BUSN 380 DEVRY FINAL EXAM SET 2

BUSN 380 DEVRY FINAL EXAM SET 2
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BUSN 380 DeVry Final Exam Set 2
BUSN380
BUSN 380 DeVry Final Exam (Version 2)
Question 1.1. (TCO 1) After a lengthy job search, Judy Smith has found a place of employment;
however, it is demanding and she is required to work long hours during the week and even on weekends,
leaving little time for outside interests. Her decision to work at this job is an example of (Points : 4)
deflation.
financial opportunity cost.
personal opportunity cost.
time value of money.
inflation.
Question 2.2. (TCO 1) Marinda Smart is interested in purchasing new appliances for her kitchen that
collectively will cost her approximately $5,000. She knows that she could obtain financing for her
purchase, but recently heard rumors that there may be layoffs where she works and is concerned about
her employment. What type of risk is Marinda concerned about? (Points : 4)
Inflation risk
Interest rate risk
Income risk
Personal risk
Liquidity risk
Question 3.3. (TCO 1) Which step in the financial planning process is demonstrated by a situation in
which Royanne decides to stop traveling through Europe and return back to the States to seek a part-time
job and take smaller, less costly trips? (Points : 4)
Developing her financial goals
Identifying alternative courses of action

Evaluating her alternatives
Implementing her financial plan
Reviewing and revising her financial plan
Question 4.4. (TCO 1) When retirement contributions made on your behalf where you work fully belong
to you even if you leave the company, this is called the point of (Points : 4)
networking.
vesting.
a tax-deferred benefit.
a tax-exempt benefit.
break even.
Question 5.5. (TCO 1) Tracey has been unemployed for almost a year. However, after extensive
research, she has found that the industry in which she would like to work will begin to experience job
growth in California. This is an example of _____ influencing jobs in the future. (Points : 4)
technology trends
economic conditions
industry trends
geographic trends
educational trends
Question 6.6. (TCO 1) This month, Ken Grossman has cash inflows of $3,500 and cash outflows of
$2,350, resulting in a (Points : 4)
balanced budget.
surplus of $1,150.
deficit of $1,150.
surplus of $3,500.
deficit of $2,350.
Question 7.7. (TCO 1) Sherry O’Neal is interested in opening a savings account and her bank offers
several types. Her main concern is that she wants to have the ability to withdraw her money whenever
she wants. She has an interest in opening an account that is best categorized as (Points : 4)
money management.
an opportunity cost.
a limited asset.
a liquid asset.
net worth analysis.
Question 8.8. (TCO 1) An example of _____ is a situation in which you would use a software program to
help track your spending each week. (Points : 4)

money management
an opportunity cost
a balance sheet
creative accounting
electronic analysis
Question 9.9. (TCO 2) An example of _____ would involve a situation in which Judy Smith and Tom
Smith each write their daughter a check for $12,500 for graduation, instead of giving her one $25,000
check, so they will not have to pay a gift tax. (Points : 4)
fraud
tax evasion
tax exclusion
tax avoidance
tax-deferred income
Question 10.10. (TCO 2) A _____ is an employer-sponsored program that allows a taxpayer to cover
medical and child care costs. (Points : 4)
tax credit
tax deduction
flexible spending account
tax-deferred investment
tax-exempt investment
Question 11.11. (TCO 2) The Federal Deposit Insurance Corporation insures deposits up to $250,000
per person per financial institution. Joyce has $198,000 in an individual account and $404,000 in a joint
account with her husband, Dan. How much of Joyce’s money is not covered by FDIC insurance? (Points :
4)
$198,000
$250,000
$602,000
$150,000
$0
Question 12.12. (TCO 2) The most liquid type of account would be a (Points : 4)
certificate of deposit.
checking account.
money market account.
brokerage account.
share of stock.
Question 13.13. (TCO 3) All of the following are examples of closed-end credit except a(n) (Points : 4)

home mortgage.
installment loan to purchase new furniture.
line of credit from your bank.
automobile loan.
single lump sum credit loan due in 90 days.
Question 14.14. (TCO 3) If a bank is attempting to evaluate the trade-in value of a 2006 SUV when Anna
McFarland is applying for a used car loan, the bank is examining which of the five Cs? (Points : 4)
Character
Capacity
Capital
Collateral
Conditions
Question 15.15. (TCO 3) An example of a credit bureau would be (Points : 4)
Equitron.
Transexpress.
the Better Business Bureau.
Experian.
FICO.
Question 16.16. (TCO 3) A _____ would require that Jessica writes a check for $125 in order to obtain a
loan for $100. (Points : 4)
credit union
payday advance company
finance company
department store
commercial bank
Question 17.17. (TCO 3) If Anthony Fontain makes a decision to accept a variable-rate loan instead of a
fixed-rate loan, he is _____ with the lender and reducing the lender’s risk. (Points : 4)
sharing the interest rate risk
increasing his monthly payments
taking a larger stake in the asset he is purchasing
repaying the loan over a faster period of time
pledging collateral
Question 18.18. (TCO 3) _____ is/are the primary reason(s) why consumers default on their debts.
(Points : 4)
Medical expenses
Defective goods and services

Excessive use of credit
Fraudulent use of credit
Consumer fraud
Question 19.19. (TCO 5) All of the following statements are true except which? (Points : 4)
You can obtain recommendations to buy or sell stocks and other securities by accessing Internet
sites.
There is a wealth of investment information available, but most small investors cannot afford to
use it.
You can obtain current price information for stocks, bonds, and mutual funds by using the
Internet.
A search engine is a research tool that helps you find the investment information you want.
Both government and businesses provide individuals with investment information.
Question 20.20. (TCO 5) If Chris is considering an investment in a pool that is managed by professional
managers, most likely he is interested in investing in (Points : 4)
common stock.
preferred stock.
corporate bonds.
real estate.
mutual funds.
Question 21.21. (TCO 5) All of the following statements are false except (Points : 4)
investors should put all of their eggs in one basket.
individuals can ignore their tolerance for risk when selecting specific investments.
diversification is one way to lessen systematic risk.
the amount of time a specific investment has to work is an important consideration when
developing an investment portfolio.
younger investors should invest a large percentage of their portfolio in income-producing
securities.
Question 22.22. (TCO 5) _____ involves the analysis of charts and historical data in order to make stock
purchasing decisions. (Points : 4)
Fundamental
Technical
Efficient market
Chart
Plot
Question 23.23. (TCO 5) A(n) _____ market is one in which previously issued financial securities are
traded among investors. (Points : 4)
technical

fundamental
efficient
secondary
primary
Question 24.24. (TCO 5) Last year, High-Tech Electronics earned $1.50 per share. If the current market
value for a share of stock is $60, what is the firm’s P/E ratio? (Points : 4)
0.04
1.50
40.00
44.00
60.00
Question 25.25. (TCO 5) Scott Turner has a bond with 10 years to maturity, a face value of $1,000, an
8% interest rate, and a market price of $800. What is the yield to maturity on this bond? (Points : 4)
4.00%
11.11%
8.00%
10.00%
6.67%
Question 26.26. (TCO 5) An example of a junk bond is a(n) (Points : 4)
Treasury bond.
bond rated B by Standard & Poor’s.
bond rated AAA by Standard & Poor’s.
insured municipal bond.
Treasury bill.
Question 27.27. (TCO 5) What is the current yield for a $1,000 corporate bond that pays 9% and has a
current market value of $825? (Points : 4)
9.0%
10.9%
10.0%
8.25%
8.0%
Question 28.28. (TCO 3) Lori Walker purchased a new car 9 months ago, and decides to take it in for
servicing under the warranty. Lori is involved in which step of the purchasing process? (Points : 4)
Problem identification
Information gathering
Evaluating alternatives

Determining the purchase price
Postpurchase activities
Question 29.29. (TCO 1) If Bradley Smith gives a cashier a document at a point of purchase with the
expectation of obtaining a discount, he is using a (Points : 4)
coupon.
rebate.
warranty.
receipt.
promissory note.
Question 30.30. (TCO 3) A credit purchase with 24 monthly payments of $80 and a down payment of
$125 would have a total cost of (Points : 4)
$2,000.
$1,795.
$2,045.
$1,920.
$1,085.
Question 31.31. (TCO 3) The _____ is considered to be the assessed value of your home. (Points : 4)
value used to calculate property taxes
estimated current market value
price you paid to purchase the home
amount of money a buyer has offered to purchase the home
cost basis assigned to your home by your insurance company
Question 32.32. (TCO 4) Your home insurance policy has a $250 deductible. If hail causes $1,500
damage to your home, what amount of the claim would the insurance company pay? (Points : 4)
$1,750
$1,250
$1,500
$250
$0
Question 33.33. (TCO 4) John Brown owns a home in Oakland, California and because of the risk of
earthquakes, he decides to purchase _____ to cover potential losses. (Points : 4)
building and other structures
additional living expenses
personal property
personal liability
specialized coverage

Question 34.34. (TCO 4) Martina has a policy that includes a $500 deductible and a coinsurance
provision requiring her to pay 10% thereafter. Her medical bills total $5,500. What amount is she required
to pay personally? (Points : 4)
$1,500
$500
$1,000
$5,000
$5,500
Question 35.35. (TCO 4) _____ is a healthcare institution that directly contracts with specific medical
care specialists in order to provide healthcare services in exchange for a fixed, prepaid monthly premium.
(Points : 4)
Blue Cross
Blue Shield
A PPO
Medicaid
An HMO
Question 36.36. (TCO 4) If Mary Lou applies for a life insurance policy and lies about her age, a _____
provision will state that her benefits will be what her premium would have bought if she had been truthful
about her age. (Points : 4)
policy loan
grace period
true age
guaranteed insurability
misstatement of age
Question 37.37. (TCO 4) If Frank has a term life insurance policy that is _____, this means that he can
obtain additional years of protection at the end of the initial term without the need for a medical
examination. (Points : 4)
straight
renewable
convertible
decreasing
accelerated
Question 38.38. (TCO 6) The Capitalist Mutual Fund’s net asset value is $27.25. The fund has liabilities
of $1.4 million and 1,600,000 shares have been issued. What is the value of the fund’s portfolio? (Points :
4)

$43.6 million
$45 million
$38.2 million
$40 million
$16 million
Question 39.39. (TCO 6) Tracey Patterson would need to purchase a(n) _____ if she desires federally
tax-exempt income. (Points : 4)
junk bond fund
intermediate corporate bond fund
municipal bond fund
short-term government
bond world bond fund
Question 40.40. (TCO 6) A benefit associated with an investment in a real estate limited partnership is
that the investor (Points : 4)
does not have to worry about capital gains tax.
does not have to pay federal income tax.
does not have to pay state income tax.
can invest in a shopping center or large building by investing as little as $5,000.
faces an investment that is very liquid.
Question 41.41. (TCO 6) Judith recently inherited several pieces of diamond jewelry from her aunt. This
jewelry is an example of (Points : 4)
a direct investment in real estate.
an indirect investment in real estate.
an investment in precious metals.
an investment in collectibles.
an investment in gems.
Question 42.42. (TCO 6) If Jeremiah’s employer makes nontaxable contributions to a plan in his name
and his salary is reduced by the same amount, Jeremiah has a (Points : 4)
money-purchase pension plan.
stock bonus plan.
profit-sharing plan.
defined benefit plan.
403(b) plan.
Question 43.43. (TCO 6) Chuck owns a home worth $140,000, a car valued at $30,000, and
miscellaneous assets worth $7,500. He owes $75,000 on the home and $12,000 on the car, and has no

other debts. His retirement account, in which he is fully vested, contains $17,500 in mutual funds. He is
insured with a $250,000 term life insurance policy. What is his net worth? (Points : 4)
$83,000
$108,000
$195,000
$358,000
$445,000
Question 44.44. (TCO 7) The benefits of establishing a trust include the fact that (Points : 4)
it can reduce or provide payment for estate taxes.
it can allow you to avoid probate and transfer assets immediately to beneficiaries.
it can free you from managing your assets, while providing you a regular income.
it can ensure that your property serves a desired purpose after you die.
All of the above
Question 45.45. (TCO 7) If Barry has been named by Anderson to distribute his assets as outlined in his
will and pay outstanding obligations, Barry will serve as a(n) (Points : 4)
executor.
trustee.
guardian.
beneficiary.
agent.