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Question 1 of 10
1. Question
Identify the types of Budget Expenses:
I. Committed Expenses
II. Discretionary Expenses
III. Flexible Expenses
IV. Non-discretionary ExpensesCorrect
Budget expenses can be either discretionary or nondiscretionary: discretionary expenses can be changed or timed depending on convenience. Nondiscretionary (fixed) expenses can be changed somewhat, but must be paid at some time.
Incorrect
Budget expenses can be either discretionary or nondiscretionary: discretionary expenses can be changed or timed depending on convenience. Nondiscretionary (fixed) expenses can be changed somewhat, but must be paid at some time.
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Question 2 of 10
2. Question
Select the different types of financial strategies:
I. Consolidation of credit card
II. Tapping into a company savings plan
III. Borrowing from friends
IV. Taking out home equity line of creditCorrect
People can use a number of financing strategies in personal budgeting. One common strategy is to consolidate credit card or student loan debt, so as to lock in a low interest rate. A person may also take a cash-out refinance, in which a first mortgage is renewed and additional cash is disbursed to the mortgager. People also often take out a home equity loan or home equity line of credit. Sometimes, an individual will use the cash value of a life insurance policy for a loan. Another common financing strategy is tapping into a company savings plan. Finally, individuals often use the after-tax money from a Roth IRA; this money can be taken out without any penalty or tax consequences.
Incorrect
People can use a number of financing strategies in personal budgeting. One common strategy is to consolidate credit card or student loan debt, so as to lock in a low interest rate. A person may also take a cash-out refinance, in which a first mortgage is renewed and additional cash is disbursed to the mortgager. People also often take out a home equity loan or home equity line of credit. Sometimes, an individual will use the cash value of a life insurance policy for a loan. Another common financing strategy is tapping into a company savings plan. Finally, individuals often use the after-tax money from a Roth IRA; this money can be taken out without any penalty or tax consequences.
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Question 3 of 10
3. Question
What are the common saving strategies an individual can use when budgeting?
I. Setting goals
II. Taking the home equity loan
III. Savings-first approach
IV. Earning interest by investing the savingsCorrect
Individuals can use a few common savings strategies when budgeting. One basic strategy is setting goals. The goals that are set should be realistic, and known to all the involved parties. Another common savings strategy is to decide ahead of time to take all of the money that is saved and devote it to some special purchase. Some people use a savings-first approach, in which they save first and pay cash in order to avoid the high interest charges on loans. They may also earn interest by investing their savings. Many people force themselves to save by having money automatically deducted from their paycheck and placed into a savings account. This may include money that is placed directly into mutual funds or money that is contributed to a company retirement plan.
Incorrect
Individuals can use a few common savings strategies when budgeting. One basic strategy is setting goals. The goals that are set should be realistic, and known to all the involved parties. Another common savings strategy is to decide ahead of time to take all of the money that is saved and devote it to some special purchase. Some people use a savings-first approach, in which they save first and pay cash in order to avoid the high interest charges on loans. They may also earn interest by investing their savings. Many people force themselves to save by having money automatically deducted from their paycheck and placed into a savings account. This may include money that is placed directly into mutual funds or money that is contributed to a company retirement plan.
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Question 4 of 10
4. Question
The ease with which an asset can be converted into cash with little loss of principal is called?
Correct
The marketability of an asset is the ease with which an asset may be bought or sold, while the liquidity of an asset is the ease with which it can be converted into cash with little loss of principal.
Incorrect
The marketability of an asset is the ease with which an asset may be bought or sold, while the liquidity of an asset is the ease with which it can be converted into cash with little loss of principal.
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Question 5 of 10
5. Question
Identify certain substitutes for liquidity:
I. Life insurance policy
II. Savings account
III. Home equity loans
IV. Real estateCorrect
Some liquidity substitutes are checking and savings accounts, money market accounts, CDs, life insurance policies, US Treasury bills, and home equity loans.
Incorrect
Some liquidity substitutes are checking and savings accounts, money market accounts, CDs, life insurance policies, US Treasury bills, and home equity loans.
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Question 6 of 10
6. Question
A consumer should buy the automobile if it will be driven more than how many miles a year?
Correct
Finally, it will make more sense to buy an automobile if it will be driven more than 15,000 miles a year, since most lease agreements will charge the consumer extra for miles driven over this limit.
Incorrect
Finally, it will make more sense to buy an automobile if it will be driven more than 15,000 miles a year, since most lease agreements will charge the consumer extra for miles driven over this limit.
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Question 7 of 10
7. Question
For whom is leasing an automobile preferable?
Correct
In some situations, it may make more sense for a consumer to lease rather than buy an automobile. For instance, some leases will offer lower monthly payments with a very small down payment. A lease may also be preferable for those individuals who plan on acquiring a new car every three or four years, or for those who would have to borrow money in order to pay for a new car.
Incorrect
In some situations, it may make more sense for a consumer to lease rather than buy an automobile. For instance, some leases will offer lower monthly payments with a very small down payment. A lease may also be preferable for those individuals who plan on acquiring a new car every three or four years, or for those who would have to borrow money in order to pay for a new car.
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Question 8 of 10
8. Question
Identify the factors that are favourable for buying a home:
Correct
There are a few factors consumers should consider before deciding whether to buy or lease a home. Most of the time, people will lease (or rent) when they do not have the requisite funds to make a down payment. Purchasing a home creates a number of tax advantages for the buyer. In addition, creditors tend to give better treatment to homeowners. A purchased home may become an appreciating asset for the owner.
Incorrect
There are a few factors consumers should consider before deciding whether to buy or lease a home. Most of the time, people will lease (or rent) when they do not have the requisite funds to make a down payment. Purchasing a home creates a number of tax advantages for the buyer. In addition, creditors tend to give better treatment to homeowners. A purchased home may become an appreciating asset for the owner.
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Question 9 of 10
9. Question
What does ARM stand for?
Correct
An adjustable rate mortgage (ARM) on a home is preferable if the home is only going to be owned for a brief time, as the initial interest rates will tend to be lower.
Incorrect
An adjustable rate mortgage (ARM) on a home is preferable if the home is only going to be owned for a brief time, as the initial interest rates will tend to be lower.
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Question 10 of 10
10. Question
What will be the effect on balance sheet and cash flow statement if a loan was secured in order to purchase an Assets purchased with a loan will cause a reduction in cash or whatever other liquid asset was used for the purchase or down payment. If a loan was secured in order to purchase the asset, the loan will be entered as a liability and there will be no change in net worth. asset?
Correct
Assets purchased with a loan will cause a reduction in cash or whatever other liquid asset was used for the purchase or down payment. If a loan was secured in order to purchase the asset, the loan will be entered as a liability and there will be no change in net worth.
Incorrect
Assets purchased with a loan will cause a reduction in cash or whatever other liquid asset was used for the purchase or down payment. If a loan was secured in order to purchase the asset, the loan will be entered as a liability and there will be no change in net worth.