Financial Exam 2
Brandon lost his debit card. When he realized it was gone his account had $238 in unauthorized charges. Since he was embarrassed about his loss, he didn't contact his financial institution for 70 days. What is the most that he is liable for?
$238
The insurance coverage provided by FDIC for a savings account is _____ per depositor per insured financial institution
$250,000
Brenda lost her debit card. When she realized it was gone, her account had $173 in unauthorized charges. She notified her financial institution within two days. How much is she potentially liable for?
$50
Rachel Johnson has net monthly income of $2,500. She has a monthly auto loan payment of $275, a student loan payment of $150, and a credit card minimum payment of $50. What is her debt-payments- to- income ratio?
(275 + 150 + 150)/2,500 = 19%
Total annual cost of buying
(Annual mortgage payments + annual property taxes + annual homeowner's insurance + maintenance and repairs) - ( Growth in equity + tax savings + Annual appreciation)
Average balance
(Loan balance in first month + Loan balance in last month) / 2
If you have probably reached the upper limit of debt obligations, your debt-to equity ratio is about
1
Carrie bought a house five years ago for 150. At that time she borrowed 140 from her bank. The house is not worth 162. Her PMI will automatically be dropped when her mortgage balance drops to
150,000 x (1-.22) = 117,000
If you have 150,000 30 year 5% mortgage, how much of your first monthly payment of 805.50 would go towards interest
150,000 x 5% x 1 month/12 = 625
Experts suggest that the debt-payments-to income ration should be a max of
20%
Hannah has liabilities totaling $30,000 (excluding her mortgage of $100,00). Her net worth is $45,000. What is her debt to equity ratio
30,000/45,000= .67
FICO Scores generally range from
350-850
All of the following are deposit institutions except
A finance company
A Trust
A legal agreement that provides for the management and control of assets by one party for the benefit of another is knows as
Zach wants to open an account, but he doesn't know which kind is appropriate. He is interested in earning a higher interest rate and knows that he might not be able to write many checks from his account. In addition, he plans to keep at least $1,000 in his account so he can avoid paying a fee. He definitely wants to have federal deposit insurance. What kind of account should he open?
A money market account
Revolving check credit
A prearranged loan for a specified amount that a consumer can use by writing a special check is
Mediation
A process used to settle grievances in a nonbinding process
Drawback of a regular savings account
A relatively low rate of return
Unit pricing
A standard measurement used to compare the prices of packages of different sizes
Interest rate that can increase or decrease during the life of her loan.
ARM.
Nicholas earned 8% in his savings account. If he is in the 28% tax bracket, what is his after-tax savings rate of return?
After-tax rate = Return x (1 - Tax Rate) = 8% x (1 - 0.28)= 8% x 0.72 = 0.0576 = 5.76%
Asset management account
An all-in-one account that provides a complete financial services program for a single fee is knows as
Preston never opened his bank statements, so he was surprised to see that he had incurred a service charge, because his balance went below a required minimum balance. In addition, he did not earn interest for this month. What kind of account does Preston have?
An interest- earning checking account
Chloe signed the back of her check with just her signature. She used a
Blank Endorsement
Nora bought a used car and was told that she needed a personal check with guaranteed payment. She obtained a
Certified check
Service contract
Covers the repair costs of a product
A credit report
Detailed credit information
Cost to buy a car
Down Payment + Total monthly loan payment + opportunity cost of down payment -- Estimated value at end of ownership = Total vehicle cost
Savings Account
Franklin is planning for a purchase of a vehicle in two years. Since he wants to be certain that his are safe, he should use.
Home equity loans
Have interest that is tax-deductible
Stop-payment order
If a check is lost or stolen, you should use a
Prepaid legal services
If you want to pay a set fee to receive unlimited or reduced-fee legal assistance, you should use
Evan had three accounts as listed below. In 2017, how much was his total insurance coverage by FDIC Bank A - $150,000 Bank B - $50,000 Bank C - $350,000
In 2017, the maximum coverage was $250,000 per insured institution. Therefore, Evan received full coverage for Banks A and B and coverage up to $250,000 at Bank C. His total coverage was 150,000 + 50,000 + 250,000 = 450,000
Becka borrowed $100 from her cousin at the rate of 6% per year. If the inflation rate was 2% that year, what is her cousin's actual rate of return on the loan?
Interest rate - inflation rate = Actual rate of return 6% - 2% = 4%
Financial services
Investments, insurance, and tax assistance are tools for financial planning and are also known as
Depreciation
Largest fixed expense with a vehicle
Contingency Clause
Madeline wants to purchase a larger house. However, she has not yet sold her current home. She may want to include
Acme Home Lending offers home equity loans up to 80% of the home value for its customers. If sally Johnson has a home valued at $200,000 and a current mortgage of $50,000 how much can she borrow in a home equity loan from Acme?
Maximum home equity loan= Home value x 80% - Mortgage balance = $200,000 x .80 - $50,000 = $110,000
Kylie went to a post office to obtain a
Money order
Limited Warranty
Most products come with some guarantee of quality. This type of warranty covers only certain aspects of the product, such as parts.
Full Warranty
Most products come with some guarantee of quality. This type of warranty states that a defective product can be fixed or replaced during a reasonable amount of time.
A credit Union
Not a non-deposit institution
Liquidity
Opportunity to withdraw your money on short notice without incurring a loss in value
Points
Rebecca paid extra money to reduce her mortgage interest rate. The extra money is called
Cash advance
Requires you to pay interest every day until you repay the cash advance
Zoe signed the back of her check with the words "for deposit only". She used a
Restrictive endorsement
Class action lawsuit
Sally has a major problem with a product and thinks that many others have had the same problem. Best way to resolve the problem
Annual Percentage yield
The Truth in savings act requires financial institutions to disclose the ____ on savings accounts.
Sticker price
The amount printed on a label with suggested retail price that is posted on a vehicle is called
Invoice Price
The dealer's cost is also known as the
Residual Value
The expected value of a vehicle at the end of a lease is called
Line of credit
The maximum dollar amount of credit the lender has made available to a borrower
Lessor
The owner/landlord is known as
The minimum monthly payment on a credit card
The smallest amount you can pay and remain a borrower in good standing.
Lessee
The tenant
Collateral
The use of property or savings to secure a loan relates to
Private-label or store brands
These products are sold by one chain of stores and are low-cost alternatives to famous-name products
Financial supermarkets
They offer a combination of services from one source
Principal
Total payment - Interest
lock
When sam applied for a loan, he was assured that his rate would not change if he closed within 30 to 90 days. Sam had a ____ on the interest rate.
Escrow
Which of the following is an account used to pay property taxes and home owner's insurance
A payday loan company
Will likely provide the most expensive loans
First sign of stolen identity
You receive bills for a credit card account you never opened.
Lemon Law
it applies to vehicles that have been serviced four times to correct the same problem in the first 12,000 miles
If denied credit
you are entitled to a free copy of your credit report
