All Quizzes Study Set

If the interest rate and monthly mortgage payment do not change over the life of your mortgage, you have a(n) a. graduated-payment mortgage. b. fixed-rate mortgage. c. reverse-annuity mortgage. d. rollover mortgage. e. adjustable-rate mortgage.

fixed-rate mortgage

The insurance designed to help with nursing home, assisted living community, or in-home care due to chronic illness is called: a. a major medical plan. b. long-term care. c. nursing home care. d. Medicare. e. a comprehensive major medical plan.

long-term care

Credit cards are an example of _____ credit.

revolving

A frequent flyer card can be aptly classified as a(n): a. student card. b. reward card. c. retail charge card. d. cash advance. e. affinity card.

reward card

If we have more income than expenses, we have what is considered a cash _______.

surplus

Murray (age 68, single) sold his home owned for 35 years so that he could relocate to a place that is closer to where his grandchildren live. He realized a $400,000 capital gain on the home. Murray's tax liability on the capital gain is computed on: a. $400,000. b. $300,000. c. $150,000. d. $250,000. e. $0.

$150,000

Billy has liquid assets of $4,000 and other assets of $50,000. His total liabilities equal $25,000. What is his net worth?

$29,000

When a lender accepts all the risk of a loan, they usually require ___% interest.

20

As a percent of take-home pay, monthly consumer credit payments should not exceed: a. 10%. b. 5%. c. 15%. d. 20%. e. 25%.

20%

Using the rule of 72, how many years would it take to double your initial investment at a rate of 9%?

8

A higher home insurance cost may result from: a. the lack of a swimming pool at the insured's residence. b. fewer captive insurance agents hired by the insurance company. c. a low crime rate in the area of the insured's residence. d. a low credit score of the insured. e. fewer insurance claims from the area of the insured's residence.

A low credit score of the insured

_____ is a health care plan in which subscribers/users contract with the provider organization, which uses a designated group of providers meeting specific selection standards to furnish health care services for a monthly fee. a. A fee-for-service plan b. A managed care plan c. A supplementary medical insurance plan d. Medicare e. An indemnity plan

A managed care plan

Which of the following represents a disadvantage of a whole life insurance policy? a. A whole life insurance policy provides only temporary coverage for a set period. b. A whole life insurance policy often provides lower yields than other investment vehicles. c. It is difficult to evaluate the true cost of a whole life insurance policy at the time of purchase. d. A whole life insurance policy may require a policyholder to pay higher premiums when the policy is renewed. e. A whole life insurance policy does not provide any tax advantages on accumulated earnings.

A whole life insurance policy often provides lower yields than other investment vehicles

There is a need for budget adjustments when: a. income is stable. b. a new calendar year begins. c. account deficits are more than surpluses. d. short-term financial goals are achieved. e. account deficits and surpluses balance out.

Account deficits are more than surpluses.

A straight bankruptcy a. exempts a debtor from all the tax payments and payments for alimony and child support. b. allows a debtor to retain some other personal assets as per federal regulations. c. results in the loss of all the assets of a debtor. d. eliminates all the obligations of a debtor. e. results in the repayment of debt within 3 to 5 years.

Allows a debtor to retain some other personal assets as per federal regulations.

The principle of indemnity will prevent a. an insured from collecting more than what he or she has lost. b. a significant amount of loss control activity. c. an insurer from ever waiving its right to subrogation. d. a negligent third party from being held liable for damages if the injured party is insured. e. the act of one person from being assigned to another.

An insured from collecting more than what he or she has lost.

Auto insurance is needed primarily: a. to counter the effects of increasing fuel prices. b. to finance automobile maintenance. c. as protection against the cost of significant loss. d. to satisfy federal requirements for a lawful citizenship. e. as a part of the homeowner's insurance requirements.

As protection against the cost of significant loss.

The preferred technique for determining how much life insurance coverage is needed for an individual is: a. using the multiple-of-earnings method adjusted for occupation. b. estimating the sum of money which, when paid in installments, will produce the same income as the person would have earned after deducting assumed amounts for taxes and personal maintenance expenses. c. computing the human life value. d. using the probability of death each year, prevailing interest rates, and assumed inflation rates to find the discounted present value of a future income stream. e. assessing the family's total economic needs and subtracting the financial resources available to meet those needs.

Assessing the family's total economic needs and subtracting the financial resources available to meet those needs.

Being a high-income individual (200k or more) or having deductions that are disproportionate with income increases the chances of an ______ of the tax return.

Audit

Sales finance companies: a. sell installment loans to retailers. b. buy installment loans from banks. c. buy installment loans from consumers. d. buy installment loans from retailers. e. sell installment loans to banks.

Buy installment loans from retailers

A(n) _____ account is called a demand deposit. a. asset management b. time deposit c. checking d. savings e. certificate of deposit

Checking

________ are the expenses that borrowers pay during the final step of a real estate purchase. a. Property taxes b. Amortization costs c. Insurance costs d. Mortgage interests e. Closing costs

Closing costs

The best way for a family to handle financial decisions is to: ensure that only one person in the family makes financial decisions. communicate consistently about money matters with family members. ensure that individuals do not interfere in other family members' financial matters. use a third party, who is not a part of the family, to set financial goals.

Communicate consistently about money matters with family members.

Estate planning involves: considering how your wealth can be most effectively passed on to your heirs. determining the income you need to maintain. the valuation and auctioning of your valuables by hiring a professional tax planner. the dissolution of all privately held corporations.

Considering how your wealth can be most effectively passed on to your heirs

The data in a Multiple Listing Service (MLS): a. include the entire ownership history of the listed properties. b. consist of a comprehensive listing of properties for sale in a given community area. c. are accessible to buyers and sellers directly. d. deal only with undervalued properties that are authorized by the government within a geographic location. e. eliminate the need for a real estate agent.

Consist of a comprehensive listing of properties for sale in a given community area.

With a ________ adjustable rate mortgage, there is an opportunity to switch to a fixed rate after a certain time.

Convertible

A(n) ______ is a type of reporting agency that collects and sells credit information about individual borrowers. a. credit scoring house b. credit bureau c. insurance company d. consumer bureau e. bank

Credit bureau

The _______ represents the initial amount that's not covered by the policy and thus must be paid by the insured. a. copayment b. internal limit c. co-insurance d. premium e. deductible

Deductible

A tax _____ is something that you can subtract, or write off, from your taxable income.

Deduction

All taxpayers have an equal probability of having their tax returns audited. True False

False

Homeowner's co-insurance requires the insured to carry insurance protection equal to the market value of the house. True False

False

Income shifting refers to the process of transferring income from the taxpayer to the IRS. True False

False

When you get your first job, you should make a good financial plan that you can follow without making changes until you retire. True False

False

Funds in commercial banks are protected by the: a. Federal Deposit Insurance Corporation (FDIC). b. National Credit Union Administration (NCUA). c. Federal Depositors Assurance Corporation (FDAC). d. National Credit Union Share Insurance Fund (NCUSIF). e. Savings Association Insurance Fund (SAIF).

Federal Deposit Insurance Corporation (FDIC).

You should consider your _______ before you take on a large consumer loan a. history of auto ownership b. educational qualification c. career plans d. financial plans e. past employment

Financial plans

The primary purpose of life insurance is to provide: a. tax-advantaged investments for your family. b. liquidity to expand your business operations. c. protection from creditors and lawsuits before your death. d. high-yield investments for you and your family. e. financial security for your dependents after your death.

Financial security for your dependents after your death.

A single-payment loan is advantageous to a borrower only if: a. it has a collateral note. b. funds are expected to be available in the future to repay the loan in a lump sum. c. the finance charges are calculated using the discount method. d. the finance charges are calculated using the simple interest method. e. the interest rate is more than that on an installment loan offered by commercial banks.

Funds are expected to be available in the future to repay the loan in a lump sum

Employers often provide _______ life insurance as a fringe benefit for their full-time employees a. standard b. credit c. home service d. mortgage e. group

Group

Which of the following homeowner's policies is best suited to a renter of an apartment? a. HO-3 b. HO-2 c. HO-1 d. HO-4 e. HO-8

HO-4

In a traditional indemnity (fee-for-service) plan, the: a. health care provider and the insurer are separate. b. insurer always pays directly to the health care provider. c. lower the deductible, the lower the premium. d. insured receives comprehensive health care services from a designated group of doctors only. e. health care provider contracts with the insured's employee union to provide health insurance benefits.

Health care provider and the insurer are separate.

_______ ___________ loans involve taking out a second mortgage.

Home equity

Which of the following forms of consumer credit is among the cheapest and offers limited tax deductions? a. Overdraft protection lines b. Unsecured personal credit c. Home equity credit lines d. The Wage Earner Plan e. Credit cards

Home equity credit lines

A ______ is an example of a tangible asset. a. mortgage b. patent c. trademark d. house e. copyright

House

decision about whether or not to grant you credit will be made by: a. individual creditors. b. local credit bureaus. c. the credit cardholder. d. the Federal Trade Commission. e. national credit bureaus.

Individual creditors

Even though homeowners are eligible for reimbursement on a full replacement-cost basis if they keep their homes insured for at least 80% of the amount that it would cost to build them today, _______ can cause the actual amount of coverage to fall below 80%. a. inflation b. deductibles c. the insurance premium d. the replacement cost e. the land value

Inflation

The economy is said to be experiencing a period of _______ when the general level of prices increases over time.

Inflation

A(n) _______ loan is repaid in a series of fixed, scheduled payments rather than in a lump sum. a. consolidated b. single-payment c. standard d. installment e. interim

Installment

A tax audit is a(n): a. Internal Revenue Service (IRS) charge of illegal action. b. Internal Revenue Service (IRS) attempt to verify the accuracy of a return. c. U.S. Tax Court action. d. U.S. Tax Court decision. e. Internal Revenue Service (IRS) revision of a previously filed return.

Internal Revenue Service (IRS) attempt to verify the accuracy of a return.

Convenience is a reason for the growth in popularity of: a. insurance companies. b. mutual savings banks. c. credit unions. d. savings and loan associations. e. Internet banks.

Internet banks

Which of the following statements regarding an individual's net worth is true? a. It is the sum of an individual's take-home pay and his or her payroll taxes. b. It is the difference between an individual's monthly income and his or her expenses. c. It is the difference between an individual's total assets and his or her total liabilities. d. It is the difference between an individual's current assets and his or her current liabilities. e. It is the sum of an individual's current assets and his or her current liabilities.

It is the difference between an individual's total assets and his or her total liabilities.

A legal claim that allows lenders to liquidate loan collateral, in case the borrower defaults, is called a: a. promissory note. b. lien. c. loan contract. d. security claim. e. rollover.

Lien

You want to pay premiums for 20 years and have your insurance premium obligations finished at that time. However, you feel you will need life insurance for the rest of your life. You should choose a _____ insurance. a. continuous premium whole life b. single premium whole life c. renewable premium whole life d. convertible whole life e. limited payment whole life

Limited payment whole life

The probability of a loss occurring can be reduced by a. insurance. b. loss retention. c. risk observance. d. risk assumption. e. loss prevention.

Loss prevention

Which of the following is a public assistance program that provides health insurance benefits only to those who are unable to pay for health care? a. Medicaid b. Point-of-service (POS) plan c. Medicare d. Workers' compensation e. Blue Cross/Blue Shield

Medicaid

_______ are considered to be variable expenses. a. Rent payments b. Cable TV fees c. Interest payments d. Medical expenses e. Insurance expenses

Medical expenses

Credit unions lend money to qualified people who are their: a. stockholders. b. employees. c. suppliers. d. policyholders. e. members.

Members

Variable auto ownership costs are dependent on the: a. periodic renewals of vehicle registration. b. installment payments on a car loan. c. miles covered by the automobile. d. driver's behavior. e. down payment.

Miles covered by the automobile

A cash budget helps you: a. identify your long-term debt. b. calculate your solvency ratio. c. measure your net worth. d. analyze your financial position. e. monitor and control your finances.

Monitor and control your finances

Most loans made by savings and loan associations are: a. education loans. b. consolidation loans. c. home improvement loans. d. mortgage loans. e. auto loans.

Mortgage loans

Which of the following is an interest-bearing checking account? a. Negotiable order of withdrawal (NOW) account b. Certificate of deposit c. Treasury bill d. Regular checking account e. Series EE U.S. savings bond

Negotiable order of withdrawal (NOW) account

Which of the following is a major reason to use credit? a. Weekly purchase of food b. Regular payment of small cash outlays c. Occasionally for convenience d. Monthly payment of utility bills e. Frequent impulse purchases

Occasionally for convenience

A good health insurance plan embodies more than financing medical expenses, lost income, and replacement services; it incorporates: a. life insurance. b. flexibility in insurance premium payment on the lapse of the insurance policy. c. other means of risk reduction such as risk avoidance. d. lifetime limited dollar insurance coverage on pre-existing conditions. e. Social Security benefits.

Other means of risk reduction such as risk avoidance.

If you are a professional who is likely to receive income that is not subject to withholding, then you are required to: a. pay an estimated tax. b. deduct a tax credit. c. file an extension. d. calculate itemized deductions. e. file an amended return.

Pay an estimated tax.

Section II of a homeowner's insurance contract covers: a. hospitalization costs for the insured. b. damages caused by a covered peril. c. paying successfully pursued liability claims against an insured. d. damages caused by people renting the property. e. living expenses while an insured's house is repaired.

Paying successfully pursued liability claims against an insured.

If you made a down payment of $11,000 on a house worth $110,000, the lenders will require _____ because of the size of the down payment. a. closing points b. a bond c. private mortgage insurance d. homeowner's insurance e. application fees

Private mortgage insurance

The community rating approach to health insurance premium pricing: a. prohibits insurance companies from varying rates based on health status or claims history. b. considers only medical insurance coverage from a private insurance company. c. advocates offering the Social Security Medicare program to all individuals irrespective of their age. d. favors the government's contribution to the health savings account (HSA). e. offers consumer-directed health plans that go one step beyond a flexible-benefit plan.

Prohibits insurance companies from varying rates based on health status or claim history.

_______ are ongoing costs of home ownership. a. Rental payments b. Property taxes and insurance c. Taxes on capital gains d. Closing costs e. Down payments

Property taxes and insurances

The last step in the financial planning process is to: develop financial plans and strategies to achieve goals. use financial statements to evaluate results of plans and budgets, taking corrective action as required. implement financial plans and strategies. redefine goals and revise plans and strategies as personal circumstances change.

Redefine goals and revise plans and strategies as personal circumstances change.

A(n) ________ is traditionally a non-interest-paying demand deposit account. a. money market mutual fund b. money market deposit account c. asset management account d. regular checking account e. negotiable order of withdrawal (NOW)account

Regular checking account

Borrowing from _____ is not advisable a. commercial banks b. relatives c. credit unions d. asset management companies e. consumer finance companies

Relatives

A check you issued last week has been stolen. You can prevent the amount on the check from being withdrawn from your account by an unauthorized person by: a. requesting a stop payment. b. tearing up the check. c. properly endorsing the check. d. depositing the correct amount of money. e. writing a new check.

Requesting a stop payment.

Credit offered in the form of _____ is most common in department and clothing stores and other high-volume outlets, where customers are likely to make several purchases each month. a. retail charge cards b. affinity cards c. reward credit cards d. collateralized credit cards e. student credit cards

Retail charge cards

A capital gain is the result of: a. selling an asset for more than its purchase price. b. holding an asset that has depreciated. c. selling an asset for less than its purchase price. d. buying a new asset at a rate lower than the market rate of the asset. e. selling an asset at its purchase price.

Selling an asset for more than its purchase price.

The interest earned on an individual's ________ is free of state and local income taxes. a. time deposits b. money market deposit accounts c. Series EE bonds d. term deposits e. certificates of deposit

Series EE bonds

Financial goals that are 12 months or closer are generally referred to as _____-_____ goals.

Short term

________ interest is earned on the initial deposit only.

Simple

Which of the following types of insurance policies provides temporary coverage for a set period? a. Whole life insurance policy b. Universal life insurance policy c. Variable life insurance policy d. Term life insurance policy e. Extended life insurance policy

Term life insurance policy

Which of the following statements regarding a good insurance agent is true? a. The agent charges high commissions for providing insurance coverage. b. The agent is aggressive while pursuing business from the potential insured. c. The agent replies with fancy buzzwords and generic answers to questions. d. The agent is recommended by professionals like bankers and attorneys. e. The agent is the first one to solicit the potential insured's patronage.

The agent is recommended by professionals like bankers and attorneys

Which of the following is the biggest fixed auto ownership cost? a. The cost of tires b. The cost of fuel c. The cost of maintenance and repair d. The cost of oil e. The cost of installment loan payments

The cost of installment loan payments

Replacement-cost coverage is the reimbursement of: a. the cost of damages caused by perils other than those mentioned in the policy. b. the increase in the deductible to reduce the amount of the insurance premium. c. the cost of defending the insured. d. reasonable living expenses while the insured's house is being repaired. e. the cost of repairing or replacing damaged structures without deducting depreciation.

The cost of repairing or replacing damaged structure damaged structures without deducting depreciation.

Underwriting refers to: a. the determination of which exposures to insure. b. restoring the claimant to the financial condition prior to loss. c. a method for developing policy wording. d. the payment of a claim. e. selling insurance at a premium less than that of the competitors.

The determination of which exposures to insure

Section I of a homeowner's insurance policy covers: a. the dwelling, accompanying structures, and personal property of the insured. b. hospitalization costs provided to the insured. c. the reasonable expenses incurred by an insured in helping the insurance company's defense. d. the cost of defending the insured. e. the liability for negligence of the insured.

The dwelling, accompanying structures, and personal property of the insured.

The more frequently a bank compounds interest, ______ for a given nominal rate will be. a. the lower the yield rate b. the lower the inflation rate c. the higher the normal rate d. the higher the stated interest rate e. the higher the effective rate

The higher the effective rate

A progressive tax structure is one in which: a. the larger the amount of taxable income, the higher the rate at which it is taxed. b. no exemptions or deductions are available. c. tax rates are inversely related to inflation rates. d. tax rates are directly proportional to inflation rates. e. everyone pays the same income tax rate.

The larger the amount of taxable income, the higher the rate at which it is taxed.

Which of the following statements regarding credit unions is true? a. They charge higher interest rates than other sources of consumer loans. b. They provide installment loans to their members. c. They are owned and managed by the government. d. They make secured loans only to non-members. e. They are profit-making organizations.

They provide installment loans to their members.

Commercial banks are able to charge lower interest rates than other lending institutions because: a. they make only secured loans. b. they make shorter-term loans. c. they get their funds from the money market. d. their depositors require higher rates. e. they usually take only the best credit risks.

They usually take only the best credit risks

One of the key goals of the Affordable Health Care Act of 2010 is: a. to increase the amount of Social Security taxes. b. to reduce the number of uninsured citizens in the country. c. to provide health care coverage to employers employing less than 50 full-time employees. d. to penalize employers for employees' job-related illness or injury. e. to underwrite the employee health care coverage on behalf of employers.

To reduce the number of uninsured citizens in the country.

A cash budget uses short-term financial goals to help you reach long-term financial goals. True False

True

Adjustments to gross income will decrease your taxable income. True False

True

An individual is said to have a balanced budget when his or her total income for the year equals or exceeds his or her total expenditures for the year. True False

True

Generally, group insurance plans cost less than individual policies. True False

True

Living a healthy lifestyle is an example of loss prevention and control. True False

True

Saving $400 for a large, flat-screen TV within the next 4 months is an example of a short-term goal. True False

True

The premiums for homeowner's insurance policies are affected by the type of structure and its location. True False

True

One trend with a profound effect on people's standard of living is the ________, which requires greater responsibility to manage money wisely. single-income family two-income family investment family retirement-income family

Two-income family

Which of the following is NOT generally considered a fixed expense? Mortgage Utilities Cable TV Loan payments

Utilities

The death benefit of a(n) ________ life insurance policy may go down because of poor investment returns. a. variable b. group c. industrial d. limited payment e. whole

Variable

At the end of your car lease period, you intend to turn in the car, and you will not pay extra at the time based on the residual value of the car. You have a(n) _______ lease. a. closed-end b. residual c. purchase option d. open-end e. money factor

closed-end

A decrease in the gross domestic product (GPD) would indicate that the economy is experiencing an: expansion. deflation. contraction. stagflation.

contraction

Following an economic trough, the economy will often enter a(n): expansion. contraction. deflation. peak.

expansion