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FHCE 3200 UGA EXAM QUESTIONS AND CORRECT ANSWERS
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FHCE 3200 UGA EXAM QUESTIONS ANDCORRECT ANSWERS
b) how well an individual can manage their finances based on their access to financial
resources - Answer financial capacity can be defined as
a) how well an individual understands financial information
b) how well an individual can manage their finances based on their access to financial
resources
c) how well an individual understands accounting
d) how well an individual can manage their finances based on their personality and
psychology
d) financial risk tolerance - Answer an individual's willingness to engage in a risky
financial behavior is known as their
a) financial risk capacity
b) financial risk efficacy
c) financial risk awareness
d) financial risk tolerance
d) all of the above - Answer Which of the following factors is not associated with an
individual's financial risk tolerance?
a) educational attainment
b) gender
c) wealth
d) all of the above are associated with risk tolerance
d) optimism bias - Answer Many people make the mistake of believing that they will
never experience painful loss. This mental fallacy is also known as
a) loss aversion
b) confirmatory bias
c) status quo bias
d) optimism bias
c) status quo bias - Answer a preference for leaving things as they are is known as
,a) loss aversion
b) physical inertia
c) status quo bias
d) negative momentum
b) designating a default option that generally leads to good outcomes - Answer People's
propensity to procrastinate on financial decisions can ironically be used to their benefit.
Which of the following exemplifies this effect?
a) Giving them numerous choices when they are trying to make a decision
b) designating a default option that generally leads to good outcomes
c) giving them complex puzzles to solve before they make the decision
d) all of the above
a) future orientation - Answer People with a _____________ tend to prefer spending less
money today and save more for the future
a) future orientation
b) present orientation
c) status quo bias
d) high risk tolerance
b) despite large temporary fluctuations, over time people tend to revert to a baseline
level of happiness - Answer Which of the following best describes the concept of the
hedonic treadmill?
a) it takes constant work to maintain even a minimal baseline of happiness
b) despite large temporary fluctuations, over time people tend to revert to a baseline
level of happiness
c) happiness has inertia: happy people tend to become happier while sad people tend to
become sadder
d) people who must work to meet their basic needs are the happiest
a) Money can buy happiness, so long as people focus their spending on luxury cars... -
Answer All of the following are true regarding the relationship of money and happiness
EXCEPT...
a) money can buy happiness, so long as people focus on spending on luxury cars, large
homes, and other consumer goods
,b) 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)
c) happiness tends to increase with income until people earn around $70,000 per year...
further increase in income do not tend to product additional happiness
d) all the above are true
c) the typical person suffers from a host of biases that reduce investment returns to less
than half of the typical market return - Answer How does the psychology of the typical
person affect investment returns?
a) while some people are panicky investors, the typical person actually gets investment
returns near the market average
b) the typical person does tend to "buy high and sell low" but this tendency only costs
them a little bit off the typical market return
c) the typical person suffers from a host of biases that reduce investment returns to less
than half of the typical market return
d) the typical person should, quite simply, never invest their own money, considering
evidence that their average investment returns are actually slightly *negative*
c) auto loan of $14,000 - Answer Which of the following will be considered a liability item
for an individual's net worth statement?
a) annual income of $114,000
b) credit card limit of $24,000
c) auto loan of $14,000
d) lottery win of $25,000
b) net worth statement - Answer When preparing an individual's net worth and income
and expenses statements, the individual's outstanding credit card balances is usually
recorded in the:
a) income and expenses statement
b) net worth statement
c) in both places
d) in neither place
c) stocks - Answer which of the following is an example of na investment asset?
a) clothing
, b) home mortgage
c) stocks
d) all of the above
d) credit card balance - Answer Which of the following debts are considered to be short
term liabilities?
a) life insurance owned by the individual
b) primary residence of the individual
c) mortgage
d) credit card balance
c) $100,000 - Answer 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?
a) $340,000
b) $220,000
c) $100,000
d) none of the above
d) credit card limit - Answer Which of the following is not considered to be a type of
asset?
a) mutual funds
b) coin collection
c) primary residence
d) credit card limit
a) net worth statement; cash flow statement - Answer The ________ is a current snapshot
of a person's assets and liability. The ________ is a current snapshot of how a persons'
net worth is changing from inflows and outflows
a) net worth statement; cash flow statement
b) cash flow statement; net worth statement
c) net worth statement; net worth statement
d) cash flow statement; cash flow statement
a)$ 30,398 - Answer Jennifer works at a retail store and earns a base salary of $2400
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