1. Who will win the NCAA Tournament? 1.North Carolina 2.Kansas 3.Memphis 4.UCLA 5.I don’t care

2. Why People Fail Financially

3. Three primary enemies to becoming financially successful are 1.Inflation, Taxes, Alcohol 2.Insurance, Cars, Houses 3.Inflation, Taxes, Procrastination 4.Insurance, Estate Planning, Procrastination

4. Batman: Age 22, Invests $5,000 per year, 8 years to and including age 29 Robin: Age 22, starts investing $5,000 per year, age 30 for 43 years to age 72 10% annual return RESULTS BATMAN: $3,788,943 ROBIN: $3,258,204 The lesson is 1.Procrastination is Expensive 2.Discipline is profitable 3.Instant gratification is expensive 4.It is important to invest early in your life

5. Your reaction to the prior problem 1.WOW! 2.I’m going to EXECUTE early! 3.I’m not going to procrastinate 4.Unbelievable! 5.Awesome! 6.Batman is my financial idol

6. Inflation: The Good, The Bad, and The Ugly

7. Currently, your annual salary is $80,000. If inflation is expected to be 3% annually, what salary do you need in 10 years to maintain the same salary in real (i.e., inflation adjusted) terms? 1.104,513 2.$105,513 3.$106,513 4.$107,513 5.$108,513 20%20%20%20%20%

8. From a personal perspective, a 4% raise in an environment where inflation is 5% is 20%20%20%20%20% 1.Good, because you will be able to buy more with the raise 2.Good, because 4% is less than 5% 3.Bad, because you will not be able to buy more with the raise 4.Bad, because inflation is bad for everyone

9. Inflation can benefit some people, especially 20%20%20%20%20% 1.Those who have a lot of debt. 2.Those who have little debt. 3.Those that have a high net worth 4.Those that have a low net worth

10. Your salary equals $10,000 per month. Your mortgage payment equals $1,000 per month. If you receive a 20% raise, the percentage of your salary allocated to the mortgage payment goes from 10% to 1.1.33% 2.5.33% 3.6.33% 4.7.33% 5.8.33%

11. Times are tough and your boss gives you a 1 percent raise telling you that you will only be able to live a little bit better next year. Inflation is 2%. Which is the most accurate statement. 1.You will be better off next year because you received a raise. 2.You will be better off next year because inflation is only 2% 3.Your “real” (inflation adjusted) wages are declining 4.Your “real” (inflation adjusted) wages will be increasing

12. Time Value of Money

13. Assuming an 8% annual return, a 25 year old would have to save $_____ a year (end of year) to have a net worth of $10,000,000 by age 75. 1.$20,000 2.$200,000 3.$17,428.58 4.$27,428.58 5.$37,428.58 6.None of the above

14. A 25 year old who saves $10,000 per year for 50 years will have $_________ by age 75. Assume an annual return of 9%. 1.$5,150,835.56 2.$6,150,835.56 3.$7,150,835.56 4.$8,150,835.56 5.$9,150,835.56 6.None of the above

15. Obtaining an extra 1 percent annual return over your lifetime is 1.Nice, but not that significant 2.Nice and very significant 3.Greedy, but not that significant 4.Greedy and very significant

16. Budgeting

17. “Pay Yourself First” mentality is 1.Good, instills a savings discipline 2.Bad, it is selfish 3.Good, helps balance your budget 4.Bad, prohibits living well long term

18. If you cannot pay all your bills this month because your 1970 Dodge Challenger repair bill was $600, in general this is 1.Acceptable, it is an old car 2.Unacceptable, you should be saving monthly for “surprise” expenses 3.Acceptable, “surprise” repair bills will challenge the budget 4.Unacceptable, you should own a newer car

19. Measuring Your Financial Success What is Financially Wealthy?

20. The main measure of your financial success is your 1.Income 2.Assets 3.Revenue 4.Net Worth 5.Debts

21. Net Worth is 1.Assets – Debts 2.Cash + Assets 3.Cash – Debts 4.Assets + Debts 5.Assets only

22. Net Worth is 1.Assets – Debts 2.Cash + Assets 3.Cash – Debts 4.Assets + Debts 5.Assets only

23. Financial Goal: To live off of your investment income and have enough funds to live forever. Annual Expenses this year = $60,000; After Tax Annual Investment Return = 5%, Inflation = 3%-- What new worth (assets assuming no debt) do you need today? 1.3,001,044 2.3,044,677 3.3,144,677 4.3,150,000 5.3,244,677

24. Investing: Ownership vs. Lending

25. If you buy a corporate (e.g., IBM) bond, 1.You own a portion of IBM 2.You own the stock of IBM 3.You are loaning money to IBM 4.None of the above

26. As interest rates go up, the value of a bond goes 1.Down 2.Up 3.Depends 4.Not enough information

27. As interest rates go down, the value of a bond goes 1.Down 2.Up 3.Depends 4.Not enough information

28. If a bond is increasing in value, interest rates are likely going 1.Down 2.Up 3.Depends 4.Not enough information

29. Your Values and Spending Money

30. How you spend money 1.Communicates what you value 2.Is a form of voting for what you believe is good for our society 3.Says a lot about who you are as an individual 4.Is important, similar to voting during an election

31. Which expenditure of money is best for society? 1.Buying Doritos and ice cream 2.Taking a trip to Europe 3.Putting gas in a gas guzzling truck 4.Donating money to an organization that feeds the poor

32. HOME OWNERSHIP

33. The first $250,000 gain for singles ($500,000 for married couples) on the sale of a house is tax free if 1.As long as it is your first house 2.As long as you are 59 ½ or older 3.You lived in your home for two of the last five years 4.None of the above

34. Dollar Cost Averaging

35. You buy $10,000 of IBM at $100 per share A month later, you buy $10,000 of IBM at $110 per share Your average price equals 1.$105 2.Greater than $105 3.Less than $105 4.$100 5.Greater than $110

36. Vehicle Lease or Purchase

37. From a financial perspective, a vehicle consists of 1.Materials, insurance, car payments 2.Interest, principal, depreciation 3.Insurance, depreciation, lease 4.Equity, depreciation, interest expense

38. You are considering leasing a $40,000 car with a residual value of $18,000 in four years. Your total lease payment would be 1.$22,000 2.<$22,000 3.>22,000 4.Not enough info. 5.None of the above

39. End of Lease: Residual Value = $17,000 Actual Value= $13,000 You total the car on the last day of the lease, you would owe 1.Nothing with gap insurance 2.$4,000 without gap insurance 3.Nothing, with collision auto insurance 4.1 and 2 5.None of the above

40. Paying for College

41. The benefits of 529 Plans for saving for college are 1.Earnings grow tax free 2.Withdrawals are tax free 3.Money withdrawn can be used for college expenses including room and board 4.Can redirect to another child (even child of a child) 5.None of the above 6.All of the above

42. The benefits of 529 Plans for saving for college are 1.Once an account is open, anyone can contribute 2.The owner is the person who establishes the account 3.Withdrawals not used for college qualifying expenses are tax free 4.1 and 2 5.1 and 3 6.All of the above

43. Love and Money Including Marriage

44. The benefits of 529 Plans for saving for college are 1.Once an account is open, anyone can contribute 2.The owner is the person who establishes the account 3.Withdrawals not used for college qualifying expenses are tax free 4.1 and 2 5.1 and 3 6.All of the above

45. Credit Good vs. Bad Credit

46. With multiple credit card bills, after making the minimum payments, you should pay off the credit card with the 1.Highest balance 2.Lowest balance 3.Highest interest rate 4.Lowest interest rate 5.None of the above

47. Home Ownership

48. List the three loans from likely highest to lowest interest rate 1.Credit card, car loan, mortgage 2.Car loan, mortgage, credit card 3.Mortgage, credit card, car loan 4.Car loan, credit card, mortgage 5.None of the above

49. Getting pre-approved for a mortgage is 1.Not in your self-interest 2.Useful, especially if you have a car loan 3.Useful, especially if you have credit card debt 4.Helpful for negotiating the purchase of a house

50. A 30 Year Mortgage is Better than 1.Not in your self-interest 2.Useful, especially if you have a car loan 3.Useful, especially if you have credit card debt 4.Helpful for negotiating the purchase of a house

51. Insurance

52. The purpose of insurance is to protect you against 1.Likely, significant financial loss 2.Likely, insignificant financial losses 3.Unlikely, but possible, significant loss 4.Unlikely, but possible, insignificant loss