WorksheetsMM Ch 2 Test Review
Total questions: 19
Worksheet time: 10mins
A financial plan is created like
map of the world.
blueprint for building a house.
bank account statement.
receipt for an item purchased with a credit card.
A person increases his net worth by
buying a new car with a 10% down payment from savings and a 90% loan.
making purchases with a credit or debit card.
increasing assets and decreasing liabilities.
transferring money from a savings account to a checking account.
A person has a house worth $100,000, a mortgage of $90,000, savings of $5,000, a car valued at $10,000, a $7,000 car loan, and $3,000 in credit card debt. This person's net worth is
$115,000.
$100,000.
$15,000.
$5,000.
A financial plan does not include
managing risk.
retirement planning.
bankruptcy.
investing.
A person increases liquidity when he
buys more items on credit and fewer items with cash.
uses money saved to buy an asset like a car.
uses cash to pay off credit card debt.
makes weekly deposits in a bank savings account.
"Good credit management" means
making purchases with credit or debit cards.
using credit to make purchases that cost more than $1,000 and paying the minimum required each month.
using credit to make purchases when the buyer knows she can quickly pay the amount owed.
making most purchases on credit in order to track money spent.
Why is insurance a method of managing risk?
Insurance protects assets from being lost or damaged.
Insurance limits a person's financial loss if an asset is lost, stolen, or damaged.
A person's liabilities are reduced when insured assets are lost or stolen.
A person's budgeted monthly expenses are covered by insurance
A 21-year-old college graduate starting her first full-time job wants to buy a home by age 30. Why should she include this goal in her financial plan?
She can apply for a mortgage now while she is young and rates are low.
She is more likely to achieve her goal if she starts saving and investing now in order to have the down payment needed to buy the house.
She can start buying things for her house while she is living with her parents and has limited expenses.
She can buy the house as soon as she finds the one she likes.
Which of the following is not a component of a financial plan?
a plan to manage risk
a plan to pay utility bills
a plan for investing
a plan for retirement
Your net worth is the difference between your __________.
assets and liabilities
payments and income
cash inflows and outflows
liquid assets and long-term assets
Which of the following is not a source of income?
wages
salary
allowance
car payment
A person's income may depend on all of the following except __________.
career choice
height
education
training
Consumers tend to spend the most money on which category of goods?
food
entertainment
housing
clothing
Assume you intend to borrow $5,000. Which of the following financing terms is the best deal?
5 percent for 4 years
9 percent for 5 years
8 percent for 3 years
9.5 percent for 6 years
Which of the following is a key component of risk management?
insurance
investments
cash
jewelry
In general, the higher the risk of a particular investment the higher the potential
debt
return
liquidity
record keeping
The most common investments include __________.
stocks and bonds
stamp collections
rare automobiles
oil paintings
Good record keeping is important for __________.
tax purposes
calculating net worth
estate planning
young children.
Equity refers to
The amount of a person's liabilities
The amount a person owes on their credit card
The amount of an asset that a person still ows money on
The amount of an asset that a person owns
