BUS Study Test Questions

BUS Study Test Questions 1. The financial decision-making process is complicated by all of the following factors EXCEPT __________. the use of information in planning. But INCLUDE: uncertainty and risk, the number of factors to consider, the complexity of relationships among factors, relative importance of consequences. 2. Your financial planning should reflect the realities of your career choice because your choice of career affects your __________. health and safety risks, salary and benefits, career duration. 3. Your time horizon for financial planning is __________. life long. 4. Individual factors may affect all the following financial situations EXCEPT __________. inflation. But INCLUDE: income, income needs, risk tolerance, wealth. 5. Periods of contraction in the economy often lead to __________. reduced returns on investment 6. An effect of deflation is that your money __________. is worth more and buys more. 7. Because of inflation, the school supplies you bought for $20 last year now cost __________. $30 8. In financial planning, effective goals are __________. timely. specific and measurable. realistic and attainable. 9. Financial advisors may assist through all the following services EXCEPT __________. career planning. But INCLUDES: tax planning. estate planning. investment planning. business financial planning 10. Characteristics of financial advisors to look for include __________.manner of compensation., professional training 11. Dylan earns $24,500 a year as an office worker. He pays $1,000 a month for rent, $300 a month toward his car, and his other expenses come to around $1,200 a month. Dylan __________.has a budget deficit. should reduce expenses. 12. If you had a budget surplus, which of the following choices would best increase that surplus? Save and invest 13. Storing wealth, creating income, and reducing future expenses are all uses of __________.assets. 14. If an asset is worth more when you re-sell it than when you bought it, then you have __________.a capital gain. 15. Seeing the effect of each financial transaction or event on your current situation is the purpose of __________. balancing your books. 16. Serena wants to see how her money from all sources came in and went out for all uses during each month of the past year. Which kind of financial statement does she need? Cash flow statement 17. In January you made your final payment on your car loan and in July you got a small home equity loan to replace windows and add a deck. How would you classify these activities in your cash flow statement? Financing 18. The value of assets is equal to the value of liabilities plus the value of __________. equity. 19. On a cash flow statement, each cash flow is shown as a percentage of total __________. positive cash flow. 20. A summary of income and expenses over a period of time is called __________. an income statement. 21. The budget process begins with a thorough understanding of your __________.current financial condition, financial statements, desires and choices 22. Creating a budget involves __________. projecting realistic behavior, questioning your assumptions, reviewing your financial records. 23. Budgets can be prepared conservatively by __________. underestimating earnings. 24. Examples of recurring incomes are __________. wages or salary, interest or dividends 25. Examples of non-recurring expenditures are __________. window replacements 26. Examples of recurring expenditures are __________.windfalls, loan repayments, auto deposits, taxes 27. A budget for long-term goals involving non-recurring items is called a/an __________. capital budget 28. Sources of information about your recurring incomes and expenditures include __________. your income statement. your cash flow statement. 29. Recurring incomes and expenses __________. satisfy lifestyle goals 30. All of the following assets or activities would be appropriate for developing a specialized budget EXCEPT __________. operating expenses. 31. specialized budget are tax consequences., an inheritance. new recreational activity, cash flows. 32. The relationship between your financial statements and your budget is that together they allow you to __________. Project the effects of your financial choices 33. Your prime directive as a consumer is to __________.live within your means. 34. When you identify the product you want to buy, you should first identify __________. what need the product will satisfy. 35. Once you have selected a good, your purchase options may include any of the following EXCEPT __________. Place of manufacture 36. selected a good, your purchase options are: price, discount, free delivery, installation, financing deal 37. An alternative to a promise of “satisfaction guaranteed” on a product is __________. Warranty 38. The costs of operating a car include all the following EXCEPT __________. price. 39. Cost of operating a car are: fuel, maintenance and repair, property taxes, insurance and registration 40. Advantages of renting a home include all the following EXCEPT __________. creating a store of value. 41. Advantages of renting a home include all: limited financial obligation, more liquidity, more mobility, limited maintenance expenses. 42. Categories for housing structures with different attributes include __________. multipleunit dwelling., mobile home, condominium. 43. A factor to consider in calculating your mortgage affordability includes __________. the mortgage factor., your gross monthly income. the monthly net of your PITI. 44. If interest rates and inflation are low and there is liquidity in the credit markets, __________. it will be easier for buyers to borrow. 45. A mortgage in which you borrow a monthly income via a loan against your home equity that you don’t have to pay back for as long as you live there is called a/an __________. reverse mortgage. 46. A budget for short-term goals involving recurring items is called a/an __________. operating budget 47. A mortgage in which you pay a fixed monthly payment for a specified number of years and then make a final large repayment of the principal is called a/an __________. balloon mortgage 48. Once you have selected a good, your purchase options may include any of the following EXCEPT __________. place of manufacture. 49. The purpose of disability insurance is to __________. provide income if you become disabled. 50. Arranging for the legal distribution or management of everything you own after your death is known as __________.estate planning. 51. Legal responsibility for someone else’s use of your possessions or someone else’s activity for which you are responsible is called __________. vicarious liability 52. The budget process begins with __________. defining goals and gathering data. 53. If you buy a $200,000 home with 10% down payment, what will be your mortgage? $180,000 54. The goals of estate planning includes all the following EXCEPT __________. avoiding inheritance taxes. 55. The goals of estate planning includes all the following minimizing estate taxes, providing for your dependents, distributing your assets, preserving wealth in the family. 56. A will that gives instructions for the management of your assets if you become unable to do so is called a __________. living will. 57. A comprehensive budget may include any of the following components EXCEPT __________. cash flow statement. 58. A comprehensive budget may include any of the following components specialized budget, tax budget, an operating budget, a capital budget. 59. A home buyer’s inspection checklist focuses on __________. structural features of a house, the exterior condition of a house, the interior condition and systems. a., b., and c 60. A chart showing the interest and principal payments on a mortgage over the life of the loan is a/an __________.amortization schedule 61. In performing an attribute analysis you compare products in terms of __________. the characteristics most important to you. 62. Your spending decisions as a consumer are framed by your __________. personal tastes, lifestyle choices, priorities in life. a., b., and c. 63. Automobile insurance coverage for financial losses of people in the other car injured in an accident you cause is called __________. bodily injury liability 64. Retirement planning involves __________. defining your goals, saving for the time when you will not have income from employment, estimating how much savings you will need to retire when you want. a., b., and c. 65. To avoid unwelcome adjustments, you should _____ be conservative in your expectations 66. The purpose of property insurance is to __________. insure the rights of ownership, cover loss of use from damage or theft, cover loss of value or cost of replacement. a., b., and c. 67. Examples of price advantages include all the following EXCEPT __________. price discrimination 68. Examples of price advantages include all the following discounts on excess inventory, seasonal or expiration date discounts, brand or label discounts, volume or quantity discounts. 69. When you invest in stocks you __________. buy a share of a corporation. 70. Commodities include all the following EXCEPT __________. stocks and bonds. 71. Commodities include all the following currencies, precious metals, energy resources, agricultural products. 72. An investment policy statement is __________. an investor’s return objectives, risk preferences, and constraints. 73. Your risk tolerance represents __________. your ability or willingness to take chances. 74. The Joneses believe it is important to try to reduce poverty and hunger globally by aiding local communities. They invest internationally in local businesses and nonprofit organizations that are effectively addressing the problem. Their strategy is an example of __________. social investment 75. The risk that actual returns will not match or exceed expected returns is called __________. investment risk 76. Investment risks include all the following EXCEPT __________. default risks. 77. Investment risks include all the following economic risks, industry and company risks, asset class risks, market risks. 78. Recession and inflation have decreased the value of your investments. This is an example of __________. economic risk 79. Perfect Lawn Inc.’s stock price has fallen because it was not able to meet its production deadlines. This is an example of __________. company risk 80. Real estate prices fell across the board because the market was glutted with surplus pre-owned homes for sale. This is an example of __________. asset class risk 81. Mutual funds provide investors with __________. Diversification, security selection, asset allocation. a., b., and c. 82. Passively managed funds designed to mirror the performance of an representative asset class are called __________. index funds 83. Mutual funds that own shares in other mutual funds rather than in securities per se, are called __________. funds of funds 84. Funds structured to increase return through active management with the expectation of a down market are called ________ inverse funds 85. Leveraged funds are riskier than funds that do not use leverage because they __________. use borrowing 86. You should read a fund’s prospectus to __________. analyze risk and return, ensure a good match with your investment goals, compare costs. a., b., and c 87. A group created to buy and manage commercial property is called a __________. syndicate. 88. A fund of real estate holdings that can be privately held or publicly traded on an exchange is a __________. real estate investment trust. 89. Investments in gold, silver, and other precious metals __________. serve as a hedge against inflation. 90. Methods of investing in commodities include __________. commodity indexes, exchange-traded open-end mutual funds. 91. An effect of deflation is that your money __________. is worth more and buys more 92. The Accounting Equation states that __________. Assets = Liabilities + Equity 93. Because of inflation, the school supplies you bought for $20 last year now cost __________. $30 94. A period of declining productivity lasting less than half a year is called __________. a contraction 95. Examples of annuities include all the following EXCEPT __________. one-time cash flows 96. Examples of annuities include all the following savings plans, layaway purchases, mortgages, retirement plan payouts 97. The formula PV x (1+r)t = FV expresses the relationship between __________. present and future value. 98. Bankruptcy occurs when __________. there is negative net worth, debts are greater than assets. 99. The value of a currency is based on __________. its stability. 100. Megan’s balance sheet shows that on February 7, 2010 she had assets totaling $27,600 and debts totaling $32,500. Which of the following statements best describes her situation? She had negative net worth 101. Robin uses her checkbook register to record and balance each cash flow, in and out, as it occurs. This activity is called __________. Bookkeeping, cash accounting. A and B. 102. The stocks in Wayne’s investment portfolio lost value in the recession, but he also had CDs and a savings account. The effect of his investment diversification on his finances was to __________. reduce risk. 103. Buying stocks or corporate or government bonds is a way to invest in __________.the capital market. 104. If the demand for labor is greater than the supply, then __________. the price of labor is higher 105. To calculate the relationships between time, risk, opportunity cost, and value, you need to know all of the following variables EXCEPT __________. where the future cash flows will go 106. To calculate the relationships between time, risk, opportunity cost, and value, you need to know all of the following variables what the future cash flows will be when the future cash flows will be the effect of time on value the rate at which time affects value. 107. The relationship between the passage of time and the value of assets is called __________.the time value of money 108. When your expenses are greater than your income you have __________. budget deficit. 109. You decide you want to have a million dollars in the bank when you retire. Your bank pays 3% interest per year. If you start when you are 28, how much would you need to save each year to reach your goal by the time you are 68, assuming the interest rate stays the same? Between $13,000 and $14,000 a year. 110. Time affects value by __________. discounting value. 111. In financial planning, the numbers expressed in an income statement, balance sheet, and cash flow statement are assessments of __________. the current situation. 112. Your financial planning should reflect the realities of your career choice because your choice of career affects your __________. health and safety risks, salary and benefits, career duration, a., b., and c. 113. A balance sheet is a list of __________. assets. debts or liabilities. equity or net worth.