# Financial Math 1

### 160 terms by Bree_x

#### Study  only

Flashcards Flashcards

Scatter Scatter

Scatter Scatter

## Create a new folder

savings

### What should be included in a financial plan to protect assets?

NOT! how much money you will have in savings

### Planning for the possiblity that your home might get struck by lightning and catch on fire is part of a plan for _____.

protecting assets

managing income

April

### Jim and Jackie are married with three children at home and a mortgage. Jim's net pay per year is \$67,000 and Jackie does not have income. Their mortgage payment of \$2,800 includes insurance on their home. They have additional monthly expenses of \$2,700. Jim contributes 15% of his earnings to a retirement fund and they have \$5,000 in savings. There is a \$500,000 life insurance policy on Jim and a \$100,000 policy on Jackie. As their financial advisor, what part of Jim and Jackie's financial plan would you encourage them to work on?

NOT! They should work on their plan for protecting their income.

NOT! They should work on their plan for managing their liquidity.

income

\$295

### Which of the following is true?

NOT! net cash flow - cash outflow = cash inflow

D

### What is meant by the term financial planning?

It is creating a road map of everything you do with your money.

### Your friend has prepared his monthly budget and asks you if he has overlooked anything in this planning. Which of the following questions points out his most serious omission?

What if you need to replace the furnace?

NOT! \$1,080.00

interest earned

### Based on the spreadsheet below, which of the following is a true statement?

The net cash flow is positive.

almost 8 years

6.6

### If there is a positive correlation between number of years of education and the amount of vacation time, which of the following careers would you expect to have the most vacation time?

pharmacist, docotorate degree

### Frank and Lynn are co-workers getting paid the same salary. They both decide to quit their jobs and start going to school on the same day. Frank gets a degree after just 18 months and spends \$6,500 dollars on his education. Lynn only spends \$3,500, but it takes her 2 years to get her degree. Assuming that they each will make \$6,000 more per year after graduating, which of the following is true?

Frank will recover his investment at an earlier date than Lynn.

F

accountant

\$42,000

\$4,980

4 years

### There is a correlation between higher education and greater degrees of both income and job stability. What is one downside of continuing education that might cause someone to choose not to seek a higher level of education despite the benefits?

Higher education can be expensive, and most students who seek degrees must accept some burden of debt.

\$69,000

### Two people quit work and begin college at the same time. Their salary and education information is given in the table below.

Person A recovers their investment in a shorter amount of time.

### Data seems to indicate that there is a negative correlation between years of education and unemployment rates. Which of the following describes what this means?

As education increases unemployment decreases.

3.3 years

all of the above

10 years

surveyor

### Based on the above table, what is the fastest growing occupation for people without a college degree?

Personal and home care aides

\$1.65 billion

761,307

33%

Orthodontist

Makeup artists

B

189,000

### According to the above graph, which industry will have 25% more growth than health services over the period from 2000 to 2010?

Computer and data processing

Security guard

### The average hourly earnings for a construction worker is projected to be \$24.50 in 2012. Jason wants to join the construction work force after he graduates in 2012. His friend tells him that average hourly earnings for construction workers will rise by 2% from 2009 to 2012. Based on the data below, assuming that the projected hourly earnings are correct, is Jason's friend's statement accurate?

NOT! His friend's statement is accurate. The average hourly earnings will increase by 2%.

### Based on trends displayed in the graphs above, which answer choice represents a likely situation for 2010?

There will be roughly 6 million employees in 2010, and those employees will have average hourly earnings of \$22.75.

### Based on the above chart, which industry's average annual rate of change is projected to decrease the most in the 2006-2016 period as compared to its average annual rate of change during 1996-2006?

NOT! Federal government

109,701

### Why is it useful to identify or analyze occupational and industrial trends when considering your career path?

Occupational trends can give you an idea of whether a certain industry is improving or declining, and might help you identify how competitive your specific job market will be.

### Based on the above table, what is the fastest growing listed occupation for those without a college degree?

Dental assistants

### U.S. Bureau of Labor Statistics, 2006. Jasmine wants to enter a career with median earnings of at least \$33,500, but she doesn't want to go to college. Which of the following occupations fits her plan?

Private detective

NOT! -17%

21,000

### In considering career options, Ella would like to enter an industry with at least 50% growth from 2000 to 2010. Based on the above graph, which of the following industries is not in that category?

Management and public relations

### The following table shows the assets and liabilities of the Smith family in 2005 and 2009. Based on the table, which of the following is true?

From 2005 to 2009, both assets and liabilities decreased.

### Over the period of a year, Sam's net worth increased. Which of the following could be true?

Sam's assets increased by more than his liabilities.

### When it goes on sale for \$1,600, Mikah buys a new plasma television that is valued at \$1,800. He takes \$300 from his savings account to use as a down payment and finances the rest. Choose the true statement.

Mikah's assets increased by \$1,500.

F

### Which of the following modifications to the list of assets and liabilities below would result in a negative net worth? House valued at \$90,000. Mortgage owed \$78,000. Car valued at \$11,000. Car loan of \$5,000. Student loan of \$13,700. Stocks valued at \$2,500. Savings of \$3,000.

Borrowing \$10,000 more in student loans.

all of the above

investment asset

\$96,600

### Mary took out a loan to buy a \$30,000 boat but had \$2,000 cash to put down.Which of the following is true?

Mary increased both assets and liabilities.

### Which of the following is a liability?

credit card balance

### Which of the following is an example of increasing both current liability and use assets?

NOT! paying off car loan and investing money in retirement fund

### In order to reduce their debt, the Johnsons sold some real estate property valued at \$165,000 for \$143,000. They paid off a loan balance of \$100,000 and put the rest in savings. Which of the following is a true statement?

NOT! The Johnsons increased their net worth.

### Which of the following modifications to the list of assets and liabilities below would result in a net worth of \$100,000? Recreational Vehicle valued at \$110,000. Car valued at \$27,000. Medical bills totaling \$8,700. Loan balance of \$80,000. Savings of \$5,000. Retirement fund of \$50,000. Credit card balance of \$2,300.

NOT! recreational vehicle value decreasing to \$100,000

use assets

liquid asset

\$412,700

### The Svensons find a refrigerator valued at \$2,300 on sale for \$1,900. They decided to withdraw \$500 from savings to use as a down payment on the purchase of the refrigerator and took out a loan to pay the balance. Choose the true statement.

NOT! The Svensons' assets increased by \$1,400.

### Mr. Chavez has assets of \$250,000 and liabilities of \$18,000. He decides to finance the entire amount of the purchase of a car valued at \$26,000. Which of the following is true?

NOT! Mr. Chavez increased both his assets and net worth.

### The following table shows the assets and liabilities of the Chang family in 2007 and 2008.

From 2007 to 2008, assets increased and liabilities decreased.

### The following table shows the assets and liabilities of the Smith family in 2005 and 2009.

The following table shows the assets and liabilities of the Smith family in 2005 and 2009.

### Mike and Kate plan to save money for their wedding over a 20 month period. They will need to save \$8,000 to help pay for the wedding. They set aside the same amount each month. After a year they saved \$4,000. Mike and Kate know they must adjust their plan in order to meet their goal, so they came up with the following options: Option A: Stay with saving the same amount they've been saving each month but postpone the wedding 2 months. Option B: Increase the amount of money they save each month by \$80 from what they've been saving. Which of the following is a true statement?

NOT! Only option B will allow them to meet their goal.

T

### Kinsey has a plan to save \$60 a month for 16 months so that she can purchase a new television. After 11 months Kinsey has saved \$600. If the most that Kinsey can possibly save is \$80 per month, which of the following statements is true?

Kinsey has a plan to save \$60 a month for 16 months so that she can purchase a new television. After 11 months Kinsey has saved \$600. If the most that Kinsey can possibly save is \$80 per month, which of the following statements is true?

### The Polleys want to put in a swimming pool next summer. They need to save \$6,000 over 12 months in order to achieve this goal. They set aside the same amount each month and after 7 months discovered they have saved \$3,100. The Polleys know that they must adjust their plan in order to meet their goal, so they come up with the following options: Option A: Save the original amount each month but put the pool in one month later than originally planned. Option B: Increase savings each month by \$100 from their original plan. Which of the following statements is true?

Neither option A nor option B will allow them to meet their goal.

### Shaniqua brings home \$225 per week working 25 hours. She is able to save \$25 of her earnings each week. Shaniqua wants to have \$600 saved at the end of 15 weeks. She is allowed to work up to 30 hours per week if she wants. She can save all the money earned working extra hours. Which of the following statements is true?

Shaniqua must work 27 hours per week to meet her goal.

8 weeks

Long term goals

A and C

14 weeks

5 weeks

### It is important to re-evaluate financial goals periodically. In which of the following situations would it be necessary to change an existing financial goal?

NOT! You came across unexpected income.

Short term

### Buying a car is an example of _____.

A short term goal

### Fran brings home \$225 per week working 15 hours of which she is able to save \$40. Fran wants to have \$1,400 saved at the end of 20 weeks. She may work up to 18 hours per week if she wants. She can save all of the money earned working the extra hours. Which of the following statements is true?

Fran must work 17 hours per week to meet her goal.

13 weeks

B and D

### Drake wants to save \$750 so that he can take a class on computer analysis for cars. The class is being held on various dates over the next several months. Drake is planning to take the class 6 weeks from now, so he plans to save \$125 each week. Unfortunately, Drake had to take out a little money from his savings in the 3rd week. After 4 weeks, Drake has \$470. He knows that he must adjust his plan in order to meet his goal. Drake came up with the following options: Option A: Stay with saving the original amount each week but take the class a week later than originally planned. Option B: Increase the amount of money he saves each week by \$15 from his original plan. Which of the following is a true statement?

Both options A and B will allow him to meet his goal.

### Two plans for reaching a goal are given below. Plan A: Save \$450 over the next 8 weeks by working 9 hours per week at \$7.20 per hour. Plan B: Save \$450 over the next 6 weeks by working 15 hours per week at \$6.50 per hour. Which of the following is a true statement?

Both plans will work for achieving the goal.

### What is true about the way you should approach financial goals across different stages of your life?

As you progress through life, your values and financial possibilities will gradually change, which leads to an evolution of your financial goals over time.

### Which of the following is not a good plan for achieving goals?

Set goals higher than what you feel you can achieve.

### Yvonne has a goal of buying a brand new home within a year. She's afraid that she will be unable to save the money that she needs for a down payment. Which of the following should not be part of Yvonne's plan for achieving her goal of buying a home?

Borrow the money for the down payment and pay it back later

### Chuy wants to buy a new television. The television costs \$1,350. Chuy decides to save the same amount of money each week, for 27 weeks. After 8 weeks Chuy saved \$440. Which of the following conclusions can you make about Chuy's plan?

Chuy will save more than he needs and will meet his goal in less than 27 weeks.

### The Greens want to put an addition on their house 18 months from now. They will need to save \$10,620 in order to achieve this goal. They set aside the same amount each month, and after a year discover they have saved \$6,120. The Greens must adjust their plan in order to meet their goal, so they came up with the following options: Option A: Stay with saving the original amount each month but put the addition on one month later than originally planned. Option B: Increase the amount of money they save each month by \$120 from their original plan. Which of the following statements is true?

Neither option A nor option B will allow them to meet their goal.

### Planning for the possibility that the plumbing in your house needs repair is part of a plan for _____.

managing liquidity

\$624

### The table below is comparing level of education achieved to the rate of unemployment and the median weekly earnings in 2008. Based on the information provided, the unemployment rate decreases the most when moving between which two consecutive educational levels?

"Less than high school" and "High School Graduate"

F

almost 8 years

189,000

I and III

capital gains

### The table below shows the typical hours worked by employees at a company. A salaried employee makes \$50,000 per year. Hourly employees get paid \$20 per hour, but get \$30 per hour for each hour over 40 hours. Which of the payment options would you recommend to a new employee?

Hourly pay. Hourly employees make more per week than salaried employees.

earned

### Which of the following describes a situation where you would most likely choose passive income over another type of income?

NOT! You own a home. You can sell it now to make a profit or you can rent it out for a year, giving the renter the option to buy it for the balance owed.

\$0.90

### The table below shows the typical hours worked by employees at a company. A salaried employee makes \$78,000 per year. Hourly employees get paid \$26 per hour, but get \$39 per hour for each hour over 40 hours. Which of the payment options would you recommend to a new employee?

Salaried pay. Salaried employees make more per week than hourly employees.

\$1,887.20

\$62,080

\$2,040

### Which of the following statements is always true?

Workers being paid on commission get paid based solely on their performance.

### Choose the method of pay that would result in the most earnings for one month on sales of \$60,000.

Graduated commission of 5% on the first \$40,000 in sales and 9% on anything over that.

34

\$5.25

\$1,200

\$4,325

### A graduated commission employee makes 3.5% interest on the first \$50,000 in sales and 6.5% interest on all sales over \$50,000. Which of the following expressions represents the employee's total earnings on \$81,500 in sales?

(0.035)(50,000) + (0.065)(31,500)

NOT! \$150,000

commission

\$87,500

\$64.93

22%

\$852.96

NOT! \$691.52

\$174.66

### The following federal tax table is for biweekly earnings of a single person. How will the federal tax affect a gross biweekly pay of \$780 for a single person claiming 6 exemptions?

It will not affect gross pay.

### Juanita receives her paycheck and knows that her gross pay and federal tax are correct. Using the fact that Social Security tax is 6.2% of gross pay, Medicare tax is 1.45% of gross pay and state tax is 19% of federal tax, determine if Juanita's net pay is correct. Choose the true statement below.

The net pay is correct.

\$16.80

### The following federal tax table is for biweekly earnings of a single person. How will the federal tax affect a gross biweekly pay of \$840 for a single person claiming 5 exemptions?

NOT! It will decrease gross pay by \$11.

### Chloe receives her paycheck and knows that her gross pay and federal tax are correct. Using the fact that Social Security tax is 6.2% of gross pay, Medicare tax is 1.45% of gross pay and state tax is 23% of federal tax, determine if Chloe's net pay is correct.

The net pay is correct.

\$51,458

\$53,650

\$7,250

### Which of the following employees has the greatest total employee compensation?

Employee B: total job benefits \$68,400 and total job expenses \$300

### The gross pay, benefits and job expenses for two different employees are shown below. Employee A: gross pay \$57,200, employee benefits \$5,300, job expenses \$800 Employee B: gross pay \$56,900, employee benefits \$6,200, job expenses \$1,400 Which of the following is a true statement?

The total employment compensations for the two employees are the same.

### Which of these is an example of an employer using benefits to encourage employees to stay with the company?

NOT! The employer provides paid time off, which the employee must use in the calendar year.

17.1

### Which of the following companies offers the greatest total employment compensation?

Company D (Gross pay \$39,400
18% of gross pay in total employee benefits)

### Which of the following is the best thing to consider when making comparisons between job offers?

total employment compensation

### If total employee benefits are calculated as a percentage of their gross pay, which of the following employees receives the largest amount in total employee benefits?

NOT! Employee A: gross pay \$32,600 , total job benefits \$33,600

Company C

\$70,970

\$51,458

### If gross pay increases by \$500, total job benefits increase by \$200 and total job expenses decrease by \$300, then total employment compensation _____.

NOT! increases by \$400
MAYBE... increases by \$1,000

### Which of the following employees has the largest gross pay?

Employee C: Total employee benefits \$1,000
Total job benefits \$51,900

\$19.25

Employee #1.

See More

Example: