FIN 2100 MIDTERM 1 STUDY GUIDE QUESTIONS WITH CORRECT
ANSWERS/NEWEST UPDATE 2025
Terms in this set (150)
How many months (minimum) of 3 months
emergency savings is
recommended
How do you find W-2? Gross Salary - employee contributions to 401-K - Health Insurance = W-2
Buys more foreign goods, but U.S. exports are more expensive
Strong U.S. Dollar
to other countries. Take vacations where the U.S. Dollar is
strong.
Weak U.S. Dollar Buys fewer foreign goods, but U.S. exports are cheaper to other countries
Direct Conversion U.S. Dollar required to buy one unit of foreign currency.
Indirect Conversion Number of units of foreign currency per U.S. dollar (Reasonable fee is
around 5%)
How much do you need to save 10-15 x annual salary with an employer match
for retirement
A dollar worth today is worth TRUE
more than a dollar received in
the future
The power of compounding TRUE
interest is one of the most
valuable lessons
Understanding taxes is critical to TRUE
wealth accumulation
You will never get ahead And paying off credit card debt is a great investment.
financially if you are paying
interest on credit card debt...
Total student debt at graduation: Target no more than 50% of
How much should I borrow
your starting salary. Make up difference with part-time work:
Internships, resume, good grades.
What is the first stage of career Assess and research personal goals, abilities, and career fields
planning and advancement?
What is the second stage Evaluate the employment market and identify specific employment
of career planning and opportunities
advancement?
, What is the third stage of career Develop a resume and cover letter; apply for available positions
planning and advancement?
What is the fourth stage of career Interview for available positions; assess your interview performance
planning and advancement?
What is the fifth stage of career Evaluate financial and other factors of positions you are offered
planning and advancement?
What is the sixth stage of career Plan and implement a program for career development
planning and advancement?
Trade-Offs of Financing Choices Loan term, Interest rate, Down Payment, Collateral.
Loan Term Short term lowers interest rate; long term raises interest rate
Interest rate Variable rate lowers interest rate; Fixed rate raises interest rate
Down Payment High Down Payment lowers interest rate; Low payment increases interest
Collateral Good collateral lowers the interest rate; no collateral raises the interest
rate.
Five C's of Credit Character, Capacity, Capital, Collateral, Conditions
Character the borrower's attitude toward his or her credit obligations
Capacity the borrower's financial ability to meet credit obligations
Capital the borrower's assets or net worth
collateral A valuable asset that is pledged to ensure loan payments.
Conditions the general economic conditions that can affect a borrower's ability to repay a
loan
Debt to Credit Limit Ratio Total balance due / credit limit (lower the ratio the better)
Savings Ratio Savings / Gross Salary
Debt Payments ratio Monthly credit payments/ take-home pay; should be less than 20%
Debt to net worth ratio liabilities/net worth
Liquidity ratio Liquid assets / monthly expenses
Bankruptcy The legal status of a person who is not able to pay debts owed.
Bankruptcy will be reported on Chapter 7 bankruptcy
your credit report for seven years
with the exception of...
Economics The study of how wealth is created and distributed.
Formalized report that summarizes your current financial
Financial Plan
situation, analyzes your financial needs and recommends future
financial activities.
What is the first step in the Six- Determine your current financial situation
Step Procedure for Financial
Planning?
ANSWERS/NEWEST UPDATE 2025
Terms in this set (150)
How many months (minimum) of 3 months
emergency savings is
recommended
How do you find W-2? Gross Salary - employee contributions to 401-K - Health Insurance = W-2
Buys more foreign goods, but U.S. exports are more expensive
Strong U.S. Dollar
to other countries. Take vacations where the U.S. Dollar is
strong.
Weak U.S. Dollar Buys fewer foreign goods, but U.S. exports are cheaper to other countries
Direct Conversion U.S. Dollar required to buy one unit of foreign currency.
Indirect Conversion Number of units of foreign currency per U.S. dollar (Reasonable fee is
around 5%)
How much do you need to save 10-15 x annual salary with an employer match
for retirement
A dollar worth today is worth TRUE
more than a dollar received in
the future
The power of compounding TRUE
interest is one of the most
valuable lessons
Understanding taxes is critical to TRUE
wealth accumulation
You will never get ahead And paying off credit card debt is a great investment.
financially if you are paying
interest on credit card debt...
Total student debt at graduation: Target no more than 50% of
How much should I borrow
your starting salary. Make up difference with part-time work:
Internships, resume, good grades.
What is the first stage of career Assess and research personal goals, abilities, and career fields
planning and advancement?
What is the second stage Evaluate the employment market and identify specific employment
of career planning and opportunities
advancement?
, What is the third stage of career Develop a resume and cover letter; apply for available positions
planning and advancement?
What is the fourth stage of career Interview for available positions; assess your interview performance
planning and advancement?
What is the fifth stage of career Evaluate financial and other factors of positions you are offered
planning and advancement?
What is the sixth stage of career Plan and implement a program for career development
planning and advancement?
Trade-Offs of Financing Choices Loan term, Interest rate, Down Payment, Collateral.
Loan Term Short term lowers interest rate; long term raises interest rate
Interest rate Variable rate lowers interest rate; Fixed rate raises interest rate
Down Payment High Down Payment lowers interest rate; Low payment increases interest
Collateral Good collateral lowers the interest rate; no collateral raises the interest
rate.
Five C's of Credit Character, Capacity, Capital, Collateral, Conditions
Character the borrower's attitude toward his or her credit obligations
Capacity the borrower's financial ability to meet credit obligations
Capital the borrower's assets or net worth
collateral A valuable asset that is pledged to ensure loan payments.
Conditions the general economic conditions that can affect a borrower's ability to repay a
loan
Debt to Credit Limit Ratio Total balance due / credit limit (lower the ratio the better)
Savings Ratio Savings / Gross Salary
Debt Payments ratio Monthly credit payments/ take-home pay; should be less than 20%
Debt to net worth ratio liabilities/net worth
Liquidity ratio Liquid assets / monthly expenses
Bankruptcy The legal status of a person who is not able to pay debts owed.
Bankruptcy will be reported on Chapter 7 bankruptcy
your credit report for seven years
with the exception of...
Economics The study of how wealth is created and distributed.
Formalized report that summarizes your current financial
Financial Plan
situation, analyzes your financial needs and recommends future
financial activities.
What is the first step in the Six- Determine your current financial situation
Step Procedure for Financial
Planning?
