NATIONAL ECONOMICS UNIVERSITY MID-TERM EXAM

PERSONAL FINANCE MANAGEMENT

COURSE

Venue:

Duration: 90 minutes

Question 1: These statements are True or False? (30 marks, 2.5 score/each correct answer)
1.1. A financial plan is an informal report that analyzes past financial decisions. (F)
Future.

1.2. Borrowers is less likely to be harmed by inflation. (T)

Better, as the real borrowing interest rates are lower.

1.3. A budget is a record of how a person or family has spent their money. (F)

Budget includes both spending and income.

1.4. A cash flow statement uses this equation: Assets - Liabilities = Net worth. (F)
Balance sheet.
Cash flow is on cash inflow and cash outflow.

1.5. Checking account balance is a liquid asset. (T)

You can withdraw in cash or use to pay anytime.

1.6. The information gathered from your loan application and the credit bureau establishes your credit
rating. (F)
Personal credit rating mainly comes from information of loan application and credit bureau, but
also from other sources of information.

1.7. Consumer credit refers to the use of debit cards for personal needs. (F)

1.8. Using the Rule of 72, with the value of land in an area is increasing 12.5 percent a year, it will
take 5.8 years for property values to double (T: 72 / 12.5 = 5.8 years)

1.9. Using the Rule of 72, at an annual interest rate of 5.75 percent, it will take 15 years for savings to
double (F: 72 / 5.75 = 12.5 years)

1.10. Purchasing a car is an example of a durable-product goal (T).

1.11. Opportunity costs refer to money already spent (F).

Actual spending => actual cost, not opportunity cost.
Not spent on this

1.12. The problem of bankruptcy is associated with overuse and misuse of credit in the borrowing
component of financial planning (T).
 Personal bankrupcy =>

Question 2: Assignments (30 marks)

2.1. (10 score) Describe some common money management mistakes that can cause long-term financial
concerns?

(Spending more than their income is the main mistake people make. In addition, the overuse of credit,
impulse buying, and not monitoring spending are other concerns) – chapter 2.

2.2. (20 scores) Present your plan for making personal financial and career decisions.
(homework 1)

Question 3: Exercises (40 marks)

3.1. (20 scores)
Use the following items to determine the total assets, total liabilities, net worth, total cash
inflows, and total cash outflows. What is the problem with this person’s personal finance
situation?
Unit: US$
Rent for the month Monthly take-home salary
880 4,250
Spending for food Cash in checking account
490 1,400
Savings account balance Balance of educational loan
2,550 3,580
Current value of automobile Telephone bill paid for month
11,000 150
Credit card balance Loan payment
3,500 140
Auto insurance Household possessions
350 15,000
Video equipment Payment for electricity
2,800 100
Lunches/parking at work Donations
220 180
Personal computer Value of stock investment
1,500 950
Clothing purchase Restaurant spending
2,400 2,500

ANSWER:

= Savings account balance + Current value of automobile + Video equipment +

Total Personal computer + Cash in checking account + Household possessions + Value of
assets stock investment 35,200
 Total
liabilitie
s = Credit card balance + Educational loan balance 7,080.00

Net 28,120.0
worth =Total assets – Total liabilities 0

Total =Rent for the month + Spending for food + Auto insurance + Lunches/parking at work
cash + Clothing purchase + Telephone bill paid for month + Loan payment + Payment for
outflow electricity + Donations + Restaurant spending 7,410.00
Total
cash
inflow = Monthly take-home salary 4250.00

3.2. (20 scores)

Consider Minh’s budget worksheet for March, and then answer the questions:
Unit: US$

Income Spending
Date Source Amount Date Purpose Amount

7/3 Wages 850.5 3/3 New clothes 180.5

9/3 Birthday gift 55.7 12/3 Motobike insurance 125.7
21/3 Wages 660.5 15/3 Rent 380.9
23/3 Part-time job for 23/3 Credit card bill
120.5 380.5
Circle K
30/3 Savings interest 25.7 25/3 Telephone bill 25.5
26/3 Grocerries 280.7
29/3 Doctor’s visit 150
a. How much was Minh able to save in March?
b. Which sources of her income may not be the same from month to month?
c. Which types of spending might not be the same from month to month?
d. Why would a series of short-term budget worksheets be needed to develop a long-term
budget?

TOTAL INCOME = 1712.9

TOTAL EXPENSES: 1523.8
Total savings: 189.1