1.When a person faces a trade-off and must give up something by making a choice,
this is referred to as

• taking out a loan.
• opportunity cost.
• the evaluation of alternatives.
• a decision-making process.
• a dilemma.

2.When bankruptcy is experienced, this can be the result of poor decisions in the _____ component of financial planning.

• sharing
• saving
• borrowing
• lending
• protecting

3.From an economic standpoint, prices in the marketplace are determined through

• the stock market.
• the government.
• employment.
• supply and demand.
• interest rates.

4.Loan risk can increase with _____.

• constant interest rates
• a short time to maturity
• lower consumer prices
• rising consumer prices
• a good credit rating

5.The future value of an account in which $2,000 is deposited each year for 5 years, and which earns 4%, is approximately _____ after 5 years.

• $2,000
• $2,400
• $10,000
• $400
• $10,800

6.Higher employment levels can be attributed to

• lower consumer prices.
• reduced employment levels.
• lower interest rates.
• higher employment levels.
• increased consumer spending.

7.When it comes to the financial planning process, the first step is to

• develop financial goals.
• implement the financial plan.
• evaluate and revise your actions.
• analyze your current personal and financial situation.
• create a financial plan of action.

8.If a person wants to determine the current value of a desired amount for the future, the following computation would be used.

• Simple interest
• Present value of a single amount
• Future value of a series of deposits
• Future value of a single amount
• Present value of a series of deposits

9.Brad Opper has a goal of "saving $50 a month for vacation." Brad's goal lacks

• a realistic perspective.
• specific terms.
• the type of action to be taken.
• a purpose.
• a time frame.

10.If John Smith is making plans to make holiday purchases at the end of the year, he is setting a(n) _____ goal.

• intermediate
• long-term
• short-term
• intangible
• durable

11.You want to determine the current value of an annuity that pays $350 a month for the next 5 years. What type of calculation would provide you with this value?

• Future value of a single amount
• Simple interest
• Present value of a single amount
• Future value of a series of deposits
• Present value of a series of deposits

12.If an employee has tax-deferred benefits, this means that the benefits are

• taxed at some point in the future.
• not subject to state income tax.
• exempt from federal income tax.
• taxed at a special rate.

13.A cash flow statement reports a person's or a family's

• net worth.
• plan for spending.
• value of investments.
• balance of savings.
• current income and payments.

14.A _____ résumé would best be used by an employee who has worked in many fields and has a variety of skills in a variety of work-related categories.

• targeted
• goal-oriented
• chronological
• functional
• career change

15.When a prospective employee presents a _____ résumé, this means that educational and work experiences are presented in a reverse time sequence.

• goal-oriented
• functional
• sequenced
• chronological
• database

16. _____ refers to the natural abilities people possess that can be brought to the workplace.

• Knowledge
• Attitudes
• Survival skills
• Occupation techniques
• Aptitudes

17.The distinction between current liabilities and long-term liabilities can be made based upon the

• amount owed.
• due date of the debt.
• interest rate charged.
• financial situation of the creditor.
• current economic conditions.

18.A savings amount of $3,500 on deposit for 4 years at 4% interest (compounded annually) would earn about

• $ 650.
• $ 600.
• $560.
• $140.
• $350.

19.A person's financial position can be improved if he or she experiences

• increased liabilities.
• reductions in earnings.
• additional credit purchases.
• an increase in investments and savings.
• lower amounts deposited in savings.

20.Which of the following situations best represents an individual facing insolvency?

• Assets $30,000; liabilities $37,000
• Assets $78,000; net worth $22,000
• Liabilities $45,000; net worth $6,000
• Assets $56,000; annual expenses $60,000
• Annual cash inflows $45,000; liabilities $50,000