Marshall University MIS 310 Fall 2013 Chapter 4-6 MCQ

Marshall University MIS 310 Fall 2013Chapter 4-6 Quiz Personal Finance Basics and the Time Value of Money1.Who is most likely to benefit from inflation? A. retired peopleB. lendersC. borrowersD. low-income consumersE. government2.A major activity in the planning component of financial planning is: A. selecting insurance coverage.B. evaluating investment alternatives.C. gaining occupational training and experience.D. allocating current resources for spending.E. establishing a line of credit.3.If a person deposited $50 a month for 6 years earning 8 percent, this would involve what type of computation? A. simple interestB. future value of a single amountC. future value of a series of depositsD. present value of a single amountE. present value of a series of deposits4.If inflation is increasing at 3 percent per year, and your salary increases at the same rate, how long will it take your salary to double? A. 30 yearsB. 24 yearsC. 18 yearsD. 12 yearsE. 6 years5.Which of the following is an example of opportunity cost? A. renting an apartment near schoolB. saving money instead of taking a vacationC. setting aside money for paying income taxD. purchasing automobile insuranceE. using a personal computer for financial planning6.John Gleason is interested in purchasing a 46″ rear projection TV for his living room. John knows that right now the TV will cost approximately $1500. John is not sure he can afford this TV right now but is worried that if he waits, the cost of the TV will rise to $1800. Which type of risk is John worried about? A. Inflation riskB. Interest rate riskC. Income riskD. Personal riskE. Liquidity risk7.John Garic has just moved into a new house and needs a lawn mower since he has always lived in apartments and now he has a lawn to mow. What type of goal would this be for John? A. Consumable-products goalB. Durable-products goalC. Intangible goalD. Intermediate goalE. Long term goalMoney Management Strategy: Financial Statements and Budgeting8.Stock and bond reports would be an example of a(n): A. investmentB. insuranceC. estate planningD. taxE. consumer purchase9.Ben Chase needs to pay off some of his debts over the next few months. Which item on his balance sheet would help him decide what amounts are due in the near future? A. The budget varianceB. Investment assetsC. Long-term liabilitiesD. Current assetsE. Current liabilities10.Which of the following situations is a person who could be insolvent? A. Assets $56,000; annual expenses $60,000B. Assets $78,000; net worth $22,000C. Liabilities $45,000; net worth $6,000D. Assets $40,000; liabilities $45,000E. Annual cash inflows $45,000; liabilities $50,00011.Payments that do not vary from month to month are ____________ expenses. A. fixedB. currentC. variableD. luxuryE. budgeted12.Nick Boss has a savings account with $550 in it. He knows that he can withdraw this money from his savings account whenever he wishes. This would be an example of: A. Money managementB. An opportunity costC. A balance sheetD. A liquid assetE. Net worth13.Katherine Kocher has determined the following information about her own financial situation. Her checking account is worth $850 and her savings account is worth $1,200. She owns her own home that has a market value of $98,000. She has furniture and appliances worth $12,000 and a home computer and laptop worth $3,300. She has a car worth $12,500. She has recently purchased a 2 year certificate of deposit worth $5,500 and she has a retirement account worth $38,550. What is the value of her liquid assets? A. $2,050B. $98,000C. $27,800D. $44,050E. $171,90014.Jamie McFarland has determined that the value of her liquid assets is $4,500, the value of her real estate is $128,000, the value of her personal possessions is $62,000 and the value of her investment assets is $73,000. She has also determined the value of her current liabilities is $7,500 and the value of her long term liabilities is $98,000. What is the total value of her assets? A. $267,500B. $105,500C. $162,000D. $205,500E. None of the choices15.A savings amount of $5,000 on deposit for 8 years at 4 percent interest (compounded annually) would earn about A. $ 200B. $ 850C. $1,370D. $1,600E. $1,840Planning your tax strategy16.Taxable income is used to compute a person’s: A. exemptions.B. income tax.C. deductions.D. capital gains.E. exclusions.17.A taxpayer with a taxable income of $47,856 and a total tax bill of $5,889 would have an average tax rate of ____ percent. A. 8.6B. 10.3C. 12.3D. 14.2E. 16.718.Reductions from gross income for such items as individual retirement account contributions and alimony payments will result in: A. adjusted gross income.B. taxable income.C. earned income.D. passive income.E. total exclusions.19.Michele Barbour is considering an additional charitable contribution of $2,000 to a tax-deductible charity, bringing her total itemized deductions to $16,000. If Michelle is in a 28 percent tax bracket, and is not subject to a phase out of deductions, how much will this $2,000 contribution reduce her taxes? A. nothingB. $560C. $1,600D. $2,000E. $4,48020.The “head of household” filing status is for people who are: A. recently divorced.B. the surviving spouse.C. not living with a spouse and have dependent children.D. married but only one spouse has income.E. married and each spouse makes about the same income.21.A person with a total tax liability of $4,350 and withholding of federal taxes of $3,975 would: A. receive a refund of $3,975.B. owe $4,350.C. owe $375.D. receive a refund of $4,350.E. receive a refund of $375.22.An IRA, Keogh plan, and 401(k) plan are examples of: A. tax-exempt retirement plans.B. tax-deferred retirement plans.C. capital gains.D. self-employment insurance programs.E. job-related expenses that are tax deductible.23.Tim Bridges purchases a bass fishing boat in the state of Oklahoma. The state imposes a 3.25% tax on the value of this purchase. What type of tax is this most likely to be? A. General sales taxB. Excise taxC. Personal property taxD. Income taxE. Estate tax24.Kim Ye is single and earns $40,000 in taxable income. He uses the following tax rate schedule to calculate the taxes he owes. .png”>Calculate the dollar amount of estimated taxes that Kim owes. A. $2,737.50B. $6,747.50C. $10,000.00D. $17,587.5025.Randal Ice has adjusted gross income of $32,000. He has medical expenses for the year of $6000. How much of these expenses can he deduct from adjusted gross income? A. $0B. $2400C. $3600D. $6000Choosing a Source of Credit: The Costs of Credit Alternatives26.You can often obtain medium-priced loans from: A. parents or family members.B. American Express.C. Diners Club.D. finance companies.E. commercial banks and credit unions.27.If you borrow $100 at 10 percent simple annual interest and repay it in one lump sum at the end of one year, you will have to pay: A. $100B. $105C. $110D. $115E. $12028.Which type of credit insurance repays your debt in the event of a loss of income due to illness or injury? A. credit life insuranceB. credit accident and health insuranceC. credit property insuranceD. credit casualty insurance29.Frank Wert wants to get a lower interest rate on his loan for the purchase of a new boat. He uses the boat as collateral for the loan. In which way is Frank reducing his lender’s risk? A. He is sharing the interest rate risk with his lenderB. He is pledging valuable assets that can be seized if the loan is not repaidC. He is taking a larger stake in the asset he is purchasingD. He is repaying the loan over a faster period of timeE. None of the choices30.Shelly Stumbaugh gets a loan for $3000 with an annual interest rate of 6%. Shelly repays the loan in 12 monthly payments of $258 per month. The total amount of interest she pays is $96. Under the rule of 78’s, what is the amount of interest included in her first payment? A. $16.00B. $14.77C. $8.00D. $1.23E. None of the choices31. If Edward received a $1,600 raise to increase his annual salary from $37,000 to $38,600 during a year with an annual inflation of 4%, what would his personal increase be in nominal terms?A. .3%B. 4.15%C. 4.3%D. 6%32. Using the same information as problem 93, what is his real personal increase?A. .3%B. 4.15%C. 4.3%D. 6%