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Personal Finance

1) Money received today is worth more than the same amount of money received in the future. This is true because
a)Money received today can grow at a compounded rate
b)Future inflation will devalue your current investment
c)All goods and services are likely to cost more in the future
d)Unique investment opportunities exist today, which may not be available in the future

2) The time value of money implies that a dollar received today is worth a dollar received tomorrow
a)More than
b)Less than
c)The same as
d)Insufficient data to answer

3) Which of the following is not a cash inflow?
a)Interest received
b)Dividend income
c)Car payment
d)Salary

4) Jim has $1,000 income from his job and $200 stock dividend income this month. This month Jim has rent and utilities of $300 and he spent $300 on groceries and $200 on clothing. What is his cash inflow this month?
a)$1,200
b)$400
c)$600
d)$500

5) Many individuals tend to their cash inflows and their outflows
a)Underestimate; overestimate
b)Overestimate; underestimate
c)Minimize; maximize
d)Not know; accurately know

6) Which of the following usually affects cash inflows the most?
a)The education and income of your parents
b)Your job skills
c)Your personal consumption behavior
d)The size of your family

7) In budgeting, it is useful to compare with the budgeted amounts to determine the accuracy or error of the budget and adjust it as necessary.
a)Actual inflows
b)Actual outflows
c)Both actual inflows and outflows
d)Current assets

8) Which one of the following is a liquid asset?
a)Cash in a saving account
b)A swimming pool
c)Real estate
d)Stock held in an IRA

9) Joe Schmo is in the 28% tax bracket. A tax-exempt employee benefit with a value of $500 would have a tax-equivalent value of:
a)$694
b)$528
c)$500
d)$360

10) Liabilities can be calculated by
a)Adding assets plus net worth
b)Subtracting net worth from assets
c)Adding assets plus income
d)Subtracting expenses from assets

Solution Preview

1) Money received today is worth more than the same amount of money received in the future. This is true because
a)Money received today can grow at a compounded rate

2) The time value of money implies that a dollar received today is worth a dollar received tomorrow
a)More than

because of reinvestment opportunities

3) Which of the following is not a cash inflow?

c)Car payment ...

Solution Summary

Response discusses concepts related to Personal Finance

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