Câu 1: True or False and Explain shortly (0.
5 mark per each)
1. Question: Because of the potential effect of inflation, individuals should
underestimate the amount of money needed for retirement.
Answer: False.
Explanation: Inflation erodes purchasing power over time, so individuals should
overestimate (rather than underestimate) the amount of money they will need for a
comfortable retirement to account for rising prices.
2. Question: The financial activities for a young, single person will probably be the
same as those for an older couple with no dependent children at home.
Answer: False.
Explanation: A young, single person often has fewer fixed expenses (no mortgage,
no spouse to support) and different priorities (education, career investments). An
older, childless couple usually has higher housing or healthcare costs, and may focus
more on retirement planning.
3. Question: Money management refers to annual financial activities necessary to
manage personal economic resources.
Answer: False.
Explanation: Money management actually refers to the ongoing (typically monthly
or weekly) tracking of income, expenses, savings, and investments. Annual activities
(e.g., filing taxes) are only a part of personal financial management.
4. Question: Closed-end credit consists of loans made on a continuous basis with
periodic bills for at least partial payment.
Answer: False.
Explanation: Closed-end credit is a one-time loan (for example, an auto loan or
mortgage) where you receive a lump sum up front and then make fixed payments
until the balance is zero. Continuous‐basis loans with revolving balances and
periodic bills are open-end (or revolving) credit (e.g., credit cards).
5. Question: Insurance is protection against possible all loss.
Answer: False.
Explanation: Insurance protects against financial loss (the cost of events like
accidents, illnesses, or property damage). It cannot protect against all
losses—specifically, it does not cover non‐quantifiable losses (e.g., emotional
distress, loss of a loved one).
6. Question: If you are unable to make your credit card payments, you should not
contact your credit card company.
Answer: False.
Explanation: If you cannot make payments, you should immediately contact your
credit card company to request a hardship plan, negotiate a lower payment, or seek
other options. Ignoring the problem typically results in late fees and negative
credit‐reporting.
Câu 2: Exercise (1 mark per each)
1. Question: Gwendolyn Francis is interested in buying a bond that pays $70 annually.
The current price of the bond is $900. What is her current yield?
Answer: The current yield is calculated as:
Current Yield=Annual CouponCurrent Market
Price=$70$900=0.0778≈7.78%.\text{Current Yield} = \frac{\text{Annual
Coupon}}{\text{Current Market Price}} = \frac{\$70}{\$900} = 0.0778 \approx
7.78\%.Current Yield=Current Market PriceAnnual Coupon=$900$70=0.0778≈7.78%.
2. Question: Marianne and Roger are in good health and have reasonably secure
careers. Each earns $45,000 annually. They own a home with a $125,000 mortgage;
they owe $25,000 on their car loans and have $22,000 in student loans. If one should
die, they think the funeral expenses would be $12,000. What is their total insurance
need using the DINK method?
Answer:
○ Total outstanding debts = mortgage ($125,000) + car loans ($25,000) +
student loans ($22,000) = $172,000.
○ Funeral expenses = $12,000.
○ DINK insurance need = debts + funeral expenses = $172,000 + $12,000 =
$184,000.
Câu 3: Mini‐case study (5 marks)
“Consider Gretchen’s budget worksheet for June, and then answer the questions.”
Income Spending
Date Source Amount ($) Date Purpose Amount ($)
7/6 Wages 423.52 3/6 New sweater 33.86
9/6 Birthday gift 50.00 12/6 Car insurance 48.29
21/6 Wages 423.52 15/6 Rent 350.00
23/6 Babysitting job 25.00 23/6 Credit card bill 296.04
30/6 Savings interest 8.92 25/6 Telephone bill 53.41
26/6 Groceries 69.30
29/6 Doctor’s visit 50.00
1.
Question: How much was Gretchen able to save in June?
Answer:
○ Total Income in June:
■ Wages (7/6): $423.52
■ Birthday gift (9/6): $50.00
■ Wages (21/6): $423.52
■ Babysitting job (23/6): $25.00
■ Savings interest (30/6): $8.92
■ Sum of Income = $423.52 + $50.00 + $423.52 + $25.00 + $8.92 =
$930.96
○ Total Spending in June:
■ New sweater (3/6): $33.86
■ Car insurance (12/6): $48.29
■ Rent (15/6): $350.00
■ Credit card bill (23/6): $296.04
■ Telephone bill (25/6): $53.41
■ Groceries (26/6): $69.30
■ Doctor’s visit (29/6): $50.00
■ Sum of Spending = $33.86 + $48.29 + $350.00 + $296.04 + $53.41 +
$69.30 + $50.00 = $900.90
○ Savings = Total Income – Total Spending = $930.96 – $900.90 = $30.06.
So, Gretchen was able to save $30.06 in June.
2. Question: Which sources of her income may not be the same from month to month?
Answer:
○ Birthday gift (9/6): This is a one‐time gift and only occurs in the month of her
birthday; it will not recur monthly.
○ Babysitting job (23/6): Babysitting income is irregular, depending on whether
she is called upon to babysit.
○ Savings interest (30/6): Although she has savings, the exact interest
credited each month can vary with the account balance and prevailing interest
rate.
3. (By contrast, her “Wages” entries likely come from a regular job and, assuming
hours/hours paid remain constant, could be similar in other months.)
4. Question: Which types of spending might not be the same from month to month?
Answer:
○ New sweater (clothing) (3/6): Clothing purchases are discretionary and can
be irregular.
○ Car insurance (12/6): This may be billed monthly or quarterly; if it’s billed
quarterly or semiannually, June’s payment would be higher than other
months’ or might not occur every month.
○ Credit card bill (23/6): Credit card balances and minimum payments
fluctuate with usage and interest charges.
○ Groceries (26/6): While groceries recur every month, the total can vary
widely depending on shopping patterns, special occasions, or price changes.
○ Doctor’s visit (29/6): Medical expenses are irregular, dependent on health
needs or appointments.
5. (On the other hand, “Rent” is typically the same each month. Telephone bills could be
somewhat consistent if she has a flat‐rate plan but might still vary with overages or
usage.)
6. Question: Why would a series of short‐term budget worksheets be needed to
develop a long‐term budget?
Answer:
○ Capture Variability: Income and spending categories fluctuate from month to
month (e.g., irregular gifts, medical bills, seasonal utility charges). One
month’s data alone could be anomalous.
○ Identify Trends: By examining several consecutive months, Gretchen can
identify which expenses are fixed (e.g., rent), which are seasonal (e.g., higher
heating costs in winter), and which are truly discretionary (e.g., clothing,
entertainment).
○ Calculate Averages: A longer series of short‐term budgets allows her to
compute average monthly spending for variable categories, so she can
estimate annual or multi‐year cash flows more accurately.
○ Adjust for One‐Time Items: Occasionally, a large one‐time expense (like
major car repairs) could skew a single month’s budget. Multiple worksheets
help smooth out such anomalies.
