Assignment:
• Your comparative advantage in a specific area is determined by
• the market value of the skill relative to your opportunity cost of supplying it.
• the absolute value of the skill in the performance of a specific job.
• minimum wage laws, health and safety standards and marginal tax rates.
• the comparative positions of the wealthy, the middle income individuals and low income individuals.
• Financial insecurity in America is primarily the result of
• the low incomes of Americans.
• the huge amount of time and complex knowledge required for basic financial planning.
• a low rate of personal saving and poor financial planning.
• a shortage of financial planners and portfolio managers.
• Economic analysis indicates that
• single-minded pursuit of money and wealth is the key to happiness.
• wealthy people are happier than those with lots of friends, satisfying marriages, and strong religious convictions.
• the desire for more wealth is limited to those who are interested only in their personal welfare.
• no matter what our objectives in life, they are easier to achieve if we have more wealth.
• Compared to high school graduates, those who drop out are
• more valuable to employers.
• more likely to be highly productive.
• more likely to earn high incomes.
• more likely to be poor.
• Which of the following is true?
• Most entrepreneurs work very few hours.
• Entrepreneurs generally save less of their income than other Americans.
• Additional years of schooling will substantially increase your earnings even if they fail to increase your productivity and ability to provide others with things that they value.
• If you want to make a lot of money, you had better figure out how to provide others with substantial value and find ways to discover and act on valuable opportunities.
• A monthly budget can help you achieve financial security by
• helping you choose stocks that are most likely to increase in price.
• reducing the likelihood that you will face unexpected expenditures for maintenance and repairs.
• expanding the borrowing limits on your existing credit cards and increasing the number of credit cards you hold.
• increasing your financial awareness and helping you allocate your funds more effectively.
• Which of the following is the best example of an item that a "real world" savings account is designed to cover?
• the monthly payment for the lease of your apartment
• the purchase of the gasoline you use driving back and forth to work
• an unexpected expenditure to repair the transmission of your car
• funds you are setting aside for your retirement years
• The use of debt financing to purchase food, clothing, vacations, and other non-durable items
• is prudent as long as you plan to save more in the future.
• is imprudent unless you need to purchase these items to impress your friends.
• is prudent as long as you have an unused balance on your credit card.
• is imprudent because such purchases will mean that you will soon be making payments on items that have no value.
• If you are using a credit card prudently, you should
• make only the minimum payment each month.
• pay the balance in full each month.
• pay only the interest on any outstanding balance.
• gradually expand the amount borrowed to the card's credit limit.
• Traditional IRAs, 401k plans, and other tax-deferred saving plans will
• reduce your current tax liability because funds paid into these plans are tax deductible.
• make it more difficult for a young person to save and accumulate wealth.
• increase your tax liability now, but you will pay lower taxes when you withdraw the funds.
• help those with the lowest incomes, but will be of little value to those with higher incomes who want to save for retirement.
• Which of the following is an advantage of an indexed equity mutual fund relative to a managed equity fund?
• Indexed funds generally have better stock pickers.
• Indexed funds engage in more detailed research.
• Indexed funds have lower operating costs because they engage in less stock trading.
• The compensation of those directing indexed funds is generally higher than those directing managed funds.
• The random walk theory indicates that
• investors can make money by purchasing stocks that are widely expected to earn substantial profits in the future.
• while changes in the prices of specific stocks are difficult to predict, experts are able to forecast the future direction of broad stock market indexes with a high degree of accuracy.
• changes in stock prices are driven by surprise occurrences that are difficult to predict.
• managed mutual funds will persistently out-perform indexed funds.
• The variation in the rate of return one can expect from ownership of stocks will generally be smaller
• if all of the funds are invested in a specific sector of the economy such as health care.
• if a diverse set of stocks is held over a lengthy period of time, such as 30 or 40 years.
• if all of the funds are invested in a single stock.
• if the funds are invested for a relatively short period of time.
• Buying shares of corporate stock tends to be risky when
• the stock of a single corporation is purchased.
• the stock may have to be sold within a few months.
• all stocks bought are in the same industry.
• all of the above are true.
• If an investor's primary stock holding is currently Exxon Mobil, the purchase of which of the following stocks would provide the investor with the largest reduction in risk?
• Chevron
• Shell Oil Corporation
• Wal-Mart
• Texaco