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77. When your assets exceed your liabilities, you:
a. are losing equity.
b. have negative net worth.
c. are solvent.
d. are bankrupt.
e. have more real assets than investments.
78. Your car has a market value of $4,000, while the balance of the loan against it is now $2,500. Your ownership interest
in the car is:
a. $2,500.
b. $4,000.
c. $6,500.
d. $1,500.
e. $5,500.
79. The total amount of salary you earn before taxes are deducted is your ______ salary.
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80. You bought a $500 stereo on an installment plan and made two payments of $75 each during the year. On your
income and expense statement for the year, you will show an expense of:
a. $150.
b. $575.
c. $650.
d. $500.
e. $75.
81. ______ are considered to be variable expenses.
a. Interest payments
b. Medical expenses
c. Rent payments
d. Insurance expenses
e. Cable TV fees
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82. Total assets on your balance sheet are $6,000 and liabilities are $2,000. Your solvency ratio will be:
a. 30%.
b. 33%.
c. 67%.
d. 85%.
e. 75%.
83. The liquidity ratio is designed to show the percentage of ______ you can cover with your current assets.
a. current debts
b. current expenses
c. long-term debts
d. planned savings
e. planned purchases
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e. Paying all short-term liabilities
87. Once you define your ______ financial goals, you can prepare a cash budget for the upcoming year.
a. post-retirement
b. short-term
c. immediate
d. long-term
e. career-oriented
88. ______ value is the value today of an amount to be received in the future.
a. Present
b. Future
c. Intrinsic
d. Extrinsic
e. Actual
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89. The process of finding present value is called:
a. discounting.
b. calculating.
c. compounding.
d. computing.
e. balancing.
90. Jean and Jim have liquid assets of $3,600 and other assets of $42,800. Their total liabilities equal $26,000. What is
their net worth? (Show all work.)
91. Rosa and Jose have liquid assets of $5,000 and other assets of $50,000. Their total liabilities equal $26,000. What is
their net worth? (Show all work.)
2. Using Financial Statements and Budgets
2. Using Financial Statements and Budgets
2. Using Financial Statements and Budgets
2. Using Financial Statements and Budgets
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96. Inflation is expected to be 3% in the coming year. If Mr. Gonza earned $45,000 this year, how much must he earn in
the following year to keep up with inflation and maintain a balance between his income and his increasing expenditures?
(Show all work.)
97. Jamie wants to have $1,000,000 for her retirement in 25 years. How much should she save annually if she expects to
earn 10% on her investments?
98. The Hamptons want to have $1,750,000 for their retirement in 30 years. How much should they save annually if they
expect to earn 8% on their investments?
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99. The Flemings will need $80,000 annually for 20 years during their retirement. How much will they have at retirement
if they can earn a 4% rate of interest on their investment?
100. Nominal interest rates are not adjusted for inflation.
a. True
b. False
101. The best way to handle inflation in long-term financial planning decisions is first to consider the history of inflation.
a. True
b. False
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102. The real rate of return is also referred to as the real:
a. liability rate.
b. short-term rate.
c. estimated rate.
d. inflation rate.
e. interest rate.