Finance 101 LQ's MC
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34 terms
Terms | Definitions |
|---|---|
| Sam and his wife Ann purchased a home in Lubbock, Texas in 1980 for $100,000. Their original home mortgage was for $90,000. The house has a current market value of $175,000 and a replacement value of $200,000. They still owe $55,000 on their home mortgage. Sam and Sally are now constructing their balance sheet. How should their home be reflected on their current personal balance sheet? |  $175,000 asset& $55,000 liability |
| Balance sheet liabilities should be recorded at their: a.) Original outstanding balance b.) Year-end outstanding balance c.) Average outstanding balance d.) Current outstanding balance e.) None of the above | d.) Current outstanding balance |
| Phil has $2,000 and he needs it to grow to $4,000 in 8 years. Assuming he adds no more money to this fund, what rate of return would he need to earn? a.) 6% b.) 7% c.) 8% d.) 9% e.) 10% | d.) 9% |
| ______ income is subject to federal taxes: a.) Gross b.) Adjusted Gross c.) Net d.) Take-home e.) Taxable | e.) Taxable |
| Mr. and Mrs. Sanborn are retired and have had several medical problems this year. Their financial matters for 2008 are as follows: Adjusted Gross Income $65,000 Un-reimbursed Medical Expenses $14,500 How much would the Sanborns' medical expenses contribute to their total itemized deductions? a.) $0 b.) $4,875 c.) $7,500 d.) $9,625 e.) $14,500 | d.) $9,625 |
| Sheldon has a home valued at $108,000 and an outstanding mortgage of $70,000. If his lender is willing to provide a home equity loan of up to 80% of market value. How much could Sheldon borrow using a home equity loan? a.) $86,400 b.) $80,000 c.) $38,000 d.) $30,400 e.) $16,400 | e.) $16,400 |
| The ______ is really a second mortgage on your home. a.) affinity card b.) unsecured personal credit line c.) home equity line of credit d.) preferred Visa card e.) platinum American Express card | c.) Home equity line of credit |
| Which of the following are true regarding credit scoring systems? a.) Lower scores are better than higher scores b.) Scoring systems are based on statistical studies c.) Credit unions calculate and sell credit scores to lenders d.) Females receive higher score than males e.) All of the Above | b.) Scoring systems are based on statistical studies |
| What is the probabilty that a professional money manager will produce superior performance next year? a.) 100% b.) 66% c.) 50% d.) 33% | d.) 33% |
| What do investors consider a risk free investment? a.) Large Company Stocks b.) Smasl Company Stocks c.) U.S. Treasury Bills d.) None of the above | c.) U.S. Treasury Bills |
| What is LIBOR? a.) The interest rate banks charge each other for loans b.) An index of the 500 largest public American companies c.) The interest rate on all federal student loans d.) A deadly Na'vi killing machine in Avatar | a.) The interest rate banks charge each other for loans |
| PLUS Loans (Parent Loans) are: a.) The fiscal responsibility of the parents b.) Have a 6 month grace period after graduation c.) Can be consolidated with a dependent student's federal Stafford loans d.) Not backed by the federal government | a.) The fiscal responsibility of the parents |
| Why would someone hire a professional to manage their money? a.) In order to diversify b.) In order to earn abnormal returns c.) They don't have time or knowledge themselves d.) All of the above | d.) All of the above |
| According to Professor Beedles, prices in the stock market react how quickly: a.) 10 minutes b.) 10 seconds c.) 1 second d.) Milliseconds | d.) Milliseconds |
| Professor Beedles talked about a simple way to see what percent of wealth you should have invested in stocks by your age. Say you are 45 years old how much wealth should you have invested in stocks. a.) 55% to 65% b.) 25% to 35% c.) Either d.) None of the Above | a.) 55% to 65% |
| Given a $500 annual deductible, a $4,000 lid on the coinsurance, 80/20 coinsurance, and a $250,000 policy limit, how much of a $15,000 medical bill will be paid by the insured? a.) $500 b.) $2,900 c.) $3,400 d.) $4,000 e.) $4,500 | c.) $3,400 |
| The rating system used to set insurance premium rates is based on which of the following factors: a.) Tobacco use b.) Age c.) Family status d.) All of the Above | d.) All of the above |
| U-Need-This has $12 million preferred stock, 10 million shared of common stock outstanding, and $39 millions in total assets. The book value is: a.) $2.00 per share b.) $4.30 per share c.) $4.10 per share d.) $1.50 per share e.) None of the above | d.) $1.50 per share |
| When evaluating a stock as a possible investment, one must consider: a.) The current market price b.) The expected capital gain c.) The expected dividend income d.) one's investment goals e.) all of the above | e.) All of the above |
| A bond selling below par value is selling at: a.) a discount b.) its coupon value c.) a premium d.) maturity e.) the highest effective yield | a.) A discount |
| A bond is quoted as 6 1/2 05. The bondholder would receive ______ interest per year. a.) $5 b.) $50 c.) $65 d.) $500 e.) $650 | c.) $65 |
| Base upon the following information: BONDS - POP 9-3/4 10 YIELD - ? CUR VOLUME - 70 CLOSE - 110-1/2 NET CHANGE - -1/2 What is the current yield on this bond? a.) 5.00% b.) 8.82% c.) 9.75% d.) 11.00% e.) 11.50% | b.) 8.82% |
| Suppose the EPS of Wal-Mart stock was $2 and the current price per earnings ratio is 10. What is the current price of Wal-Mart stock? a.) $5 b.) $8 c.) $20 d.) $40 e.) Can not compute with given information | c.) $20 |
| The minimum rate of return you would like to receive in compensation for the amount of risk you have assumed is the: a.) desired rate of return b.) actual rate of return c.) exact rate of return d.) approximate yield e.) none of these | a.) Desired rate of return |
| If the current price of an investment increases, what affect does the price increase have on approximate yield: a.) moderately increase yield b.) decrease yield c.) will not affect the yield d.) drastically increase yield e.) none of the above | b.) Decrease yield |
| Corporate ownership is evidenced by: a.) preferred stock b.) common stock c.) bonds d.) capital gain e.) property rights | b.) Common stock |
| The Smith family owns 200 shares of Elta stock. The company declared a 5% stock dividend. The Smiths now own: a.) 200 shares b.) 205 shares c.) 210 shares d.) 420 shares e.) 410 shares | c.) 210 shares |
| Which of the following companies is a blue chip stock: a.) General Electric (GE) b.) Harley Davidson c.) Amazon.com d.) Starbucks e.) Krispy Kreme | a.) General Electric (GE) |
| The ____ of a stock reflects stockholder confidence: a.) par value b.) book value c.) face value d.) price/earnings ratio e.) dividend yield | d.) Price/Earnings ratio |
| Companies whose earnings have increased at an above-average level over the recent past are called: a.) blue-chip companies b.) growth companies c.) income companies d.) speculative companies e.) defensive companies | b.) Growth companies |
| To most stockholders, the main advantages of common stock investment are: a.) attractive returns and active trading b.) attractive returns and voting rights c.) high dividends and active trading d.) high risk and active trading e.) high risk and attractive returns | a.) Attractive returns and active trading |
| One of the more appealing features of a common stock is that stock investments: a.) offer ownership with a limited liability b.) offer relatively high annual income c.) can always be sold for at least the purchase price d.) have a relatively high minimum investment e.) offer tax-exempt income | a.) Offer ownership with a limited liability |
| It is NOT a good idea to use credit for: a.) convenience b.) durable expenses c.) consumable items d.) investments e.) improving one's credit rating | c.) consumable items |
| Mike has a MasterCard with an annual fee of $25, 18% interest, and a $1,000 credit limit. He always pays the total outstanding balance monthly. His most recent monthly statement lists last month's payment, new charges this month totaling $1,500, and a $30 fee. That fee is most likely the result of: a.) interest charges b.) his annual fee c.) an over-the-limit fee d.) a late payment e.) transaction fees on purchases | c.) an over-the-limit fee |
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