Personal finance true/falls

A bear market develops when investors are optimistic and stock prices rise.

False

A blue chip stock is too speculative for most people.

False

A bond with a rating of AAA is considered a "junk" bond

False

A general obligation bond is repaid using income from the project it has funded.

False

A high price-earnings ratio indicates that a stock might be a good investment.

False

A person's choice of employment has very little influence on her or his lifestyle

False

A personal property floater is not necessary to cover a gun collection because all items in a house are covered under a standard homeowner's policy.

False

A stop loss order guarantees that a stock will be sold at a certain price.

False

A term life insurance policy usually has a cash value

False

APR stands for Approximate Percentage Rate.

False

Aaron has total monthly debt payments (excluding his mortgage) of $500. His net take home pay is $2,500. His debt payments-to-income ratio is 25%.

False

Amoritization refers to changes in the monthly payment for a variable rate mortgage.

False

An appraisal refers to the price for which a home has been sold.

False

Collision coverage pays for damage to your vehicle for such hazards as fire, theft, or wind damage.

False

Credit bureaus make the final decision on loan approvals.

False

Credit cards are the cheapest form of credit.

False

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

False

Fixed expenses are payments that vary from month to month.

False

Group health insurance will cover you but not your immediate family.

False

Health insurance includes both medical expense insurance and disability income insurance.

False

Higher inflation usually results in lower interest rates.

False

If a financial institution is federally insured, you cannot lose any of your money, regardless of how much you have on deposit.

False

If you file Chapter 7 bankruptcy, you are no longer responsible to pay alimony, child support, or educational items.

False

Medical expenses, clothing, and telephone bills are examples of fixed expenses

False

Most Americans have adequate or sufficient saving for emergencies

False

Obtaining credit may be easier for people who file Chapter 7 bankruptcy than for those who file a Chapter 13 bankruptcy.

False

On Form 1040, both Standard Deductions and Itemized Deductions may be taken in order to reduce Adjusted Gross Income.

False

Once a person begins to earn income, they must file a tax return every year.

False

Paypal account balances are insured directly by the FDIC.

False

Personal risks, property risks, and liability risks are types of speculative risks.

False

Preferred stock voting rights supersede those of common stock voting rights.

False

Preferred stockholders share in the profits of a corporation equally with common stockholders after all dividends have been paid.

False

Premiums on whole life policies increase as the age of the insured increases.

False

Replacement cost for settling property insurance claims is less costly than the actual cash value method

False

Serial bonds are a group of bonds that come due all at once.

False

Tenia Corporation has common stock and preferred stock outstanding. Preferred stock has an annual dividend of $10,500 and dividends in arrears of $31,500. In order for Common Stockholders to receive any kind of dividend in the current year, the Board of Directors would have to declare total dividends of $31,500.

False

The dollar value if a fixed-return investment increases when overall interest rates in the economy increase.

False

The financial planning process is complete once you implement your financial plan.

False

The main purpose of saving is to help you balance your budget each month.

False

The only way an investor can make money on a bond investment is to hold the bond until it matures.

False

The premium for a whole life insurance policy increases with your age.

False

The price you pay for credit - in the form of interest - varies little from lender to lender.

False

The risks associated with almost all financial decisions are fairly easy to measure.

False

Treasury bonds are excellent short term investments

False

Western Union wire transfers can be traced to the individual recipient

False

When interest rates are rising, you should use short-term loans instead of long-term loans to take advantage of current low rates.

False

With a two for one stock split, the value of your shares doubles

False

You should wait to contribute to a 401K at work until all of your financial affairs are in order.

False

A buy-down is an interest rate subsidy from a home builder or developer that reduces the mortgage payments during the first few years of the loan.

True

A home made of wood is more expensive to insure than a comparable brick structure (excluding Acts of God.)

True

A line of credit is the maximum dollar amount of credit the lender has made available to you.

True

A mortgage bond is secured by assets if the issuing firm.

True

A person's life situation is a reflection of his or her age, goals, # of children, marital status, and employment situation.

True

A person's net worth is the difference between the value of the items she/he owns and the amounts he/she owes to others.

True

A personal cash flow statement presents income and outflows of cash for a given period, such as a month

True

A stock proxy gives your right to vote at the annual stockholders meeting someone else.

True

A tax-exempt employee benefit is usually more advantageous to the employee than a tax-deferred benefit.

True

According to the text, at age 50 you have a greater probability of suffering a disabling injury of disease than you do of dying.

True

An FHA-insured mortgage has less risk than a conventional mortgage for the financial institution.

True

Analyzing your current financial position is the first stage of the financial planning process.

True

Bonds provide one of the most stable sources of income of any investment.

True

Consumer credit is based on trust in people's ability and willingness to pay bills when due.

True

Cumulative preferred stock dividends must be paid before common stockholder receive any dividends.

True

Currents Liabilities are amounts that must be paid within a short period of time, usually less than a year.

True

Ease of mobility is considered to be an advantage of renting.

True

Electronically filed tax returns are more accurate than paper returns.

True

Excise taxes are imposed on specific goods and services such as gas, cigarettes, alcohol, and tires

True

FICO stands for Fair Isaac Company and is your credit score.

True

Finance companies are considered to be non-deposit institutions.

True

Generally, most products are covered by an implied warranty

True

Generally, the longer the term of a certificate of deposit, the higher the rate of interest paid by a bank.

True

Hannah Corporation pays $.55 annual dividend. The stock was issued at $21 a share and has a current market value of $23.50 per share. The current dividend yield is 2.34 percent.

True

Household size can have a major influence on personal financial planning decisions.

True

If a savings account has a nominal rate of interest of 4 percent, compounded daily, the effective rate of interest will be higher than 4 percent.

True

In order to sell a stock short, the stock must first be borrowed from a broker.

True

Inflation reduces the buying power of money.

True

Interest rate risk results from the changes in the cost of money.

True

Keeping money as cash creates an opportunity cost.

True

Liquid assets are cash and items of value that can easily be converted to cash

True

Many health insurers use prescription data to deny coverage to individuals.

True

Most of the information in your credit file may be reported for only seven years.

True

Opportunity costs refer to time, money, and other resources that are given up when a decision is made.

True

Prepaid interest may be part of a mortgage agreement.

True

Property damage liability coverage would pay for damage to another vehicle for which you were at fault.

True

SAM stands for shared appreciation mortgage, an arrangement in which the borrower agrees to share the increased value of the home with the lender.

True

Series EE savings bonds are now only sold electonically.

True

The Call feature of bonds was names after Professor Call's gr. gr. grandfather.

True

The Credit Card Accountability Responsibility and disclosure Act of 2009 requires people under 21 years of age to have a co-signer or show proof of income in order to get a credit card.

True

The accidental death benefit is often referred to as double indemnity.

True

The beta index compares the risk associated with a specific stock with the risk of the stock market as a whole.

True

The coordination of benefits is a method of integrating the benefits payable under more than one health insurance plan so that the benefits received from all sources are limited to 100 percent of allowable medical expenses.

True

The date of record determines who will received the declared dividends.

True

The easiest loans to obtain are usually the most expensive

True

The interest from a home equity loan is an example of an itemized deduction.

True

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

True

The purpose of a household inventory is to provide evidence of items covered by home insurance.

True

The purpose of insurance is to help protect you and your family against financial hardship due to hazard, accident, death, and the like.

True

When comparing savings accounts, you should compare the effective rate of interest or APR rather than the stated or nominal rate.

True

When computing the debt-to-equity ratio, the value of your home is included in net worth.

True

When interest rates are falling, you should select long term savings instruments to "lock in" earnings at current high prices.

True