FINANCE EXAM 3

Prices on big ticket items such as vehicles, furniture, appliances and electronic equipment is usually the same from seller to seller T/F

False

The sticker price on a new car is typically the final sale price T/F

False

When considering insurance loss frequency is more important than loss severity T/F

False

The primary difference between a speculative risk and a pure risk is their is a chance for ____ in a speculative risk and a chance for ____ in a pure risk

Gain and loss (speculative), only loss (pure)

What is the first step in the risk management process

Identify the Risk

Buying without fully considering priorities and alternatives is called _________

Impulse buying

Fire theft Illness, and accidents are all examples of

Perils

The larger the down payment one can make on a purchase the easier the payments will fit into one's budget T/F

True

The security deposit is the amount paid in advance to a landlord for normal wear and tear on rental property T/F

True

When researching safety on a vehicle you should check on recalls T/F

True

Owing more on a vehicle loan than the vehicle is actually worth is called being

Upside Down

Implied warranties required by state laws include a warranty of _____

Verbal Warranty

A vehicle lease is essentially ______

a rental of a vehicle

With a closed end lease there is ____

no charge if the end-of-lease value of the vehicle is lower than the originally projected residual value.the possibility of some end-of-lease charges on excess wear.

The key to success in negotiating a car purchase is to obtain the ___ before discussing any other aspects of the deal.

price for the car

A ______ is a refund of part of the purchase price

rebate

With _____ the agreement stays in effect unless either party give proper notice.

​a periodic tenancy lease

Jillian wants to rent an apt that has monthly rent payment of $850 requires a $400 security deposit and a $500 damage deposit in order to move in how much will she be required to pay to move in

$1750

steps in the planned buying process

-Prioritizing wants -Pre-shopping research -Fitting your budget -Comparison shopping -Negotiating -Making the decision -Evaluating the decision

A point as defined in the Real Estate market is what % of a loan amount

1%

Have an ability standards for rental property would not include things such as

A Dishwasher

Monthly fees assessed to buyers of cooperatives include funds for ____ A)management fees. B)payment on the cooperative's debt. C) ​insurance covering the building(s) D) All of these

All of these

Pre shopping research for new cars should focus on ______ A. Price B. Trade-in value C. Financing D. All of these

All of these

Reduced risk gives one the freedom to A)Buy a car B)Buy a house C) D)All of these

All of these

When negotiating to purchase a vehicle besides the price what other variables should be considered

All of these

_____ should be completed before interacting with sellers

Answer on test: All of these

An increase in the value of a home is called ______

Appreciation

____ is when the home is financially and legally transferred to the new owner

Closed

A form of housing ownership where the owner holds legal title to a specific housing unit and a proportionate interest in a common ground in facility is.

Condominium

Dividing the price of a product by the number of times it will likely be used provides its _______ and provides a way to compare among competing purchase options

Cost per use

Owning a big screen TV is called a _____ while the potential theft of that tv is called an _______

Exposure; peril

A lease typically affects the landlord but not the renter

False

In most jurisdictions landlords are prohibited from harassing tenants who report violation of billing codes or other tenant rights T/F

False

Financial product used for transferring and reducing risk by having a large number of people share in the financial losses suffered by the members of the group is called

Insurance

The types of insurance you carry which covers losses suffered by others is called _____ insurance

Liability

The amount borrowed under a mortgage loan divided by the initial purchase price is known as what

Loan-to-Value (or LTV) Ratio

Buying an alarm system as an option on your new sports car is an example of

Loss control

Person who leaves his or her insured car running when he or she runs into the convenience store provides an example of a _____ hazard

Morale

___ insurance is generally required when a borrower makes a minimum down payment

Mortgage

A loan to purchase real estate in which the real estate itself serves as collateral is a _____ loan

Mortgage loan

In this kind of lease you must pay any difference between the projected residual value of the vehicle and the market value at the end of the lease period

Open End

The PITI acronym in mortgage lending stands for

Principal, Interest, Taxes, Insurance

Which is not an additional charge when leasing an automobile

Residual Value

Deciding not to drive a car is an example of handling risk through

Risk Avoidance

People who are uncomfortable with risk and who avoid it whenever they can are using the approach of

Risk Avoidance

The decision not to buy collision insurance on an old car is called

Risk retention

When purchasing Insurance you should

Shop around for the lowest cost coverage

Which of the following is not a peril A)Fire B)Wind C)Frozen water Pipes D)Smoking

Smoking

When a tenant that wants to move before leasing to another tenant

Subleasing

When a star football running back pays an insurance company to insure his legs this is an example of

Transferring Risk

A risk transfer is any arrangement where an insurance company agrees to reimburse you for a financial cost T/F

True

An ill advised credit purchase can have negative effects on your budget for years T/F

True

Buying a home represents the largest expenditure most people will ever make T/F

True

In administering a risk management program you should use the maximum possible loss as a guide for the dollar amount of coverage to buy T/F

True

It is wise to make a list of all damages and defects in an apartment before moving in and moving out T/F

True

One should assume risk that is affordable and insure against losses that would be unaffordable T/F

True

Property insurance protects you from financial losses resulting from damage to or destruction of your property or possession T/F

True

The escrow account is used to accumulate funds for

both homeowner's insurance premiums and real estate property taxes.

The true cost of an automobile to the dealer is

invoice price less any dealer discounts

When comparing buying versus renting comparable housing, renting requires a ____ annual cash flow while buying typically ____ one's tax liability.​

lower; decreases