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CALIFORNIA STATE UNIVERSITY, FULLERTON

MIHAYLO COLLEGE OF BUSINESS AND ECONOMICS
Department of Finance

Finance 310
Personal Finance
(Fall 2013)





Midterm Exam One

1) In order for your financial plan to be realistic and attainable it needs to be based upon your



2) Which one of the following is not one of the five basic steps in personal financial planning?



3) Suppose that you just completed your first year of college with $11,000 in loans and plan to borrow the maximum each year from
now until graduation. You have never accounted for the way you spend your money, do not have a budget, and want to insure that you
will be able to repay your loans after college. What is the most important thing you can do right now?

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4) Probably the most important determinant of your future earnings will be



5) Chapter 1 discusses ten principles that form the foundation of personal finance. The principle that considers the fact that one
expects to earn additional return for increasing investment risk is the ________ principle.



6) Chapter 1 discusses ten principles that form the foundation of personal finance. The principle that suggests that you should make
your future financial security your most important priority is the ________ principle.


7) The sub-prime mortgage mess is dominating the news. Many people signed up for adjustable rate mortgages and now they can't
afford their payments. Many of these people were misled by the lender. Which financial principle from chapter one most applies?


8) Fair market value refers to


9) One of the following items would not go on a balance sheet. Which one is it?



10) Which financial planning document should you use to measure your current level of wealth?



11) Net worth, or your general level of worth, is found by



12) Which type of expenditure would probably be the hardest for an individual to track?
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13) A statement that records where your money has come from and where it has gone over some period of time is called a(n)



14) Suppose that you wanted to calculate a financial ratio measuring your liquidity. You would likely use the ________ ratio.



15) Kareem currently has $6000 in monetary assets and $2000 in current liabilities. What is his current ratio now?



16) What interest rate would be required to turn $100 into $200 in six (6) years?



17) The discount rate is the interest rate used to bring ________ back to ________.



18) A series of equal dollar payments at the end of each period for "x" number of time periods is



19) Deductions calculated using Schedule A which are totaled and subtracted from taxable income are called ________.



20) Which of the following is not an income tax filing status?



21) The amount of income taxes that you actually pay is based upon your
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22) Why might someone choose to use itemized deductions instead of taking the standard deduction offered by the IRS?



23) Who must file a federal income tax return?



24) Financial institutions that provide traditional checking and savings accounts are commonly referred to as



25) Of the following, which one is not an advantage of a CD as a cash management alternative?



26) You have $5,000 in a 36 month Certificate of Deposit that has an APR of 3.75%. If inflation averages 4.25% during these 36
months, what is the real rate of return on your CD?



27) What is the name for an automatic loan made to your checking account whenever your account does not contain enough cash to
cover the checks that you have written against it?



28) A tax system in which tax rates increase as income increases is called a(n) ________ system.





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29) Three years ago you purchased a share of CompUTech stock for $4, which you could sell today at the current market price of
$150. What would be your capital gain on the sale, ignoring commissions?



30) Assume that you have a marginal tax rate of 28 percent, a state income tax rate of 4 percent, and have a city income tax rate of 1
percent. The tax for Social Security and Medicare is 7.65 percent. What would be the effective marginal tax rate on your last dollar
of earnings?