PERSONAL FINANCE MID, Personal Finance Exam 1

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A $200 savings account that earns $13 interest in a year has a yield of ____________ percent. A. 6.00 B. 13.00 C. 7.00 D. 11.25 E. 6.50

an example of depository financial institution is an insurance company

False

The ________ is usually about 20 days after the credit card statement is closed

Grace period

Debt securities issued by he US treasury that are due in one year or less are called

Treasury bills

installment credit

a borrowing arrangement in which regular monthly payments of principal and interest must be made

risk-free rate

a return on an investment that is guaranteed for a specified period

Now account

a type of deposit that provides checking and pays interest

Skimming

copying credit information from the magnetic strip on a credit card

if a person obtains your credit card number by standing close enough to you to either see your credit card of hear you speak it they are a. shoulder surfing b. dumpster diving c. pretexting d. skimming

a. shoulder surfing

creditorys prefer a ______ level of cash inflow and ________ level of cash outflow a. low; low b. high; low c. high; high d. medium; low

B. high; low

Credit scored in the 500-600 range will result in a. lower interest rates b. higher interest rates c. automatic acceptance of your credit application d. preferential treatment of your application

B. higher interest rates

A convertible bond is a bond that can be exchanged, at the owner's option, for a specified number of shares of the corporation's common stock.

TRUE

A person's net worth is the difference between the value of the items owned and the amounts owed to others.

TRUE

An estate tax is imposed on the value of an individual's property at the time of his or her death.

TRUE

An exclusion is earnings not included in taxable income.

TRUE

Consumer credit refers to the use of credit for personal needs (except a home mortgage) by individuals.

TRUE

Credit cards can eliminate the need for carrying large amounts of cash.

TRUE

If an investor owns cumulative preferred stock, missed or omitted dividends accumulate and must be paid before any cash dividend is paid to common stockholders.

TRUE

If you want to take advantage of a grace period on your credit card, you must pay your bill in full every month.

TRUE

In the 5 Cs of credit, capital refers to your assets or net worth.

TRUE

Inflation reduces the buying power of money

TRUE

The managers of mutual funds tailor their investment portfolios to the investment objectives of their customers.

TRUE

an asset management account combines accounts with a brokerage account and provides a single account statemetn

true

good cash management requires some liquidity, but excessive liquidity has an opportunity cost

true

investments with a higher risk of default pay higher rates of interest than those which are less risky

true

some investments are subject to credit risk. this means that the borrowers may not repay on a timely basis

true

to calculate interest earned multiply the deposit amount times the annual interest times the adjustment for the investment period

true

treasury bills are more liquid that cps because there is a secondary market for t bills

true

Financial institutions loan funds at a _________ they pay depositors

-higher interest rate than

What does the S in SMART stand for? A. Specific B. Standard C. Superfluous D. Simple

When one investment company manages a group of mutual funds, it is called a(n): A. family of funds. B. exchange fund. C. diversification fund. D. versatility fund. E. group of funds.

the minimum credit score required by financial institutions a. varies by institutions b. 500 c. 550 d. 600

A. varies by institutions

A mutual fund that invests in common stocks of rapidly growing corporations with higher-than-average revenue and earnings growth is called a(n) ____________ fund. A. balanced B. growth C. industry D. income E. money market

Certificates of deposit are good for A. Beating inflation and growing your money B. Building a solid savings foundation C. Investing for long-term growth D. Investing in the short-term

What should not be included in your personal mission statement? A. Visions B. Weaknesses C. Strengths D. Priorities

Where is one place where paper money is printed? A. San Francisco B. Washington, D.C. C. Denver D. Philadelphia

You used your clothing store credit card this month and your bill arrived in the mail 12 days ago. If you pay your bill today, this is referred to as a(n) A. Credit report B. Grace period C. Interest charge D. Minimum charge

B. Grace period

Fredrick received a $1,400 loan from the bank for a new appliance. The bank is using the simple interest formula for this two-year, 8% loan. What is his total interest? A. $16 B. $80 C. $112 D. $224 E. $1,416

Your happiness is not: A. Dependent on your genes B. Dependent on your circumstances C. A result of intentional activity D. Dependent on how much money your brother makes

Which of the following can result from a failure to repay a loan? A. Bankruptcy. B. Loss of income. C. Loss of a good reputation. D. Damage to family relationships. E. All of these answers may be a result of the failure to repay a loan.

With an open-end credit, you pay back one-time loans in a specified period of time in equal amounts.

FALSE

A credit card whose interest rate changes as a specific market interest rate changes is said to have a A) variable rate. B) fixed rate. C) constant rate. D) tiered rate.

APR means

annual percentage reate

Credit has its advantages and disadvantages. Which of the following is false? A) Credit cards should be used with discipline. B) You should spend up to the limit on all your credit cards. C) Cash advances are available through a credit card. D) Bankruptcy is the worst-case scenario from poor credit management.

proprietary credit card

credit card good only with a particular merchant

paying your phone bill and electric bill on time each month will help you to establish a

credit history

credit report

documents showing information reporting your payment history and post use of credit

ATM cards are declining in use because they are expensive and the machines are becoming more difficult to relocate

false

treasury securities re t bills with a maturity of one year or less

true

Income received from investments and savings is called A. Passive income B. Financial income C. Incurred income D. Non-earned income

Molly purchased a $1,500 dishwasher from Best Appliances. She will make 12 equal payments over the next year to pay for it. She is using A. Closed-end credit. B. Open-end credit. C. Revolving check credit. D. A line of credit. E. None of these.

Money you receive from your investments and savings is called: A. Passive income B. Retirement plan (401k) C. Frugal D. Paycheck

Most of the information in your credit file may be reported for only ______ years. A. 7 B. 9 C. 11 D. 13 E. 15

Read the information below about the profiles of individuals regarding their federal income tax Mr. Chu - Married with two children, contributes to a retirement plan Mr. Ortiz - Single, age 35, rents an apartment Ms. Lalio - Single, age 58, contributes to a Roth IRA Ms. Feldman - Married, no children, rents a house. Which person listed above is likely to have the greatest number of payroll tax exemptions which lowers taxable income? A. Mr. Chu. B. Mr. Ortiz. C. Ms. Lalio. D. Ms. Feldman

Savings compounded ____________ would have the highest effective yield. A. daily B. annually C. semi-annually D. monthly E. weekly

The annual percentage yield indicates: A. How much interest is earned in a year if allowed to compound B. the total amount of money invested plus interest C. The interest rate D. All of these

The debt-to-equity ratio is: A. calculated by dividing total liabilities by net worth. B. calculated by dividing monthly debt payments by net monthly income. C. determined by dividing your assets by your liabilities. D. a useless ratio for determining your credit capacity. E. rarely used by creditors in determining credit worthiness.

The definition of passive income is: A. Income received from one's investments and savings B. Sufficient means to support oneself C. Income received on a regular basis with little effort required to maintain it D. Income received after putting in overtime

The least likely reason to choose a career is because: A. It has the highest salary B. It matches your interests C. It fits your values D. You can pursue your passion

The question "Will you repay the loan?" relates to A. Character. B. Capacity. C. Capital. D. Collateral. E. Conditions.

Therese made an investment of $1,000 into an account that pays a 10% annual interest rate which is compounded quarterly. At the end of the 12-month period, Therese earned $103.81 in interest on her $1,000 investment. She calculates her annual percentage yield (APY) to be 10.38%. This is an example of how interest is: A. Compounded B. The same as the annual percentage rate (APR) C. Effected by the annual percentage yield (APY) D. Part of the Truth in Savings Act

What do you call altered mortgage terms that attempt to keep borrowers from foreclosure? A) Forbearance B) Reinstatement C) Cram down D) Bankruptcy

What is the best definition for "frugal"? A. To spend money efficiently and effectively B. To spend little money C. To spend money on cheap things D. To always buy the least expensive item

What is the main function of the Securities and Exchange Commission (SEC)? A. To combat investment fraud and protect investors. B. To regulate the credit industry. C. To stop identity theft and computer hacking. D. To collect taxes on the profits people receive from selling their stocks.

What makes up 40% of your happiness? A. Attitude and self-directed behavior B. Family and friends C. Paid bonuses D. Winning the lottery

When making online transactions, it is important to minimize the threat of identity theft by A. using a unique password and changing it frequently. B. using a desktop computer instead of a mobile device. C. shutting down the computer and erasing the memory each day. D. doing all online transactions from home using Wi-Fi.

Which is not a personal finance life stage? A. Age < 18 B. Age 16-24 C. Age > 65 D. Age 41-65

Which of the following does the textbook say is a major factor in your happiness? A. Deciding when enough is enough B. Spending your money on things you want C. Only spending money on the things you need and saving the rest of it D. Giving your money to charity

Which of the following is an example of closed-end credit? A. A mortgage loan. B. A department store credit card. C. Overdraft protection. D. A bank line of credit. E. All of these are examples of closed-end credit.

Barb Hotchkins is in the 28 percent tax bracket. A tax-exempt employee benefit with a value of $500 would have a tax-equivalent value of: A. $694. B. $528. C. $500. D. $360. E. $140.

A. $694.

a 6 month 180 day cd offers an annualized interest rate of 1.10% and requires a minimum deposit of $25,000. the amount of interest that will be earned on this investment is A. 135.62 B. 275.00 C. 137.50 D. 2,750.00

A. 135.62

Your previous balance is $100; you charge $100 more on January 2 nd and your month-end balance is $200. What method would cost the most with 12% APR? A. Adjusted balance method B. Average daily balance method C. Minimum finance charge D. Both the adjusted balance method and the average da

A. Adjusted balance method

Which of the following affords can you access to a sweep account? A. asset management account B. NOW account C. MMDA account D. MMF

A. Asset management account

Changes in income, values, and family situation make it necessary to A. Evaluate and revise your actions. B. Implement the financial plan. C. Develop financial goals. D. Analyze your current personal and financial situation. E. Create a financial plan of action.

A. Evaluate and revise your actions.

if the federal reserve buys or sells treasure securities to affect the money supply, it uses A. open market operations B. reserves at commercial banks C. discount rate adjustments D. Federal funds adjustments

A. Open market operations

Many Americans have money problems because of A. Poor planning and weak money management habits B. Too many clearly defined goals C. Proper use of credit D. Not enough advertising to make effective decisions E. Controlled spending

A. Poor planning and weak money management habits

John Jones was laid off of his job two months ago. He just received an offer for a position that pays 2/3 the salary of his old job. Why should he set up a financial plan? A. To increase the effectiveness of obtaining, using, and protecting his financial resources. B. To decrease control of his financial affairs regarding debt. C. To accept the loss of freedom from financial worries due to his new position. D. To learn how to manage with less savings. E. To find out why he was laid off.

A. To increase the effectiveness of obtaining, using, and protecting his financial resources.

the yield curve is typically _____. meaning that the annualized interest is higher for debt securities with longer terms to maturity. A. upward sloping B. horizontal C. downward sloping D. Vertical

A. Upward sloping

If a family planned to spend $370 for food during March but only spent $348, this difference would be referred to as a: A. variance. B. deficit. C. fixed living expense. D. budget reduction. E. contribution to net worth.

A. VARIANCE

checking accounts may offer all of the following except A. account balance insurance in excess of 250,000 B. stop payment serices C. overdraft protection D. atm privileges

A. account balance insurance in excess of 250,00

which of the following can be used by a creditor in deciding whether or not to grant credit? a. credit history B. race C. Gender D. A&C

A. credit history

which of the following is the best rule in shredding informations? a. if you have any question, shred it b anything with your name and address on it received through the mail C. only items received from your bak or brokerage firm D. any item received that is first class mail

A. if you have any question, shred it

A person borrows $200 from a payday loan company, and pays $10 interest for two weeks. This would result in an annual interest rate of approximately ___ percent. Ignore compounding. A. 260 B. 130 C. 40 D. 20 E. 5

A person's credit report includes his A. medical history and driving record. B. history of loans and credit activities. C. retirement and savings account balances. D. cost of insurance premiums and amount of federal tax refunds.

A simple, stress-free lifestyle in which consumption, materialism, and wealth accumulation are minimized is: A. Personal values B. Voluntary simplicity C. Financial plan D. 90-10 rule

Assume that you purchase a $1,000 corporate bond that pays 9.25 percent interest. What is the amount of interest that you receive each year? A. $1,000 B. $92.50 C. $92 D. $90 E. $9.25

Boy: Age 10 Deposited $1,000 earning 4% Interest Value at age 20 = $1,492.00 Boy: Age 17 Deposited $1,000 earning 6% Interest Value at age 20 = $1,197.00 The ten-year-old boy has more money in his savings account because the money was deposited A. in an insured bank account. B. at an earlier age. C. in an account with a higher interest rate. D. in an account at a credit union.

Connie has a goal of buying a car 10 months from now. This would be classified as a(n) A. Intermediate goal B. Short-term goal C. Long-term goal D. Impulse goal

How many years should it take to attain intermediate goals? A. Less than 1 year B. 1-5 years C. More than 5 years D. Over your lifespan

If interest rates in the overall economy decrease, what will happen to the market value of a corporate bond with a fixed interest rate? A. The bond is worthless. B. The value of the bond will increase. C. The value of the bond will decrease. D. The value of the bond will not change. E. It is impossible to determine if the bond's value will increase or decrease.

If your parents deposited $15,000 into an account for you when you were born as part of a college savings fund and that account is earning 10% annually, how much will you have in your college savings fund on your 18th birthday? A. $36,099.29 B. $83,398.76 C. $162,520.59 D. $50,795.32

Maintaining organized records for income and expenses is important in order for a person to know where her money is going. What is an effective strategy? A. Request a free annual report from the Internal Revenue Service. B. Track monthly income and spending in a notebook or spreadsheet. C. Get help by hiring someone. D. Open a checking account at a bank and review the monthly statements.

Many people expect A. Their ability to make payments to get harder over time. B. Their incomes to increase to make it easier to make payments. C. Their interest rates to decrease as their credit balances decrease. D. Their interest payments to increase as their credit balances decrease. E. Their household expenses to be covered with their mortgage payment.

Orlando Blodgett is buying the stock of the Getaway Caribbean Cruise Company. However, if he buys the stock today, he knows it is the first day it is selling without the dividend for this quarter. What date is Orlando buying the stock on? A. Record Date B. Ex dividend date C. Payment date D. Sale date E. None of the choices

The more specific your goals are, the less likely they are to: A. Be thought about B. Not be attained C. Be focused on D. Be attained

This is a combination of your values, how you were raised, and your parent's traits. A. Voluntary simplicity B. Money personality C. Frugal D. Personal values

Under an FHA graduated payment mortgage, which of the following fluctuates over the term of the loan? A) interest rate B) monthly payments C) finance charge D) annual rate

What do you call a stream of equal payments received or paid at equal intervals in time? A. A lump sum B. An annuity C. Discounting D. Future value

When a credit card company contacts a person's employer or asks for a copy of a school transcript with grades, they are generally evaluating a person's A. capacity. B. character. C. collateral. D. conditions.

Which lender is likely to ask you to write a check for $115 before granting you a $100 loan? A. credit union B. payday advance company C. finance company D. department store E. commercial bank

Which of the following is an important benefit of long-term investing in the stock market? A. Getting to know a financial advisor well over many years. B. Historically, investing in stocks for a long period of time generates higher returns than savings accounts. C. There are no fees for investments held for longer than five years. D. After ten years, profits on investments in the stock market are protected from price fluctuations.

Which of the following is not a major warning sign that you are headed for financial trouble? A)Cash advances on credit cards B)Net worth is increasing C)No emergency fund D)Taking money from retirement savings

Which of the following is paper money backed by? A. The U.S. president B. The full faith and credit of the U.S. government and the Federal Reserve Bank C. The Federal Reserve Bank D. The Bureau of Engraving and Printing and the Federal Reserve Bank

Which of the following statements regarding debit and credit card liability is correct? A. A credit card carries more risk of loss to the cardholder. B. A debit card carries more risk of loss to the cardholder. C. There is no cardholder liability if either type of card is lost. D. The Federal Government insures losses on credit but not debit cards. E. The Federal Government insures losses on debit but not credit cards.

A family with $45,000 in assets and $22,000 of liabilities would have a net worth of: A. $45,000. B. $23,000. C. $22,000. D. $67,000. E. $41,000.

B. $23,000.

Which of the following may not be a feature of some credit cards? A. credit limits B. Annual fees C. Grace periods D. cash advances

B. Annual fees

A cash flow statement reports a person's or a family's: A. net worth. B. current income and payments. C. plan for spending. D. value of investments. E. balance of savings.

B. current income and payments.

improper use of credit may a. increase your ability to save money B. make it necessary to file for bankruptcy C. increase your personal wealth D. all of the above

B. make it necessary to file for bankruptcy

credit extended to consumers for short periods of time to make specific purchases is A. installment credit B. non-installment credit C. revolving open ended credit D. minimum line credit

B. non installment credit

an increase in spending by the us governemnt will result in all of the following except A. upward pressure on interest rates B. reduction in government borrowing C. an increase in the demand for funds D. An increase in the issuance of Treasury securities

B. reduction in government borrowing

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? A. $50,000 B. $80,000 C. $110,000 D. $150,000 E. $160,000

All of the following are true of conventional loans except what? A) They are made to the buyer without governmental insurance or guarantee B) The policy requiremets of the lender are not uniform C) The requirements to qualify are uniformly fixed by state law D) They require a higher down payment than non-conventional loans

Anna recently opened a savings account and made three deposits in the amounts of $100,000, $65,000, and $200,000. If the Great Depression was to occur again and the bank closed, how much money would Anna be insured for? A. $365, 000 B. $200,000 C. $250,000 D. $100,000

Bankruptcy courts treat gift cards A. As illegal loans. B. As bribes. C. The same way they handle unsecured debt. D. As a smart choice. E. The same as debit cards.

Being frugal means: A. To be very tight with money B. To spend money carelessly C. To be resourceful when fulfilling your need for goods and services D. Shopping to improve your mood

Credit cards are generally used for such purchases as A) cars. B) homes. C) meals, clothing, and groceries. D) stocks.

Electronic bill paying allows you to A. Check the balances in your accounts B. Deposit checks C. Pay your bills D. All of these

Home equity loans should be used for A. Buying dinner at a restaurant. B. Borrowing money for impulse purchases. C. Major expenses such as home improvements or education. D. Getting cash for weekend entertainment. E. Selling a car

If a loan is being paid in installments instead of all at the end of the loan period, the actual rate of interest A. Will be lower than the stated rate. B. Will be the same as the stated rate. C. Will be higher than the stated rate. D. Will be unrelated to the stated rate. E. Cannot be determined without knowing the length of the loan period

If you borrow $100 at 10 percent simple annual interest (APR) and repay it in one lump-sum at the end of one year, you will repay: A. $100. B. $105. C. $110. D. $115. E. $120.

In addition to a Social Security number or taxpayer ID, which of the following documents will a bank require to open a new account? A. Driver's license and a copy of a recent credit report. B. Proof of citizenship and a recent medical examination. C. Photo identification and proof of address. D. Name of employer and a character reference.

Investment education help investors avoid scams and protect themselves against fraud. Which statement is a red flag that something is wrong? A. The stocks being recommended all have some risk. B. Do research before purchasing an investment product. C. This investment is guaranteed to make a profit. D. The return on this investment may be high.

Joan Zemke expects interest rates to decline over the next few months. To maximize her earnings she should use a(n): A. regular savings account. B. interest-bearing checking account. C. five-year certificate of deposit. D. six-month certificate of deposit. E. money market fund

Karen Price has determined that her net worth is $30,000, excluding her home. She owes $80,000 on her mortgage and $15,000 on a car loan. What is Karen's debt-to-equity ratio? A. 3.2 B. 2.0 C. 0.5 D. 2.7 E. 0.3

Matt Dannon just bought the stock of a company. He knows that with this stock comes the responsibility to approve major actions taken by the company. What gives Matt this responsibility? A. Equity B. Proxy C. Voting Rights D. Dividends E. None of the choices

Negative or inaccurate information on a person's credit report will make it difficult for a person to A. travel. B. retire. C. get a home mortgage. D. apply for life insurance.

Sam is comparing the costs of two loans. One is due in one year and the other is due in four years. Both have the same stated rate of interest. Which of the following is true? A. The principal paid for the one-year loan will be lower than the principal paid for the four-year loan. B. The principal paid for the one-year loan will be higher than the principal paid for the four-year loan. C. The interest paid for the one-year loan will be lower than the interest paid for the four-year loan. D. The interest paid for the one-year loan will be higher than the interest paid for the four-year loan. E. The interest and principal payments cannot be compared for the two loans.

Tanya received a $1,000 loan from the bank for a vacation. The bank is using the simple interest formula for this one-year, 9% loan. What is her total interest? A. $9 B. $45 C. $90 D. $450 E. $1,009

The Truth-in-Savings law requires that financial institutions: A. provide insurance for savings accounts. B. send customers monthly bank statements. C. report annual percentage yield on savings. D. offer adjustable rate savings accounts. E. become members of the Federal Reserve System.

The borrower's attitude toward his or her credit obligations is called: A. capacity. B. capital. C. character. D. collateral. E. conditions.

The easiest way to establish credit is to A) purchase a new car with a car loan. B) purchase a house with a mortgage. C) apply for a credit card. D) pay cash for all your purchases.

The type of bond that is not registered in the investor's name is a ___________ bond. A. revenue B. general obligation C. bearer D. zero-coupon E. tax-exempt

To keep yourself from using your credit card you should: A) Destroy it B)Hide it C)Leave it at home D)Keep it in your wallet

To make sure you have SMART goals, you must A. Make sure that they take a long time to achieve B. State a general end time C. State a specific end time D. Not worry about the time it takes to achieve them

Which of the following is considered a conventional loan? A) FHA insured B) VA guaranteed C) commercial bank's ARM loan D) contract for deed

Which of the following is included in a standard homeowners or renters policy? A. Disability insurance. B. Appliance repairs. C. Theft of personal property. D. Damage from earthquake.

Which of the following is included when determining a person's net worth? A. Rented apartment. B. Health insurance. C. Gold coins. D. Bank safe deposit box.

hat is the quickest and simplest form of bankruptcy? A)Chapter 13 B) Chapter 8 C) Chapter 7 D)Chapter 5

Your great aunt mary passed away and left you and your inheritance of $5,000. Since you don't have a need for the money in the near future, which of the following would be the best place to put the $5,000? A. A savings account earning 1% B. A checking account C. A five-year CD paying 4.38% annually D. High risk stock in a producer of natural gas that is predicted to triple in the next year.

C. A five year CD paying 4.38% annually

Which of the following is not a good short term money market investment A. NOW account B. Savings account C. AT&T common stock D. treasury bills

C. AT&T common stock

the following money market securities are insulated from credit risk with the exception of A. treasury securities B. bank deposits C. commercial paper D. CD's

C. commercial papers

the law that prohibits denying credit due to race, gender, age, natural origin, religion, or marital status is A. fair labor standards act B. the fair issac act C. equal credit opportunity act D. Fair treatment of borrowers act.

C. equal credit opportunity act

which of the following would not be contracted in all cases of identity theft? a. local law enforcements b federal trade commission c. postal inspection serve d 2 major credit bureaus

C. postal inspeciton serivce

risk management of money market investments involves all of the following except A. credit risk B. Interest rate risk C. potential for default with back by the federal government D. liquidity risk

C. potential for default when backed by the federal government

which of the following is not a method for computing interest on credit cards? A. previous balance method B. average daily balance method C. present value of future payment method D. adjusted balance method

C. present value of future payments methold

A personal mission statement does not: A. Reflect your strengths. B. Reflect your passions. C. Reflect your stakeholders. D. Reflect the people around you.

A suggested amount of savings in order to pay for emergencies is A. 10% of assets. B. 1 month of variable expenses. C. 2 to 3 months of fixed expenses. D. 3 to 9 months of living expenses.

Affan Chawdry has monthly net income of $1,050. He has a house payment of $450 per month, a car loan with payments of $250 per month, a Visa card with payments of $50 per month, and a credit card with a local department store with payments of $100 per month. What is Affan's debt payments-to-income ratio? A. 2.63 B. 1.24 C. 0.81 D. 0.38 E. 0.50

All of the following are consumer credit protection laws except A. The Truth in Lending and Consumer Leasing Act B. The Equal Credit Opportunity Act C. The Fair Credit Billing Act D. The Credit Lawsuit Act E. The Consumer Credit Reporting Reform Act

All of the following are signs of financial trouble except A. You use savings to pay for necessities such as food and utilities. B. You receive second and third payment due notices from creditors. C. You exceed the credit limits on your credit cards. D. You pay your credit card bills in full each period. E. The total balance on your credit cards increases every month.

An example of a change in a person's life situation requiring a review of their financial goals and plans is A. graduating from middle school. B. purchasing a new car. C. buying life insurance. D. becoming a parent.

Before taking out a loan, you should ask yourself whether you can meet all of your essential expenses and still afford the monthly loan payments. This can be determined by A. Adding up basic monthly expenses then subtracting this total from take-home pay. B. Asking what you plan to give up to make the monthly loan payment. C. Multiplying your take-home pay by 50% and subtracting your current loan payments. D) Adding up basic monthly expenses, subtracting this total from take-home pay, and, if needed, figuring out what to give up to make the payment. E. All of these answers are correct.

Comparison of earnings for different savings plans can best be accomplished using the: A. discounted present value. B. compounded rate of return. C. net present value. D. annual percentage yield. E. after-tax rate of return.

Credit reports can be obtained for all of the following reasons except A. In response to a court order. B. In connection with a credit transaction. C. For underwriting of insurance. D. Inquiry by a neighbor. E. For some legitimate business need.

The APR is the percentage cost of credit on a(n) ______________ basis. A. monthly B. quarterly C. semi-annual D. annual E. life-of-loan

The process whereby the value of an investment increases exponentially over time is called the _________________. A. Annual percentage rate B. Time value C. Annual percentage yield D. Compounding

Ways to gather information on careers and decide which career best suits your own mission statement and goals include: A. Researching the U.S. Bureau of Labor Statistics' Occupational Outlook Handbook B. Job shadowing C. Internships D. All of these

What is an acceptable way for people to lower the cost of their automobile insurance? A. Cancel their insurance after their car is registered. B. Use the car for work as well as for pleasure. C. Have their car inspected by a mechanic certified by the state. D. Increase the amount of the deductible.

What rule(s) is (are) a good way to allocate your money? A. 80-10-10 rule B. 90-10 rule C. 70-30 rule D. Both 80-10-10 or 90-10 are good ways to allocate money

Which of the following is not reflective of a SMART goal? A. Specific B. Measurable C. Attainable D. Reasonable E. Timely

Which of the following plans is not incorporated in a financial plan? A. Budget plan B. Investment plan C. Estate plan D. Education plan

Who is NOT an originator of primary loans? A) savings and loans B) credit unions C) commercial banks D) FHA

Who is responsible for a loan repayment? A. The store granting credit B. The credit card company C. The government D. The cosigner E. The bank

Higher consumer prices are likely to be accompanied by A. Lower union wages B. Lower interest rates C. Lower production costs D. Higher interest rates E. Higher exports

D. Higher interest rates

Using the services of financial institutions or specialists (such as insurance agents or investment brokers) will be most evident in your effort to A. Develop financial goals. B. Evaluate and revise your actions. C. Analyze your current personal and financial situation. D. Implement the financial plan. E. Create a financial plan of action.

D. Implement the financial plan.

Which of the following goals would be the easiest to implement and measure? A. Invest $2,000 a year for retirement. B. Reduce our debt payments. C. Save funds for an annual vacation. D. Save $100 a month to create a $4,000 emergency fund. E. Spend less each month.

D. Save $100 a month to create a $4,000 emergency fund.

All of the following are true of MMMDA except A. a minimum balance is required B. the account pays higher interest C. a limited number of checks may be written monthly D. they are the same regardless of the depository institutions offering them

D. they are the same regardless of the depository institutions offering them

A credit card statement does not contain which of the following A. previous balance B. current balance C. account number D. who purchased the item

D. who purchases the item

Hugh Jackman is thinking about buying an investment. The investment option that he is thinking about buying is an investment where investors pool their money. One of the key features is that it is managed by professional managers. What investment is Hugh thinking about purchasing? A. Common Stock B. Preferred Stock C. Corporate Bond D. Real Estate E. Mutual Fund

If you are denied credit, A. You have a legal right to sue the credit bureau. B. Your parent can purchase a copy of your credit report. C. You have a legal right to sue the company that denied you credit. D. The denial will remain in your credit file for 10 years. E. You are entitled to a free copy of your credit report.

Which of the following investments would provide the most predictable source of income? A. commodities B. options C. precious metals D. common stock E. government bonds

If a $10,000 investment earns a 9% annual return, what should its value be after one year? A. $9,000 B. $9,100 C. $10,000 D. $10,090 E. $10,900

E. $10,900

Fran Gardner has a goal of "saving $25 per month for a TV." Fran's goal lacks A. Measurable terms B. A realistic perspective C. Specific actions D. A tangible end E. A time frame

E. A time frame

Items that you own with a monetary worth are referred to as: A. liabilities. B. variable expenses. C. net worth. D. income. E. assets.

E. assets.

Allen Arnold has determined that the amount of money he spends on his mortgage payment, car insurance payment, and cable bill totals $1,200 each month. What type of expenses has Allen determined with this calculation? A. current liabilities B. long Term liabilities C. net worth D. variable expenses E. fixed expenses

E. fixed expenses

The financial planning process concludes with efforts to: A. develop financial goals. B. create a financial plan of action. C. analyze your current personal and financial situation. D. review the financial plan. E. review and revise your actions.

E. review and revise your actions.

Total earnings of a person minus the deductions for taxes and other items is called: A. budgeted income. B. gross pay. C. net worth. D. total revenue. E. take-home pay.

E. take-home pay.

A certificate of deposit is usually considered to be very liquid

FALSE

A defensive stock is a stock that typically sells for less than $1.

FALSE

Preferred stock represents the most basic form of corporate ownership

FALSE

The government has an unlimited supply of money.

FALSE

The life situation of a household has little influence on personal financial planning decisions.

FALSE

A stream of equal payments that occurs at the end of a period is called A. An ordinary annuity B. Compounding C. An annuity due D. An end annuity

A woman invested $10,000 in a corporate bond offered by a technology company. The interest rate on the bond is 6% and the bond matures in seven years. The company went bankrupt three years after the bond was bought. What happened to her investment? A. She probably lost most of the $10,000 because corporate bonds are not insured. B. She was paid interest for the full seven years because the bond was bought through a broker. C. The bond was probably converted into stocks. D. $10,000 was deposited in a retirement account.

According to Lyubomirsky, what percent of your happiness comes from your genes? A. 50% B. 10% C. 40% D. 55.34%

All of the following describe being in control of your finances except A. Buying things you don't need B. Using money according to your values C. Not spending more than you make D. Seeing money as a resource

An Example of "passive income" is: A. Income received from your investments B. Income received from your part-time job, where you do nothing C. Money received from an inheritance D. Lottery winnings

At what personal finance life stage should a person start a Roth IRA? A. Independent B. Empty nest C. Early family D. Dependent

Banks and other companies are willing to issue credit cards because these financial institutions A. make money on the interest they charge on unpaid balances. B. own credit counseling agencies. C. are required by recent laws to make money available. D. are responsible for keeping inflation low.

Brandon wants to purchase new furniture for his home but does not want his purchases to put him into debt. Brandon loves being social and has a talent for bartending, so he decides to take a second job bartending at night. He plans to save the money he receives from tips to purchase his new furniture. Brandon is: A. Augmenting his income B. Downshifting C. Dollar cost averaging D. Creating an investment account

Garrett Cammans is thinking about buying an investment. The investment option that he is thinking about buying represents the most basic form of ownership and pays a dividend. The dividend on this investment is paid after all other payments and dividends have been made. What investment is Garrett thinking about purchasing? A. Common Stock B. Preferred Stock C. Corporate Bond D. Real Estate E. Mutual fund

How can you reach financial independence sooner? A. Lower your expenses and increase your saving or investing B. Increase your income and expenses C. Decrease your income and increase your expenses D. There is no way to speed up the financial independence process

In order to decrease the time you need to acquire passive income you can _________________ expenses. A. Decrease B. Maintain C. Increase D. Augment

Jill just borrowed $6,000 and will be charged a simple interest rate of 12 percent. Jill will pay ________ interest for borrowing the money on September 1 and repaying the money on December 31. A) $240 B) $420 C) $720 D) $1,200

Which of the following may not be a feature of some credit cards? A) Credit limits B) Annual fees C) Grace periods D) Cash advances

Because credit card interest rates are usually quite high, you should pay off your credit card balances before you invest funds anywhere else

Asset allocation is the process of spreading your assets among several different types of investments to lessen risk

TRUE

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

TRUE

During inflationary times, there is a risk that the financial return on an investment will not keep pace with the rate of inflation.

TRUE

Each dollar bill has a serial number starting with the letter or the district in which it was printed.

TRUE

Higher returns on savings will usually result in less liquidity.

TRUE

T/F convenience, deposit rates and insurance ,and fees are the primary consideration in choosing a financial institution for your needs?

True

On your credit card statement, the amount that you owe the financial institution now is called the A) previous balance. B) minimum payment. C) new balance. D) payments.

All of the following are true of prestige credit cards except they A) always have considerably higher annual fees. B) are sometimes referred to as gold or platinum cards. C) provide extra benefits to cardholders. D) are given to individuals who have an exceptional credit standing.

the average individual loss as a result of identity theft has in recent years been a. decreasing b. staying the same c. increasing d. no pattern is discernible

c. incrasing

Cash advances are A) a good way to finance your purchases. B) cheaper than a line of credit. C) not shown on the credit card statement. D) easy to make at an ATM machine.

Which of the following is not correct about cash advances? A) There is no grace period for cash advances. B) The interest rate for cash advances is higher than for purchases. C) A cash advance is like a loan. D) A transaction fee of 5% may be charged.

if you receive a phone call that seeks to verify or update personal information you should a. ask several questions of the solicitor to verify their authenticity b. ask to speak to supervisor c. obtain their name and address in case you need to contact them in the future. d. obtain their name and phone number and call them back to verify their credentials

d. obtain their name and phone number and call them back to verify their credentials

describe four factors you should consider when choosing a financial institution

debit car no services fee atm card credit card location free checks interest rates interest rate charged

If you wish to make purchase that are charged against your checkin account without writing a check you need to have a _________

debit card

If you purchase a bond that matures in 5 years but you may have to cash it in before that time you expose it to

interest rate risk

mutual fund or combinations of investments

investment company

your ability to cover any short term cash deficiencies is called

liquidity

_____ is short term credit provided by some department stores to consumers to purchase non specific items

non-installment credit

If you have an exceptional credit standing, the company issuing your credit card may upgrade you to what are called ________.

prestige cards

the interest rate is composed of the _____ and the ______

risk free rate; risk premium

firewall and virus protection

something your should install on your computer to protect you from hackers and worms

Credit card statement

statement that lists beginning balance purchases and payments and an ending balance

Even if you cannot pay your credit card bill in full you should still attempt to pay as much as possible so that you can minimize finance charges

Generally short term debt securities issued by large corporations also known as commercial paper, typically offer a slightly higher return than treasury bills

true

T/F a certificate of deposit guarantees or locks in a n interest rate for a specified time and rate

true

The annual percentage rate (APR) is useful because it allows you to easily compare financing costs among various possible creditors.

true

because they have lower expenses, web based financial institutions tend to pay higher interest rates on deposits that institutions with physical branches

true

Which is an example of a personal mission statement? A. To live every day to the fullest with compassion and understanding B. To retire when I'm 50 and move to Florida C. To have a huge wedding with family and friends D. To buy a fancy car

Which of the following can cause a person to become a victim of consumer fraud? A. Having accounts at more than one bank. B. Responding to an email from an unknown sender. C. Filing income taxes online. D. Registering for the "Do Not Call" list.

You buy a T- bill which as a par value of 10,000 for 9600 and the t bill has a one year maturity. what will be your return? a. 2.5% B. 4.1% C. 4.8% D. 6.0%

B. 4.1%

______ risk is the potential loss of converting an investment into cash A. Credit B. interest rate C. LIquidity D. Asset

C. liquidity

In the independent life stage, you should open the following account(s): A. IRA B. Checking account C. Overdraft protection D. All of these

In which instances are you really "in control of your money"? A. When money is used for enjoyment B. When money is a grave necessity C. When you are shopping at the mall D. When it is used as a resource

Information about a personal bankruptcy may be reported in your credit file for A. 1 year. B. 3 years. C. 7 years. D. 10 years. E. Permanently.

James Green just bought the stock of a company. He knows that he will receive a cash payment from the company once a quarter, although the company is not obligated to make this payment. What will he receive? A. Equity B. Proxy C. Voting Rights D. Dividends E. None of the choices

T/F since rates and fees differ only slightly between all national banks, there is little need to consider these when choosing your financial institutions

False

debit cards allow you to pay for a purchase later when the bill arives

False

securities firms primarily sell insurance to protect individuals from adverse events

False

Organizations that offer a diverse set of financial services to individuals and firms are _____________.

Financial conglomerates

The most important priority for an investor in preferred stock is receiving cash dividends before common stockholders are paid any cash dividends.

TRUE

The potential return of any investment should be directly related to the risk that the investor assumes.

TRUE

The time value of money is most commonly applied to two types of cash flows: lump sum and annuity.

TRUE

To prevent an overdraft or "bounced check," it is always a good idea to record your check written in your check register and reconcile you account balance when you receive your monthly bank statement

TRUE

Two key concepts that you should keep in mind when borrowing are the finance charge and the annual percentage rate.

TRUE

A credit card statement will not show the method of calculating finance charges.

false

A pawnshop with a monthly interest rate of 2.75 percent would have an annual interest rate of ____ percent. Ignore compounding. A. 33.00 B. 27.50 C. 20.00 D. 5.50 E. 2.75

Because of the short-term nature of credit card lending, the condition of the economy is not considered.

FALSE

jill just borrowed 6,000 and will be charge a simple interest rate of 12%. Jill will pay _______ for borrowing the money on septemeber 1 and repaying the money on December 31st. A. 240 B. 420 C. 720 D. 1,200

A. 240

During the past month, Jennifer Ernet had income of $3,000. During the month, her net worth declined by $200. If no other financial activities occurred, this means Jennifer's payments for the month were: A. $3,200. B. $3,000. C. $2,800. D. $200. E. $0.

A. 3,200

Dividend payments on common stock are guaranteed, but the amount is determined by the board of directors.

FALSE

If expenses for a month are greater than income, an increase in net worth will result.

FALSE

Inflation is most harmful to people with incomes expected to increase.

FALSE

A tax ____________ is an amount subtracted directly from the amount of taxes owed. A. credit B. exemption C. deduction D. exclusion E. shelter

A. CREDIT

_____ risk is the risk that a borrower may not repay on a timely basis A. credit B. interest rate C. Liquidity D. Assets

A. Credit

Liabilities are amounts representing: A. debts. B. items of value. C. living expenses. D. taxable income. E. current assets.

A. DEBTS

A question associated with the saving component of financial planning is: A. Do you have an adequate emergency fund? B. Is your will current? C. Is your investment program appropriate to your income and tax situation? D. Do you have a realistic budget for your current financial situation? E. Are your transportation expenses minimized through careful planning?

A. Do you have an adequate emergency fund?

Payments that do not vary from month to month are ____________ expenses. A. fixed B. usage C. variable D. luxury E. output

A. FIXED

Deposits at commercial banks are insured by a government owned insurance agency called

A. Federal Deposit Insurance Corporation

Intermediate goals are usually achieved within the next year or so.

FALSE

Which of the following is not a disadvantage of using credit? A. makes it easier to save B. the potential high cost C. the difficulty in paying back loans D. the potential for personal bankruptcy

A. Makes it easier to save

Attempts to increase income are part of the _____________ component of financial planning. A. Obtaining B. Planning C. Saving D. Borrowing E. Spending

A. Obtaining

Opportunity costs refer to money already spent.

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

Which of the following is not true regarding cash advances on credit cards? A. they are treated jus like other charges on your credit card B. there is a charge for interest from the time you take the advance to the time you pay it off C. There is also a transaction fee on most cash advances D. the grace period does not apply to cash advances

A. they are treated just like other charges on your credit card

By reviewing your credit card statement you can determine all of the following except A. total purchases made year to date B. your available credit remaining C. if a payment can be made that will avoid interest charges D. how much time you have to make a payment

A. total purchases made year to date

A direct loan for personal purposes, home improvements, or vacation expenses is called A. A credit card. B. An installment cash credit. C. A bank line of credit. D. Open-end credit. E. Single lump-sum credit.

____ management is a series of decisions made over a short term period regarding cash inflows and outflows A. cash B. money C. liabilities D. Assets

B.Money

A term that refers to the borrower's assets or net worth is called: A. capacity. B. character. C. capital. D. collateral. E. conditions.

Terry Hamilton has just received $30,000 from an uncle who died and is trying to decide how to invest it. She has done some research has decided that about 30% of the money should go into large cap stocks, 20% into medium cap stocks, 15% into small cap stocks, 10% into bonds, 10% into foreign stocks and 15% into cash. She thinks that even if one area does not do that well, the rest will so that her overall return will be pretty good. What aspect of investing is Terry most concerned about? A. Income B. Return C. Diversification D. Liquidity E. Investment Growth

The Federal Trade Commission provides information to consumers about A. interest rates. B. international trade laws. C. identity theft. D. bankruptcy

Which of the following terms is correctly matched? A. Capital Gains - Scholarships. B. Rent - Tax free income. C. Gross Income - Salary before taxes. D. Deductions - Earned Income.

Which of the following will help to create discretionary income? A. Having payroll taxes deducted from each paycheck. B. Contributing to a emergency savings account. C. Spending less than total income each month. D. Paying credit card bills at the end of the month.

Your sense of fulfillment decreases with the more money you spend after you reach _________________. A. Old age B. Retirement C. Enough D. Satisfaction

Which of the following characteristic is common to both commercial banks and credit unions? A. Lower fees B. Lower credit card rates C. insurance up to $250,000 D. nonproft

C. insurance up to $250,000

Patricia McDonald has determined that the value of her liquid assets is $4,500, the value of her real estate is $128,000, the value of her personal possessions is $62,000, and the value of her investment assets is $73,000. She has also determined the value of her current liabilities is $7,500 and the value of her long term liabilities is $98,000. What is Patricia's net worth? A. $267,500 B. $105,500 C. $162,000 D. $205,500 E. $132,000

C. $162,000

Caroline lives in City A and earns $50,000 per year. The cost of living index in City A is .8. She is considering a move to City B which has a cost of living index of .9. How large a salary will she require in City B to maintain her current standard of living? A. $44,444 B. $40,000 C. $56,250 D. $45,000 E. $50,000

C. $56,250

If Patty Shoemaker estimates that her $75 weekly grocery bill will increase at an annual inflation rate of 3%, what should her weekly grocery bill be in 5 years? A. $64.73 B. $82.85 C. $86.93 D. $343.50 E. $398.18

C. $86.93

In applying for a credit card, the potential creditor will look at your _______ to determine if you ave funds to cover future debt payments if necessary

Captial

The ac that allows banks to transmit electronic images of checks, thus allowing funds to be transferred immediately is known as

Check 21

Money market funds invest mainly in ______ which are short term debt securities issued by large corporations

Commercial paper

Who determines whether you have personal financial success? A. Wall Street B. Government C. Society D. Yourself

"I pay my credit card bill in full five-to-seven days before the due date each month!" Someone who does this is likely to have A. a very high interest rate. B. adequate insurance coverage. C. monthly dividends from bonds. D. an excellent credit score.

To understand why you do what you do with money, you need to uncover your _________________. A. Habits B. Relationship with money C. Style D. Money personality

Which of the following is correct? A. A home purchase is a consumable-product goal B. Entertainment is a durable-product goal C. Appliances and sporting equipment are intangible-purchase goals D. Leisure and education are durable-product goals E. Food and clothing are consumable-product goals

E. Food and clothing are consumable-product goals

Jake Jones wants to deposit $100 per month into an account earning 5 percent for the next 4 years so he can purchase a used car at that time. What type of computation would he use to determine the amount he will have for his purchase? A. Present value of a single amount B. Future value of a single amount C. Simple interest D. Present value of an annuity E. Future value of an annuity

E. Future value of an annuity

A financial plan is another name for a budget.

FALSE

It is not difficult to find a credit card company that is eager to extend credit to you.

TRUE

Liquidity is the ease with which an asset can be converted to cash without a substantial loss in dollar value.

TRUE

Mutual funds range from very conservative to extremely speculative investments.

TRUE

One of the disadvantages of credit cards is that they allow you to spend beyond your means.

TRUE

Parents or family members are often the source of the least expensive loans.

TRUE

Purchasing a car is an example of a durable-product goal.

TRUE

The annual percentage rate is the percentage cost of credit on a yearly basis

TRUE

If you have an exceptional credit standing, the company issuing your credit card upgrade you to what are called _______>

Prestige cards

The major reasons why investors purchase mutual funds are professional management and diversification.

TRUE

one disadvantage of a proprietary credit card is that it limits your purchases to a single merchant

A non depository institutions transactions in stocks or bonds is a __________.

Securities firm

Credit cards are an example of revolving open end credit

If you have credit problems, you should contact a credit repair service instead of trying to resolve the issues yourself.

false

MasterCard and Visa are not accepted by gas stations such as Shell, which issue their own credit cards.

false

The interest charged on purchases and cash advances on credit cards is computed in the same way.

false

There is no cost to the merchant when you use a MasterCard or Visa.

false

which of the following will not protect your from identity theft while on vacation a. carry all credit cards, passports,and birth certificates with you b. have your mail stopped c. do not leave credit slips in restaurants d. do not leave sensitive information in your hotel room when you are not there

a. carry all credit cards, passports, and birth certificates with you

the $500 minimum balance you are required to keep in your now checking account represents opportunity cost

True

Cash advances on credit cards normally cost you interest from the date of the advance and also a transaction fee of 1 to 2 percent.

true

You should invest in risky investments instead of paying off your credit card debt because the return might be higher than the cost of financing.

false

certificates of deposits with shorter maturity dates tend to pay higher interest rates than those with longer maturity dates

false

in order to have a safety deposit box at a bank, a person needs to also maintain another checking or savings account at that bank

false

protection against adverse events

insurance company

cash advance

cash borrowed on credit cad

cash outflows are more than inflows

cash deficiency

Buying on credit is almost always cheaper than paying cash

FALSE

When starting an investment program, you should stop participating in your savings program.

FALSE

A budget is a specific plan of how a person or family expects to spend their money.

TRUE

A line of credit is A. The equal payments required for one-time loans. B. The loan amount for installment cash credit. C. The maximum loan amount for closed-end credit. D. The maximum dollar amount of credit the lender has made available. E. The monthly payment required for single lump-sum credit.

specializes in personal loans

finance company

overdraft protection

short term loan to cover a cash deficiency in a checking account

social security card

something you should never carry in your wallet

the term structure of interest rates is a measure by a ___. which shows the interest rate offered at each maturity level A. economist B. yield curve C. graph D. index

yield curve

Deposits at Commercial banks are insured up to ________ per depository by the federal deposit insurance corporation

$250,000

A bond that is backed only by the reputation of the issuing corporation is called a(n) ____________ bond. A. debenture B. mortgage C. indenture D. preemptive E. treasury

A buyer wants to take out an FHA loan. The broker should refer the buyer directly to: A) any approved lending institution such as a bank or savings and loan association B) an FHA appraiser in the area C) the Federal Housing Administration Office D) the Federal National Mortgage Association

A credit card offers a grace period of 21 days, which mean that the card holder A. needs to have the payment posted by the 21st day or a late fee will be charged. B. can miss one payment per year if all other monthly payments that year are made by the 21st day. C. receives rewards points if the bill is paid before the 21st day. D. can have cash advances that are interest-free during the 21 days

A credit report includes A. Credit history. B. Assumptions made by credit rating agencies. C. Credit score. D. Credit expectations. E. All of these.

A debit card: A. immediately deducts the cost of your purchase from your bank account. B. sends money directly to Dr. Basford's account. C. is a new type of a credit card issued by VISA International. D. is another name for a travel and entertainment card. E. typically has a credit limit of $1,000.

A good rule of thumb is to limit consumer credit payments to ____________ percent of your net monthly income. A. 20 B. 30 C. 40 D. 50 E. 60

A mutual fund in which shares are issued only when the fund is organized is called a(n) ____________ fund. A. closed-end B. open-end C. load D. no-load E. convertible

A risk of using a debit card for buying goods and services is that A. there may be insufficient funds in the bank account. B. there may be a hidden fee for each purchase. C. the card may have expired. D. the repayment period may be shorter than thirty days.

An example of a tax that raises the price of a product to reduce its popularity is A. an excise tax on tobacco. B. federal payroll tax on salary. C. state income tax. D. property tax.

An objective that should be attained within 1-5 years is defined as a(n): A. Intermediate goal B. Long-term goal C. Short-term goal D. Personal mission statement

Anna is going to deposit $500 into an account that has an annual interest rate of 8% compounded quarterly. How much will she have at the end of one year? A. $541.22 B. $537.68 C. $546.93 D. $538.15

Another name for open-end credit is: A. revolving credit. B. a box of credit. C. convenience credit. D. installment credit. E. single lump-sum credit.

Credit cards have all of the following advantages except A) they allow you to borrow cash interest free for 60 days. B) make purchases without carrying cash. C) obtain free financing until the bill is due. D) itemized monthly statement.

Four friends each deposited $1,000 in a savings account at their local bank on the same day. After two years, from the date of deposit, the friend who had the most amount of money is the one whose bank compounded interest A. daily. B. weekly. C. monthly. D. yearly.

How are stocks on the secondary market bought and sold? A. For every stock that is bought there needs to be a seller of the stock. B. The New York Stock Exchange does the processing for all stock purchases. C. Stocks can only be bought and sold in a package costing a minimum of $10,000. D. Stocks are sold after the investor gets permission from the public company

Impulse shopping usually results in A. an increase in personal debt. B. a decrease in the buying of goods at department stores. C. an increase in credit scores. D. a decrease in the number of items purchased online.

In 2010, the U.S. Congress established The Consumer Financial Protection Bureau (CFPB). The purpose of this organization is to A. protect consumers against abusive credit practices, promote financial education, and research financial behavior. B. set annual interest rates to prevent inflation, regulate banks nationally, and protect against identity theft. C. insure stocks against loss, investigate investor complaints, and certify stockbrokers. D. enforce bank regulations, advocate loans for the poor, and audit bank records.

Internet banking allows you to A. Check the balances in your accounts B. Deposit checks C. Deposit cash D. All of these

Many think that perhaps the greatest disadvantage of using credit is A. The temptation to overspend. B. The convenience offered instead of using cash. C. The float from using credit. D. The increase in total purchasing power. E. The increased satisfaction during present and future income periods.

Ms. Jones graduated from college when she was age 30. She had a $10,000 college loan. She did not pay back the loan and still owes $8,000. Now she is 60 years old. Ms. Jones needs to know that A. if a student loan is unpaid, it may result in the borrower not being able to get Social Security retirement checks. B. many people do not pay the full amount of their student loans because they filed for personal bankruptcy. C. since this happened more than ten years ago, the loan does not have to be repaid. D. the government will require monies in an investment account be used to repay the loan.

One example of using credit responsibly is A. charging an expensive item that is on sale for one day when cash will be available next week. B. paying less than the minimum balance on a monthly bill. C. buying a leather coat with the intention of paying the cost over four years. D. charging wanted items by purchasing them online.

One reason that young people benefit from having a tax advantaged Traditional Individual Retirement Account (IRA) savings account for retirement is that A. Their income is generally lower during retirement years resulting in a lower tax bracket. B. They can deposit any amount of their income into these accounts while working. C. They generally get a debit card for withdrawals. D. The management fees for these accounts are lower during their retirement years

Sean Rouse has purchased the stock of the Stowaway Transportation Company. The company is getting ready to pay a dividend. He knows he must be registered on the corporation's books on the ________________ in order to receive the dividend. A. Record date B. Ex dividend date C. Payment date D. Purchased date E. None of the choices

The Consumer Credit Counseling Service A.Aids families with serious debt problems by helping them to manage their money better and set up a realistic budget. B. Is a consolidation firm that will manage bills for a percentage of the total payment due. C. Provides counseling, usually for a fee. D. Is a program to wipe out your debts within two years. E. All of these are correct.

The Fair Credit Reporting Act (FCRA) is a major law that protects consumers who apply for loans and people using credit. Which of the following is one of the major rights of consumers under this law? A. Consumers must be told why their loan application was denied. B. Consumers cannot be denied loans because of their criminal record. C. Credit card companies cannot charge fees in excess of $50. D. Credit can only be issued to citizens of the US.

To reduce the cost of homeowners or renters insurance, policy holders should A. install an alarm system for fire and burglary. B. recycle paper and plastic trash daily in the same trash bin. C. keep emergency numbers for police, fire, and ambulance on the refrigerator. D. install a backup generator for electric power.

Using the present value long-hand method, how much money would need to be deposited to earn $5,000 in five years with a 5% interest rate compounded annually? A. $3,917.63 B. $3,917.00 C. $3,918.63 D. $3,918.00

Voluntary simplicity is a simple lifestyle in which both _________________ and materialism are minimized. A. Consumption B. Saving C. Being frugal D. Spending

What are the qualities of a SMART goal? A. Specific, measurable, attainable, relevant, time B. Special, measurable, attitude, realistic, try C. Specific, mission, attainable, reason, time D. Special, mission, attitude, reason, try

What gives money its value? A. Supply and demand B. Backed by gold C. Backed by silver D. Present values

What is a debit card? A.A card that carries a credit card logo and is tied to a checking account B.A card known as a bank card or a cash card that does not include acredit card logo C.A card that has a minimum line of credit D.A loan card provided by a bank after being approved by a loan o±cer

What is a lump sum? A. A single, one-time payment B. Monthly payments C. Yearly payments D. Money in your savings account

What is earning interest on interest? A. Compounding B. APR (annual percentage rate) C. Savings D. Investing

What is financial independence? A. When passive income exceeds expenditures B. When you don't live with your parents C. When you get a job D. When you have $1 million in retirement savings

What is the difference between a stock and a bond? A. Stockholders have voting rights and bondholders do not. B. Bondholders own part of the company and stockholders do not. C. Stocks can be sold if owned for 30 days and bonds cannot. D. Interest is paid on bonds daily and on stocks quarterly.

What should your mission statement reflect? A. Your life goals, how to see them clearly, and how to be motivated to continue on with them B. Your personal financial plan C. Your likes and dislikes D. Your family's spending habits

What strategy is an effective way to build adequate financial resources for a family to pay for college tuition? A. Opening a 529 College Savings Plan in the first year of a child's birth. B. Taking a greater risk by purchasing speculative stocks until a child is age 16. C. Reducing taxes by investing money in mutual funds. D. Increasing contributions to Social Security.

What strategy to help impulse buyers does the book suggest? A)The "ten second hold" rule B)Realistic budget evaluation C)The "do I need it?" strategy D)The stop and think strategy

What two cities are currently producing coins? A. Denver and Philadelphia B. Philadelphia and San Francisco C. Denver and San Francisco D. Fort Worth and Washington, D.C.

When a consumer is disappointed with the quality of a product purchased, which of the following should the person try to do first? A. Return the product with a receipt. B. Write to the manufacturer complaining about the product. C. Try to sell the product online. D. Use social media to post comments about the product.

When an employee is vested in his retirement plan, it means that the employee is now entitled to A. all of the money contributed by the employer to the pension. B. only the money that he contributed to the pension. C. contribute any amount of income to the pension. D. begin to collect pension checks in ten years.

When interest rates are rising, a person would be best served by: A. short-term savings instruments. B. long-term savings instruments. C. short-term loans. D. variable-rate loans. E. certificates of deposit.

Which act helped eliminate investor confusion with compounding interest and the related yields? A. The Truth in Savings Act B. The Compound Interest Act C. The Interest and Yield Act D. The Sarbanes Oxley Act

Which financial institution would be the best fit for a college-aged student who needs a checking account? A. Commercial bank B. Credit union C. Savings institution D. All of these

Which is not a component of the formula APY = (1 + r/n) n - 1? A. N - 1 = Compound minus interest rate B. R = Stated annual interest rate C. N = Number of times you'll compound every year D. APY = Annual percentage pate

Which of the following are short-term solutions if you are at risk for foreclosure? A)Reinstatement B)Loan modifications C)Loan defaults D)Partial claim

Which of the following investments offers the greatest liquidity? A. savings accounts B. common stock C. corporate bonds D. real estate E. collectibles

Which of the following is a correct calculation of simple interest on $1,000 at the end of one year? A. 3% = $30 or $1,030.00 B. 4% = $400 or $1,400.00 C. 5% = $150 or $1,150.00 D. 6% = $ 600 or $1,600.00

Which of the following is an example of collateral? A. Real estate. B. Personal check. C. Bank credit card. D. Term life insurance.

Which of the following is an example of insurance fraud? A. A person's claim that another car hit his car causing an injury that existed before the accident. B. A person with his own insurance drives a rented car. C. A person installs a radar detector in his car. D. A person excludes his daughter living at college out-of-state as a driver on his car insurance policy.

Which of the following is generally considered a tax deduction and may reduce a person's federal income taxes? A. A donation to a charitable organization. B. Insurance premiums. C. Heating expense. D. The fees credit card company charge.

Which of the following is likely to DECREASE the auto insurance premium on a policy? A. Taking a drivers education course. B. Having a car accident. C. Adding a driver to an existing policy. D. Getting a parking ticket.

Which of the following is not a characteristic of the empty nest life stage? A. Saving for your children's future college education B. Beginning to plan for retirement C. Making more money than ever before D. Investing more money in conservative investments

Which of the following is often the first sign of a stolen identity? A. You receive bills for a credit card account you never opened. B. You see charges to your account for things you purchased. C. You receive a phone call from the thief. D. You receive a duplicate credit card from your credit card company. E. All of these are typical signs of a stolen identity.

Which of the following is the best advice for a student with college loans? A. After graduation, have a budget that includes money for paying more on the loan than is required monthly. B. Get a full time job with a large company that has a tuition reimbursement policy for its employees. C. Refinance the loan by transferring the amount of money owed to a credit card with a low-interest rate. D. After five years of working, if the loan is not fully repaid apply for personal bankruptcy

Which of the following is the correct formula for computing your annual percentage yield? A. APY = (1+ r/n)n -1 B. APY = (1- r/n) - 1 C. APY = [(1- r) n] + 1 D. APY = [(r - n) r] - 1

Which of the following risks can a person cover by having insurance to protect against financial loss? A. A flood in a home. B. A traffic violation. C. A divorce. D. Losing a job.

Which of the following statements is true? A. Most mutual funds are managed funds. B. The role of a fund manager is not important because the investment company is always changing managers. C. If a fund has performed well under its present manager over a 5-year, 10-year, or longer period, it is time to sell the fund. D. Managed funds are usually index funds that include a high concentration of defensive stocks. E. A team of managers is always better than a single fund manager.

Which one of the following is often the source of the least expensive loan? A. parents or family members B. banks C. savings and loan associations D. finance companies E. loan sharks

Why should you want to do a job? A. Because it makes you happy B. Because it has a big salary C. Because there are a lot of benefits D. Because you are bored

You have a long-term goal of paying off your school loans in five years. You will graduate with a loan debt of $20,000 and an interest rate of 6%. How much will you need to pay each month to have the debt paid off in five years? A. $386.66 B. $400.00 C. $390.17 D. $368.08

You should do all of the following to prevent written checks from being altered except: A.Count the number of checks you wrote this month B.Put a $ sign in front of the amount in the currency box C.Make a note in the memo line for your own reference D.Start your written amount on the farleft

Your personal mission statement should be composed of each of the following except: A. Dreams B. Stakeholders C. Strengths D. Passions

Your checkbook balance at the end of May is $1,041 when you receive May's bank statement, you discover the following additional items: bank fees $271, interest earned $163. your adjusted checkbook balance after considering these items is A. $993 B. $770 C. $1,204 D. $920

A. $993

If a $10,000 investment increases to $10,090 in one year, what is its rate of return? A. .9 percent B. 1.09 percent C. 9 percent D. 90 percent E. 109 percent

A. .9 PERCENT

Assuming you were charged a simple interest of 5% on a loan of 1,000 which requires you to repay in 2 payments, one at the end of the first six month and one at the end of the second six months, total payments on the loan would be 1. 1,037.50 B. 525.00 C. 512.50 D. 1,000.00

A. 1,037.50

the average credit card balance of undergraduate students is between a. 3000 - 7000 B. 1000-3000 C. 7000-10000 D. 12000-15000

A. 3000-7000

Which of the following short-term goals is stated most clearly? A. Buy a car for less than $17,000 within 6 months B. Retire at age 65 with $2,000,000 in my 401(k) account C. Purchase a house with a mortgage no greater than $150,000 within 5 years D. Set up an emergency fund E. Invest $50 per month for the next 18 years for my nephew's college fund

A. Buy a car for less than $17,000 within 6 months

a _______ card allows you to pay for a purchase at a later time when the bill arrives A. credit B. debit C. Expenses D. ATM

A. Credit

Present value computations are also referred to as A. Discounting. B. Add-on interest. C. Compounding. D. Simple interest. E. An annuity.

A. DISCOUNTING

Which of the following financial institutions specializes in making personal loans to people who are perceived to have a higher risk to default A. Finance companies B. Commercial banks C. Savings institutions D. Credit Unions

A. Finance companies

_______ are non depository institutions that sell shares to individuals and use the proceeds to invest in securities to create mutual funds A. Finance companies B. Securities Firms C. insurance companies D. Investment Companies

A. Investment companies

Which of the following would increase the interest rate for a loan? A. Poor credit rating B. Higher down payment C. Constant interest rates D. Lower consumer prices E. Short time to maturity

A. Poor credit rating

Paul Jacoby wants to deposit money today for a vacation he plans to take to Asia after he graduates from Grad School. Which formula should he use to determine the amount of money he will have available for his vacation? A. Present value of a single amount B. Future value of a single amount C. Simple interest D. Present value of an annuity E. Future value of an annuity

A. Present value of a single amount

The step in the personal financial planning process that follows "Create and implement your financial action plan" is A. Review and revise your plan B. Identify alternative courses of action C. Determine your current financial situation D. Evaluate your alternatives E. Develop your financial goals

A. Review and revise your plan

the term structure of interest rates is the relationship between the maturities of ______ debt securities and the annualized yields offered on those securities A. risk free B risk premium C. specific return D.nominal return

A. Risk Free

The _____ is the return on an investment that is guaranteed for a specified period A. risk free rate risk premium C. specific return D. fair market return

A. Risk free rate

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. sweep account B. asset management account C. Money market Fund D. Secondary Market

A. Sweep Account

Interest rates could change due to all of the following except A. united nation's resolution to change the fed fund rate B. shift in savings by investors C. shift in monetary policy of the fed D. shift in business demands for funds

A. United nations resolution to changed the fed fund rate

Which of the following would be deducted from gross income to obtain adjusted gross income? A. alimony payments B. mortgage interest C. medical expenses D. foreign income exclusion E. charitable contributions

A. alimony payments

All of the following are true of prestige credit cards except they A. always have considerably higher annual fees B. are always referred to as gold or platinum cards C. provide extra benefits to cardholders D. are given to individuals who have an exceptional credit standing

A. always have considerable higher annual fees

A __________ is a check that is written on behalf of a person to a specific payee and will be charged against a financial institution's account A. cashier's check B. money order C. traveler's check D. Personal check

A. cashiers check

In comparing credit cards to other forms of credit, which of the following is true? A. credit cards are generally the most expensive form of credit B. You should invest funds before paying off your credit cards C. it is prudent to borrow from some cards to pay off other credit cards D. All of the above

A. credit cards are generally the most expensive form of credit

simple interest

A. each calculation of interest on an annual basis

If you put $1,000 in a saving account and make no further deposits, what type of calculation would provide you with the value of the account in 20 years? A. future value of a single amount B. simple interest C. present value of a single amount D. present value of a series of deposits E. future value of a series of deposits

A. future value of a single amount

The changing cost of money is referred to as ____________ risk. A. interest-rate B. inflation C. economic D. trade-off E. personal

A. interest-rate

because of the active bond market in chicago, one risk that a corporate bond is less likely to expose you to is the A. liquidity risk B. credit risk C. default risk D. interest rate risk

A. liquidity risk

In general the more liquid an investment is, the ____ the return you will receive. A. lower B. higher C. less predictable D. there is no relationship between liqudity and return

A. lower

Generally a savings account yields are ____than CD that are exposed to __________ liquidity rate A. lower; more B. higher; less C. higher; more D. Lower; less

A. lower; more

Which of the following items will give you the highest return? A. one year CD B. Savings account C. Now account D. checking account

A. one year CD

manipulationg e mail viruses and host files to redirect users from legitimate commercial web sites to bogus web sites to obtain log in names are passwords a. pharming b. phishing c. skimming d. trolling

A. pharming

the relationship between risk and return A. positive B. negative C. is inverse D. has no correlation

A. positive

Which of the following methods of calculating finance charges on credit cards is least favorable to the cardholder? A. previous balance method B. ending balance method C. average daily balance method D. adjusted balance method

A. previous daily balance

A person's net worth would increase as a result of: A. reduced amounts owed to others. B. reduced earnings. C. increased spending for current living expenses. D. decreased value of personal possessions. E. decreased value of investments.

A. reduced amounts owed to others.

which of the following is the least common manner in which an identity theft victim discovers the crime a. routine examination of a credit report b. receiving a collection notice c. being denied credit D. reviewing a credit card statement

A. routine examination of a credit report

which of the following is not a money market investment? A. shares of a corporate stock B Now account C. savings account D. treasury bills

A. shares of a corporate stock

if the government borrows funds to finance a military build up in the middle east, this will cause a A. shift in the demand for funds B. shift the supply of funds C. shift in monetary policy D. Shift in open market operations

A. shift in the demands for funds

Which of the following is not true about annual fees on credit cars? A. the fees are the same on all credit cards B. the fees may be high, up to $70 a year C. many cards do not have annual fees D. some cards may waive the fees for individuals who pay their credit card bills in a timely manner

A. the fees are the same on all credit cards

Credit cards have all of the following advantages except a. they allow you to borrow cash interest free for 60 days B. make purchases without carrying cash C. obtain free financing unit the bill is due D. itemized monthly statement

A. they allow you to borrow cash interest freeform 60 days

Which of the following are good tips on the use of a credit card? A. treat it as a means of convenience B. use it as a source of funds C. make the minimum required monthly payments D. all of the above

A. treat it as a means of convenience

wanda clark expects interest rates to decline in the next few months. to maximize her earning she should put her savings in a A. two year certificate B. six month certificate of deposit C. money market account D. passbook savings account

A. two-year certificate of deposit

a credit card whose interest rates change as a specific market interest rate changes is said to have a A. variable rate B. fixed rate C. constant rate D. tiered rate

A. variable rate

A college student wants to buy a bike to ride from a rented apartment to the college campus. Which of the following should be part of the research? A. Finding out which is the most popular bike sold in the area. B. Determining which bike is safe and affordable for the intended user. C. Comparing the cost of a repair and an accessory from three bike shops. D. Checking to see if the bicycle was made in America.

A credit card holder who pays off his balances in full each month is known as A. An impulsive lender. B. A convenience user. C. A home equity holder. D. A convenience user AND a home equity holder. E. All of these are correct.

A fee that some investment companies charge for advertising and marketing a mutual fund is called a: A. 14A-1 fee. B. 12b-1 fee. C. 18-2 fee. D. 21-AB fee. E. None of these answers are correct.

A loan officer is examining whether or not to will offer you a loan today. Specifically, she is examining your income and debts. Which of the five Cs is the loan officer reviewing? A. Character B. Capacity C. Capital D. Collateral E. Conditions

A person is age 16 and looking for part-time work at a restaurant that is part of a national chain. Which of the following is the employer allowed to ask for on a job application? A. Copy of a major credit card. B. Social Security number. C. Parents' occupations. D. List of medical problems.

A prearranged loan up to a specified amount that a consumer can access by writing a special check is known as A. A bank credit card. B. A revolving check credit. C. Installment sales credit. D. Single lump-sum credit. E. Closed-end credit.

According to the Fair Credit Billing Act, if a creditor fails to follow the rules that apply to correcting any billing errors, you have the right to sue for A. Actual damages. B. Actual damages plus twice the amount of any finance charges. C. The amount owed on the item in question. D. Three times the actual damages. E. Nothing.

All of the following are examples of being frugal except: A. Using coupons B. Spending 100% of your paycheck C. Considering needed items found in the classified ad section of the newspaper D. Buying items you need of value

All of the following are related to the time value of money except: A. FVIF B. PVIFI C. PVIF D. FVIFA

All of the following statements are considered to be good advice for a potential investor starting an investment program except: A. Work to balance your budget. B. Increase credit purchases and make installment payments in order to increase cash available for investing. C. Establish specific and measurable investment goals. D. Start an emergency fund. E. Establish a line of credit.

Amy Farmer receives something in the mail from the company she has purchased stock in. This legal form lists the issues to be decided at the annual stockholders' meeting and asks her to sign something that allows someone else to vote for her. What has she received in the mail? A. Equity B. Proxy C. Voting rights D. Dividends E. None of the choices

An investor who is interested in diversifying his stock portfolio should buy A. speculative stocks, such as new companies without a history of profits. B. stocks in different sectors, such as health care, finance and technology. C. stocks offering a fixed rate of return. D. stocks with high dividends.

An ordinary annuity is a A. Stream of unequal payments that occurs at the end of a period B. Stream of equal payments that occurs at the end of a period C. Stream of equal payments that occurs at the beginning of a period D. Stream of unequal payments that occurs at the beginning of a period

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? A. 2% B. 4% C. 6% D. 8% E. 10%

Borrowing money from family and friends is a: A)Yellow flag warning: caution B)Red flag warning: danger C)Green flag warning: go ahead

Consumer credit A. Is a privilege of the affluent. B. Dates back to colonial times. C. Carries no finance charge. D. Is not a major force in our economy. E. Use has been declining in recent years.

Denmark, declared the "Happiest Place on Earth," is classified as a _________________ society according to the text. A. Communist B. Post consumerism C. Consumerism D. Democratic

During which life stage is a person likely to earn the greatest amount of money? A. Retirement life stage B. Empty nest life stage C. Independent life stage D. Early family life stage

Experts suggest that the debt payments-to-income ratio should be a maximum of A. 0% B. 20% C. 25% D. 50% E. 100%

Experts suggest that you spend no more than ____________ percent of your net income on credit purchases. A. 10 B. 20 C. 30 D. 40 E. 50

Hannah has liabilities totaling $30,000 (excluding her mortgage of $100,000). Her net worth is $45,000. What is her debt-to-equity ratio? A. .45 B. .67 C. .75 D. 1.00 E. 1.30

Home equity loans A. Are based on the original purchase price of a home. B. Have interest that is tax-deductible. C. Do not have any security attached to the loan. D. Have a 60-day grace period. E. Are the most expensive loans available.

How does credit help borrowers? A. Borrowing is not on a person's credit report until all payments are made. B. A person can buy a big ticket item on credit and use it while paying for it. C. Buying on credit helps a person to increases her credit score. D. A person who borrows can satisfy her wants and needs without concern.

If overall interest rates in the economy rise, a corporate bond with a fixed interest rate will generally: A. increase in value. B. decrease in value. C. remain unchanged. D. become worthless. E. be returned to the corporation.

If you are investing a stream of equal payments that occur at the beginning of each month, what type of investing is this called? A. Lump sum B. Annuity due C. Discounting D. Ordinary annuity

If you double the monthly payment for a credit card, the loan will be paid off in A. Half the time. B. Less than half the time. C. More than half the time. D. The additional payment will have no impact. E. Not enough information is available to answer.

If you have $3,000 today with a 10% APY, how much will you have one year from now? A. $3,200 B. $3,300 C. $3,100 D. $3,500

If you have declared personal bankruptcy, that fact may be reported by credit bureaus for ____________ years. A. 5 B. 10 C. 15 D. 20 E. 25

If you put $1,000 into an account earning 5% interest annually, how much will you have in five years? A. $5,000.00 B. $1,276.28 C. $1,050.50 D. $1,500.00

In order to be sure that the checking or savings account linked to the account owner's debit card has sufficient funds for purchases, banks offer "easy-access" credit as an option. Which of the following explains how "easy access" credit works? A. A person monitors his bank account balances and can use a computer to transfer funds. B. The bank provides a line of credit to automatically replenish bank account balances. C. The bank sends a text message to the debit card holder when the linked account balance is low. D. A person has all of her credit cards linked together and, therefore, money is always available.

In order to increase their probability of attainment, goals should have a specific end date. In 55 months Clare wants to have her college loans paid off, in 24 months she wants to start a family, and in 15 months she wants to take a trip to China. Which goal category is Clare pursuing? A. Intermediate goals B. Long-term goals C. Short-term goals D. Attainable goals

In which of the following markets may a lender sell a loan that a mortgage banker has previously originated? A) primary market B) secondary market C) mortgage market D) consumer market

Installment credit exploded on the American scene with the advent of the A. Airplane B. Automobile C. Cell phone D. Computer E. Train

Jamil has retired and can live without needing to ever work again. What has he reached? A. Financial literacy B. Financial independence C. Voluntary simplicity D. His personal financial plan

Mike Lively is thinking about buying an investment. The investment option that he is thinking about buying is an ownership claim on the company. The most important priority he has with this investment is receiving dividends before dividends are paid to other types of investments. What investment is Mike thinking about purchasing? A. Common Stock B. Preferred Stock C. Corporate Bond D. Real Estate E. Mutual Fund

Rebecca has a $400 paycheck. She wants to use the 90-10 rule. How much must she save to achieve this? A. $340 B. $40 C. $360 D. $50

SMART goals need to be A. Sporadic B. Measurable C. Artful D. Reliable E. Tough

The 80-10-10 rule requires that you: A. Save 80% of your income, give away 10%, and live on 10% B. Live on 80% of your income, save 10%, and give away 10% C. Give away 80% of your income, put 10% in savings, and live on 10% D. Live on 80% of your income, save 10%, and invest 10%

The Truth in Savings Act A. Provides formulas so people can calculate the APY on investments B. Requires that banks must disclose the fees, the APR, and the APY on interest-bearing accounts C. Requires that banks must disclose the fees, the APR, and the APY on loans D. Provides formulas so people can calculate the APY on loans

The _________________ frequently interest is compounded, the _________________ the yield. A. More; lower B. More; higher C. Less; higher D. Less; same

The best way to deal with not being able to pay your mortgage is: A) Don't open the mail from the bank B) Call your lender and work something out C)Don't answer the phone D)Move in the middle of the night

The debt payments-to-income ratio is: A. calculated by dividing total liabilities by net worth. B. calculated by dividing monthly debt payments (not including house payments) by net monthly income. C. determined by dividing your assets by your liabilities. D. a useless ratio for determining your credit capacity. E. rarely used by creditors in determining credit worthiness.

The ease with which an investment can be converted to cash without a substantial loss in dollar value is called the: A. asset value. B. liquidity factor. C. immediate quotient. D. fixed cost factor. E. variable cost factor.

The fastest way to get out of debt is to: A)Buy things you don't need B)Don't buy things you cannot afford C)Refinance to get better interest rates

The information in your credit report is primarily used by the credit bureau to compute your A. debt to equity ratio B. FICO score C. debt payment to income ratio D. liquidity ratio E. long term capitalization ratio

The more specific your goals are: A. The more work they are. B. The more likely they will be achieved. C. The more fun they are. D. The less likely they will be achieved.

The premium of a person's life insurance policy is likely to be more expensive as a result of A. traveling. B. smoking. C. where the person lives. D. the person's net worth.

Timothy Carter has net monthly income of $3,800. He has a monthly auto loan payment of $350, a student loan payment of $150, a mortgage payment of $1,200, and a credit card minimum payment of $45. What is his debt-payments-to-income ratio? A. 13.2% B. 14.3% C. 36.7% D. 42.0% E. 45.9%

To be frugal includes all of the following except A. Being resourceful when satisfying your need for goods and services B. Buying all of the things you want C. Using already owned items D. Practicing restraint in how you consume goods and services

What is compounding? A. Depositing money in the bank B. When interest is added to your initial deposit and you begin to earn interest on interest C. Your initial deposit D. The amount of interest you pay on a loan

What is the first step in setting the foundation for your financial plan? A. Understanding your values and goals B. Understanding your current relationship with money C. Identifying your current relationship with money D. Establishing your mission statement

What is the opportunity cost of a person selling her stocks and bonds worth $5,000 to spend on a winter vacation? A. Loss of the ability to go out of town during the cold weather. B. Loss of the chance for the money to grow in value. C. Ability to have a balanced budget. D. There is none since they are equal opportunities.

What term would you use to describe a person who avoids waste and is resourceful when fulfilling his or her needs for goods and services? A. Voluntary simplicity B. Frugal C. Money personality D. Personal financial success

What type of account would be considered the most liquid? A. certificate of deposit B. checking account C. money market account

When evaluating your credit application, a lender may NOT A. Ask your date of birth. B. Deny you credit if you receive public assistance. C. Request a list of the ages of your dependents. D. Inquire if you ever received credit before from that lender. E. Ask the income of your spouse if you have a joint application.

When making a will, a person will choose a trusted individual to make sure that the will is carried out as intended. This individual is the A. beneficiary. B. executor. C. proxy. D. probate lawyer

When people invest money in stocks, bonds, or real estate, they are A. insuring that they get a steady source of future income. B. letting their assets work for them to create more money. C. preventing an increase in inflation. D. taking advantage of another person's wealth.

When selecting a financial planner for advice, it is important to know the A. person's age. B. whether the person has a license or certification. C. credit history of the person. D. discount being offered by the person to new clients.

Which best describes compound interest? A. Interest is added to a deposit B. Interest is added to your initial deposit and you earn interest on interest C. You pay double interest D. You pay two separate interest rates

Which example indicates discounting? A. Looking for less inexpensive options when shopping B. Figuring out how much money to invest now to have a certain amount in the future C. Shoplifting D. All of these

Which is not an example of being frugal? A. Buying a used car B. Hiring someone to paint your living room C. Buying the things you need D. All of these

Which of the following correctly defines future value? A. The current value of a said future amount based on the interest rate and time in the account. B. The value of an amount at a future date based on the interest rate and time in the account. C. A single, one-time payment. D. A series of equal payments that are made at equal intervals over time.

Which of the following is NOT correct? A. Using credit is appropriate to pay for medical emergencies. B. Using credit can increase the amount of money that will be available to spend in the future. C. Using credit sometimes occurs automatically, such as for water or electricity usage. D. Using credit cards usually makes returning merchandise without a receipt easier. E. Using credit allows consumers to enjoy goods and services now and pay later.

Which of the following is an effective strategy in times of falling interest rates? A. Use long-term loans to take advantage of current low rates. B. Use short-term loans to take advantage of lower rates when you refinance the loans. C. Select short-term savings instruments to take advantage of higher rates when they mature. D. Select short-term savings instruments to lock-in earnings at current high rates. E. Select long-term savings instruments to lock-in earnings at current low rates.

Which of the following is an example of how a stock may provide income? A. Insurance. B. Dividends. C. Principal. D. Premium.

Which of the following is an example of open-end credit? A. An automobile loan B. A department store credit card C. An installment loan for purchasing furniture D. A mortgage loan E. Single lump-sum credit

Which of the following items should be shredded to protect yourself from identity theft? A. Magazines B. Papers with personal information C. Envelopes D. Privacy notices that are received with credit card statements E. Newspaper ads

Which of the following types of personal information should never be sent in an email or text message? A. Birthdate. B. Credit or Debit card number. C. Name of high school or college the person attended. D. Name of the town where the person lives.

A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends a direction for your financial activities is a(n) A. Insurance prospectus. B. Financial plan. C. Budget. D. Investment forecast. E. Statement.

B FINANCIAL PLAN

What is the average amount of a credit card's late fee? A. $2 0 B. $26 C. $30 D. $36

B- 26$

If you are considering a now account that requires a $500 minimum balance and pays 2% interest what would be the opportunity cost if you would need to withdraw the required minimum balance from a savings account paying 5% interest? compute the opportunity cost for one year a. 10 b. 15 c. 25 d. 35

B. $15

Joseph is eligible for a nontaxable life insurance benefit with an annual premium of $400 paid entirely by his employer. Assuming Joseph is in a 25% bracket, how much would he have to earn to pay for this benefit with after-tax dollars? A. $425.00 B. $533.33 C. $433.33 D. $500.00 E. $400.00

B. $533.33

If a 9 month 270 days cd earns an annual rate of 1% what is the actual return on the investment A. .0074% B. .0074% C. 74% D. 7.4%

B. .0074%

Maurice purchased a $10,000, 90 day CD that pays 8%. how much will maurice receive when the CD matures? A 10,800 B. 10,197 C. 10,200 D. 10,267

B. 10,197

If a bank provides overdraft protection at a rate of 12% for each $100 borrowed when an overdraft accord what amount of interest would a customer pay for a $188 overdraft? A. 24.00 B. 22.56 C. 10.56 D. 12.00

B. 22.56

If inflation is increasing at 3 percent per year, and your salary increases at the same rate, how long will it take your salary to double? A. 30 years B. 24 years C. 18 years D. 12 years E. 6 years

B. 24 YEARS

your commercial bank is offering a one year CD with an interest rate of 7%. A competing bank offers an interest of 10% on their one year certificate. the risk premium offered by the competing bank is A. 7% B. 3% C. 4$ D. 1.5%

B. 3%

Kelly deposits 1,000 in her savings account earning 4% per year. how much interest would she earn in a year? a. 4 B. 40 C. 44 D. 400

B. 40

What would be the annualized return to an investor who purchases a one year 10,000 T bill for 9,600 and sells it on the secondary market 90 days after the purchase for 9,750 A. 3.5% B. 6.34% C. 10.14% D. 16.22%

B. 6.34%

Annual earnings on a $2,000 Certificate of Deposit earning 3.15% would be A. $31 B. $63 C. $126 D. $2000 E. $2630

B. 63

Historically credit problems remain on a credit bureaus report for ____ years while a bankruptcy remains for _____ years a. ten; twenty b. seven; ten C. eight; 15 D. 5; 10

B. 7;10

assuming you were charged simple interest on a loan of 4,900 which requires you to repay in one year 5,952 what rate of interest would you be charged? A. 9.26% B. 8% C. 7.41% D. 11%

B. 8%

what is the interest cost and the total amount due on a six month loan of 1,500 at 13.2% simple annual interest? A. 99;1,500 B. 99; 1,599 C. 198; 1698 D. 198; 1500

B. 99; 1599

For good financial management, you should treat a credit card as a A. source of funds B. a means of convenience C. a way to finance everything D. an inexpensive form of financing

B. A means of convenience

Which of the following is not true regarding certificates of deposit A. the longer the term, the higher the interest rate paid B. all banks offer the same rates on CD's C. early withdrawals of money are subject to a penalty D. The investment of large amounts will pay higher interest than lower amounts

B. All banks offer the same rates on CD's

Which of the following is not a depository institution? A. first national bank of chicago B. Butterfield and Edwards Brokerage firm C. American 1 Federal Credit Union D. New England Savings Bank

B. Butterfield and Edwards Brokerage firms

Which of the following personal information would not be asked on a credit card application A. cash inflows B. Country of birth C. Capital and collateral D. cash outflows

B. Country of Birth

which of the following is not a service that a depository institution might offer A. checking services B. Credit counseling C. On line services D. The use of a debit card

B. Credit counseling

the item that receives the most weight in the FICO credit scoring system is A. the amount of credit used each month B. credit payment history C. Credit Utilization D. Credit inquiries

B. Credit payement history

A _______ card allows you to pay for a purchase directly from your checking account without writing a check A. credit B. Debit C. expenses D. Travel

B. Debit

An asset management account combines A. assets and expenses B. deposit accounts with a brokerage account C. a savings account with a brokerage account D. A savings account with long term investments

B. Deposit accounts with a brokerage account

The state of Oklahoma imposes a tax of $.17 per gallon on gasoline. What type of tax is this most likely to be? A. general sales tax B. excise tax C. personal property tax D. income tax E. estate tax

B. EXCISE TAX

Which of the following will not be included on your credit report? A. social security number B. FiCO score C. unpaid accounts D. companies that have recently assed your report

B. FICO

If you ahve 10,000 that your do not currently need for expenses and you wish to put it somewhere that it will retain, which of the following financial institutions would you not choose A. Savings institutions B. Finance company C. Securities Firm D. Investment Company

B. Finance Company

If you were taking out a personal loan, the highest rate would probably be charge by a A. commercial bank B. finance company C. member of your family D. Credit union

B. Finance Company

Allison is a recent college graduate and is looking for a bank in which to open a checking account. she has narrowed her choice tot two. first national requires a $100 minimum deposit and charges 15 cents per check. city bank requires a $500 minimum deposit but charges only 5 cents per check. Both pay the same interest rate on the minimum deposit. Allison estimates that she will write 40 checks per month. Assuming that allusion could invest any funds not required for a minimum deposit in a one year CD paying 6 percent, what would be the monthly cost to allusion for first nation and city bank? A. first nation -$6; city bank -$2 B. First national -$6; city bank -$4 C. first national -$6; city bank -$26 D. First national -$6; city ban -$8

B. First national -$6; City bank -$4

Tim Calibe received a $500 gift from his grandparents. He wants to invest this money for the down payment of a house he plans to purchase in 3 years. What type of computation should he use? A. Present value of a single amount B. Future value of a single amount C. Simple interest D. Present value of an annuity E. Future value of an annuity

B. Future value of a single amount

Patrick Guitman recently graduated from college with $20,000 in student loans and $5,000 in credit card debt. He usually makes minimum payments on his debt and he has been late with three payments in the last year. He wants to buy a new car but was told that his interest rate on a loan would be very high. What is the most likely reason this might be so? A. General interest rates are very low B. His credit rating is poor because of his late payments C. He already has a student loan outstanding D. Recent graduates are not allowed to have more than $25,000 in debt outstanding E. Interest rates must be tied to the CPI

B. His credit rating is poor because of his late payments

Taxable income is used to compute a person's: A. exemptions. B. income tax. C. deductions. D. capital gains. E. exclusions.

B. INCOME TAX

The rising of prices that causes changes in buying power is referred to as ____________ risk. A. interest-rate B. inflation C. economic D. trade-off E. personal

B. INFLATION

Which of the following personal information should not be asked on a credit card A. stocks and bonds owned B. Income of parents C. employment History D. expenses and commitments

B. Income of parents

Which of the following is classifies as anon depository institutions? A. Credit union B. Insurance company C. Commercial bank D. Savings and loans

B. Insurance company

______ risk is the risk that an investment could decline as a result of a change in interest rates. A. credit B. interest rate C. Liquidity D. Asset

B. Interest rate

which of the following is not true regarding a money market deposit account MMDA a. a minium balance is required B. It has a maturity date C. the account pays interest D. the limited number of checks may be written monthly

B. It has a maturity date

The ability to convert financial resources into usable cash with ease is referred to as: A. bankruptcy. B. liquidity. C. investing. D. saving. E. opportunity cost.

B. LIQUIDITY

As Jean Tyler plans to set aside funds for her young children's college education, she is setting a(n) ____________ goal. A. intermediate B. long-term C. short-term D. intangible E. durable

B. LONG-TERM

Which of the following will not vary at a commercial bank? A. Interest rates B. Limit of FDIC insurance on accounts C. loan conditions D. Service Fees

B. Limit on FDIC insurance on account

Which of the following accounts would tend to give you the higher interest combined with ease of access to your funds on a limited basis? A. checking account B. MMDA C. NOW account D. CD

B. MMDA

In comparing an MMDa to a NOW account, the MMDA does all of the following except A. it pays a higher interest rate B. MMDA accounts are less liquid C. it provides more limited checking services D. MMDA accounts must maintain a large balance

B. MMDA are less liquid

Rob Redbird is interested in attending a concert next weekend. Unfortunately, he is scheduled to work. If he finds a substitute for his shift so he can attend the concert, what kind of cost is he incurring? A. Fixed B. Opportunity C. Unexpected D. Unavoidable E. Tangible

B. Opportunity

In which city are coins made? A. Saint Louis B. Philadelphia C. New York D. Washington, D.C.

B. Philadelphia

The _______ is an additional return beyond the risk free rate that can be earned from deposit guaranteed by the government A. Risk-free rate B. risk premium C. specific return D. Nominal return

B. Risk premium

Which of the following is an example of opportunity cost? A. Renting an apartment near school B. Saving money instead of taking a vacation C. Organizing income tax records D. Purchasing automobile insurance E. Using a personal computer for financial planning

B. Saving money instead of taking a vacation

Which of the following is not a depository institution? A. Commercial Bank B. Securities Firm C. Savings institutions D. Credit Union

B. Securities Firm

_________ are non depository institutions that facilitate the purchase or sale of securities by firms or individuals by providing investment banking services and brokerage services. A. Finance companies B. Securities firms C. Insurance companies D. Investment companies

B. Securities Firms

you have choice between investing 10,000 in a cd that is six months will pay your 10,190 or investing 9,800 in a t bill that in 182 will return 10,000 ignoring any opportunity cost between the 2 investments which will give you the higher annualized return and what will the annualized return be? A. t bill; 2 % B. T bill; 4.01% C. CD; 3.8% D. CD; 1.9%

B. T bill; 4.01%

Opportunity cost refers to A. Money needed for major consumer purchases. B. The trade-off of a decision. C. The amount paid for taxes when a purchase is made. D. Current interest rates. E. Evaluating different alternatives for financial decisions.

B. The trade-off of a decision.

The Rule of 72 is: A. A tool to determine the number of years until retirement for an employee B. Used to estimate how long it takes for prices to double using a given annual inflation rate C. The legal code for requiring companies to provide a match on retirement savings D. Used to calculate interest rates for savings E. The number of steps required to complete a financial plan

B. Used to estimate how long it takes for prices to double using a given annual inflation rate

Credit has its advantages and disadvantages. Which of the following is false? A. credit cards should be used with discipling B. You should spend up to the limit on all of your credit cards C. cash advances are available through credit D. Bankruptcy is the worst-case scenario from poor credit management

B. You should spend up to the limit on all of your credit cards

which of the following does money management not involve? A. a series of decisions B. a long term time period C. cash inflows D cash outflows

B. a long term time period

A budget deficit would result when a person's or family's: A. actual expenses are less than planned expenses. B. actual expenses are greater than planned expenses. C. actual expenses equal planned expenses. D. assets exceed liabilities. E. net worth decreases.

B. actual expenses are greater than planned expenses.

the secondary market for t bills means that a. they cannot be sold before their maturity date with the help of a brokerage firm B. an idividual may purchase t bills that were owned by some other investor rather than from the government C. t bills are less liquid that CS D. all of the above

B. an individual may purchase t bills that were owned by some other investor rather than from the government

Kyle Burroughs has decided to put $25 more per week in his savings account. He knows this will reduce his ability to go out to eat each week but thinks building his savings is important. This would be an example of: A. a budget variance. B. an opportunity cost. C. a balance sheet. D. an accounting error. E. a budget anomaly.

B. an opportunity cost.

On a credit card, a finance charge is applied to A. any purchase B. any balance not previously paid C. current purchases D. Future purchases

B. any balance not previously paid

All of the following are true of the grace period on credit cards expect it A. usually about 20 days B. applies only to cash advances C. is the time in between the time the statement is close and the time the bill is due D. amounts to free credit time

B. applies only to cash advances

Which of the following is not true about a certificate of depsoits? A. it pays higher interest than a savings account B. are only offered in denominations of $100,000 C. it is not as liquid as a savings account D. funds are locked in for specific periods of time

B. are only offered in denominations of 100,000

Which of the following are considered to be personal financial statements? A. budget and credit card statements B. balance sheet and cash flow statement C. checkbook and budget D. tax returns E. bank statement and savings passbook

B. balance sheet and cash flow statement

of the following statements which is not an advantage of using credit a. credit creates stability and allows you to establish a favorable credit history B. buying today and paying tomorrow seems idea, but continual spending can lead to financial problems C. using credit is safe since charge accounts and credit cards let you shop and travel w/o carrying large amounts of cash D. credit cards permit the purchase of goods even when cash funds are low.

B. buying today and paying tomorrow seems ideal, but continual spending can lead to financial problems

stopping payment on a check A. is possible after the check clears in case of disputes B. can only be used if the check has not cleared C. is free if your checkbook is lost or stole D. is encourage by most banks at customer service

B. can only be used if the check has not cleared

New regulations that provide clearer and more favorable financing rules for individual credit card users do all of the following except A. prohibit interest rate increases if you miss a payment on another credit card B. cap the amount of any increase to 5% C. require a 45 day notice of any credit card interest rate increase D. prohibit the rate on existing credit card balances

B. cap the amount of any increase to 5%

a commitment to cover credit repayments under adverse conditions such as accident or illness is called A. accident insurance B. credit insurance C. health insurance D. unemployment insurance

B. credit insurance

identity theft occurs when an individual obtains w/o your permission all of the following info except: a. social security number b. date and place of birth c. drives license number d. bank account number

B. date and place of birth

the impact of credit _______ saving and _______ spending a. increases; decreases B. decreases; increases C. decreases; decreases D. has no relationship

B. decreases; increases

obtaining information in order to steal your identity from document discarded by your bank is a. shoulder surfing b. dumpster diving c. pretexting d. skimming

B. dumpster diving

which of the following is not a method by which financial institutions calculate finance charges on credit cards A. previous balance method B. ending balance method C. average daily balance method D. adjusted balance method

B. ending balance method

the cost of using credit may result in ______ spending and _______ increased debt A. controlled; reduced B. excessive; increased C. excessive; reduced D. controlled; increased

B. excessive; increased

Advantages of using credit are all of the following except A. the ability to cover cash flow shortages B. increases the number of checks written C. the ability to buy large items earlier D. convenience in making day to day transactions

B. increases the number of checks written

The annual percentage rate is all of the following except A. a simple interest rate for borrowing money for a year B. it requires a complex formula to compute C. it includes fees such as application processing fees D. it allows easy comparison of financing costs among various creditors

B. it requires a complex formula to compute

which of the following is not true regarding reviewing your credit history? A. your will be able to determine if any errors have been made so they can be corrected B. it will help determine if there are credit cards that you should apply for to improve your credit standing C. it will reveal the kind of information that lenders will consider when making a decision to extend credit D. Will reveal deficiencies that you can work to eliminate that will improve your credit ratings

B. it will help determine if there are credit cards that you should apply to improve your credit standing

which of the following is true of a now account A. pays no interest B. not s liquid as a traditional checking account C. no minimum balance is required D. is not an issued account

B. not as liquid as a traditional checking account

If a credit cards has a provision allowing you to make purchases beyond the stated credit limit, it is referred to as A. purchase protection plan B. overdraft protection C. grace period D. first forgiveness provision

B. overdraft protection

using email messages from a legitimate source to obtain account information for the purpose of identity theft is referred to as a. pharming b. phishing c. skimming d. trolling

B. phising

a disadvantage of using credit as a source of liquidity is the A. inconvenience of using credit B. potential cost of finance charges C. Acceptability of credit by creditors D. poor records available after credit use

B. potential cost of finance charges

Which of the following is an example of opportunity cost? A. renting an apartment near school B. saving money instead of taking a vacation C. setting aside money for paying income tax D. purchasing automobile insurance E. using a personal computer for financial planning

B. saving money instead of taking a vacation

you have 3,000 that you may beed to use to replace the furnace in your home. ivy ou need the funds, it would be on no less than a week's notice. into which type of account would it be best for you to deposit the 3,000? A. checking account B. savings account C. Now account D. all of the above

B. savings account

the market where an investor could see t bills that he owns is called the a. primary market b. secondary market c. stock market d. t bill market

B. secondary market

This month, Ken Grossman has cash inflows of $3,100 and cash outflows of $2,950, resulting in a A. balanced budget. B. surplus of $150. C. deficit of $150. D. surplus of $3,100. E. deficit of $2,950.

B. surplus of $150.

In securing a credit card you should try to obtain A. the highest maximum limit possible B. a maximum limit high enough to cover monthly expenses C. a maximum limit high enough to cover anything, you might wish to purchase D. the lowest maximum limit possible to restrict your usage

B. the maximum limit high enough to cover monthly expenses

which of the following is not true about a certificate of deposit? A. they pay higher interest than T-bills B. they are long term investments of two years or more C. funds are locked in for specific periods of time D. a penalty is imposed for early withdrawl

B. they are long term investments of two years of more

Money market funds MMF have all of the following characteristics except A. pooled money provided by individuals to invest B. unlimited check writing C. short- term maturity D. a minimum investment amount

B. unlimited check writing

Opportunity cost refers to: A. money needed for major consumer purchases. B. what a person gives up by making a choice. C. the amount paid for taxes when a purchase is made. D. current interest rates. E. evaluating different alternatives for financial decisions.

B. what a person gives up by making a choice.

which of the following should not affect your choice of a financial institution A. convenience B. whether it is state or federally charted C. deposit rates and insurance D. fees

B. whether it is state or federally charted

Which of the following is not an advantage of using atm cards? A. it is easy and convenient to withdraw funds. B. your total banking expenses are likely to be lower. C. you have access to your account any time of the day D. You can bank at remote locations all over the world.

B. your total banking expenses are likely to be lower

To join a credit union you need to,

Be a member of a group with a common bond

A $1,000 corporate bond pays 6.5 percent a year. What is the annual interest you will receive each year? A. $0.65. B. $6.50. C. $65 D. $1,060.50 E. $1,065

A call feature: A. allows bondholders to convert their bond to a specified number of shares of common stock. B. is not available on corporate bonds. C. allows the corporation to buy outstanding bonds from current bondholders before the maturity date. D. is only available with government securities. E. is guaranteed by the corporation.

A certificate of deposit usually has: A. high interest-rate risk. B. low safety for savers. C. limited liquidity. D. a variable rate of return. E. no minimum deposit amount.

A mutual fund that invests in the common stocks of companies in the same industry is called a(n) ____________ fund. A. growth-income B. income C. sector D. small-cap E. money market

A negotiable instrument has to include all of the following except : A. Specific amount of money B. Payable to someone or some company C. Bank's address D. The date

A neighborhood restaurant wants to add a place for outdoor dining. In order to do this, the owners need a loan of $50,000. Which of the following can influence getting a new loan approved? A. Using a personal three- year car loan as collateral for a business loan. B. Asking for a loan from family and friends. C. Using a good credit history from a business credit card to get a business loan. D. Getting a cosigner on the loan.

A person bought 100 shares of stock for $6,000. After selling these 100 shares for $10,000, the investor is A. prohibited from buying stocks for a period of six months. B. required to report the sale to the Securities and Exchange Commission (SEC). C. responsible to report the $4,000 profit on his federal tax return. D. unable to collect the money until a broker finds a buyer.

A person who owns a house needs to reduce her monthly expenses. Which of the following is good advice to help her save money? A. Buy environmentally safe cleaning products for home use. B. Make purchases for home products online. C. Lower the thermostat for heat when no one is home. D. Pay home repair bills with a debit card.

A personal check with guaranteed payment is called a: A. traveler's check. B. bank draft. C. certified check. D. money order. E. cashier's check.

A stock issued by a corporation that has the potential of earning above-average profits when compared to other firms in the economy is called a(n) ____________ stock. A. defensive B. cyclical C. growth D. income E. blue-chip

A temporary reduction or suspension of your mortgage payments for three or four months followed by a new repayment plan is called a: A) Reinstatement B)New payment plan C)Forbearance D)None of the choices are correct

A typical grace period for many credit card issuers is A. 0-10 days. B. 10-20 days. C. 20-25 days. D. 30-40 days. E. 45-60 days.

A young man owes $6,000 in income taxes that was due three years ago. To collect this debt, the Internal Revenue Service is able to A. take possession of property equal to the unpaid balance. B. notify the police to make a citizen's arrest. C. garnish his salary. D. suspend voting rights.

According to the Fair Debt Collection Practices Act, debt collectors cannot: A) Call you before 10:00 a.m. B) Call you after 7:00 p.m. C) Contact you after you ask them in writing to stop contacting you. D) Tell you who they are.

An individual or family should consult with a lawyer when A. deciding between term or whole life/universal life insurance policies. B. establishing a 529 College Education Fund. C. estate planning that includes a will. D. receiving an inheritance or windfall income.

An investor bought 100 shares of stock in a technology company for $3,000 and three years later, sold all the shares for $4,000. The $1,000 profit is known as A. diversification. B. a yield. C. a capital gain. D. dollar cost averaging

Currently, which two U.S. cities produce coins for circulation? A. New York and Washington, D.C. B. Atlanta and Seattle C. Philadelphia and Denver D. Boston and Houston

FICO scores generally range from A. 100 to 1000. B. 200 to 700. C. 350 to 850. D. 450 to 650. E. 500 to 1000.

For the past two years, the price of gasoline increased 10%, while incomes did not increase. Which of the following will impact the monthly budget and financial plans of most people as a result of this price increase? A. Insurance premiums. B. Property taxes. C. Use of an automobile. D. Automobile repairs.

If you cosign a loan: A. you are only responsible for half of the debt obligation. B. you will be asked, but not required, to pay the loan if full if the borrower fails to pay. C. you will be required to pay the loan in full if the borrower defaults on the payments. D. the creditor must first try to collect from the borrower. E. the creditor is prohibited from garnishing your wages if you refuse to pay the loan in full.

If you invest $100 and receive a 12% APR (annual percentage rate), what will your balance be at the end of the year? A. $121.12 B. $121.00 C. $112.00 D. $100.12

If you miss payments on a home equity loan, you can lose your A. Savings account. B. Car. C. House. D. Retirement account. E. Furnishings.

Income can be earned or unearned. Which of the following is an example of unearned income? A. Money from a part-time second job. B. Tips from customers. C. Interest from bank accounts. D. Paid vacation days from work.

Kevin Bacon is thinking about buying an investment. The investment option that he is thinking about buying is a written pledge by a corporation to repay a specified amount of money. It also pays interest payments every 6 months until it matures. What investment is Kevin thinking about purchasing? A. Common Stock B. Preferred Stock C. Corporate Bond D. Real Estate E. Mutual Fund

Lilia borrows a diamond necklace from her friend Jane for a special event. The necklace is very expensive and is insured on Jane's parents' homeowner's policy. When the necklace is returned, Jane notices that a diamond is missing. Jane should handle this situation by A. calling the insurance company and filing a claim. B. telling her parents that she lost the diamond somewhere in their home. C. informing Lilia that she is responsible and asking Lilia to have the necklace repaired. D. using Lilia's ATM pin to withdraw money from Lila's account to replace the missing diamond.

Money personality is: A. The point at which spending more money has a diminishing rate of fulfillment B. Sufficient means to support oneself C. Your style and habits of money management D. Income from your investments

Normally, corporate bondholders receive interest: A. monthly. B. every three months. C. every six months. D. yearly. E. when the bond matures.

One of the drawbacks of borrowing from parents or family members is that such loans: A. tend to be more expensive than other types of loans. B. must be interest-free. C. may create tension within the family. D. are limited to oral agreements. E. are legally prohibited from establishing repayment dates and terms.

One of the reasons lenders review the credit history of individuals applying for credit and loans is to determine A. place of residence. B. the amount of life insurance coverage. C. how much is owed. D. health history.

One way that leads a person to earn additional income is for the person to A. discuss financial goals with her supervisor. B. increase budgeted monthly expenses. C. increase her knowledge or improve skills. D. volunteer at a successful corporation

Paper money is produced by the _________________. A. Federal Reserve Bank B. United States Treasury C. Bureau of Engraving and Printing D. Fort Knox Mint

Paul borrowed $200 to be repaid in one year. He paid 10% interest and a service charge of $3.00. What is his finance charge? A. $3.00 B. $20.00 C. $23.00 D. $200.00 E. $223.00

Payday, cash advance, check advance, and post- dated checks are _________ loans. A. inexpensive B. medium-priced C. expensive D. low APR E. variable APR

People in the U.S. spend 5.5% of their income on food consumed in the home and spend 4.5% of their income on food outside of the home. What does this say about how they spend their money? A. They have little value for healthy food. B. Eating out is less expensive than making food at home. C. They value eating out. D. Food prices are high since supermarkets are profitable.

Peter borrowed $225. He paid $20 interest and a service charge of $3.00. What is his finance charge? A. $3.00 B. $20.00 C. $23.00 D. $225.00 E. $248.00

The acronym for setting good goals is SMART. What does each of the letters in SMART stand for? A. Smart, Measurable, Attainable, Real, Time B. Specific, Measurable, Attainable, Reliable, Time C. Specific, Measurable, Attainable, Realistic, Time D. Serious, Measurable, Attainable, Reachable, Time

The amount of savings in a bank account that is protected by the Federal Deposit Insurance Corporation (FDIC) is A. $ 50,000. B. $100,000. C. $250,000. D. $500,000.

The best way to maintain your credit rating is to: A. use credit sparingly. B. pay cash for your purchases. C. repay your debts on time. D. declare a Chapter 7 bankruptcy. E. use as many credit cards as you can.

The feature of a fixed-rate mortgage loan that is it different from an adjustable-rate mortgage loan is that the fixed-rate mortgage has A. a down payment on the loan is 30% of the selling price of the home. B. a down payment on the loan is only 5% of the selling price of the home. C. an interest rate that remains the same throughout the length of the loan. D. an interest rate that changes annually throughout the length of the loan.

The periodic charge for the use of credit is A. A line of credit. B. A revolving check credit. C. Interest. D. A grace period. E. Principal.

The purpose of bankruptcy laws is to A. teach people who cannot control their spending a lesson. B. to help those in financial trouble with government money. C. protect people from losing all of their property to creditors. D. separate "good debt" from "bad debt."

The question "What are your assets and net worth?" relates to A. Character. B. Capacity. C. Capital. D. Collateral. E. Conditions

The rate of return on a savings account is also referred to as: A. liquidity. B. compounding. C. yield. D. opportunity cost. E. asset turnover.

The terms "job" and "career" are often used interchangeably. However, there is a major difference in the meaning of the terms. A career is characterized as A. responsibilities without risk because it involves different tasks. B. responsibilities that result in earning income from an hourly wage. C. a profession or vocation requiring special education or training. D. work that includes the benefit of short hours or little responsibility.

There are 5 stages that make up a person's personal finance life stages. In which stage would a person start a 401(k) or retirement plan? A. Dependent life stage B. Independent life stage C. Early family life stage D. Empty nest life stage E. Retirement life stage

To avoid high fees for loans, a person should avoid borrowing from a: A. credit union. B. savings and loan association. C. pawnshop. D. commercial bank. E. mutual savings bank.

Twenty years ago, you began investing $2,000 a year. Because your investments earned an average of 8 percent a year, your investment portfolio has a current dollar value of $92,000. How much did you earn on your investments over the 20-year period of time? A. $2,000 B. $40,000 C. $52,000 D. $92,000 E. $132,000

Under Chapter 7 of the U.S. bankruptcy code, A. All debts are forgiven. B. Alimony and child support debts are released. C. Certain assets receive some protection. D. Taxes and fines no longer need to be paid. E. Debt arising from driving while intoxicated is forgiven.

Valerie Kilmer has purchased the stock of the Williams Widget Company. After she buys the stock she is told that the number of shares she owns will be divided into a larger number. In fact, she will get two shares for every share that she owns today. What has happened to this company? A. Dividend split B. Proxy split C. Stock split D. Banana split E. None of the choices

What characteristics describe the empty nest life stage? A. You are ready to retire. B. You no longer work full time. C. Your children are no longer dependent on your income. D. You've reached financial independence.

What do you need to create a personal mission statement? A. Money and family B. Food and a car C. Values and a vision of the future D. Morals and logic

What gives paper currency value? A. Having a high supply and high demand B. Having a high supply and low demand C. Having a limited supply and relatively high demand D. Having a low supply and low demand

What is (1+ r/n)n -1? A. Future value (FV) B. Annual percentage rate (APR) C. Annual percentage yield (APY) D. Compound percentage interest (CPI)

What is paper money backed by? A. Gold B. Gold and silver C. The full faith and credit of the U.S. government and the Federal Reserve Bank D. Silver

What is the difference between an annuity and an annuity due? A. There are no payments in an annuity due. B. Payments are at the beginning of the month for an annuity and at the end of the month for an annuity due. C. Payments are at the beginning of the month for an annuity due and at the end of the month for an annuity. D. There is no difference.

What is the money in the United States backed by? A. Gold B. Silver C. The full faith and credit of the U.S government D. The president's oath of office E. The Chinese yen

What kind of insurance is extremely important for a single 25-year-old person to buy? A. Renters insurance. B. Long term care insurance. C. Health insurance. D. Life insurance

What step can you take if your credit application is denied? A. Sue the credit rating agency. B. File a complaint against the merchant. C. Ask why you were denied credit. D. Reapply for credit once 30 days have passed. E. Borrowers do not have any rights provided by law.

When establishing your mission, you should include all of the following except A. Vision B. Mission C. Long-term goal D. Value

When interest is added to your initial deposit and you begin to earn interest on interest, this is known as A. The annual percentage rate B. The time value of money C. Compounding D. The future value of money

Which is nota requirement for a negotiable instrument? A.Date B.Payable for a speciFc amount of money C.Contains personal information (address, phone number, full name, etc.) D.Signature by person who owns the account

Which of the following electronically subtracts money from your savings or checking account to pay for goods and services? A. A credit card B. Closed-end credit C. A debit card D. A gift card E. A home equity loan

Which of the following federal laws protects borrowers? A. Social Security Act. B. National Privacy Act. C. Truth in Lending Act. D. Homeland Security Act.

Which of the following government programs would provide partial income to support someone who is permanently disabled? A. Affordable Care Act. B. Americans with Disabilities Act. C. Social Security. D. Meals on Wheels.

Which of the following investments provides the greatest amount of liquidity? A. Mutual Funds. B. Real Estate. C. Certificate of Deposit (CD). D. Collectibles.

Which of the following is an advantage of people increasing their personal savings? A. The economy grows faster when people save money rather than spend it. B. The government benefits from taxes on savings. C. People are better able to afford items such as a future down payment on a home. D. Banks can use the money from deposits to make profits on loans to the public.

Which of the following is an agency that helps people with credit problems or debt? A. Chamber of Commerce. B. Governor's Office. C. Consumer Protection Agency. D. Small Business Administration.

Which of the following is an early warning sign of credit card trouble? A) You have an emergency fund B)You are getting cash advances on your credit card C)You are paying only the minimum balance D)You are unable to make the minimum payment

Which transaction requires a securities license? A) leasing a commercial building B) selling a commercial warehouse C) selling shares in Fannie Mae D) arranging a sale-leaseback on a commercial property

Which type of loan will result in the largest reduction of the principal balance most quickly?A) 10% over 30 years B) 11% over 20 years C) 13% over 15 years D)14% over 20 years

Who controls the circulation of money in the United States? A. Coin mints B. The Bureau of Engraving and Printing C. The Federal Reserve D. The president of the United States

_________________ is the practice of investing or saving money at specific times regardless of market conditions or your personal finance outlook. A. Down shifting B. Financial literacy C. Dollar cost averaging D. Regular investing

The major function of a financial plan is to A. Reduce taxes. B. Increase savings. C. Achieve financial goals. D. Improve your credit rating. E. Obtain adequate insurance protection.

C ACHIEVE FINANCIAL GOALS

Jack has $1,000 that the wishes to invest for the next two years. one year CDS are currently paying 8% while 2 year CDs are paying 12%. Economists are predicting that interest rates will rise by the end of the year. what is the minimum amount interest rates would have to increase to make the one year cd better than the 2? A. 16% B. 14% C. 12% D. 10%

C. 12%

A taxpayer with a taxable income of $47,856 and a total tax bill of $5,889 would have an average tax rate of ____ percent. A. 8.6 B. 10.3 C. 12.3 D. 14.2 E. 16.7

C. 12.3

on april 1, alex deposited 2,000 i na n MMDA that pays 3% interest. On July 1, alex invested $3,000 in a sex month CD that pays 6% interest. how much total interest will alex have earned by December 31st? A. $90.00 B. $45.00 C. $135.00 D. 240.00

C. 135.00

If you buy a 10,000 par value, three month t bill prices at 9800 what will your return be? A. 8.2% B. 6.5% C. 2.04% D. 4.08%

C. 2.04%

Bill borrowed 3,600 and will be charged a simple interest rate of 18% bill will pay ______ interest for borrowing the money on april 1 and repaying the money on decemebr 31 A. 468 B. 648 C. 486 D. 162

C. 486

If a $10,000 T bill is purchased for 9,600 and matures in 270 days, what will be the annualized return A. 4% B. 4.17% C. 5.63% D. 2.85%

C. 5.63%

If you borrowed 8,700 at 6% for one year, what would your total interest be if you are charged simple interest? A. 600 B. 9,222 C. 522 D. 600

C. 522

a credit score of _____ would normal allow you to have easy approval for credit A. 500 B. 600 C. 700 D. 1,000

C. 700

If inflation is expected to be 8 percent, how long will it take for prices to double? A. 6 years B. 8 years C. 9 years D. 12 years E. 18 years

C. 9 YEARS

You have $3,000 that you may need any day to replace the furnace in your house. Which of the following would be the best place to put the $3,000? A. A one year CD earning 4% B. A common stock mutual fund earning 9% C. A savings account earning 2% D. Shares of stock in a high tech company that could double in 6 months

C. A savings account earning 2%

The first step of the financial planning process is to A. Develop financial goals. B. Implement the financial plan. C. Analyze your current personal and financial situation. D. Evaluate and revise your actions. E. Create a financial plan of action.

C. Analyze your current personal and financial situation.

Karen Price has created a financial statement for herself that lists all of the assets she owns as well as the debts she owes. This would be an example of: A. money management. B. opportunity cost analysis. C. a balance sheet. D. a liquidation exercise. E. a budget variance.

C. BALANCE SHEET

Generally the ____ the credit history, the _____ the credit limit a. better; lower B. worse: higher C. better; higher d. none of the above

C. Better; higher

Who is most likely to benefit by inflation? A. Retired people B. Lenders C. Borrowers D. Low-income consumers E. Government

C. Borrowers

Future value computations are also referred to as A. Discounting. B. Add-on interest. C. Compounding. D. Simple interest. E. An annuity.

C. COMPOUNDING

Which of the following is a nonprofit depository institution that provides services only to members who have a common affiliation A. commercial banks B. Savings institutions C. Credit unions D. Finance companies

C. Credit unions

_________ goals relate to infrequently purchased, expensive items. A. Short-term B. Intangible-purchase C. Durable-product D. Consumable-products E. Intermediate

C. Durable-product

Which one of the following is not included in gross income? A. Tax credit. B. Exemption. C. Exclusion. D. Earned income. E. Portfolio income.

C. EXCLUSION

the identity theft and assumption deterrence act has designated which federal agency as the central clearing house for all identity theft complaints a. FBI B. CIA C. FTC D. WPA

C. FTC

which of the following agencies should always be notified in the event of idnentiy theft? a. FBI b. secret service c. FTC D. postal shit

C. FTC

which of the following is not a characteristic of money market funds? MMF A. pooled money provided by individuals to invest B. short term maturity C. High risk investments D. a minimum investment amount

C. High risk investments

creditors prefer a _____ amount of capital and _____ collateral in the best of circumstances a. low; low b. high; low C. high; high D. medium; low

C. High; high

An investor should expect to receive a risk premium for A. Expanded exports B. Lower consumer prices C. Higher potential earnings due to uncertainty D. Reduced availability of investments E. Expected lower inflation

C. Higher potential earnings due to uncertainty

a one year CD has a ____ return and ______ liquidity than a checkin account. A. lower; lower B. higher; higher C. higher; lower D. lower Higher

C. Higher; lower

The loss of a job is referred to as ____________ risk. A. interest-rate B. inflation C. income D. trade-off E. personal

C. INCOME

An advantage of personal financial planning is: A. The use of low-interest savings B. Increased impulse spending C. Increased control of financial affairs D. More credit card debt E. Less monitoring of investments

C. Increased control of financial affairs

______ are non depository institutions that provide insurance to protect individuals or firms against possible adverse events A. Finance companies B. Securities Firms C. insurance companies D. Investment Companies

C. Insurance companies

The goal of investing $50 per month for the next 18 years for your nephew's college fund is a(n) __________ goal. A. Short-term B. Intermediate C. Long-term D. Intangible E. Durable

C. Long-term

Because of interest that can be earned, if I can invest a dollar today, it should be worth _________ in the future. A. Less B. The same as C. More D. Either less or the same as E. Either the same as or more

C. MORE

juan has $1,000 that he would like to invest in a cd. his bank offers two alternative, i.e... a one year cd paying 6% or a two year cd paying 9%. Juan has been reading that interest rates are rising and based on his research, he estimates that by year end the rate on one year cps will increase to 10%. what alternative would give juan the most interest and what would the total interest be A. two one year cps returning $120 in interest B. Two one year cds returning $160 in interest C. one two year cd returning $160 interest D. One two year Cd retuning $1900 in interest

C. One two year CD returning $160 in interest

Which of the following intermediate goals is stated most clearly? A. Buy a car for less than $17,000 within 6 months B. Retire at age 65 with $2,000,000 in my 401(k) account C. Purchase a house with a mortgage no greater than $150,000 within 3 years D. Set up an emergency fund E. Invest $50 per month for the next 18 years for my nephew's college fund

C. Purchase a house with a mortgage no greater than $150,000 within 3 years

the risk free rate on borrowed funds is determined by: A. the federal reserve B. congress C. supply and demand D. the banking system

C. Supply and demand

The consumer price index reflects: A. The prices of products and services in the United States B. The prices of products and services around the world C. The change in prices of products and services of urban consumers D. The change in prices of products and services around the world E. None of the above

C. The change in prices of products and services of urban consumers

which of the following is true wit regards to rising interest rates? A. use short-term loans to take advantage of low interest rates B. select long term savings options to lock in current interest rates C. use long term loans to take advantage of current low rates D. the term of the loan option in not impacted by rising interest rates

C. Use long term loans to take advantage of current rates

which credit card requires full payment each month? A. mastercard B. visa C. american express D. a proprietary card

C. american express

The easiest way to establish credit is to A. purchase a new car with a car loan B. Purchase a house with a mortgage C. Apply for a credit card D. Pay cash for all your purchases

C. apply for a credit card

which of the following would not help improve your credit score? A. reducing unnecessary expenditures B. destroying some credit cards C. applying for more credit cards D. notifying creditors of late payment

C. applying for more credit cards

The current financial position (including net worth) of an individual or family is best presented with the use of a(n): A. budget. B. cash flow statement. C. balance sheet. D. bank statement. E. time value of money report.

C. balance sheet.

all of the following are provisions of the credit card act of 2009 except A. cardholders must be given at least 21 days from the a in which the bill is mailed to make a payment B. cardholders less that age 21 must show proof of their income C. cardholders can spend beyond the limit imposed on their credit card D. promotional interest rates must be offered for a period of at least 6 months

C. cardholders can spend beyond the limit imposed on their credit card

Which of the following would give you the greatest liquidity A. one year CD B. Savings account C. Now account D. checking account

C. checking account

In comparing credit cards to other forms of credit, which of the following is false? A. credit cards are generally the most expensive form of credit B. you should pay the most expensive debt off first C. Credit cards can be viewed as a source of funds D. A home equity loan is a way of combining credit card and other debt

C. credit cards can be viewed as a source of funds

For January, Bethany DeWeese had cash inflows of $4,200 and cash outflows of $4,750, resulting in a A. balanced budget. B. surplus of $550. C. deficit of $550. D. surplus of $8,950. E. deficit of $4,750.

C. deficit of $550.

which of the following is not a fee that financial institutions charge A. Checking account service charge B. atm usage fee C. depository insurance D. Safety deposit box rental

C. depository insurance

Which one of the following should be budgeted first? A. variable expenses B. vacation expenses C. fixed expenses D. unplanned living expenses E. recreation expenses

C. fixed expenses

If a person deposited $50 a month for 6 years earning 8 percent, this would involve what type of computation? A. simple interest B. future value of a single amount C. future value of a series of deposits D. present value of a single amount E. present value of a series of deposits

C. future value of a series of deposits

all of the following are true of treasury securities except A. are a means by which the us government lends money B. have a maturity range from 3 months to 30 years C. have a minimum par value of $100 D. can be bought and sold on the secondary market

C. have a minimum par value of 100

when interest rates rise, individuals who make deposits will earn a __ rate of interest, while individuals who need to borrow funds will ave to pay a __ rate A. Higher; lower B. lower; higher C. Higher; Higher D. Lower; lower

C. higher; higher

Which of the following is not true regarding revolving end credit? a. credit cards are an example of it B. a specific maximum amount of credit is establish C. if the balance is not paid off over a period of months, a penalty is incurred D. interest is charged on the remaining balance each mont

C. if the balance is not paid off over a period of months a penalty is incurred

Money market funds MMFs offer all of the following except A. short term maturity securities B. safe investments with higher rates that t bills C. insured savings D. check writing privileges.

C. insured saving

which of the following is not an advantage of a checking account? A. stop payment services B. overdraft protection C. interest earned on balances D. liquidity

C. interest earned on balances

of the following statements which is not a disadvantage of using credit? A. it can be costly to use B. it can be difficult to repay if overused C. it is more difficult to obtain than repay D. it may tempt you to make impulse purchases

C. it is more difficult to obtain than repay

which of the following is not true regarding a savings account? A. it does not provide checking services B. it is less liquid than checking account C. it pays lower interest than a checking account D. it is less convenient than a checking account

C. it pays lower interest than a checking account

which of the following will not help you establish a good credit history? A. paying your phone bill on time B. financing a car and making payments on time c. making as many purchases as possible with cash D. never exceeding your credit limit on your credit card

C. making as many purchases as possible with cash

which of the following is not a factor in the FICO credit scoring? A. credit utilization B. length of relationship wit creditors C. marital status D. number of inquires

C. marital status

Credit cards are generally used for such purchases as A. cars B. Homes C. meals, groceries, and clothing D. Stock

C. meals, groceries, and clothing

To achieve both liquidity and an adequate return, you should consider investing in A. only one money market investment with a high return and low liquidity B. only one money market investment with low return and high liquidity C. multiple money market investments with varied returns and levels of liquidity D. Multiple money market investments with high returns and high liquidity

C. multiple money market investments with varied returns and levels of liquidity

on your credit card statement, the amount that you owe financial institution now is called the A. preivous balance B. minimum balance C. new balance D. payments

C. new balance

Which of the following in not true of a now account? A. offered by depository institutions B. pays relatively low interest C. only three checks per month can be written D. requires a minium balance

C. only 3 checks per month can be written

an arrangement that protects a customer who writes a check for an amount that exceeds the checking account balance is called A. liquid investment B. stop payement C. overdraft protection D. automatic transfer

C. overdraft protection

posing as an employee of a brokerage firm to obtain information to allegedly update your account information is a. shoulder surfing b. dumpster diving c. pretexting d. skimming

C. pretexting

which of the following is not a reason that your checking account balance might change from one month to another A. deposits to your account B. Cleared checks C. purchasing new shoes with a credit card D. bank fees

C. purchasing new shoes with a credit card

An asset management account does all of the following except A. combines deposit accounts with a brokerage account that is used to buy or sell stocks B. provides a single consolidated statement showing the ending balance and activity of all account C. requires a small initial investment to start D. Sweeps any unused balance in the checking account into a money market account at the end of the day

C. requires a small initial investment to start

when you invest in a cd that has a maturity of one year, you are guaranteed the interest rate offered on that CD. your return would be termed A. risk premium B. money i the bank C. risk free return D. liquid assets

C. risk free return

Which of the following is a disadvantage of using credit? a. ease of returning merchandise B. shopping convenience C. slowing of progress toward financial goals D. capacity to access credit in the future

C. slowing of progress toward financial goal

If you find yourself with an excessive credit card balance, the first thing you should do is A. borrow funds from family members B. quit school and get a job C. spend as little as possible D. file for personal bankruptcy

C. spend as little as possible

Federal tax-deferred employee benefits are: A. not subject to federal income tax. B. not subject to state income tax. C. taxed at some future time. D. are taxed at a special rate. E. only available to union employees.

C. taxed at some future time.

The annual price increase for consumer goods and services measured by the Bureau of Labor Statistics is referred called ________. A. deflation B. inflation C. the consumer price index D. the price calculator E. goods and all of the above

C. the consumer price index

which of the following is a feature of a treasury bill (T-bill) A. they have a maturity of more than one year B. they are available with a minimum value at maturity of $100 C. They are purchased at a discount from par value D. they must hold maturity

C. they are purchased at a discount from par value

A _______ is a check that is written on behalf of an individuals and will be charged against a large well-known financial instituion or credit card sponsor's account A. cashier's check B. money order C. traveler's check D. Personal check

C. travelers check

the term structure is often based on rates of return or yields offered by ______ which are _______ issued by the U.S. treasure with different maturities A. treasure securities; mutual fun securities B. treasury securities; equity securities C. treasure securities; debt securities D. None of the Above

C. treasury securities: debt securities

free credit reports are accessible to all US consumers at a. www. creditreport.com b. www.freecreditreport.com c. www.annualcreditreport.com d. www. experian. com

C. www. annualcreditreport.com

some credit card companies will waive the annual fee on a credit card if A. you use the card infrequently B. you carry a large balance from month to month C. you pay your bills in a timely manner D. Credit card companies never waive annual fees

C. you pay your bills in a timely manner

With an inflation rate of 9 percent, prices would double in about ___________ years. A. 4 B. 6 C. 8 D. 10 E. 12

C.8

Which of the following financial institutions would be used the most by business customers wishing to borrow money? A. Commercial Banks B. Savings instituions C. Credit Unions D. All are used equally by business customers

Commerical Banks

A cash advance A. Increases a borrower's credit limit. B. Is the cheapest way to obtain money when away from home. C. Usually is obtained from a bank. D. Accrues interest charges beginning the day the cash advance is made. E. Is tax-deductible

A checking account at a commercial bank is called a: A.Share draft account B.Negotiable instrument C.±inancial intermediary D.Demand deposit account

A highly successful high school student applied to public and private colleges and he was accepted to all of them, including one very prestigious university. The tuition at these colleges ranges from $15,000 to $55,000 a year. His mother lost her job. What is the first thing the family should do to address this situation? A. Use their emergency fund to pay for tuition. B. Charge the cost of the son's first semester tuition on a low-interest rate credit card. C. Have the son postpone going to college for one year. D. Contact all of the colleges to explain the current financial situation to see if they can help.

A major difference between leasing and borrowing to buy is that A. Leasing is less expensive for the consumer. B. Leasing does not require that the consumer give a down payment. C. Borrowing requires the consumer to be at least age 25. D. Borrowing requires the consumer to make monthly payments with interest.

A person has three credit cards with a total of $15,000 owed and a credit score of 500. She does not have a savings account and wants to improve her credit score and decrease her debt. What is the first thing she should do to address her problem? A. Ask her employer for a payday loan to help pay the outstanding debts. B. Choose the credit card with the highest interest rate and only pay that card's invoice monthly. C. File for bankruptcy if she is less than 30 years old. D. Contact credit card companies to negotiate a lower interest rate and a repayment plan.

A person received a free copy of her credit report and found inaccurate information. What should she do? A. Contact her employer about the mistake B. Inform the Consumer Financial Protection Bureau (CFPB). C. Send a letter to the Internal Revenue Service (IRS) about her problem. D. Write to the credit-reporting agency about the mistake

A person, who is reluctant to invest in stocks because she has a low tolerance for risk, should consider A. trading stocks frequently to avoid taxes. B. buying on margin by borrowing from the brokerage firm. C. choosing speculative stocks since they pay interest. D. buying mutual funds because they are professionally managed

A savings account earns 4 percent. If the saver is in a 28 percent tax bracket, the after-tax savings rate of return would be ____ percent. A. 28.00 B. 16.72 C. 4.00 D. 2.88 E. 1.12

A woman parked her car and went shopping. When she returned she discovered that her car was damaged while it was parked. When filing a claim, what does she have to provide to her insurance company? A. The name of the person who damaged the car. B. The Social Security number of the person who damaged the car. C. Proof that she has enough money to pay for the deductible. D. A copy of the police report that she got from the police department.

An important responsibility for young adults living independently is to A. purchase cell phone product insurance. B. pay the principal if they have a mortgage. C. purchase vacation homes. D. monitor credit card expenses and debt.

An individual with a high tolerance for risk and volatility in financial markets would be most comfortable with more than 50% of his investments in which of the following? A. Insured bank savings accounts. B. Government bonds. C. Mutual Funds. D. Common stocks

Anthony's friend Donald asks to borrow Anthony's computer for the weekend while Donald's computer is being repaired. What is most important for Anthony to consider before allowing Donald to borrow the computer? A. The length of time Donald and Anthony have been friends. B. Donald's credit score. C. The items that Donald has that Anthony might need to borrow. D. Donald's level of responsibility and honesty.

Beverly Frickel purchased 100 shares of Gleason Systems stock for $42.50 per share. Her commission for this purchase was $35. She sold the stock two years later for $55 per share and a commission of $50. While she held the stock it paid a dividend of $1.50 per share. What was Beverly's total dollar return on this stock? A. $1250 B. $1165 C. $150 D. $1315 E. $1400

Calculate the future value when PV = $1,600, the interest rate is 8%, and there are 10 periods. A. $7,030.26 B. $3,620.37 C. $3,370.60 D. $3,454.28

Checking account overdraft protection A.Saves you money in overdraft fees B.Saves your reputation C.Saves you time D.All of these

Credit bureaus get their information from all of the following except A. Banks. B. Credit card companies. C. Finance companies. D. References. E. Stores

Credit card transactions are considered a form of borrowing because A. consumers need to sign the receipt given by the store. B. credit results in the money charged being immediately deducted from a bank account. C. the credit limit is based on a person's ability to repay debt. D. someone else's money is being used in exchange for the promise of repaying in the future.

Credit files can include all of the following except A. Employer, position, and income. B. Previous address. C. Spouse's name, Social Security number, employer, and income. D. Race or nationality. E. Checks returned for insufficient funds.

Darissa Poe is buying shares in a mutual fund that only invests in companies from countries other than the United States. What type of mutual fund has she purchased? A. An aggressive growth fund B. An equity income fund C. A global fund D. An international fund E. A regional fund

Entrepreneurs who start a new business with the hope of making a profit are A. working fewer hours than people who have an employer. B. earning higher wages than most people. C. taking advantage of government protection against financial loss. D. accepting the risk of financial loss if unsuccessful

Eric Peltz earns $80,000 a year. His monthly expenses total $4,300. What is the minimum amount of money that Mr. Peltz should set aside in an emergency fund? A. $2,150 B. $4,300 C. $8,600 D. $12,900 E. $43,000

Following the signing of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, debtors seeking to erase all debts will have to wait ___ year(s) from their last bankruptcy before they can file again. A. one B. three C. seven D. eight E. ten

How can you obtain passive income (non-earned income)? A. Stock dividends B. Interest from bank investments C. Rental properties D. All of these

How does having a loan to pay for a college education affect a person's net worth? A. Education is an investment in the future which increases net worth. B. Only the amount of interest affects net worth. C. Private bank loans decrease net worth while federal loans do not. D. Net worth decreases by the amount of the total loan plus interest.

How does money make you happy? A. You use it to do good B. You have enough to survive C. You are responsible with your money D. All of these

If Joe has monthly expenses of $600 rent, $100 insurance, $300 food and entertainment, and $100 miscellaneous repairs, what will his income need to be (per month) in order for him to become financially independent? A. $1,500 B. $2,000 C. $1,350 D. $1,100

If Marjorie Wilcox borrows $200 for one year with an APR of 12% and an annual service fee of $10, what is her total cost of credit? A. $10 B. $12 C. $24 D. $34 E. $42

If Phil has a $100,000 bond with a 7% interest rate, compounded annually, how much will he have in 8 years? A. $163,452.83 B. $170,978.42 C. $149,867.49 D. $171,818.62

If Vince charged $200 on his credit card with 18% APR and he paid his balance in full within the grace period, how much was he required to pay? A. $3.00 B. $18.00 C. $182.00 D. $200.00 E. $236.00

If the board of directors approves a two for one stock split, an investor who owns 150 shares before the split owns ____________ shares after the split. A. 75 B. 150 C. 225 D. 300 E. 450

If you are denied credit, you can contact the credit bureau and ask for a copy of your credit report. The bureau cannot charge a fee for this service as long as you ask to see your files within A. 10 days. B. 20 days. C. 30 days. D. 60 days. E. 90 days.

If you think your identity has been stolen, which of the following actions does the Federal Trade Commission recommend you take immediately? A. Report it to your neighbor. B. Call 911. C. Contact your local bank. D. File a police report. E. All of these steps should be taken immediately.

If you want to file a complaint against a bank, you A. Must have an account at the bank. B. Must have at least $100,000 invested in the bank. C. Must have a checking or savings account with the bank. D. Do not need to have an account at the bank. E. Must have a loan outstanding at the bank.

If your credit application is denied, you: A. should sue the credit rating agency. B. should file a complaint against the merchant. C. have no legal right to know why. D. are entitled to know the specific reason you were denied credit. E. can reapply for credit after 30 days.

James Turbyfil purchased 100 shares of IBM for $72. James also paid $55 commission. What was the total purchase price for this transaction? A. $55 B. $72 C. $7,237.50 D. $7,255.00 E. $7,347.50

Many people want to achieve the goal of financial independence, which is: A. When unearned income exceeds passive income B. When needs exceed income C. When expenditures exceed passive income D. When passive income exceeds expenditures

Money only makes you happy if: A. There is enough to survive B. You use it to do good and you are responsible with it C. You have more than everyone else D. All of these

Money only makes you happy if: A. You have more than everyone else in your tribe B. You use it to do good and are responsible with it C. You have enough to survive D. All of these

Of the following statements, which one accurately describes what investments are? A. A foundation for your savings B. Savings vehicles that provide the same return as certi C. Savings vehicles with no risk D. A way to have your money grow faster than inflation

Paper money is backed by the credit and faith of the U.S. government and _________________. A. Wells Fargo B. The Federal Union C. The USDA D. The Federal Reserve

Patsy Banz owns 220 shares of General Mills Corporation. For the last calendar quarter, General Mills Corporation paid a dividend of $0.47 a share. What is the total amount she received in her dividend check for this quarter? A. $0.47 B. $47 C. $94 D. $103.40 E. It is impossible to calculate the total dividend amount with this information.

Personal bankruptcy can be filed under which section(s) of the U.S. bankruptcy code? A. Chapter 7 B. Chapter 11 C. Chapter 13 D. Chapters 7 and 13 E. Chapters 11 and 13

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-toincome ratio? A. 8% B. 13% C. 17% D. 19% E. 20%

Rachel Johnson went to the ATM to draw $300 cash with her debit card. She inadvertently pulled out her credit card instead, not realizing the expenses for cash advances. If her credit card company charges a cash advance fee of 3% and interest at 24% APR, what are the total fees she will pay for her mistake? A. $3 B. $6 C. $9 D. $15 E. $24

Suppose you borrow $300 for one year and pay a finance charge of $20. If you repay this loan all at once after one year, what is your average balance? A. $20 B. $150 C. $160 D. $300 E. $320

The minimum monthly payment on a credit card is A. The amount to be paid without paying interest. B. The interest amount charged for the month. C. The minimum to be paid to avoid any charges or fees. D. The smallest amount you can pay and remain a borrower in good standing. E. The amount needed to pay off the credit card in one year.

The purpose of long-term care insurance policies is to pay for A. catastrophic medical conditions after age 85. B. funeral expenses. C. medicine for people age 65 and older. D. assisted living and nursing care costs.

The result of 4% inflation on the value of money when bank interest rates are 2% is that A. the value of the money increases at a faster rate. B. consumers are able to buy more than they did last year. C. the value of money doubles at a faster rate. D. consumers will have less money for spending

The rule for allocating your money that takes into account community responsibility and retirement is called the _________________ rule. A. 90-5-5 B. 82-8-10 C. 60-20-20 D. 80-10-10

The use of property or savings to secure a loan relates to A. Character. B. Capacity. C. Capital. D. Collateral. E. Conditions.

The value of the mutual fund's portfolio minus the mutual fund's liabilities divided by the number of shares outstanding is called the: A. book value. B. outstanding balance. C. per share value. D. net asset value. E. accounting value.

Timothy Carter went out to eat with his girlfriend at a fancy restaurant. When he tried to pay the bill with his Mastercard credit card, he was told that the restaurant accepted only cash or American Express. His waiter suggested that he use the ATM across the street to withdraw cash using his credit card. Tim did as suggested and didn't pay attention to any fees until he received his credit card statement one month later. He was shocked to see the total fees (3% cash advance), and his APR was increased to 21%. Given the cost of the meal ($125) plus the associated fees, how much did his meal cost him? A. $2.19. B. $3.75. C. $125. D. $130.94. E. $151.25.

Victoria is married and 29 years old. What life stage is she in? A. Dependent life Stage B. Empty nest life stage C. Independent life stage D. Early family life stage

What best describes voluntary simplicity? A. High-stress lifestyle B. Complex lifestyle C. Increased consumption and clutter D. Simple, stress-free lifestyle

What country was declared the "Happiest Place on Earth"? A. The United States B. Germany C. Finland D. Denmark

What is the compounding of interest? A. The initial deposit B. Money in a savings account C. Interest found in a savings account D. Interest on interest added to an initial deposit

What is voluntary simplicity? A. Volunteering your time and money to help a great cause B. A high-stress, complicated lifestyle in which consumption and materialism are increased C. Being resourceful when fulfilling your need for goods and services, using already owned items, and doing it yourself D. A simple, low-stress lifestyle where consumption and materialism are minimized

When calculating the debt-to-equity ratio, the following is NOT included: A. Credit card balances. B. Open-end credit. C. Auto loan balances. D. Mortgage balance. E. All of these are included in the calculation.

Which explains that you are in control of your finances? A. You spend more than you make and you buy whatever you want B. You see money as a resource, use money freely and carelessly, and spend as much as you make C. You see money as a resource and you buy anything you want regardless of the price D. You see money as a resource, use money according to values, and don't spend more than you make

Which of the following factors, other than job performance, will result in higher wages being given to many workers? A. An increase in the number of vacation days per year. B. A decrease in corporate borrowing. C. A higher number of college graduates who have the same major. D. A low number of available qualified workers looking for a job.

Which of the following financial institutions qualify as a financial intermediary? A commercial bank B. A credit union C. A savings institution D. All of these

Which of the following institutions makes loans based on the value of tangibles possessions, such as jewelry and collectibles? A. life insurance company B. finance company C. mortgage company D. pawnshop E. investment company

Which of the following is NOT a credit bureau? A. Experian. B. Equifax. C. Trans Union. D. FICO. E. All of these are credit bureaus.

Which of the following is NOT correct? A. Using credit can result in a greater chance of bankruptcy. B. Using credit can decrease the amount of money that will be available to spend in the future. C. Using credit offers convenience when shopping on the Internet. D. Using credit cards typically offer a "float" of up to 10 days. E. Using credit allows a consumer to shop without carrying a large amount of cash.

Which of the following is an advantage of opening a Roth Individual Retirement Account (IRA) as a young person with a full time job? A. The money in the account can be used to pay income taxes. B. It is a convenient way to save money for a vacation. C. The money can be used to pay credit card debt if monthly expenses are high. D. Some of the money can be used for buying a qualified first-time home.

Which of the following is often considered to offer the least expensive loans? A. Banks. B. Finance companies. C. Loan companies. D. Parents or family members. E. Savings and loan associations.

Which of the following people can take the greatest amount of investment risk? A. A married couple who have teenage children and a high-interest mortgage loan on their new home. B. A single person with a full time job earning minimum wage. C. An elderly married couple whose only income is social security. D. A young college graduate who is single and has a leadership position in a profit making company.

_________________ were established for people who have a common bond. A. Commercial bonds B. Credit bureaus C. Stockholders D. Credit unions

To choose the right type of financial instrument, which of the following should you consider? A. Fee's B. Locations and hours C. Interest rates D. All of these

D-All of these

If a $10,000 investment earns a 9% annual return, what should its value be after 7 years? A. $547 B. $5,033 C. $9,200 D. $18,280 E. $18,380

D. $18,280

A family has a net worth of $156,000 and liabilities of $167,000, what is the amount of their assets? A. $11,000 B. $156,000 C. $167,000 D. $323,000 E. $452,000

D. $323,000

Randy Hill wants to retire in 40 years with $2,000,000. If he can earn 10% per year on his investments, how much does he need to deposit each year to reach his goal? A. $4,518 B. $5,000 C. $44,190 D. $50,000 E. None of the above

D. $50,000

When prices are rising at a rate of 3 percent, the cost of products and services would double in ______ years. A. 3 B. 6 C. 12 D. 24 E. 36

D. 24

Kayla deposits $1500 into a now account that requires a minimum balance of $500 and offers and interest rate of 2.4%. how much interest will use earn in one year in the now account? A. 360 B. 23 C. 12 D. 36

D. 36

Place the following steps for a personal financial plan in the proper order: 1. Review and revise your plan 2. Identify alternative courses of action 3. Create and implement your financial action plan 4. Determine your current financial situation 5. Evaluate your alternatives 6. Develop your financial goals A. 6, 1, 2, 5, 3, 4 B. 4, 2, 6, 5, 3, 1 C. 3, 6, 4, 2, 5, 1 D. 4, 6, 2, 5, 3, 1 E. 6, 2, 5, 4, 1, 3

D. 4, 6, 2, 5, 3, 1

If you buy a 10,000 par value t bill wit h and 180 day maturity date for 9750 what will be your return? a. 2.5% b. 3.06% c. 4.5% d. 5.2%

D. 5.2%

A tax credit of $50 for a person in a 28 percent tax bracket would reduce a person's taxes by: A. $10. B. $28. C. $14. D. $50. E. $35.

D. 50

in savings or investing, the ________ the risk, the ______ the return A. Higher; higher B. lower; lower C. higher; lower D. A & B

D. A & B

when the federal reserve wishes to ____ interest rates, it _____ the amount of funds ar commercial banks. A. increase; increase B. reduce; reduce C. reduce; increase D. A & B

D. A & B

generally, yields are ______ for securities that are exposed to _________ liquidity risk A. higher; more B. higher; less C. lower; less D. A & C

D. A & C

The goal of purchasing a long-term care insurance policy would be most appropriate for A. A young couple without children. B. A single mother with a preschool daughter. C. A recent college graduate. D. A single adult nearing retirement age. E. An extremely wealthy executive.

D. A single adult nearing retirement age.

The stages that an individual goes through based on stages in the family and financial needs is called the A. Financial planning process B. Budgeting procedure C. Personal economic cycle D. Adult life cycle E. Tax planning process

D. Adult life cycle

A financial conglomerate offers a diverse set of services that include which of the following? A. Credit cards B. Personal Loans C. Brokerage subsidiary D. All of the above

D. All of the above

A reverse mortgage: A.Allows you to live in your house and have access to the equity B.Is a Fxed rate mortgage C.Is only available to those 62 years of age and older D.Allows you to live in your house and have access to equity AND is available to those 62 years and older

D. Allows you to live in your house and have access to e to those 62 years and older

In applying for a credit card, the potential creditor will look at which of the following as a source of future debt payments if necessary

D. Balances in Savings account

The problem of bankruptcy is associated with poor decisions in the ______________ component of financial planning. A. Sharing B. Savings C. Obtaining D. Borrowing E. Protecting

D. Borrowing

which oft he following items should not be removed from your wallet? a. social security card B. infrequently used credit cards C. birth certificates D. drivers license

D. Drivers license

The inflation rate for a household will be: A. Greater than the inflation rate as reported by the CPI since the index excludes the product or service with the highest inflation rate for the past 12 months B. Lower than the inflation rate as reported by the CPI since the index excludes the product or service with the lowest inflation rate for the past 12 months C. Equal to the inflation rate as reported by the CPI since it includes all products and services whether or not the prices have changed in the past 12 months D. Either greater than or less than the inflation rate as reported by the CPI depending on the household's "basket" of goods and services purchased E. Zero since the CPI does not measure consumer price changes

D. Either greater than or less than the inflation rate as reported by the CPI depending on the household's "basket" of goods and services purchased

To develop a financial plan, one should A. Set several general goals for the short-term B. Only set long-term goals after short-term goals have been accomplished C. Focus on intermediate goals first D. Identify specific, realistic goals along with the time frame and an action plan E. Not worry about whether or not the goals can be achieved based on one's income and life situation

D. Identify specific, realistic goals along with the time frame and an action plan

The time value of money refers to A. Personal opportunity costs such as time lost on an activity. B. Financial decisions that require borrowing funds from a financial institution. C. Changes in interest rates due to changes in the supply and demand for money in our economy. D. Increases in an amount of money as a result of interest earned. E. Changing demographic trends in our society.

D. Increases in an amount of money as a result of interest earned.

Wanda Green wants to take out a 4 year loan to purchase a car. What type of computation would she use to calculate her monthly payments? A. Present value of a single amount B. Future value of a single amount C. Simple interest D. Present value of an annuity E. Future value of an annuity

D. Present value of an annuity

Sally Smith's friends have told her that they think she should consider a visit to a personal financial planner. Why do you think her friends made the suggestion? A. Sally usually saves 10 percent of her paycheck for long-term goals. B. Sally has no credit card debt. C. Sally tracks her investments and makes changes to her allocations once per year. D. Sally plans to quit her job and volunteer for local organizations. E. Sally has used a budget for years.

D. Sally plans to quit her job and volunteer for local organizations.

In comparing credit cards, which of the following is false? A. some cars are more widely accepted than others B. some cards offer a teaser interest rate C. Some charge an annual fee and others do not D. Some cards allow you to carry a balance from month to month with no interest

D. Some cards allow you to carry a balance from month to month with no interest

Financial decisions related to income include all except the following A. Spending B. Saving C. Sharing D. Taking E. All of these are financial decisions

D. TAKING

To calculate the time value of money, we need to consider all except the A. Payments. B. Annual interest rate. C. Length of time the money is invested. D. Type of investment. E. Principal.

D. TYPE OF INVESTMENT

all of the following are correct statements about credit except: A. creditors provides funds B. credit need to be paid back in the future C. repayment will include interest D. the interest is the total amount to be repaid

D. The interest is the total amount to be repaid

savings institutions accept deposits and provide mortgage and personal loans to individuals. Another name for these types of financial institutions is

D. Thrift institution

An example of a personal opportunity cost would be A. Interest lost by using savings to make a purchase. B. Higher earnings on savings that must be kept on deposit a minimum of six months. C. Lost wages due to continuing as a full-time student. D. Time comparing several brands of personal computers. E. Having to pay a tax penalty due to not having enough withheld from your monthly salary.

D. Time comparing several brands of personal computers.

which of the following is not correct about cash advances A. there is no grace period for cash advances B. the interest rate for cash advances is higher than for purchases C. a cash advance is like a loan D. a transaction fee of 5% may be charged

D. a transaction fee of 5% may be charged

The stages that an individual goes through based on age, financial needs, and family situation is called the: A. financial planning process. B. budgeting procedure. C. personal economic cycle. D. adult life cycle. E. tax planning process.

D. adult life cycle.

Information such as ______can be easily found on a variety of websites A. loan rates B. Stocks quotes and company information C. yields of treasury securities D. All of the above

D. all of the above

All of the following situations are valid reasons to borrow funds except A. a medical emergency B. a college education C. purchasing a car in order to return to the workforce D. borrowing forever day living expenses

D. borrowing for everyday living expenses

The ability to save funds is _____ when credit payments are _______. a. increased; small B. reduced; small C. reduced; large D. A & C

D. both A & C

Which of the following statement are true regarding non installment credit? a. the borrower has a longer time to repay B. monthly payments of principal and interest must be paid C. the borrower has an unlimited amount of credit D. credit is usually issued for 30 days or less

D. credit is usually issued for 30 days or less

Which of the following is not a disadvantage of using an ATM card? A. forgetting to record the transaction B. fees from your bank and other banks for using out-of-network machines C. increased fees if you make too many transactions per period D. Difficulty of withdrawing funds

D. difficulty of withdrawing funds

Which of the following may result in much of your personal financial information becoming part of the public record a. marriage b. applying for financial aid at college c. purchasing a house with a mortgage d. divorce

D. divorce

Cash advances are A. a good way to finance your purchases B. cheaper than a line of credit C. not shown on the credit card machine D. easy to make at an ATM machine

D. easy to make at ATM machine

which of the following is not one of the primary 3 credit bureaus a. Equifax B. Experian C. Transunion D. Fair Issac corporation

D. fair Isaac corporation

at your place of emplyment, which of the following is acceptable? a. use of your social security number as an employee number on your time card b. inclusion of your social security number on your employee identity badge c. inclusion of your social security number on your paycheck d inclusion on your social security number on your payroll registry in the accounting office

D. inclusion on your social security number on your payroll registry in the accounting office

When purchasing a certificate of deposit CD A. you are always better off to buy the longer term cd B. you will earn more interest percentage wise on the lower dollar CDs C. the amount you invest is at risk so choose carefully D. it is wise to shop around as rates vary among financial institutions

D. it is wise to shop around as rates vary among financial institutions

All of the following are disadvantages of having proprietary credit cards except A. your purchases are limited to a single merchant per card B. you may need several credit cards C. you receive several billing statements D. it takes considerable time to allow you to begin obtaining credit

D. it takes considerable time to allow you to begin obtaining credit

A personal balance sheet presents: A. amounts budgeted for spending. B. income and expenses for a period of time. C. earnings on savings and investments. D. items owned and amounts owed. E. family financial goals.

D. items owned and amounts owed.

the safest way to order merchandise using a credit card is by a. cell phone b. computer c. hand held phone d. land line phone

D. land line phone

Credit cards with a tiered interest rate charge cardholders who A. carry large balances a lower rate B. pay off their balances monthly a higher rate C. make early payments at a higher rate D. make late payments a higher rate

D. make late payments a higher way

credit card companies fees cannot exceed ________ of the initial credit limit. A. more than 5% B. more than 10% C. more than 50% D. more than 25%

D. more than 25%

________ is a movement that began in sepetember 2011 to protest against large banks that are believed to receive excessive support from the government A. the 15-m B. march on washington C. anti-corruption D. occupy wall street

D. occupy wall street

Lorenzo is considering two banks for his checkin account. Sun bank requires a minimum deposit of $100, charges a monthly fee of $8, plus 5 cents a check. Merchants bank also requires a minimum deposit of $100, charges no monthly fee, but a per check charge of 15 cents. How many check would lorenzo need cowrite each month to make sun bank cheaper to use than merchants? A. over 50 B over 60 C. over 70 D. over 80

D. over 80

safest way to obtain new checks is to a. have them mailed first class to your house b. have them mailed first class to your work. c. have them sent via united parcel service d. pickup at bank

D. pickup at bank

Which type of computation would a person use to determine current value of a desired amount for the future? A. simple interest B. future value of a single amount C. future value of a series of deposits D. present value of a single amount E. present value of a series of deposits

D. present value of a single amount

The _____ method charges interest based on the balance at the beginning of the new billing period A. new cycle B. adjusted balance C. average daily balance D. previous balance

D. previous balance

For a dependent to qualify as an exemption, he or she must: A. be married. B. be under age 16. C. be registered in school. D. receive more than one half of his or her support from the taxpayer.

D. receive more than one half of his or her support from the taxpayer.

Sandy has a beginning balance on her master card statement of 300. This month she had purchases of 400, payments of 300 and 100 cash advance. to avoid interest charges sandy must make a payment of A. 400 B. 500 c. 100 D. sandy can't avoid interest charges

D. sandy can't avoid interest charges

Identity thieves that obtain your information from the magnetic strip on your credit card area. shoulder surfing b. dumpster diving c. pretexting d. skimming

D. skimming

which of the following should not be considered when evaluating a checking account? A. the overdraft protection available B. the stop payment feature and the cost of it C. the fees charged monthly D. the type of account insurance carried by the bank

D. the type of account insurance carried by the bank

Opportunity costs refer to: A. current spending habits. B. changing economic conditions that affect a person's cost of living. C. storage facilities to make financial documents easily available. D. trade-offs associated with financial decisions. E. avoiding the use of consumer credit.

D. trade-offs associated with financial decisions.

Debit card

Deducts amounts automatically from checking account

Financial institutions offering traditional checking and savings accounts as well as providing loans to both individuals and firms are called __________.

Depository institutions

Financial institutions that accept deposits (that are insured up to a maximum level) from individuals and provide loans are called

Depository institutions

A good example of closed-end credit is: A. a credit card issued by a department store. B. a credit card issued by VISA or MasterCard. C. the use of overdraft protection at a bank. D. the use of a cashier's check to pay for a purchase. E. a mortgage loan.

A loan that must be repaid in total on a specified day, usually within 30 to 90 days, is A. A credit card. B. An installment cash credit. C. A bank line of credit. D. Open-end credit. E. Single lump-sum credit.

Approximately ____________ percent of all mutual funds are open-end funds. A. 5 B. 6 C. 30 D. 72 E. 93

Before buying goods and services on credit, a consumer should consider all of the following except A. Whether the good or service will have lasting value. B. Whether the good or service will increase personal satisfaction during present income periods. C. Whether the good or service will increase personal satisfaction during future income periods. D. Whether current income will continue or increase. E. Whether the good or service will be worth more because it was purchased with credit instead of cash.

Carrie thought she misplaced her checkbook for a few days. When she found it, she noticed that two checks, her cash, and her debit card were missing. She immediately thought about the increase in identity theft in her area and decided to take some action. She should take all of the following steps except A. Stop payment on the missing checks. B. Cancel her debit card. C. Get a new debit card with a new personal identification number (PIN). D. Close her bank account and open a new one. E. All of these steps are appropriate to take if she suspects identity theft.

If you have reached the upper limit of debt obligations, your debt-to-equity ratio is about A. 0. B. 0.2. C. 0.25. D. 0.5. E. 1.

If you think a bill is wrong or you want more information about the bill, then you and your creditor should follow all of the steps here except A. You should notify your creditor in writing. B. You should pay the portion of the bill that is not in question. C. Your creditor must acknowledge your letter within 30 days. D. Your creditor must adjust your account or tell you why the bill is correct within two billing cycles. E. Your creditor must reimburse you for your time spent researching the error.

The Equal Credit Opportunity Act (ECOA) prohibits a lender from discriminating based on A. Race. B. Nationality. C. Age. D. Sex. E. All of these are prohibited.

The finance charge for credit includes all of the following except A. Interest costs. B. Services charges. C. Credit-related insurance premiums. D. Appraisal fees. E. The amount borrowed.

Using mathematical formulas, financial tables, or a financial calculator, you can find the A. Future value of an amount invested today B. Present value of an amount you will receive in the future C. Future value of an amount you deposit annually D. Present value of an amount if you make annual payments E. All of these

Which is NOT true about the Fair Credit Reporting Act? A. It regulates the use of credit reports. B. It requires deletion of out-of-date information. C. It gives consumers access to their files and the right to correct any misinformation. D. It places limits on who can obtain a report. E. It gives borrowers the right to know why they are denied credit.

Which of the following acts sets procedures for promptly correcting billing mistakes, refusing to make credit card or revolving credit payments on defective goods, and promptly crediting your payments? A. Experian Act of 1982 B. Fair Credit Reporting Act of 1971 C. Bills and Disputes Act of 1963 D. Equifax Act of 1979 E. Fair Credit Billing Act of 1975

Which of the following is NOT a valid credit application question? A. How much of a loan are you requesting? B. What is the account number for your checking account? C. What is the name of the nearest relative not living with you? D. How many dependents do you have? E. All of these are valid credit application questions.

Which of the following is NOT associated with credit cards? A. A grace period B. A finance charge C. An annual fee D. Convenience users and borrowers E. A down payment on a home

Which of the following is a valid reason for borrowing? A. Purchasing a car so a homemaker can return to work B. Borrowing for a college education C. Purchasing a home D. Paying for a medical emergency E. All of these are valid reasons for borrowing

Which of the following is the best scoring technique used in credit applications for consumers with limited credit histories? A. CreditHistory B. CreditReport C. FICO D. LimitedCredit E. VantageScore

Which of the following is the only online source authorized to provide a free credit report each year at your request? A. www.annualcreditscore.com B. www.freecreditreport.com C. www.onlinecreditreport.com D. www.freecreditscore.com E. www.annualcreditreport.com

Rebecca Gladyn plans to attend graduate school in 5 years. She thinks that she will need a total of $32,000 to pay for school and she wants to save money each month to reach her goal. What type of computation should she use? A. Present value of a single amount B. Future value of a single amount C. Simple interest D. Present value of an annuity E. Future value of an annuity

E. Future value of an annuity

Which of the following long-term goals is stated most clearly? A. Buy a car for less than $17,000 within 6 months B. Retire at age 65 C. Purchase a house with a mortgage no greater than $150,000 within 3 years D. Set up an emergency fund E. Invest $50 per month for the next 18 years for my nephew's college fund

E. Invest $50 per month for the next 18 years for my nephew's college fund

The potential for difficulty to convert an investment to cash is referred to as ____________ risk. A. interest-rate B. inflation C. economic D. trade-off E. liquidity

E. LIQUIDITY

The 'borrowing' activity in a financial plan relates to A. Acquiring adequate insurance coverage B. Investing for long-term growth C. Setting up a budget D. Obtaining financial resources from employment, investments or ownership E. Maintaining control of credit-buying habits

E. Maintaining control of credit-buying habits

The tangible and intangible factors that create a less than desirable situation is referred to as ____________ risk. A. interest-rate B. inflation C. economic D. trade-off E. personal

E. PERSONAL

The uncertainty associated with decision making is referred to as A. Opportunity cost. B. Selection of alternatives. C. Financial goals. D. Personal values. E. Risk.

E. RISK

A deduction from adjusted gross income for yourself, your spouse, and qualified dependents is: A. the standard deduction. B. a tax credit. C. an itemized deduction. D. an exclusion. E. an exemption.

E. an exemption.

) The only way an investor can make money on a bond investment is to hold the bond until maturity

FALSE

A blue-chip stock is too speculative for most investors.

FALSE

A disadvantage to credit cards is that there is no way to keep track of individual expenditures.

FALSE

A financial plan is an informal report that analyzes past financial decisions.

FALSE

A personal balance sheet reports your income and expenses.

FALSE

A stock split is a procedure in which a stockholder's common stock is exchanged for preferred stock

FALSE

Although useful for many things, the Internet cannot be used to monitor the value of stock, bond, and mutual fund investments.

FALSE

Because of the growth potential, stocks or mutual funds that invest in stocks should be the only type of securities included in the investment portfolio for most people.

FALSE

Credit cards are commonly used for purchases such as clothing, car repairs, or the purchase of a new car.

FALSE

Developing a budget is part of the "spending" component of financial planning.

FALSE

Financial Plans are only created by financial planners.

FALSE

Financial records that are referred to on a regular basis should be kept in a safe-deposit box.

FALSE

Generally, it is not a good idea to participate in an employer-sponsored retirement program

FALSE

Higher inflation usually results in lower interest rates.

FALSE

In the 5 Cs of credit, capital refers to your financial ability to meet credit obligations.

FALSE

Interest earned is calculated by multiplying the principle times the opportunity cost.

FALSE

Most consumers have only one choice in financing current purchases

FALSE

Once you have painstakingly developed a financial plan, it is not wise to change it.

FALSE

Over the past 50 years, stocks and U.S. government bonds have returned about the same rate of return.

FALSE

Purchasing a car is an example of a consumable-product goal.

FALSE

Risks associated with most financial decisions are easy to measure.

FALSE

Tax-exempt bonds offer slightly higher interest rates than corporate bonds

FALSE

The APY earned on $10,000 at 12% interest compounded monthly over the course of one year is the same rate as if compounded daily.

FALSE

The annual percentage yield (APY) is the effective monthly rate of return taking into account the effect of compounding interest.

FALSE

The long-term goals for a young single will probably be the same as those for an older couple with no dependent children at home.

FALSE

The process of discounting involves knowing how much money you would have had to deposit yesterday in order to have a specific amount today.

FALSE

The record date is the date that the actual dividend payment is made to stockholders.

FALSE

Today, there are more closed-end funds than there are open-end funds.

FALSE

When applying for a credit card, the amount of savings that you have will not be a factor in the credit card company's decision.

FALSE

Your friends and neighbors can get credit information about you.

FALSE

you can be assured that if you your atm query shows you have a certain balance in your checking account, that figure is more accurate than the amount in your check register

FALSE

Deposits in commercial banks which are members of the FDIC are insured up to a maximum of $50,000 per account

False

Finance companies are more selective in choosing the lender they serve, and therefore usually charge lower interest rates than banks or credit unions

False

Introductory high interest rates paid by financial institutions for new accounts are usually a good deal and you should therefore take advantage of them without question

False

T/F Bank fees for use of an ATM are not usually a large consideration in choosing a bank with which to do business

False

a _____ account acts a traditional checking account except that it pays interest

NOW

A credit card that can only be used in establishments of the issue is call a _________ credit card

Proprietary

non-depository institutions that sell and purchase securities

Securities firm

A credit card statement lists purchases that were made with the credit cards as well as any balance carried forward from the previous statement

Advantages of using credit include the ability to make purchases when cash inflow is low and the convenience of not carrying cash or checks

Credit limits may be as high as $10,000 for those credit card holders who have an exceptional credit history

Excessive use of credit can impair your ability to save

Finance charges apply only to balances that were not paid in full before their due date in the current billing period

Financial institutors issuing master cards and visas typically earn a higher rate of interest the credit extended

If you find that you will not be able to make credit payments on time, the best course of action is to immediately notify the creditor

If you pay your total credit card amount before the grace period, you are normally not charged any interest

In oder to have credit in the future you must have used it wisely in the past

One of the disadvantages of credit cards is that they allow you to spend beyond your means

T/F hisotrical credit problems normal remain on a credit bureau's report for 7 years and ten years for bankruptcy

T/F it is not difficult to find a credit card company that is eager to extend credit to you

T/F the proper use and control of credit is the best way to build a good credit history

The annual percentage rate APR is useful because it allows you to easily compare financing costs among various possible creditors

There are many incentives, such as discounts and bonuses offered by credit card companies to get you to use their cards

To properly manage your money you should use a credit card only if you will have the cash to cover the payment when you receive you credit card statement

Your credit card statement must state how long it will take you to pay off the existing balance due when paying only the minimum amount each month

a self imposed credit limit indicates that you will use a credit card only if you will have the cash to cover the payment when you receive your credit card statemetn

an advantage to credit is it eliminates the need for writing checks

an alternative to mastercard, visa, and american express cards is a retail or proprietary card that is issued for use at a specific retail establishment

cash advances on credit cards normally cost you interest from the date of the advance and also a transaction fee of 1% - 2%

congress has passed regulation that protect consumers who use credit card services

credit cards can eliminate the need for carrying large amounts of cash

federal law requires creditors to explain note reasons for the denial of credit

if it takes you four years to pay off a loan you have to pay the annual interest rate 4 times

if you are a victim of identity theft, you may be turned down for employment as a result of incorrect background information

if you have exhausted all efforts to resolve and excessive credit card balance, personal bankruptcy may be your only option

most identify theft victims discover the crime in a reactive as opposed to a proactive manner

one advantage of credit cards is that you can receive free financing if you pay off your balance each month

one advantage of using a credit card is that you receive a list of your purchases, which enables you to keep track of your spending

the annual percentage APR on credit is the simple interest rate after including any fees (such as an application processing fee) imposed by the creditor

the fair credit reporting act requires credit bureaus to correct any erroneous information on your credit card

the fair reporting act limits the sharing of credit information

the interest you pay when using credit cards can have major impact on the total amount you owe

the most important element in FICO credit scoring is your payment history

using more credit than can be repaid is a primary cause of individual bankruptcies

using more credit that can be repaid is a primary cause of bankruptcy

you can begin to build a credit history by having telephone service

your credit report can be request on line and should be checked periodically for errors

A "free" checking account with a minimum balance of $500 has an opportunity cost of lost interest.

TRUE

A closed-end fund is a mutual fund in which shares are issued only when the fund is organized

TRUE

A corporate bond is a corporation's written pledge that it will repay a specified amount of money with interest.

TRUE

A large cap stock is a stock issued by a company that has capitalization of $10 billion or more.

TRUE

A registered bond is a bond whose ownership is registered in the owner's name by the issuing company.

TRUE

A state may impose a personal property tax.

TRUE

A tax credit is an amount subtracted directly from the amount of taxes owed.

TRUE

Advantages of using credit include the ability to make purchases when cash inflow is low and the convenience of not carrying cash or checks.

TRUE

Analyzing your current financial position is a part of the first stage of the financial planning process.

TRUE

Bondholders generally receive interest payments every six months.

TRUE

Credit bureaus obtain their data from banks, finance companies, merchants, credit card companies, other creditors, and court records.

TRUE

Credit when effectively used, can help you have more and enjoy more.

TRUE

Dollar cost averaging enables investors to avoid the problem of buying high and selling low.

TRUE

Exemptions are deductions for yourself, your spouse, and qualified dependents that you can deduct from adjusted gross income.

TRUE

Inflation reduces the buying power of money.

TRUE

Interest is a periodic charge for the use of credit, or other finance charges.

TRUE

One advantage of credit cards is that you can receive free financing if you pay off your balance each month.

TRUE

One advantage of using a credit card is that you receive a list of your purchases, which enables you to keep track of your spending.

TRUE

Opportunity costs refer to time, money, and other resources that are given up when a decision is made.

TRUE

Opportunity costs refer to what a person gives up when making a decision.

TRUE

Paper money is backed by the full faith of the U.S. government and the Federal Reserve Bank.

TRUE

Perhaps the greatest disadvantage of using credit is the temptation to overspend

TRUE

Personal financial planning is the process of managing your money to achieve personal economic satisfaction.

TRUE

Retirement planning includes thinking about your housing situation, recreational activities, and possible volunteer or part-time work.

TRUE

Short-term goals are usually achieved within the next year or so.

TRUE

T/F money management is a series of decisions made over a short term period regarding cash inflows and outflows

TRUE

When prices are increasing at a rate of 6 percent, the cost of products would double in about 12 years.

TRUE

When you cosign a loan, you are being asked to guarantee this debt.

TRUE

You can use the future value interest factor (FVIF) table to calculate the future amount of a lump sum.

TRUE

You have two choices in declaring personal bankruptcy: Chapter 7 and Chapter 13 bankruptcy

TRUE

You put your $100 in a savings account and earn 12% APR. At the end of one year, you earned $12.00 in interest. This is an example of simple interest.

TRUE

You should sign your new credit cards as soon as they arrive

TRUE

maintaining liquid assets that you can easily access when you need funds allows you to avoid using credit and paying finance charges

TRUE

A mutual fund is a means by which investors with only a small amount of money can invest in a portfolio of securities

True

ATM charges may be substantial if you make many transactions monthly and use out of network machines

True

Because most regular checking accounts do not pay interest, you should keep only enough funds in your account to cover anticipated expenses with a small reserve for unanticipated expenses

True

Credit unions are nonprofit depository institutions that serve members who have a common affiliation (such as the employer or same community

True

Depository institutions are financial institutions that accept deposits (that are insured up to a maximum level) from individuals or firms and provide loans

True

Nondepository institutions are financial institutions that provide various financial services but their deposits are not federally insured

True

Savings institutions differ from commercial banks in that they tend to focus less on providing commercial loans

True

posing as an employee of a financial institution to obtain information for purposes of identity theft is an example of pretexting

True

credit card

a cards that allows for purchases to be paid at a later date

Asset management account

a deposit and brokerage account

when making purchases on line, you can take all of the following steps to recognize and avoid identity theft except a. use your cell phone to place credit card orders b. use a secure browser c. red the privacy policies of websites d. don't download files sent to you by strangesrs

a. use your cell phone to place credit card orders

overdraft protection

allows you to make purchases beyond your stated credit limit

risk premium

an additional return beyond the risk-free rate

Secondary Market

an existing market where securities are brought and sold

All of the following are true of the grace period on credit cards except it A) is usually about 20 days. B) applies only to cash advances. C) is the time in between the time the statement is "closed" and the time the bill is due. D) amounts to free credit time.

In securing a credit card you should try to obtain A) the highest maximum limit possible. B) a maximum limit high enough to cover necessary monthly purchases. C) a maximum limit high enough to cover anything you might wish to purchase. D) the lowest maximum limit possible to restrict your usage.

On a credit card, a finance charge is applied to A) any purchase. B) any balance not previously paid. C) current purchases. D) future purchases.

Which of the following personal information should not be asked on a credit card application? A) Stocks and bonds owned B) Income of parents C) Employment history D) Expenses and commitments

APR means A) actual percentage rate. B) applied percentage rate. C) annual percentage rate. D) all-banks percentage rate.

Some credit card companies will waive the annual fee on a credit card if A) you use the card infrequently. B) you carry a large balance from month to month. C) you pay your bills in a timely manner. D) Credit card companies never waive annual fees.

The easiest way to establish credit is to A) purchase a new car with a car loan. B) purchase a house with a mortgage. C) apply for a credit card. D) pay cash for all your purchases.

Which credit card requires full payment each month? A) MasterCard B) Visa C) American Express D) A proprietary card

Which of the following is not a method for computing interest on credit cards? A) Previous balance method B) Average daily balance method C) Present value of future payment method D) Adjusted balance method

Which of the following is not included in the dependent life stage? A. Certificate of deposit B. College savings plan C. Student loans D. Savings account

if you think your identity has been stolen FTC recommends doing all of the following except: a. contact the credit bureaus b. file a police report c destroy all of your credit cards d. call your creditors

c destroy all of your credit cards

Today Bob Jones purchased an investment grade gold coin for $50,000. He expects the coin to increase in value at a rate of 12% compounded annually for the next 5 years. How much will the coin be worth at the end of the fifth year if his expectations are correct? a. $89,792.82 b. $6691 1.28 c. $88,117.08 d. $89,542.38 e. None of the above

c. $88,117.08

identify thieves that have systematically infiltrated corporations and financial institutions in order to facilitate large scale identity thefts are usually a part of a. the federal trade commission b. the internal revenue service c. a well organized crime ring d. a political party

c. a well organized crime ring

In applying for a credit card, the potential creditor will look at your ________ to determine if you have funds to cover future debt payments if necessary.

capital

stop payment

check not honored by a financial institution

revolving open end credit

credit arrangement where the balance may be paid off monthly and interest is only charge on the remaining unpaid amount

extends the payment time through credit

credit card

A credit card statement does not contain which of the following? A) Previous balance B) Current balance C) Account number D) Who purchased the item

Credit card companies' fees cannot exceed ________of the initial credit limit. A) more than 5% B) more than 10% C) more than 50% D) more than 25%

Credit cards with a tiered interest rate charge cardholders who A) carry large balances a lower rate. B) pay off their balance monthly a higher rate. C) make early payments a higher rate. D) make late payments a higher rate.

automatically deducts an amount from a checkin account

debit card

financial institutions that accept deposits

depository institutions

Credit cards are commonly used for purchases such as clothing, car repairs, or the purchase of a new car.

false

it is illegal for a federal insured financial institution to charge those with poor credit higher interest rates than those with good credit

false

the monetary policy of the federal reserve system has very little to do wit hate changes in interest rates a consumer will experience

false

the one year loan rate for individuals is usually about the same as the one year CD rate

false

you should select only one financial institution for all your checking, saving and investing needs

false

List 4 types of financial institutions that you have made use of or plan toddle with in the future

finance companies, securities firms, insurance companies,investment company, banks, and credit unions

financial institutions that offer a diverse set of services

financial conglomerate

prestige cards

gold or platinum cards

The ________ is usually about 20 days after the credit card statement is closed.

grace period

your ability to cover short-term cash deficiencies is a measure of your

liquidity

Credit risk

risk that the borrower may not repay on a timely basis

The _________ is the return that is guaranteed on an investment for a specified period of time

risk-free rate

the purchase and sale of treasury bills before their maturity takes place in the _______ wit the assistance of a brokerage firm

secondary market

the risk free rate on borrowed funds is determined by the ____ and _____ of funds

supply and demand

The personal cost of identity theft is difficult to measure but calculating the financial cost is an easier task

for creating credit stores, credit bureaus rely on a model created by the fir isaac corporation

extends credit by providing a service and billing for the service at the end of the time preiod

telephone company

FTC

the federal agency that acts as a clearing house for all identity theft complaints

credit limit

the maximum amount allowed to charge

credit payment hisotry

the most important factor used in the fido credit scoring model

Grade period

time allowed without interest before the payment is due

treasury bills

treasury securities with maturities of one year or less

A risk free rate is a return on an investment that is guaranteed for a specified period

true

CDs that have small denominations such as 10,000 or less are sometimes referred to as retail CD because they are more attractive to individuals that to firms

true

Cashier's checks, money orders, and traveler's checks are secured check alternatives to a personal check and therefore are more risk-free for the payee

true

Credit limits may be as high as $10,000 for those credit card holders who have an exceptional credit history.

true

It is not difficult to find a credit card company that is eager to extend credit to you.

true

One advantage of credit cards is that you can receive free financing if you pay off your balance each month.

true

One advantage of using a credit card is that you receive a list of your purchases, which enables you to keep track of your spending.

true

There are many incentives, such as discounts and bonuses, offered by credit card companies to get you to use their cards.

true

To properly manage your money you should use a credit card only if you will have the cash to cover the payment when you receive your credit card statement.

true

Your credit card statement must state how long it will take you to pay off the existing balance due when paying only the minimum amount each month.

true

a debit card differs from a credit card in that it does not provide credit; instead it deducts the purchase from your checking account immediately

true

a money market deposit account requires a minimum balance pays interest and allows a limited number of checks to be written each month

true

even if you cannot pay your credit card bill in full, you should still attempt to pay as much as possible so that you can minimize finance charges.

true

interest rate changes are affected by the relationship of the total supply of funds provided by all investors and he total demand for funds by all borrowers

true

liquidity is necessary because there are times during the year when your cash inflows are not adequate to cover your cash outflows

true

risk premium is the amount of interest you might receive over and above the risk-free return insured by the federal government

true

stopping payement on a check should be used if you paid to have your bathroom remodeled and the job was not complete

true

treasury bills may be purchased by individuals but require a minimum investment of 10,000 par value

true

using a shredder to destroy personal data will protect your from shoulder surfing

true

you should attempt to have sufficient amount of funds in liquid assets to draw on when your cash outflows exceed your cash inflows

true

risk management of money market investments involves assessing the risk exhibited by the investor

truuuuuuuuuu

If a credit card has a provision allowing you to make purchases beyond the stated credit limit, it is referred to as A) purchase protection plan. B) overdraft protection. C) grace period. D) first forgiveness provision.

New regulations that provide clearer and more favorable financing rules for individual credit card users do all of the following except A) prohibit interest rate increases if you miss a payment on another credit card. B) cap the amount of any increase to 5%. C) require a 45 day notice of any credit card interest rate increase. D) prohibit the rate on existing credit card balances from being increased unless you are at least 60 days late on payments.

The annual percentage rate (APR) is all of the following except A) a simple interest rate for borrowing money for a year. B) it requires a complex formula to compute. C) it includes fees such as application processing fees. D) it allows easy comparison of financing costs among various creditors.

Which of the following personal information would not be asked on a credit card application? A) Cash inflows B) Country of birth C) Capital and collateral D) Cash outflows

or good financial management, you should treat a credit card as A) a source of funds. B) a means of convenience. C) a way to finance everything. D) an inexpensive form of financing.

Creditors are willing to extend credit when the economy is weak to stimulate purchases.

false

If you discover an error on your credit card statement, you should not pay any portion of the balance until the matter has been resolved.

false

If your credit card company decides to increase your interest rate, they must notify you 30 days in advance.

false

It is good financial planning to pay only the minimum credit card payment and thus maintain a balance since interest rates are low on credit cards.

false

MasterCard, Visa, and American Express credit cards all allow you to pay only a portion of your amount due and finance the remainder from month to month.

false

Prestige cards (gold or platinum cards) always charge a higher annual fee, but offer extra benefits such as free insurance on rental cars or special warranties on purchases.

false

The Bureau of Consumer Financial Protection was created in 2010 to ensure that credit card companies are treated fairly.

false

The previous balance method takes into account the time that you pay off any part of the outstanding balance.

false

The simple interest rate includes any fees charged by the creditor

false

When applying for a credit card, the amount of savings that you have will not be a factor in the credit card company's decision.

false

You should discontinue any credit card that is not sponsored by a company that sells necessities

false

One disadvantage of a proprietary credit card is that it limits your purchases to a single merchant.

true

One of the disadvantages of credit cards is that they allow you to spend beyond your means.

true

Some credit cards offer card users cash rewards if they exceed a certain spending level each month.

true

The annual percentage rate (APR) on credit is the simple interest rate after including any fees (such as an application processing fee) imposed by the creditor.

true

the interest you pay when using credit cards can have a major impact on the total amount you owe.

true

If you include all fees charged by a lender and the simple interest rate, the result will be the ________.

APR

54. Which of the following is NOT a valid reason for borrowing? A. Purchasing a new dishwasher. B. Paying for everyday living expenses. C. Buying a car to start a new job. D. Paying for a medical emergency. E. All of these are valid reasons for borrowing.

In applying for a credit card, the potential creditor will look at which of the following as a source of future debt payments if necessary? A) Cash outflows B) Credit history C) Potential inheritances D) Balances in savings accounts

When used effectively, credit can result in A. Default. B. Bankruptcy. C. Loss of creditworthiness. D. Financial loss. E. Improved lifestyle.

By reviewing your credit card statement, you can determine all of the following except A) total purchases made year-to-date. B) your available credit remaining. C) if a payment can be made that will avoid interest charges. D) how much time you have to make a payment.

In comparing credit cards to other forms of credit, which of the following is true? A) Credit cards are generally the most expensive form of credit. B) You should invest funds before paying off your credit cards. C) It is prudent to borrow from some cards to pay off other credit cards. D) All of the above.

Which of the following are good tips on the use of a credit card? A) Treat it as a means of convenience B) Use it as a source of funds C) Make the minimum required monthly payment D) All of the above

Which of the following is not true about annual fees on credit cards? A) The fees are the same on all credit cards. B) The fees may be high, up to $70 per year. C) Many cards do not have annual fees. D) Some cards may waive the fees for individuals who pay their credit card bills in a timely manner.

Which of the following is not true regarding cash advances on credit cards? A) They are treated just like other charges on your credit card. B) There is a charge for interest from the time you take the advance to the time you pay it off. C) There is also a transaction fee on most cash advances. D) The grace period does not apply to cash advances.

Which of the following methods of calculating finance charges on credit cards is least favorable to the cardholder? A) Previous balance method B) Ending balance method C) Average daily balance method D) Adjusted balance method

All of the following are provisions of the Credit Card Act of 2009 except A) cardholders must be given at least 21 days from the day in which the bill is mailed to make a payment. B) cardholders less than age 21 must show proof of their income. C) cardholders can spend beyond the limit imposed on the credit card. D) promotional interest rates must be offered for a period of at least six months.

Credit cards are generally used for such purchases as A) cars. B) homes. C) meals, clothing, and groceries. D) stocks.

If you borrowed $8,700 at 6% for one year, what would your total interest be if you are charged simple interest? A) $600 B) $9,222 C) $522 D) $600

If you find yourself with an excessive credit card balance, the first thing you should do is A) borrow funds from family members. B) quit school and get a job. C) spend as little as possible. D) file for personal bankruptcy.

In comparing credit cards to other forms of credit, which of the following is false? A) Credit cards are generally the most expensive form of credit. B) You should pay the most expensive debt off first. C) Credit cards can be viewed as a source of funds. D) A home equity loan is a way of combining credit card and other debt.

All of the following are disadvantages of having proprietary credit cards except A) your purchases are limited to a single merchant per card. B) you may need several credit cards. C) you receive several billing statements. D) it takes considerable time to process your application to allow you to begin obtaining credit.

In comparing credit cards, which of the following is false? A) Some cards are more widely accepted than others. B) Some cards offer a teaser interest rate. C) Some charge an annual fee and others do not. D) Some cards allow you to carry a balance from month-to-month with no interest

The ________ method charges interest based on the balance at the beginning of the new billing period. A) new cycle B) adjusted balance C) average daily balance D) previous balance

A disadvantage to credit cards is that there is no way to keep track of individual expenditures.

false

Because of the short-term nature of credit card lending, the condition of the economy is not considered.

false

A credit card that can only be used in establishments of the issuer is called a(n) ________ credit card.

retail or proprietary

A credit card statement lists purchases that were made with the credit card as well as any balance carried forward from the previous statement.

true

A self-imposed credit limit indicates that you will use a credit card only if you will have the cash to cover the payment when you receive your credit card statement.

true

Advantages of using credit include the ability to make purchases when cash inflow is low and the convenience of not carrying cash or checks.

true

An alternative to MasterCard, Visa, and American Express credit cards is a retail or proprietary card that is issued for use at a specific retail establishment.

true

Because credit card interest rates are usually quite high, you should pay off your credit card balances before you invest funds anywhere else.

true

Congress has passed regulations that protect consumers who use credit card services.

true

Credit cards can eliminate the need for carrying large amounts of cash.

true

Finance charges apply only to balances that were not paid in full before their due date in the current billing period

true

Financial institutions issuing MasterCards and Visas typically earn a high rate of interest on the credit extended.

true

If it takes you four years to pay off a loan, you have to pay the annual interest four times.

true

If you have exhausted all efforts to resolve an excessive credit card balance, personal bankruptcy may be your only option.

true

If you pay your total credit card amount before the grace period, you are not normally charged any interest.

PERSONAL FINANCE MID, Personal Finance Exam 1

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