2. 8.01-8.03 Review Personal Finance

3. Darren plans to buy a home one day, but currently does not set aside savings for this because he plans to live in an apartment for at least three years. This is an example of which reason individuals fail to save and invest? A. Depending too heavily on credit B. Depending on insurance too much C. Inability to pay current expenses D. Lack of awareness of amounts needed to meet future goals D. Lack of awareness of amounts needed to meet future goals

4. Max bought penny stocks and Nancy bought blue chip stocks. Which statement about Max and Nancy is TRUE? A. Max paid a higher price per share than Nancy paid. A. Max paid a higher price per share than Nancy paid. B. Max bought stock in a large, stable company. B. Max bought stock in a large, stable company. C. Nancy is taking a much higher risk than Max. C. Nancy is taking a much higher risk than Max. D. Nancy paid more for her stocks, but has less risk. D. Nancy paid more for her stocks, but has less risk.

5. How are saving and investing different? A. Investors want to be able to easily access their money, while those who save do not. A. Investors want to be able to easily access their money, while those who save do not. B. People save so they can pay for unexpected needs; they invest to make a profit. B. People save so they can pay for unexpected needs; they invest to make a profit. C. People who save tend to be better risk- takers than those who do not. C. People who save tend to be better risk- takers than those who do not. D. People who save tend to earn larger returns on their money than those who invest. D. People who save tend to earn larger returns on their money than those who invest.

6. How are savings and investments different? Savings are: A. less secure than investments. B. more liquid than investments. C. more risky than investments. D. more volatile than investments.

7. What do saving and investing have in common? A. Both are designed primarily to make a large profit. A. Both are designed primarily to make a large profit. B. Both are usually risk-free. C. Both may be used to get ready to pay big expenses. C. Both may be used to get ready to pay big expenses. D. Both yield high rates of interest.

8. Samantha saved $75 a month, even in December, when she wanted to buy holiday gifts for her family and friends. Which rule for saving and investing does this BEST illustrate? A. Over-relying on credit for expenses B. Rule of 70-20-10 C. Rule of 72 D. View saving and investing as a fixed expense D. View saving and investing as a fixed expense

9. Since Gloria was laid off from her job and is having trouble paying her bills, she puts no money into savings. This is an example of which reason individuals fail to save and invest? A. Depending too heavily on credit B. Depending on insurance too much C. Inability to pay current expenses D. Lack of awareness of amounts needed to meet future goals D. Lack of awareness of amounts needed to meet future goals

10. What do saving and investing have in common? A. Both allow money to be withdrawn at any time. A. Both allow money to be withdrawn at any time. B. Both are known for their safety and low level of risk. B. Both are known for their safety and low level of risk. C. Both involve putting money into a savings account. C. Both involve putting money into a savings account. D. Both may be used to help reach financial goals. D. Both may be used to help reach financial goals.

11. How are savings and investments different? A. Savings earn high rates of interest, but investments do not. A. Savings earn high rates of interest, but investments do not. B. Savings have changeable rates of interest, but investment interest rates are fixed. B. Savings have changeable rates of interest, but investment interest rates are fixed. C. Savings involve low risk factors, but the risks with investments are greater. C. Savings involve low risk factors, but the risks with investments are greater. D. Investments may be withdrawn at any time, but savings may not be easy to access. D. Investments may be withdrawn at any time, but savings may not be easy to access.

12. The Haleys calculated that it would take 30 years to double the money they invested in a retirement account. Which rule for saving and investing does this BEST illustrate? A. Pay yourself first" Rule of Saving B. Rule of 70-20-10 C. Rule of 72 D. Saving and Investing Plan

13. What do saving and investing have in common? A. Both are negatively affected by diversification. A. Both are negatively affected by diversification. B. Both are designed mainly to make money over time. B. Both are designed mainly to make money over time. C. Both are good ways to prepare for later years of life. C. Both are good ways to prepare for later years of life. D. Both are subject to sudden changes in the rate of earnings. D. Both are subject to sudden changes in the rate of earnings.

14. When Meredith received her first paycheck, she decided to set aside money to buy a car before spending any of the income. Which rule for saving and investing does this BEST illustrate? A. "Pay yourself first" Rule of Saving B. Rule of 70-20-10 C. Rule of 72 D. Over-relying on credit for expenses

15. John and Larry were each given $1,000. John invested his money in savings bonds. Larry invested in growth stocks. What is an ADVANTAGE of Larry's decision over John's? A. Easier access to money B. Fixed dividends C. Less chance of losing his investment D. Possibility of higher earnings

16. Scenerio Mark works part-time at a shoe store for $450 a month. He owns a motorcycle valued at $1,500 which costs him $120 per month for gas and upkeep. Mark has $200 in a checking account and $800 in savings. He spends $200 a month for food and $120 for incidentals. Mark currently owes $160 in monthly bills.

17. Mark's total liabilities should be shown as: A. $160. B. $280. C. $480. D. $600.

18. Mark's listing of assets should include: A. current monthly bills and wages from the shoe store. A. current monthly bills and wages from the shoe store. B. gas and upkeep for his motorcycle, food, and incidentals. B. gas and upkeep for his motorcycle, food, and incidentals. C. his job, his savings, and his incidental expenses. C. his job, his savings, and his incidental expenses. D. value of motorcycle, and money in checking and savings. D. value of motorcycle, and money in checking and savings.

19. Mark works part-time at a shoe store for $450 a month. He owns a motorcycle valued at $1,500 which costs him $120 per month for gas and upkeep. Mark has $200 in a checking account and $800 in savings. He spends $200 a month for food and $120 for incidentals. Mark currently owes $160 in monthly bills. Mark's total assets should be shown in his balance sheet as: A. $450. B. $1,450. C. $2,350. D. $2,950.

20. Laura earned $40 this month and received $100 from a savings bond. She borrowed $25 and spent $120. Laura should list $5 on her income and expense statement as: A. expenses. B. income. C. net gain. D. net loss.

21. Marie's balance sheet showed that the difference between her assets and liabilities was $5,000. This is the amount of Marie's: A. asset. B. balance sheet. C. liability. D. net worth.

22. Lily ran out of cash before getting paid for each of the past three pay periods. In order to take a closer look at her recent monthly earnings and spending, Lily needs to prepare a(n): A. balance sheet. B. income and expense statement. C. savings plan. D. spending plan.

23. Jason has $500 in a savings account. He should list this on his balance sheet as a(n): A. asset. B. liability. C. net worth. D. owner's equity.

24. Karen owes her grandmother $85. She should list this on her balance sheet as a(n): A. asset. B. liability. C. net worth. D. owner's equity.

25. Jan spent $50 this month on clothing and $65 on entertainment. Jan should list these on her income and expense statement as: A. expenses. B. income. C. net gains. D. net losses.

26. After Chuck prepared an income and expense statement, he found a way to plan his budget so he would not have to borrow money. Which direct benefit of financial planning does this illustrate? A. Being financially independent B. Not having resources to maintain standard of living B. Not having resources to maintain standard of living C. Decreased sense of security D. Increasing the need for credit

27. Haley just finished listing her financial goals and wants to determine her net worth. Haley needs to prepare a(n): A. balance sheet. B. income and expense statement. C. savings plan. D. spending plan.

28. Nancy planned to earn $1,000 per month in wages and tips. When she was out sick, she earned only $500. In which cell of her spending plan should Nancy record $500? A. Cell 1 B. Cell 2 C. Cell 4 D. Cell 5

29. During the summer, Calvin spent $250 on music and entertainment, cashed in a savings bond worth $500, paid rent of $350, paid $100 in living expenses, earned $300 in wages and tips, received a gift of $1,000, and paid utilities totaling $100. Which is an accurate summary of Calvin's income, expenses, and net gain or loss? A. Income: $1,800 Expenses: $800 Net gain: $1,000 A. Income: $1,800 Expenses: $800 Net gain: $1,000 B. Income: $1,300 Expenses: $1,300 Net gain/loss: 0 B. Income: $1,300 Expenses: $1,300 Net gain/loss: 0 C. Income: $300 Expenses: $2,300 Net gain: $2,000 C. Income: $300 Expenses: $2,300 Net gain: $2,000 D. Income: $300 Expenses: $2,300 Net loss: $2,000 D. Income: $300 Expenses: $2,300 Net loss: $2,000

30. Rita budgeted $120 per month for electric utilities, but her utility bill for May was only $90. In which cell of her spending plan should Rita record $30? A. Cell 3 B. Cell 4 C. Cell 5 D. Cell 6

31. Alice told her mother she plans to save $250 by April 1. What step in the spending plan process should Alice do NEXT? A. Implement the spending plan B. Make realistic estimates for income and expenses B. Make realistic estimates for income and expenses C. Organize a recordkeeping format D. Use a control system to monitor money in and out D. Use a control system to monitor money in and out

32. During June, Lisa spent $300 on a trip, received a gift valued at $400, paid $250 for the rent, paid $175 in living expenses, and earned $300. What are Lisa's total expenses for the month? A. $475 B. $550 C. $725 D. $1,125

33. Eve had not paid for her senior expenses by the date set; so, she determined that her spending plan had not worked at all. What step in the spending plan process should Eve do NEXT? A. Implement the spending plan B. Make realistic estimates for income and expenses B. Make realistic estimates for income and expenses C. Review and revise her financial goals D. Use a control system to monitor money in and out D. Use a control system to monitor money in and out

34. Brent used an envelope system to track his actual income and expenditures. What step in the spending plan process should Brent do NEXT? A. Evaluate how well the spending plan turned out A. Evaluate how well the spending plan turned out B. Implement the spending plan C. Make realistic estimates for income and expenses C. Make realistic estimates for income and expenses D. Organize a recordkeeping format

35. Dee set up a weekly spending plan showing columns for income and expenses. What step in the spending plan process should Dee do NEXT? A. Implement the spending plan B. Make realistic estimates for income and expenses B. Make realistic estimates for income and expenses C. Set smart financial goals D. Use a control system to monitor money in and out D. Use a control system to monitor money in and out

36. Larry budgeted $50 per month on entertainment. When he decided to go to two concerts in one month, he actually spent $120 in one month. In which cell of his spending plan should Larry record $120? A. Cell 1 B. Cell 2 C. Cell 4 D. Cell 5

37. Nora planned to earn $100 per month in tips. When business slowed down in November, she earned only $20. In which cell of her spending plan should Kaye record $100? A. Cell 1 B. Cell 2 C. Cell 4 D. Cell 5

38. Carl selected a format and decided to prepare his spending plan for a one-month period. What step in the spending plan process should Carl do NEXT? A. Evaluate how well the spending plan worked A. Evaluate how well the spending plan worked B. Implement the spending plan C. Make realistic estimates for income and expenses C. Make realistic estimates for income and expenses D. Use a control system to monitor money in and out D. Use a control system to monitor money in and out

39. John had $75 in total expected income for the month and $125 in total anticipated expenses. What is John's net gain or loss? A. Net gain of $50 B. Net gain of $200 C. Net loss of $50 D. Net loss of $200

40. Rick planned to earn $500 per month, but earned only $380. In which cell of his spending plan should Rick record $120? A. Cell 1 B. Cell 2 C. Cell 3 D. Cell 6

41. During the summer, Jason earned $1,525 in wages, paid his parents $750 to help with household expenses, sold his four-wheeler for $300, and paid $120 premiums on a life insurance policy. What is Jason's total income for the summer? A. $1,525 B. $1,825 C. $1,975 D. $2,725

42. Gina made a decision to develop a spending plan. What step in the spending plan process should Gina do NEXT? A. Evaluate how well the spending plan worked A. Evaluate how well the spending plan worked B. Implement the spending plan C. Make realistic estimates for income and expenses C. Make realistic estimates for income and expenses D. Set smart financial goals

43. Luke expected to spend $50 per month on school expenses. When he bought books for fall semester, he spent $150. In which cell of his spending plan should Luke record $150? A. Cell 1 B. Cell 2 C. Cell 4 D. Cell 5