2 is the ability to convert assets and financial resources


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. _____ is the ability to convert assets and financial resources into usable cash relatively easily.

  • Bankruptcy
  • Solvency
  • Investing
  • Opportunity cost
  • Liquidity

3. The Federal Reserve has the responsibility to

  • monitor illegal business activities.
  • approve spending by Congress.
  • set federal income tax rates.
  • maintain an adequate supply of money.
  • maintain a balanced budget for the federal government.

4. The _____ refers to stages that an individual goes through based on age, financial needs, and family situation.

  • financial planning process
  • financial cycle
  • adult life cycle
  • personal economic cycle
  • tax planning process

5. A family spends $40,000 on living expenses. With an annual inflation rate of 3%, they can expect to spend approximately _____ in 4 years.

  • $45,000
  • $41,200
  • $42,000
  • $43,700
  • $46,000

6. Higher employment levels can be attributed to lower consumer prices.

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

7. The time value of money refers to

  • personal opportunity costs such as time lost on an activity.
  • financial decisions that require borrowing funds from a financial institution.
  • increases in an amount of money due to earned interest.
  • the impact of inflation upon the dollar.
  • changing demographic trends in our society.

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. Which goal below would be the easiest to implement and measure in terms of accomplishment?

  • "Reduce our debt payments."
  • Save $100 a month to create a $4,000 emergency fund."
  • "Save funds for an annual vacation."
  • "Invest $2,000 a year for retirement."

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. In order to evaluate present value scenarios, _____ is/are needed.

  • multiplication
  • compounding
  • simple interest calculations
  • discounting
  • payment information

12. A commitment to a profession that requires continued training and offers a clear path for occupational growth is a(n)

  • apprenticeship.
  • internship
  • employment.
  • cooperative employment experience.
  • career.

13. Personal financial statements would include

  • budget and credit card statements.
  • income tax forms and a cash flow statement.
  • a checkbook and a budget.
  • a balance sheet and a cash flow statement.
  • a bank statement and a savings passbook.

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. A _____ résumé is designed to obtain a specific job.

  • functional
  • chronological
  • goal-oriented
  • targeted
  • data

16. A lack of _____ refers to a lack of willingness to accept a variety of employment positions and is a common career planning mistake.

  • common sense
  • flexibility
  • training
  • communication
  • perseverance

17. A family with $66,000 in assets and $52,000 of liabilities would have a net worth of

  • $66,000.
  • $52,000.
  • $118,000.
  • $14,000.
  • $41,000.

18. Personal balance sheets can be used to analyze

  • future income and expenses.
  • the net worth of an organization.
  • the cash flow of an individual or a family.
  • debt payment activities.
  • what an individual or family owes and owns.

19. Solvency can be assessed through the analysis of the following financial document.

  • Cash flow statement
  • Debt consolidation statement
  • Personal income statement
  • Credit report
  • The balance sheet

20. If a person has a payment that does not vary from month to month, then this type of payment is _____.

  • semivariable
  • current
  • variable
  • fixed
  • budgeted

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