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

If you have liquid assets of $20,000 and current liabilities of $10,000, then you A) have a current liquidity ratio of 2. B) are in poor financial shape with a liquidity ratio of 0.5. C) may have trouble paying your bills depending on their due dates. D) are over-extended by $10,000. {Ans: Answer: A Explanation: A) $20,000/$10,000 = 2}Forecasting for more than a month at a time is not helpful because you can't plan for unexpected expenses in the future. {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}Which of the following is not a true statement about mutual funds? A) They are managed by professional managers. B) Proceeds are only invested in stocks. C) A minimum investment is required. D) The value of shares is reported in The Wall Street Journal. {Ans: B}Allison anticipates an additional car expense two months from now of $400 for new tires that she has not previously budgeted for. What action should Allison take? A)