 22 shares of Company 's stock, which is currently selling at $45 per share. He also has 130 shares of Company 's stock, which is currently selling at $75 per share. What is the total value of Sal's stock holdings? nswer: Sal's Company stocks are worth 22 x $45 = $990. Sal's Company stocks are worth 130 x $75 = $9,750. Sal's total stock holdings are valued at $990 + $9,750 = $10, ) To determine his net worth, fzal has gathered information on all of his assets and liabilities. He has $4,350 in household assets, $400 in liquid assets, and Series EE bonds currently worth $785. fzal's only liability is the remaining balance of his car loan, which is $1,250. What is fzal's net worth? nswer: Net worth is the value of total assets - the value of total liabilities. fzal's assets are $4,350 + $400 + $785 = $5535. fzal's net worth, then, is $ $1,250 = $4,285. 5