FINC 2400 Final Exam
If Kim's current debt ratio is 45%, this means that _____ of Kim's assets are purchased on credit
45%
If you buy a term insurance policy with a conversion option, this means that you
Can convert your term policy to a whole life policy during the conversion period
Which of the following is not a cash inflow?
Car payment
The best substitute for mortgage insurance would be
Decreasing term insurance
Which of the following statements is not true concerning comprehensive and collision insurance?
Financially it is advisable to take out the lowest deductible.
On which type of insurance policy is choosing an insurance company with a high rating the most important?
Life insurance
When considering how much money to spend on the purchase of a new car, you must consider how your choices affect your spending on other needs. The __________ solution limits your purchases to what you can afford to pay off when your credit card bill arrives each month.
Limited debt
Which of the following items would a personal loan be a better option than a credit card for a college student?
Tuition and dorm fees
Posing as an employee of a brokerage firm to obtain information to allegedly update your account information is an example of
Pretexting
Using the income method, if Jenny has an annual income of 50,000 debt of 20,000 and factor of 10, then she should purchase ____ of insurance
$300,000
How much would be owed by the patient on a $3,000 bill if a PPO uses a discount on charge arrangement wherein the percentage paid to the provider is 70% and the patients co pay, as specified by the PPO, is 20%.
$420
The monthly payment for a 15-year loan would be about ______ times as much as a comparable 30 year loan.
1.25
Which risk management alternative is feasible when the likelihood of an event that could cause a financial loss is very low and the potential financial loss due to the event is small?
Accept risk
The accumulation of interest over time is called
Compounding
Which of the following benefits is most often available through an employer??
Health insurance
The relationship between risk and return
Is positive
Which of the following will not affect the premiums on a term life insurance policy
Percentage earned on savings portion of premium
Disability income is
Tax free
Life insurance may be obtained through all of the following except
The federal government
Of the following statements dealing with premiums on life insurance, which is not true?
There are very few things you can do to reduce your life insurance premiums
Life insurance that provides insurance over a specified term and allows policyholders to invest residual funds is known as
Variable life insurance
Which of the following factors does not affect your life insurance premiums
Your level of education
The ability to save funds is ______ when credit payments are _____
Both increased; small and reduced; large and correct
Additional coverage in your automobile insurance policy can be purchased for
Both the cost of a rental car while your car is being repaired and the cost of towing even if the problems are not the result of an accident are correct answers.
Which of the following would be classified as a short term goal?
Buying new clothing this month
A personal loan is different from a credit card in all of the following EXCEPT it
Contains a longer grace period
Health insurance policies may provide coverage for all of the following except
Cosmetic surgery
Having a longer term loan
Costs you more interest and therefore increases the cost of your loan
Which of the following personal information would not be asked on a credit card application
Country of birth
Which of the following is covered by renters insurance?
Damage to a stove that the landlord purchased before you moved in.
Which of the following would not be included in closing costs
Earnest money
Before you decide to take out an individual disability policy, you should consider all of the following except
Employer disability insurance policy
The law that prohibits denying credit due to gender, age, origin, religion, or marital status is
Equal Credit Opportunity Act
The cost of using credit may result in _____ spending and _____ debt
Excessive; increased
The Identity Theft and Assumption Deterrence Act has designated which federal agency as the central clearinghouse for all identity theft complaints?
FTC
If you have $10,000 that you do not currently need for expenses and you wish to put it somewhere so that it will earn a return, which of the following financial institutions would you not choose?
Finance company
One disadvantage of a flexible spending account is
Funds allocated to the account cannot be rolled over into the next year
In saving or investing, the _____ the risk, the _______ the return.
Higher; higher and lower; lower
The more expensive the car, the _____ the payments, and the _____ you can put away in other investments.
Higher; less
Medicare basic coverage (Part A) covers
Hospital expenses, including surgeries.
Your decision about one component of your financial plan can affect all other components. Which statement is true?
If you make poor investment decisions, you may have to work longer than planned.
At your place of employment, whuch if the following is acceptable?
Inclusion of your social security number on your payroll registry in the accounting office.
Budgeting helps set goals by estimating __________ on a monthly basis to determine how much to save and spend
Income and expenses
The easiest method of estimating your life insurance needs is the
Income approach
Which of the following is NOT an appropriate approach to solving the problem of an annual budget deficit?
Increase short-term, flexible expenditure items
Cash flow can be increased by the following EXCEPT:
Increasing credit card purchases
If you choose to receive your benefit in the form of equal payments for a certain number of years instead of a lump sum, you elected to recurve a(n)
Installment payment settlement
____________ risk is the risk that an investment could decline as a result of a change in interest rates.
Interest Rate
When a person owns corporate stocks, government or corporate bonds, or mutual funds, these are called
Investment assets
Which of the following is not true regarding a Money Market Deposit Account (MMDA)?
It has a maturity date
All of the following statements about uninsured motorist coverage are true except
It replaces bodily injury liability when you are at fault
Which of the following is not true regarding reviewing your credit report?
It will help determine if there are credit cards that that you should apply for to improve your credit standing.
A personal balance sheet presents
Items owned and amounts owed
Which of the following is not a service company that would rate the financial condition of insurance companies?
Kelly's Blue Book
In general the most expensive part of your automobile policy is _____ coverage.
Liability
Which of the following is true about condominiums?
Maintenance fees of common areas are shared
_____________ serves as a backup for expenses not covered by basic health insurance.
Major medical insurance
Which of the following is NOT a disadvantage of using credit?
Makes it easier to save
Credit cards are generally used for such purposes as
Meals, clothing, and groceries.
Which of the following could save a smaller proportion of their earnings to achieve the same level of wealth??
Medical doctor
Which of the following features on your car will not result in lower premiums?
Mercury vapor headlights
Which of the following is NOT an annuity?
Monthly utility bills
Indemnity health care plans have
More flexibility and choices than managed care plans
The time value of money implies that a dollar received today is worth ______ a dollar received tomorrow.
More than
Personal loans include all of the following except
Mortgage loans
A(n) __________ account acts as a traditional checking account except that it pays interest.
NOW
The difference between assets and liabilities is called
Net worth
A deductible is an anount
Not paid by the insurance company
Private health insurance plans contain all of the following coverage except
Nursing home insurance
Which of the following is not true of a NOW account?
Only three cheques per month can be written
If a credit card has a provision allowing you to make purchases beyond the stated credit limit, it is referred to as
Overdraft protection
The additional living expenses component of a homeowners policy is designed to
Pay for temporary housing while your home is repaired from covered damage
An arrangement in which the PPO pay the provider a specific sum for each day a patient is hospitalized is called a
Per diem rate arrangement
Which of the following methods of calculating finance charges in credit cards is least favorable to the cardholder?
Previous balance method
Which of the following is not a reason that your checking account balance might change from one month to another?
Purchasing new shoes with a credit card
To significantly reduce your automobile insurance premiums and still have adequate coverage, you should
Raise the deductibles on comprehensive and collision
The cost of health care has risen dramatically in recent years due to all except
Reduced litigation costs
Making extra mortgage payments does which of the following?
Reduces the length of the loan
The initial rate in an ARM will typically be
Relatively low to benefit the homeowner
Independent insurance agents
Represent many differeng insurance companies
In comparing credit cards, which of the following is false?
Some cards allow you to carry a balance from month to month with no interest
If you find yourself with an excessive credit card balance, the first thing you should do is
Spend as little as possible
An asset management account that moves any unused balance in the brokerage account into a money market investment at the end of each business day is called a(n)
Sweep account
A low liquidity ratio means
That you probably will have trouble paying your current bills
Present and future values concepts are not applied to which of the following:
The balance of your checking account today
Your financial position is highly influenced by all of the following except:
The bonus cheque your best friend just received
The time value of money refers to
The difference in values of money as to when it is received.
All of the following are true regarding a consigned on an account EXCEPT
The lender may not seize the assets of a cosigner
Which of the following items is NOT a liability?
The wages you give up to take a class
Which of the following best explains the reason that 1/3 households in the US do not have life insurance?
There is no immediate benefit
Which of the following is not true of a CD?
They are long term investments of two years or more.
Savings institutions accept deposits and provide mortgage and personal loans to individuals. Another name for these types of financial institutions is
Thrift institution
By reviewing your credit card statement, you can determine all of the following except
Total purchases made year to date
The job marketability of your spouse
Would be a factor considered in the budget method of determining life insurance needs
If you are interested in achieving a long-term savings goal, then
You believe that saving a small amount is better than saving nothing at all.
Which of the following is true of renters insurance?
Your renters insurance covers only your own property, not the property of your landlord.
Which of the following is not an advantage of using an ATM card?
Your total banking expenses are likely to be lower
On a credit card, a finance charge is applied to
Any balance not previously paid
Deposits at commercial banks are insured up to _______ per depositor by the FDIC.
$250,000
Jacob recieved a $1,000 a year raise in january, sold stocks in march for $6,000 that were originally purchased for $4,000, and in July had a $100 monthly increase in mortgage payments on an adjustable rate mortgage. The increased mortgage payment was in effect the remainder of the year. What was the total impact on Jacobs cash flow of the year?
$6,400
You have cash value coverage for your personal property on you homeowners policy. A camera that cost you $300 eight years ago had a life expectancy of 10 years. The camera was stolen and a new one will cost only $200. How much will the insurance company pay?
$60
If a nine month (270 day) CD earns an annual rate of 1%, what is the actual return on the investment?
.0074
A market analysis is NOT
A guarantee of the price you will receive when selling a home
Identity thieves that have systematically infiltrated corporations and financial institutions in order to facilitate large-scale identity thefts are usually a part of
A well-organized crime ring
Free credit reports are accessible to all US consumers at
Annualcreditreport.com