FIN 200 exam 1 Exam Questions with Correct Answers

A personal cash flow statement measures all of the following except: A. Net worth B. Cash inflows C. Cash outflows D. A personal cash flow statement measures all of the above - Answers-A. Net Worth Jill receives $1,000 in salary and a $100 dividend from investments each month. Jill also pays $300 in rent and utilities, $200 on groceries, and $300 on a car payment and insurance each month. What is Jill's net cash flow each month assuming all inflows and outflows remain constant? - Answers-$300 Which of the following will affect cash outflows? A. Personal consumption behavior B. Size of family C. Education Level D. Age E. All of the above will affect cash outflows - Answers-E. All of the above will affect cash outflows T/F: High income always leads to a positive net cash flow - Answers-False Which of the following is the best definition of a budget? - Answers-A cash flow statement that is based on forecasted cash flows for a future time period Many individuals tend to ________ their cash inflows and ________ their outflows. - Answers-overestimate; underestimate Student loans, automobile loans, and housing loans are good examples of - Answers-Long term liabilities What are "liquid assets"? - Answers-Assets that can easily be bought or sold without losing value T/F: Your net worth can change even if your net cash flows are zero - Answers-True If Jack has cash outflows of $1,000 and cash inflows of $1,200 each month, he can increase his net worth by how much each month? - Answers-$200 T/F: Compounding is the act of finding the present value of a lump sum to be received at some point in the future. - Answers-False