CH 1 - Overview of Personal Finance

Ryan worked 40 hours during the first week of his summer break and made $9 per hour. His paycheck was 332.46. How much did his employer withhold from his paycheck?

• $360.00

• $27.54

• $9

• There is not enough information provided to solve this problem.

Why is it worth investing significantly in education?

• Higher lifelong earnings potential

• College debt builds good credit

• It's easier to find a job with a college degree

• None of the above

Why would a person want to engage in financial planning?

• Plan for a college education of their children

• Start a family

• Buy a home

• All are good reasons to utilize financial planning

A good financial advisor should be able to __.

• Provide references

• Guarantee you do not lose money in the stock market

• Take no more than 25% of your money for profit

• All of the above

The best definition of personal financial planning is _.

• a process of mapping decisions for spending, borrowing, and saving and investing to achieve your financial goals

• an investment schedule established by a financial advisor to help a person pay debt

• the process of determining how much a person can afford to pay for a house based on their income

• the comparison between the cost of education and a persons projected income

Which statement is true about Americans saving for retirement?

• Most Americans save more money than they need for retirement.

• Americans do not need to save for retirement since Social Security will cover expenses during their retirement years

• 1 out of 3 Americans have no retirement savings

• The average American saves 10% of annual income for retirement

Which is a true statement about the relationship between education and a person's earning power?

• The age a person starts work determines earning power more than the education level.

• The average person with an associate's degree can expect to earn at least $125 a week more than a high school graduate.

• A person with a master's degree can expect an annual income that is double that of a person with a bachelor's degree.

• A college education does not influence a person's earning power

A rainy day fund, also known as an emergency fund should be established and used for...

• Unexpected items that go on sale

• large expenses such as a house or college education

• long-term investments such as stocks

• necessary expenses when a person loses a job or is unable to work due to illness or injury

All of the following are examples of wants except _.

• food

• a motorcycle

• a piano

• steak and lobster

A person decides to ride a bicycle to work instead of driving a car. The opportunity cost related to this decision is _.

• the money saved by not buying as much gas for the car

• the exercise that riding the bike provides

• the time that might be saved by driving the car

• the shorter route from home to school that the bike can take