Fin 101 Exam 1
The market price of a house is $125,000 and the homebuyer will borrow $100,000. Two points will equal $2,500.
False
Financially, you will generally do better by selling your old vehicle yourself rather than trading it in.
True
Gasoline is a variable cost of automobile ownership.
True
If Suzie has $2,000 in checking, $50,000 in a money market account, and $75,000 in certificates of deposit (all individual accounts) at her local bank, her accounts would be completely insured through the FDIC.
True
If you are eligible to receive a tax refund, you will have to file a tax return to get the refund.
True
Most new car warranties are void if the owner fails to perform routine maintenance on the car.
True
Most types of personal property depreciate, or decline in value, shortly after being put into use.
True
One could expect to earn a higher rate of interest on a certificate of deposit than on a checking account.
True
One's average tax rate is typically lower than one's marginal tax rate.
True
Russ and Lois got married December 30. Since they were single for most of the year, however, they can legally file as married taxpayers in the year of the wedding.
True
Soon after signing a sales contract, homebuyers often have buyer's remorse as they question whether they have done the right thing.
True
Liquidity Ratio
total liquid assets / total current debts
Debt service ratio
total monthly loan payments / monthly gross (before-tax) income
Solvency Ratio
total net worth / total assets
Savings Ratio
Cash surplus / income after taxes
A budget is a detailed statement of what income and expenses occurred over a past period.
False
A liquid financial asset can be quickly converted into cash, but there is often a large loss of value as a result of the quick conversion to cash.
False
A loan-to-value ratio of 90% would require the buyer to make a 90% down payment.
False
A long-term capital gain, an investment held for more than 12 months, would be taxed at the same rate as earned income.
False
Money I loaned to a friend is a liability on my balance sheet.
False
No haggling pricing on a vehicle generally ensures buyers pay the lowest price.
False
A PITI payment is composed of principal, interest, real estate taxes, and insurance.
True
A balance sheet shows your financial condition as of the time the statement is prepared.
True
A charge made on your credit card becomes a liability as soon as the charge is incurred.
True
A closed end automobile lease is the most popular type of lease.
True
A husband and wife would be the only couple combination that could file a joint return.
True
A lender will generally require mortgage insurance if the down payment is less than 20%.
True
A taxpayer can write off a maximum of $3,000 of capital losses in one tax year.
True
As a homeowner, the federal government allows you to deduct interest expenses and taxes paid on the property.
True
As of 2009, the FDIC insures depositor's funds up to $250,000 at member banks.
True
Tax avoidance is legal, tax evasion is illegal.
True
The Federal personal income tax is a progressive tax.
True
The difference between the market value of your home and the balance of the mortgage is your equity in the property.
True
The money factor on an auto lease is similar to the interest rate on a loan.
True
When negotiating either an auto purchase or a lease, do not reveal what you can afford to pay per month.
True
When testing driving a car, it is recommended to make sure it fits into your garage, especially if you're interested in a larger SUV or truck.
True