University of Maryland University College FINC 321 6980 Fundamentals of Building Wealth Section 6382
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University of Maryland University College
FINC 321 6980 Fundamentals of Building Wealth
Section 6382
Final Examination
Instructor: Dr. Emmanuel Anoruo
Spring 2015
INSTRUCTIONS:
1. Answer all questions 2. Use only
capital letters 3. Submit only the answer sheet
1.
A
surplus on your cash-flow statement indicates that you are?
a.
?using savings to pay current
expenses.
b.
?managing your financial resources
successfully.
c.
?borrowing money to pay current
expenses.
d.
?both using savings to pay current
expenses and borrowing money to pay current expenses.
2.
Rent
and vehicle insurance payments are examples of?
a.
?short-term liabilities.
b.
?variable expenses.
c.
?fixed expenses.
d.
?long-term liabilities.
3.
Food,
clothing, and entertainment are examples of?
a.
?short-term liabilities.
b.
?variable expenses.
c.
?fixed expenses.
d.
?long-term liabilities.
4.
Paul
is a college student who has the following financial information. He would like
your help in figuring his surplus for last year.
?
Income
from summer job
$5,000
Support
from parents
$3,500
Scholarship
$1,200
Savings
account balance
$1,250
Variable
expenses
$3,500
Fixed
expenses
$4,000
Current
liabilities
$800
?
What
is Paul’s surplus?
?
a.
?$2,650
b.
?$2,200
c.
?$1,250
d.
?$1,000
5.
The
Ronselli family has total assets of $460,000 and total liabilities of $186,000.
Included in their total assets are monetary assets of $47,000 and investment
assets of $253,000. What is the Ronsellis’ investment assets-to-total assets
ratio??
a.
?26 percent
b.
?55 percent
c.
?65 percent
d.
?92 percent
6.
Taxable
income is determined by subtracting all but which one of the following from
gross income.?
a.
?exemptions
b.
?Adjustments
c.
?exclusions
d.
?Credits
7.
Which
of the following taxes is progressive?
a.
Federal income taxes
b.
State sales taxes
c.
?Social Security taxes
d.
All of these
8.Which of the following is not defined as part of
gross income?
a.
?Gifts and inheritances
b.
?Capital gains
c.
?Scholarship income spent on room
and board
d.
?Illegal income
9. ?____ cannot be deducted as an adjustment to
income.
a.
?The amount contributed to an individual
retirement account (IRA)
b.
?Job-related moving expenses
c.
?Student loan interest for higher
education
d.
?State income taxes paid
10. ?Charge accounts are
referred to as open-ended credit because they
a.
?allow repeated borrowing
without having to reapply for the credit each time.
b.
?don’t have to be paid off
completely each month.
c.
?make use of a plastic card.
d.
?can be used to purchase
merchandise or to borrow cash.
11.
?A personal line of credit acts very much like
a.
?open-ended/revolving credit.
b.
?closed-end credit.
c.
?installment credit.
d.
?single-payment credit.;
12.
The outstanding balance owed on a debt is the
a.
?APR.
b.
?principal.
c.
?finance charge.
d.
?equity.
13.
A borrower who has failed to make a payment of principal or interest when
due or meet any other requirement of a credit agreement is said to be in
a.
?Arrears
b.
?Foreclosure
c.
?Rescission
d.
?Default
14. ?Credit interest rates that go up and down
according to interest rates in the economy as a whole are referred to as
a.
?teaser rates
b.
?variable rates.
c.
?penalty APRs.
d.
?prime rates.
15. ?Credit
card costs can include
a.
?annual fees.
b.
?interest.
c.
?transaction fees.
d.
?All of these.
16. ?Buying
without fully considering priorities and alternatives is called
a.
?impulse buying.
b.
?unplanned purchasing.
c.
?money saving.
d.
?planned buying.
17.?A(n) ____ is a refund of part of the purchase price.
a.
?rebate
b.
?MSRP
c.
?sticker price
d.
?dealer holdback
18. ?The
process of comparing products or services to find what you think is the best
buy is called
a.
?negotiating.
b.
?preshopping research.
c.
?comparison shopping.
d.
?decision making.
19. ?A
vehicle lease is essentially
a.
?a rental of a vehicle.
b.
?buying a vehicle on credit.
c.
?always a bad deal.
d.
?a way to get a rebate.
20. A
loan to purchase real estate in which the real estate itself serves as
collateral is a ____ loan.?
a.
?mortgage
b.
?property
c.
?real estate
d.
?homeowner’s
21.Jillian wants to rent an apartment that has monthly rent
payments of $850 and requires a $400 security deposit and a $500 damage
deposit. In order to move in, Jillian will probably be required to pay
a.
?$850.
b.
?$1250.
c.
?$1750.
d.
?$2100.
22.Carl has found an apartment that has monthly rent payment of
$950 and requires a one month’s security deposit and a $500 damage deposit. In
order to move in, Carl will probably be required to pay?
a.
?$950.
b.
?$1450.
c.
?$1900.
d.
?$2400.
23.When a tenant who wants to move before his or her lease is
up and leases to another tenant, this is called?
a.
?releasing.
b.
?leasing.
c.
?subleasing.
d.
?co-leasing.
24.The type(s) of insurance you carry but which covers losses
suffered by others is called ____ insurance.?
a.
?liability
b.
?income
c.
?auto
d.
?homeowner’s
25.Fire, theft, illness, and accidents are all examples of
a.
?exposures
b.
?perils
c.
?hazards
d.
?losses
26.Deciding not to drive a car is an example of handling risk
through?
a.
?risk avoidance.
b.
?loss control.
c.
?risk reduction.
d.
?transferring risk.
27.The decision not to buy collision insurance on an old
car is called?
a.
?risk avoidance.
b.
?loss control.
c.
?risk reduction.
d.
?risk retention.
28.People who are uncomfortable with risk and who avoid it
whenever they can are using the approach of?
a.
?risk retention.
b.
?risk transfer.
c.
?risk avoidance.
d.
?loss control.
29.Buying an alarm system as an option on your new sports car
is an example of?
a.
?risk avoidance.
b.
?loss control.
c.
?transferring risk.
d.
?risk retention.
30. When a star football running back pays an insurance
company to insure his legs, this is an example of?
a.
?risk avoidance.
b.
?loss control.
c.
?transferring risk.
d.
?risk retention.
31.?The main purpose of using a tax-sheltered retirement
account to invest for retirement is to
a.
?have the government ultimately
collect more in taxes from you.
b.
?leave more money to your heirs.
c.
?provide your employer with a
tax-deduction.
d.
?let you accumulate more money for
retirement.?
32.Which descriptor below indicates that the funds in that type
of retirement account will be eligible for a tax-free withdrawal?
a.
?Roth
b.
?Keogh
c.
?ERISA
d.
?SEP-IRA
33.. ?Many employers encourage their workers to
participate in the companyâ€
s retirement plan by offering a _________ equal to
all or a portion of the amount the employee contributes into the plan.
a.
?tax-deduction
b.
?raise
c.
?bonus
d.
?matching contribution
34.?The best-known defined-contribution plan is the
a.
?401(k) plan.
b.
?403(b) plan.
c.
?457 plan.
d.
?SIMPLE IRA.
35.?The process by which employees obtain nonforfeitable rights
to their retirement benefits that cannot be taken away in case of dismissal or
resignation is called
a.
?funding.
b.
?vesting.
c.
?integration.
d.
?catch-up.
36. Cindy Estrada is applying for a loan and the bank has
asked her for some financial information. Use the following data to calculate
Cindy’s net worth.
?
Checking account balance
$1,300
American Express credit card balance
$650
Money market account
$2,200
House
$255,000
Mortgage loan balance
$140,000
Automobile
$20,000
Cash on hand
$575
Auto loan balance
$8,700?
a.
?$121,025
b.
?$129,725
c.
?$130,375
d.
?$131,025
37. Maria Gomez would like to learn more about her
financial situation. Help her calculate her current net worth.
?
Annual salary
$42,000
U.S. savings bond
$1,500
Money market fund
$4,000
Checking account balance
$760
MasterCard balance
$2,800
Value of automobile
$15,000
Outstanding auto loan
$6,750?
a.
?$3,460
b.
?$10,210
c.
?$11,710
d.
?$53,710
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