personal finance exam 1

Private Mortgage Insurance is usually required if the down payment is less than ________ percent of the purchase price of the home.

20

A home worth $200,000 with $120,000 still owed on the mortgage would have equity of $80,000, which is ________ percent of the home's value.

40%

A $200 savings account that earns $13 interest in a year has a yield of ________ percent.

6.50

Which of the following statements regarding debit and credit card liability is correct?

A debit card carries more risk of loss to the cardholder

Which type of organization does not provide home mortgages?

Check cashing outlets

Amy Farmer is getting a loan to buy a used car. The bank wants to know the trade-in value of the car she is purchasing. Which of the 5 Cs of credit is the bank examining?

Collateral

Which of the following can affect the price of a home?

Current interest rates

Savings compounded ________ would have the highest effective yield.

Daily

If you cosign a loan and the debt is not paid off, then this fact does not become a part of your credit record.

False

The debt payments-to-income ratio is calculated by dividing your total liabilities by your net worth.

False

The more frequent the compounding, the less a person will earn on a savings account.

False

Joan Zemke expects interest rates to decline over the next few months. To maximize her long-term earnings she should use a:

Five-year certificate of deposit

A trust has the purpose of:

Managing the assets of a person

Which one of the following savings plans is not covered by federal deposit insurance?

Money Market fund with an investment company

Which of the following serves as collateral for the mortgage?

The home you buy

A debit card deducts the amount of purchases from your checking account by:

Transferring money electronically

A " no-fee" checking account that requires a non-interest-earning minimum balance of $500 has an opportunity cost of lost interest earnings.

True

Credit is an arrangement to receive cash, goods, or services now and pay for them in the future.

True

In the 5 Cs of credit, conditions refers to general economic conditions that can affect your ability to repay a loan.

True

Negotiating a purchase price for a home can involve an offer and a counteroffer

True

Real estate professionals believe that location is the most important factor to consider when selecting a home.

True

The Fair Credit Reporting Act, which regulates the use of credit reports, requires the deletion of obsolete information, and gives consumers access to their files.

True

Using a "debit card" to make purchases means you are spending your own funds. True

True

A VA-guaranteed loan program provides assistance to:

armed services veterans

Most people do not select a place of residence based on:

credit score

Brett has hired a professional to assess the soundness of the roof, foundation, and building materials of a potential home he is considering. The professional will also be checking other aspects of the home including the plumbing, heating, and cooling systems. Brett is paying for a:

home inspection

Which one of the following is not a source that provides data to credit bureaus?

internal revenue services

Which of the following represent the use of credit?

mortgage

What does it mean to sublet an apartment?

obtain another tenant to take over rent payments during the lease period

Which of the following expenses is paid from an escrow account?

property taxes

A common cost associated with renting is:

the security deposit

The most frequent users of payday loans are workers who have become trapped by debts or poor financial decisions. T/F

true

The rate of return on a savings account is also referred to as:

yield