Question 1

A high debt-to-asset level is common during the early- to mid-earning life stages.

Accepted Answer

A) True 
 B)False

Question 2

A debt-to-asset ratio above 1 is more important than a liquidity ratio above 1.

Accepted Answer

A) True 
 B)False

Question 3

Describe why some people may need alternative budget strategies? Give an example to illustrate why someone might need the envelope method while someone else needs the pay yourself first method.

Accepted Answer

If someone has good intentions but is st...

Question 4

This month Joshua has $2000 income from his job and $100 interest income.His expenses are rent $500,food and entertainment $400,car expenses $600.He has $40 000 held in bonds and a car loan of $10000 .What is his net worth?

Accepted Answer

A)  $30 000
B)  $32 100
C)  $30 600
D)  $30 500E) A) and C)
F) B) and D)

Question 5

George has total debts of $10 000,liquid assets of $8000 and current liabilities of $5000.His current ratio is

Accepted Answer

A)  0) 8.
B)  0) 63.
C)  6) 3.
D)  1) 6.E) B) and D)
F) B) and C)

Question 6

This month Joshua has $2000 income from his job and $100 interest income.His expenses are rent $500,food and entertainment $400 and car expenses $600.He has $40 000 held in bonds and a car loan of $10 000.What is his cash flow this month?

Accepted Answer

A)  $600
B)  $500
C)  -$9400
D)  $30 600E) None of the above
F) A) and D)

Question 7

Household assets include jewelry and furniture and should be valued at their original cost.

Accepted Answer

A) True 
 B)False

Question 8

If you have an increase in monthly disposable income from $4000 to $4500 and an increase in spending of $650 per month,your net cash flow is reduced by $150 per month.

Accepted Answer

A) True 
 B)False

Question 9

Cash outflows represent your liabilities,such as the pay-off value on your car or home.

Accepted Answer

A) True 
 B)False

Question 10

Jennifer has assets of $100 000 and debts of $10 000.She could

Accepted Answer

A)  borrow more money,since her debt ratio is low.
B)  apply for a bank loan,but expect to be turned down.
C)  borrow approximately $200 000 at below-market rates.
D)  establish an emergency fund of $10 000 in order to qualify for a loan.E) B) and D)
F) A) and B)

Question 11

When a person owns corporate stocks,government or corporate bonds,or mutual funds,these are called

Accepted Answer

A)  liquid assets.
B)  long-term assets.
C)  investment assets.
D)  retirement assets.E) B) and C)
F) C) and D)

Question 12

A negative cash flow means net worth will decrease.

Accepted Answer

A) True 
 B)False

Question 13

Should Shane be concerned about his liquidity ratio of 80 percent?

Accepted Answer

A)  No,he is in good position regarding liquidity.
B)  No,this indicates a healthy cash flow.
C)  Yes,he may have problems covering upcoming payments.
D)  Yes,he may decrease his net worth with too many investments.E) None of the above
F) A) and B)

Question 14

Which of the following is a true statement about mutual funds?

Accepted Answer

A)  You get to choose what stocks the mutual fund invests your money in.
B)  A minimum investment is required.
C)  They are only invested in stocks.
D)  The value of shares are not reported in The Globe and Mail or on various websites.E) None of the above
F) A) and C)

Question 15

If you feel your debt-to-asset ratio is low,you should review your cash flows to maximize your income and minimize expenses.

Accepted Answer

A) True 
 B)False

Question 16

Individuals who switch from a low-demand industry to a high-demand industry may earn higher incomes.

Accepted Answer

A) True 
 B)False

Question 17

A personal cash flow statement is usually the starting point for an individual's or family's budget.

Accepted Answer

A) True 
 B)False

Question 18

Your net worth can change even if your net cash flows are zero.

Accepted Answer

A) True 
 B)False

Question 19

Marta has been keen on following her budget for some time,but unexpected expenses such as car repairs or broken appliances always seem to force her to cancel her vacation each year.Suggest what course of action Marta should follow.

Accepted Answer

Marta has not likely budgeted for an eme...

Question 20

Nancy has a gross income of $47 000,disposable income of $40000,a net worth of $80000 and saves $8000 a year.Her savings rate is

Accepted Answer

A)  10 percent.
B)  15 percent.
C)  17 percent.
D)  20 percent.E) B) and C)
F) All of the above

Exam 1: Tools for Financial Planning - Planning with Personal Financial Statements

Household assets include jewelry and furniture and should be valued at their original cost.

Correct AnswerverifiedShow Answer

Marta has been keen on following her budget for some time,but unexpected expenses such as car repairs or broken appliances always seem to force her to cancel her vacation each year.Suggest what course of action Marta should follow.

Correct AnswerverifiedMarta has not likely budgeted for an eme...View AnswerShow Answer

If you feel your debt-to-asset ratio is low,you should review your cash flows to maximize your income and minimize expenses.

Correct AnswerverifiedShow Answer

Your net worth can change even if your net cash flows are zero.

Correct AnswerverifiedShow Answer

Which of the following is a true statement about mutual funds?

Correct AnswerverifiedShow Answer

Individuals who switch from a low-demand industry to a high-demand industry may earn higher incomes.

Correct AnswerverifiedShow Answer

George has total debts of $10 000,liquid assets of $8000 and current liabilities of $5000.His current ratio is

Correct AnswerverifiedShow Answer

A high debt-to-asset level is common during the early- to mid-earning life stages.

Correct AnswerverifiedShow Answer

Nancy has a gross income of $47 000,disposable income of $40000,a net worth of $80000 and saves $8000 a year.Her savings rate is

Correct AnswerverifiedShow Answer

A negative cash flow means net worth will decrease.

Correct AnswerverifiedShow Answer

This month Joshua has $2000 income from his job and $100 interest income.His expenses are rent $500,food and entertainment $400 and car expenses $600.He has $40 000 held in bonds and a car loan of $10 000.What is his cash flow this month?

Correct AnswerverifiedShow Answer

Cash outflows represent your liabilities,such as the pay-off value on your car or home.

Correct AnswerverifiedShow Answer

This month Joshua has $2000 income from his job and $100 interest income.His expenses are rent $500,food and entertainment $400,car expenses $600.He has $40 000 held in bonds and a car loan of $10000 .What is his net worth?

Correct AnswerverifiedShow Answer

Jennifer has assets of $100 000 and debts of $10 000.She could

Correct AnswerverifiedShow Answer

If you have an increase in monthly disposable income from $4000 to $4500 and an increase in spending of $650 per month,your net cash flow is reduced by $150 per month.

Correct AnswerverifiedShow Answer

Should Shane be concerned about his liquidity ratio of 80 percent?

Correct AnswerverifiedShow Answer

When a person owns corporate stocks,government or corporate bonds,or mutual funds,these are called

Correct AnswerverifiedShow Answer

A personal cash flow statement is usually the starting point for an individual's or family's budget.

Correct AnswerverifiedShow Answer

A debt-to-asset ratio above 1 is more important than a liquidity ratio above 1.

Correct AnswerverifiedShow Answer

Describe why some people may need alternative budget strategies? Give an example to illustrate why someone might need the envelope method while someone else needs the pay yourself first method.

Correct AnswerverifiedIf someone has good intentions but is st...View AnswerShow Answer

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Marta has not likely budgeted for an eme...
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If someone has good intentions but is st...
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