ECO 110 UNIT 1 Milestone 1 - Questions with 100% Correct Answers | Latest Version 2024 | Verified - Correct Answers Highlighted in Yellow

ECO 110 UNIT 1 Milestone 1 - Questions with 100% Correct Answers | Latest Version 2024 | Verified 1 Rhian is an investment consultant and advises his clients on how to invest their savings. Keep in mind that returns on stock market investments are not guaranteed and are uncertain. To which of these clients should Rhian recommend investing in the stock market? Angela, 24, who works at a law firm and has a steady annual income Meredith, who receives a monthly income from her pension Mike, 56, who has just begun saving for retirement Ravi, who works two part-time jobs and is struggling to pay off his student loans RATIONALE Young people generally have higher risk tolerance because they have more long-term earning potential. Here, the best candidate to invest in the stock market would be Angela. Additional factors such as age and career ensure that even if the rate of the returns on the investment declines, she will be able to earn back the invested money. CONCEPT Weighing Financial Risk 2 Ally uses her technology skills and a spreadsheet to track her monthly expenses. She wants to use her fixed expenses for the last month to project her total fixed expenses for the year. Her expenditures on rent, an auto loan, credit card debt, and her student loan are entered in cells B1 to B5, and her total expenses for January are in cell B6 of her spreadsheet. What should Ally use to project her total expenses for the year? =(B6-SUM(B1:B5)) =SUM(B1:B5) MULTIPLY(B6*12) =B6*12 RATIONALE Ally can multiply her total fixed expenses for January by 12 to get a projection of her fixed expenses for the year. The operator for multiplication in spreadsheet formulas is the asterisk (*). Hence, the correct answer is =B6*12. CONCEPT Computing with Spreadsheets 3 Joseph lives in an apartment and pays $1,200 in rent and $150 in utilities. He has $12,000 in his savings account, a car valued at $7,500, and $3,216 in credit card debt. He has $15,000 in student loans, yet to be paid. Using the given information, calculate Joseph's net worth, current ratio, and debt ratio. Joseph has a net worth of $66. His current ratio is 3.73 and his debt ratio is 99%. Joseph has a net worth of $15,066. His current ratio is 0.42 and his debt ratio is 45%. Joseph has a net worth of −$66. His current ratio is 2.63 and his debt ratio is 100%. Joseph has a net worth of −$15,066. His current ratio is 0.59 and his debt ratio is 122%. RATIONALE The formulas that can be used to calculate net worth, current ratio, and debt ratio are as follows: Net worth = Assets − Liabilities Net worth = $19,500 - $19,566 = −$66 Current ratio = Monetary assets / Current liabilities Current ratio = $12,000 / $4,566 = 2.63 Debt ratio = Total liabilities / Total assets * 100 Debt ratio = ($19,566 / $19,500) * 100 = 100% CONCEPT Balance Sheets 4