Investment Banking 101 Exam 1 Review Correct 100%

TRUE OR FALSE: A home and land should be recorded on the personal balance sheet at their original cost. - Answer False TRUE OR FALSE: All assets, regardless of category, should be recorded on your balance sheet at their current fair market value. - Answer False TRUE OR FALSE: Money I loaned to a friend is a liability on my balance sheet. - Answer False TRUE OR FALSE: You may be under-budgeting for food if you continually have monthly deficits in the food category. - Answer True Your ________ is an example of a liquid asset. a) home b) charge account c)checking account d)life insurance cash value e) car - Answer C Sam and his wife Ann purchased a home in Lubbock, Texas in 1980 for $100,000. Their original home mortgage was for $90,000. The house has a current market value of $175,000 and a replacement value of $200,000. They still owe $55,000 on their home mortgage. Sam and Sally are now constructing their balance sheet. How should their home be reflected on their current personal balance sheet? - Answer $175,000 asset and $55,000 liability The balance sheet equation is - Answer Total assets - total liabilities = net worth Mandy and Jeff have a net worth of $25,000 and total assets of $140,000. If their revolving credit and unpaid bills total $2,200, what are their total liabilities? - Answer $115,000 You are solvent if your .... - Answer total assets exceed total liabilities The income and expense statement is specific to ... - Answer a specific period of time TRUE OR FALSE: Tax avoidance is legal, tax evasion is illegal - Answer True The federal income tax is .... - Answer progressive TRUE OR FALSE: One's marginal tax rate is typically lower than one's average tax rate - Answer False TRUE OR FALSE: The main objective of tax planning is to maximize the amount of money you keep by minimizing the amount of taxes you pay - Answer True TRUE OR FALSE: As a single taxpayer with no dependents, one is generally eligible to file as "head of household" - Answer False TRUE OR FALSE: Social security taxes are paid on earned income but not investment income - Answer True TRUE OR FALSE: The Medicare portion of the Social Security tax is paid on 100% of earnings - Answer True For tax purposes, head-of-household refers to ... - Answer single individual with dependents In 2014, the total social security tax was ... - Answer 6.2% Tom sold mutual fund shares he had owned 3 years so that he could use the proceeds to return to college. Tom is in the 15% marginal tax bracket and his capital gains from this sale were $11,000. How much tax would Tom owe on those gains? - Answer $0 This is the name applied to interest earned on the initial deposit amount plus the previously earned interest - Answer Compound Interest This is the general name given to an account that allows the account holder to access the funds through a variety of banking options such as ATM withdrawals, online banking, using debit card, or through a teller - Answer Demand deposit