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FHCE 3200- final exam Questions With Complete Solutions
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FHCE 3200- final exam Questions With Complete Solutions
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FHCE 3200- final exam QuestionsWith Complete Solutions
Financial capacity can be defined as: correct answer: How well an individual can manage their finances based on their access to financial resources
An individual's willingness to engage in a risky financial behavior is known as their correct answer: financial risk tolerance
Which of the following factors is associated with an individual's financial risk tolerance? correct answer: Educational attainment Gender Wealth
Many people make the mistake of believing that they will never experience painful losses. This mental fallacy is also known as: correct answer: optimism bias
A preference for leaving things as they are is known as: correct answer: status quo bias
People's propensity to procrastinate on financial decisions can ironically be used to their benefit. Which of the following exemplifies this effect? correct answer: Designating a default option that generally leads to good outcomes
People with a ____________ tend to prefer spending less money
today and save more for the future. correct answer: future orientation
Which of the following best describes the concept of the hedonic
treadmill? correct answer: Despite large temporary fluctuations,
over time people tend to revert to a baseline level of happiness
All of the following are true regarding the relationship of money
and happiness: correct answer: Spending money on certain kinds of expenses (such as gifts and vacations) tends to increase happiness more than spending on other kinds of expenses (such as TV and rent). Happiness tends to increase with income until people earn around $70,000/year... further increases in income do not tend to
predict additional happiness.
How does the psychology of the typical person affect investment
returns? correct answer: The typical person suffers from a host of biases that reduce investment returns to less than half of the typical market return
Which of the following will be considered a liability item for an individual's net worth statement? correct answer: Auto loan of $14,000 When preparing an individual's net worth and income & expenses statements, the individual's outstanding credit card balance is usually recorded in the: correct answer: net worth statement
Which of the following is an example of an investment asset? correct answer: stocks
Which of the following debts are considered to be short term liabilities? correct answer: credit card balance
Jessica and John Smith have a net worth of $120,000. They have
total assets worth $220,000. How much total debt do they have? correct answer: $100,000
Which of the following is not considered to be a type of asset? correct answer: credit card limit
The ___________ is a current snapshot of a person's assets and liability. The ____________ is a current snapshot of how a person's net worth is changing from inflows and outflows. correct answer: Net worth statement; Cash flow statement
Jennifer works at a retail store and earns a base salary of $2400 per month. In addition this she earns a commission of 2% on every high end electronic item that she sells to the customers visiting the store. In 2015, Jennifer has sold over 40 large screen
LED TVs and 29 laptops. The average price of the TVs was $1200, and the average price of the laptops was $1100. What was Jennifer's total income for 2015? correct answer: $30,398
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