Finc 2400 Chapter 2 Exam Questions (60 Terms) With Verified Definitions Updated 2024

Paying off a credit card with cash will have which of the following effects on net worth? A) Increase B) Decrease C) No effect D) Insufficient data to determine the answer {Ans: C}David's liquidity ratio is 3.0. He has $1,000 in current liabilities. Therefore, he has ________ worth of liquid assets. A) $3,000 B) $333 C) $4,000 D) $700 {Ans: Answer: A Explanation: A) x/$1,000 = 3.0 x = $3,000}Nancy has $40,000 of annual disposable income and saves $8,000 a year. Her savings rate is A) 5%. B) 12%. C) 17%. D) 20%. Answer: {Ans: D}Getting financial help from family and friends is easy and should be your first option in case of an emergency. {Ans: FALSE}Bill's annual savings rate is 9%. If Bill currently saves $6,750 annually, how much more will he need to save to increase his savings rate to 11%? A) $8,250 B) $135 C) $1,500 D) more information needed to determine the answer {Ans: C}A budget will not do which of the following? A) Help determine if cash outflows will be sufficient to cover cash inflows B) Anticipate cash shortages C) Determine the excess you have to invest D) Determine the