Final Exam BSOP 206 After a lengthy job search, Judy Smith has found a place

| June 14, 2018

After a lengthy job search, Judy Smith has
found a place of employment; however, it is demanding and she is required to
work long hours during the week and even on weekends, leaving little time for
outside interests. Her decision to work at this job is an example of (Points :
4)

deflation.

financial opportunity cost.

personal opportunity cost.

time value of money.

inflation.

Question 2.2. (TCO 1) Marinda Smart is
interested in purchasing new appliances for her kitchen that collectively will
cost her approximately $5,000. She knows that she could obtain financing for
her purchase, but recently heard rumors that there may be layoffs where she
works and is concerned about her employment. What type of risk is Marinda concerned
about? (Points : 4)

Inflation risk

Interest rate risk

Income risk

Personal risk

Liquidity risk

Question 3.3. (TCO 1) Which step in the
financial planning process is demonstrated by a situation in which Royanne
decides to stop traveling through Europe and return back to the States to seek
a part-time job and take smaller, less costly trips? (Points : 4)

Developing her financial goals

Identifying alternative courses of action

Evaluating her alternatives

Implementing her financial plan

Reviewing and revising her financial plan

Question 4.4. (TCO 1) When retirement
contributions made on your behalf where you work fully belong to you even if
you leave the company, this is called the point of (Points : 4)

networking.

vesting.

a tax-deferred benefit.

a tax-exempt benefit.

break even.

Question 5.5. (TCO 1) Tracey has been
unemployed for almost a year. However, after extensive research, she has found
that the industry in which she would like to work will begin to experience job
growth in California. This is an example of _____ influencing jobs in the
future. (Points : 4)

technology trends

economic conditions

industry trends

geographic trends

educational trends

Question 6.6. (TCO 1) This month, Ken
Grossman has cash inflows of $3,500 and cash outflows of $2,350, resulting in a
(Points : 4)

balanced budget.

surplus of $1,150.

deficit of $1,150.

surplus of $3,500.

deficit of $2,350.

Question 7.7. (TCO 1) Sherry O’Neal is
interested in opening a savings account and her bank offers several types. Her
main concern is that she wants to have the ability to withdraw her money
whenever she wants. She has an interest in opening an account that is best
categorized as (Points : 4)

money management.

an opportunity cost.

a limited asset.

a liquid asset.

net worth analysis.

Question 8.8. (TCO 1) An example of _____
is a situation in which you would use a software program to help track your
spending each week. (Points : 4)

money management

an opportunity cost

a balance sheet

creative accounting

electronic analysis

Question 9.9. (TCO 2) An example of _____
would involve a situation in which Judy Smith and Tom Smith each write their
daughter a check for $12,500 for graduation, instead of giving her one $25,000
check, so they will not have to pay a gift tax. (Points : 4)

fraud

tax evasion

tax exclusion

tax avoidance

tax-deferred income

Question 10.10. (TCO 2) A _____ is an
employer-sponsored program that allows a taxpayer to cover medical and child
care costs. (Points : 4)

tax credit

tax deduction

flexible spending account

tax-deferred investment

tax-exempt investment

Question 11.11. (TCO 2) The Federal Deposit
Insurance Corporation insures deposits up to $250,000 per person per financial
institution. Joyce has $198,000 in an individual account and $404,000 in a
joint account with her husband, Dan. How much of Joyce’s money is not covered
by FDIC insurance? (Points : 4)

$198,000

$250,000

$602,000

$150,000

$0

Question 12.12. (TCO 2) The most liquid
type of account would be a (Points : 4)

certificate of deposit.

checking account.

money market account.

brokerage account.

share of stock.

Question 13.13. (TCO 3) All of the
following are examples of closed-end credit except a(n) (Points : 4)

home mortgage.

installment loan to purchase new furniture.

line of credit from your bank.

automobile loan.

single lump sum credit loan due in 90 days.

Question 14.14. (TCO 3) If a bank is
attempting to evaluate the trade-in value of a 2006 SUV when Anna McFarland is
applying for a used car loan, the bank is examining which of the five Cs?
(Points : 4)

Character

Capacity

Capital

Collateral

Conditions

Question 15.15. (TCO 3) An example of a
credit bureau would be (Points : 4)

Equitron.

Transexpress.

the Better Business Bureau.

Experian.

FICO.

Question 16.16. (TCO 3) A _____ would
require that Jessica writes a check for $125 in order to obtain a loan for
$100. (Points : 4)

credit union

payday advance company

finance company

department store

commercial bank

Question 17.17. (TCO 3) If Anthony Fontain
makes a decision to accept a variable-rate loan instead of a fixed-rate loan,
he is _____ with the lender and reducing the lender’s risk. (Points : 4)

sharing the interest rate risk

increasing his monthly payments

taking a larger stake in the asset he is purchasing

repaying the loan over a faster period of time

pledging collateral

Question 18.18. (TCO 3) _____ is/are the
primary reason(s) why consumers default on their debts. (Points : 4)

Medical expenses

Defective goods and services

Excessive use of credit

Fraudulent use of credit

Consumer fraud

Question 19.19. (TCO 5) All of the
following statements are true except which? (Points : 4)

You can obtain recommendations to buy or sell stocks and other
securities by accessing Internet sites.

There is a wealth of investment information available, but most small
investors cannot afford to use it.

You can obtain current price information for stocks, bonds, and mutual
funds by using the Internet.

A search engine is a research tool that helps you find the investment
information you want.

Both government and businesses provide individuals with investment
information.

Question 20.20. (TCO 5) If Chris is
considering an investment in a pool that is managed by professional managers,
most likely he is interested in investing in (Points : 4)

common stock.

preferred stock.

corporate bonds.

real estate.

mutual funds.

Question 21.21. (TCO 5) All of the
following statements are false except (Points : 4)

investors should put all of their eggs in one basket.

individuals can ignore their tolerance for risk when selecting specific
investments.

diversification is one way to lessen systematic risk.

the amount of time a specific investment has to work is an important
consideration when developing an investment portfolio.

younger investors should invest a large percentage of their portfolio in
income-producing securities.

Question 22.22. (TCO 5) _____ involves the
analysis of charts and historical data in order to make stock purchasing
decisions. (Points : 4)

Fundamental

Technical

Efficient market

Chart

Plot

Question 23.23. (TCO 5) A(n) _____ market
is one in which previously issued financial securities are traded among
investors. (Points : 4)

technical

fundamental

efficient

secondary

primary

Question 24.24. (TCO 5) Last year,
High-Tech Electronics earned $1.50 per share. If the current market value for a
share of stock is $60, what is the firm’s P/E ratio? (Points : 4)

0.04

1.50

40.00

44.00

60.00

Question 25.25. (TCO 5) Scott Turner has a
bond with 10 years to maturity, a face value of $1,000, an 8% interest rate,
and a market price of $800. What is the yield to maturity on this bond? (Points
: 4)

4.00%

11.11%

8.00%

10.00%

6.67%

Question 26.26. (TCO 5) An example of a
junk bond is a(n) (Points : 4)

Treasury bond.

bond rated B by Standard &
Poor’s.

bond rated AAA by Standard & Poor’s.

insured municipal bond.

Treasury bill.

Question 27.27. (TCO 5) What is the current
yield for a $1,000 corporate bond that pays 9% and has a current market value
of $825? (Points : 4)

9.0%

10.9%

10.0%

8.25%

8.0%

Question 28.28. (TCO 3) Lori Walker
purchased a new car 9 months ago, and decides to take it in for servicing under
the warranty. Lori is involved in which step of the purchasing process? (Points
: 4)

Problem identification

Information gathering

Evaluating alternatives

Determining the purchase price

Postpurchase activities

Question 29.29. (TCO 1) If Bradley Smith
gives a cashier a document at a point of purchase with the expectation of
obtaining a discount, he is using a (Points : 4)

coupon.

rebate.

warranty.

receipt.

promissory note.

Question 30.30. (TCO 3) A credit purchase
with 24 monthly payments of $80 and a down payment of $125 would have a total
cost of (Points : 4)

$2,000.

$1,795.

$2,045.

$1,920.

$1,085.

Question 31.31. (TCO 3) The _____ is
considered to be the assessed value of your home. (Points : 4)

value used to calculate property taxes

estimated current market value

price you paid to purchase the home

amount of money a buyer has offered to purchase the home

cost basis assigned to your home by your insurance company

Question 32.32. (TCO 4) Your home insurance
policy has a $250 deductible. If hail causes $1,500 damage to your home, what
amount of the claim would the insurance company pay? (Points : 4)

$1,750

$1,250

$1,500

$250

$0

Question 33.33. (TCO 4) John Brown owns a
home in Oakland, California and because of the risk of earthquakes, he decides
to purchase _____ to cover potential losses. (Points : 4)

building and other structures

additional living expenses
personal property

personal liability

specialized coverage

Question 34.34. (TCO 4) Martina has a
policy that includes a $500 deductible and a coinsurance provision requiring
her to pay 10% thereafter. Her medical bills total $5,500. What amount is she
required to pay personally? (Points : 4)

$1,500

$500

$1,000

$5,000

$5,500

Question 35.35. (TCO 4) _____ is a
healthcare institution that directly contracts with specific medical care
specialists in order to provide healthcare services in exchange for a fixed,
prepaid monthly premium. (Points : 4)

Blue Cross

Blue Shield

A PPO

Medicaid

An HMO

Question 36.36. (TCO 4) If Mary Lou applies
for a life insurance policy and lies about her age, a _____ provision will
state that her benefits will be what her premium would have bought if she had
been truthful about her age. (Points : 4)

policy loan

grace period

true age

guaranteed insurability

misstatement of age

Question 37.37. (TCO 4) If Frank has a term
life insurance policy that is _____, this means that he can obtain additional
years of protection at the end of the initial term without the need for a
medical examination. (Points : 4)
straight

renewable

convertible

decreasing

accelerated

Question 38.38. (TCO 6) The Capitalist
Mutual Fund’s net asset value is $27.25. The fund has liabilities of $1.4
million and 1,600,000 shares have been issued. What is the value of the fund’s
portfolio? (Points : 4)

$43.6 million

$45 million

$38.2 million

$40 million

$16 million

Question 39.39. (TCO 6) Tracey Patterson
would need to purchase a(n) _____ if she desires federally tax-exempt income.
(Points : 4)

junk bond fund

intermediate corporate bond fund

municipal bond fund

short-term government bond

world bond fund

Question 40.40. (TCO 6) A benefit
associated with an investment in a real estate limited partnership is that the
investor (Points : 4)

does not have to worry about capital gains tax.

does not have to pay federal income tax.

does not have to pay state income tax.

can invest in a shopping center or large building by investing as little
as $5,000.

faces an investment that is very liquid.

Question 41.41. (TCO 6) Judith recently
inherited several pieces of diamond jewelry from her aunt. This jewelry is an
example of (Points : 4)

a direct investment in real estate.

an indirect investment in real estate.

an investment in precious metals.

an investment in collectibles.

an investment in gems.

Question 42.42. (TCO 6) If Jeremiah’s
employer makes nontaxable contributions to a plan in his name and his salary is
reduced by the same amount, Jeremiah has a (Points : 4)

money-purchase pension plan.

stock bonus plan.

profit-sharing plan.

defined benefit plan.

403(b) plan.

Question 43.43. (TCO 6) Chuck owns a home
worth $140,000, a car valued at $30,000, and miscellaneous assets worth $7,500.
He owes $75,000 on the home and $12,000 on the car, and has no other debts. His
retirement account, in which he is fully vested, contains $17,500 in mutual
funds. He is insured with a $250,000 term life insurance policy. What is his
net worth? (Points : 4)

$83,000

$108,000

$195,000

$358,000

$445,000

Question 44.44. (TCO 7) The benefits of
establishing a trust include the fact that (Points : 4)

it can reduce or provide payment for estate taxes.

it can allow you to avoid probate and transfer assets immediately to
beneficiaries.

it can free you from managing your assets, while providing you a regular
income.

it can ensure that your property serves a desired purpose after you die.

All of the above

Question 45.45. (TCO 7) If Barry has been
named by Anderson to distribute his assets as outlined in his will and pay outstanding
obligations, Barry will serve as a(n) (Points : 4)

executor.

trustee.

guardian.

beneficiary.

agent.

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