FIN 300 EXAM QUESTIONS AND
ANSWERS ALREADY PASSED
When planning your financial goals, what role does the economy play? - Answer- Daily
economic transactions facilitate financial planning activities, which affect personal
finance decisions.
The _____ _____ System is the central bank of the United States and has significant
economic responsibility. - Answer- Federal Reserve
A rise in the general level of prices is called: - Answer- inflation
Tom needs a new washing machine. A new one costs $400. He decides to save and
buy one next year. All other factors being equal, if inflation is 4%, the washing machine
will cost $_____ next year. - Answer- 416 (400x4%= $16) ($16+$400= $416)
When consumer saving and investing increase, interest rates tend to: - Answer-
decrease
Key factors for most people in making financial decisions include: - Answer- - time value
of money
- inflation costs
- financial opportunity costs
The rule of 72 is used to estimate the time that it would take for your money to: -
Answer- double
According to the text, what are the main reasons Americans have financial problems? -
Answer-
The measure of the average change in the prices urban consumers pay for a fixed
"basket" of goods and services is called the: - Answer- consumer price index
When people first begin planning for retirement, saving for a child's college education,
and planning the purchase of a vacation home, these are usually: - Answer- long-term
goals
When discussing personal financial growth, what is an important aspect? - Answer-
Setting goals
,Rachel has been shopping for a new refrigerator over the course of three days and has
been putting all her household chores on hold. She finds a refrigerator that fits her
needs and purchases it. This is an example of: - Answer- personal opportunity costs.
True or false: A key factor in making financial decisions is time value of money. -
Answer- True
When consumer, business, government, and foreign borrowing increase the demand for
money, interest rates tend to: - Answer- rise
The amount to which current savings will increase based on a certain interest rate and a
certain time period is called: - Answer- future value
Phillip has an investment of $200 that is expected to earn 10% annually. How much will
the investment be worth at the end of the second year if the investment earns interest
compounded annually? - Answer- 242 ($200 X 0.10 X 1 =$20 in interest. $200 + $20 =
$220 at the end of the first year. At the end of the second year he'll have: $220 X 0.10 X
1 =$22 in interest. $220 + $22 = $242).
Another name used for calculating present value is ______. Compounding is the other
term for future value. - Answer- discounting
Which of the following is the first step in the financial planning process? - Answer-
Determine your current financial situation.
Samantha wants to buy a new watch that costs $100. She decides to wait a year. All
other factors being equal, if inflation is 4%, the watch will cost $ next year. - Answer-
104 ($100x4%=$104)
Developing your financial goals is the ______ step in the financial planning process. -
Answer- second
According to AICPA Insights, which of the following is a common mistake related to
implementing a financial plan? - Answer- Emotional decision making
In the context of global influences, which of the following statements are true of
American consumers and American businesses?
- American businesses compete against foreign companies for the spending dollars of
American consumers.
- American businesses have no competitors in the global economy.
- American consumers provide foreign companies with a market.
- The global economy is solely driven by American consumption. - Answer- - American
businesses compete against foreign companies for the spending dollars of American
consumers.
- American consumers provide foreign companies with a market.
, John has an interest rate of 7.2% on his savings account. Using the Rule of 72, his
money will double in _____ years. - Answer- 10 (.2)
Long-term financial security starts with a regular ______ plan for emergencies and
unexpected bills. - Answer- savings
Examples of opportunity costs do NOT include:
- having enough money to fund retirement and pay for current expenses.
- forfeiting interest and taking money from savings and purchasing new appliances to
save energy costs.
- being able to work and go to school at the same time.
- accepting a low yield because you have chosen low-risk investments. - Answer- -
having enough money to fund retirement and pay for current expenses.
- being able to work and go to school at the same time.
- accepting a low yield because you have chosen low-risk investments.
According to the text, there are ______ main factors that contribute to Americans having
money problems. - Answer- two
Determining your current financial situation involves which of the following?
- Preparing your personal financial statements.
- Assessing your risk.
- Creating and implementing your financial action plan.
- Identifying current income, savings, living expenses, and debts. - Answer- - Preparing
your personal financial statements.
- Identifying current income, savings, living expenses, and debts.
Which of the following are part of evaluating alternative courses of action in the financial
planning process? - Answer- - Evaluating risk
- Considering the consequences of your choices
- Considering inflation risk
American consumers spend dollars on goods and services. The goods and services are
manufactured or offered by American companies and companies from other countries.
This is an example of: - Answer- a global economy and foreign competition.
Examples of opportunity costs include:
- trading in a large car with poor gas mileage for a smaller car that is fuel-efficient.
- not having as much money in savings because you purchased new appliances to save
energy costs.
- having enough money to save for retirement and to pay for current expenses.
- delaying investment while waiting for the time value of money to increase the pay
received.
ANSWERS ALREADY PASSED
When planning your financial goals, what role does the economy play? - Answer- Daily
economic transactions facilitate financial planning activities, which affect personal
finance decisions.
The _____ _____ System is the central bank of the United States and has significant
economic responsibility. - Answer- Federal Reserve
A rise in the general level of prices is called: - Answer- inflation
Tom needs a new washing machine. A new one costs $400. He decides to save and
buy one next year. All other factors being equal, if inflation is 4%, the washing machine
will cost $_____ next year. - Answer- 416 (400x4%= $16) ($16+$400= $416)
When consumer saving and investing increase, interest rates tend to: - Answer-
decrease
Key factors for most people in making financial decisions include: - Answer- - time value
of money
- inflation costs
- financial opportunity costs
The rule of 72 is used to estimate the time that it would take for your money to: -
Answer- double
According to the text, what are the main reasons Americans have financial problems? -
Answer-
The measure of the average change in the prices urban consumers pay for a fixed
"basket" of goods and services is called the: - Answer- consumer price index
When people first begin planning for retirement, saving for a child's college education,
and planning the purchase of a vacation home, these are usually: - Answer- long-term
goals
When discussing personal financial growth, what is an important aspect? - Answer-
Setting goals
,Rachel has been shopping for a new refrigerator over the course of three days and has
been putting all her household chores on hold. She finds a refrigerator that fits her
needs and purchases it. This is an example of: - Answer- personal opportunity costs.
True or false: A key factor in making financial decisions is time value of money. -
Answer- True
When consumer, business, government, and foreign borrowing increase the demand for
money, interest rates tend to: - Answer- rise
The amount to which current savings will increase based on a certain interest rate and a
certain time period is called: - Answer- future value
Phillip has an investment of $200 that is expected to earn 10% annually. How much will
the investment be worth at the end of the second year if the investment earns interest
compounded annually? - Answer- 242 ($200 X 0.10 X 1 =$20 in interest. $200 + $20 =
$220 at the end of the first year. At the end of the second year he'll have: $220 X 0.10 X
1 =$22 in interest. $220 + $22 = $242).
Another name used for calculating present value is ______. Compounding is the other
term for future value. - Answer- discounting
Which of the following is the first step in the financial planning process? - Answer-
Determine your current financial situation.
Samantha wants to buy a new watch that costs $100. She decides to wait a year. All
other factors being equal, if inflation is 4%, the watch will cost $ next year. - Answer-
104 ($100x4%=$104)
Developing your financial goals is the ______ step in the financial planning process. -
Answer- second
According to AICPA Insights, which of the following is a common mistake related to
implementing a financial plan? - Answer- Emotional decision making
In the context of global influences, which of the following statements are true of
American consumers and American businesses?
- American businesses compete against foreign companies for the spending dollars of
American consumers.
- American businesses have no competitors in the global economy.
- American consumers provide foreign companies with a market.
- The global economy is solely driven by American consumption. - Answer- - American
businesses compete against foreign companies for the spending dollars of American
consumers.
- American consumers provide foreign companies with a market.
, John has an interest rate of 7.2% on his savings account. Using the Rule of 72, his
money will double in _____ years. - Answer- 10 (.2)
Long-term financial security starts with a regular ______ plan for emergencies and
unexpected bills. - Answer- savings
Examples of opportunity costs do NOT include:
- having enough money to fund retirement and pay for current expenses.
- forfeiting interest and taking money from savings and purchasing new appliances to
save energy costs.
- being able to work and go to school at the same time.
- accepting a low yield because you have chosen low-risk investments. - Answer- -
having enough money to fund retirement and pay for current expenses.
- being able to work and go to school at the same time.
- accepting a low yield because you have chosen low-risk investments.
According to the text, there are ______ main factors that contribute to Americans having
money problems. - Answer- two
Determining your current financial situation involves which of the following?
- Preparing your personal financial statements.
- Assessing your risk.
- Creating and implementing your financial action plan.
- Identifying current income, savings, living expenses, and debts. - Answer- - Preparing
your personal financial statements.
- Identifying current income, savings, living expenses, and debts.
Which of the following are part of evaluating alternative courses of action in the financial
planning process? - Answer- - Evaluating risk
- Considering the consequences of your choices
- Considering inflation risk
American consumers spend dollars on goods and services. The goods and services are
manufactured or offered by American companies and companies from other countries.
This is an example of: - Answer- a global economy and foreign competition.
Examples of opportunity costs include:
- trading in a large car with poor gas mileage for a smaller car that is fuel-efficient.
- not having as much money in savings because you purchased new appliances to save
energy costs.
- having enough money to save for retirement and to pay for current expenses.
- delaying investment while waiting for the time value of money to increase the pay
received.
