FI 201 Personal Financial Managment
If you own stock, you may receive income from
all of the above
How long should you keep documents relating to investments?
as long as you own them
Jenny wants health insurance that limits the amount that she must pay before the insurance starts paying benefits. She is concerned about a
Deductible
Which of the following is an example of open-end credit?
Department store credit card
The money left over after paying for housing, food, and other necessities is called
Discretionary income
Another name for take-home pay is
Disposable income
A distribution of money, stock, or other property that is paid to owners of a company is called a
Dividend
Brandon lost his debit card. When he realized it was gone, his account had $238 in unauthorized charges. Since he was embarrassed about his loss, he didn't contact his financial institution for 45 days. What is the most that he liable for?
$238
Brenda lost her debit card. When she realized it was gone, her account had $173 in unauthorized charges. She notified her financial institution within two days. How much is she potentially liable for?
$50
Since 1926, the average annual return for stocks has been about
10
Financial experts recommend a debt/payments ratio of less than ____ of take-home pay
20%
good rule of thumb is to limit installment payments to
20%
Financial experts recommend a monthly savings ratio of at least ____ of gross income
5 - 10%
A demand deposit is also known as
A checking account
All of the following are acceptable types of documentation for a household inventory except
A listing of items and their details in your memory.
An individual who purchases insurance is
A policyholder
Franklin is planning for a purchase of a vehicle in two years. Since he wants to be certain that his funds are safe, which of the following should he use?
A savings account
The major function of a financial plan is to
Achieve financial goals
Gross income after certain reductions have been made is
Adjusted gross income
The stages that an individual goes through based on stages in the family and financial needs is called the
Adult life cycle
Which of the following questions is NOT needed before deciding how and when to make a major purchase?
All of the above are valid questions to ask.
What should a home buyer consider when evaluating a house?
All of the above should be evaluated
Failure to repay a loan may lead to all except:
All of the answers may be a result of the failure to repay a loan.
Ricky has a conventional mortgage. He can monitor his interest and principal payments using
Amortization
Which of the following expressions is correct?
As the consumer goes, so goes the U.S. economy
The equation to calculate net worth is:
Assets - liabilities = net worth
Installment credit exploded on the American scene with the advent of the
Automobile
Another name for equity financing is money received from the sale of
common stock
A person who is named to receive the benefits from an insurance policy is a(n)
Beneficiary
An estate consists of
everything you own
When Smee applied for a loan, he was assured that his rate would not change if he closed within a specific time period. Smee had a
lock
Which of the following financial documents would most likely be stored in a safe deposit box?
marriage certificates
Which of the following is an example of closed-end credit?
mortgage
A legal form that requests that owners transfer their voting rights to individual(s) is called a
proxy
A bond that is repaid from the income generated by the project it is designed to finance is called a(n)
revenue bond
Nancy is studying the health insurance plan options offered by her employer. She wants a policy that will have the insurance pay a percentage of her medical expenses. She should review the
Coinsurance
In which of the following are most of the investments insured?
Commercial bank
Which of the following offers checking, savings, lending, and other services?
Commercial bank
When Jane researched the brands and prices of her refrigerator, she was
Comparison shopping
Earning interest on interest is called
Compounding
The insurance that helps pay extensive hospital, surgical, medical, and other bills with a low deductible is known as a
Comprehensive major medical policy
Jacob drives by a Big Box home improvement center on his way home from work. He usually stops and buys something because it makes him feel good. Jacob is
Compulsive shopping
Madeline wants to purchase a larger house. However, she had not yet sold her current home. She may want to include a(n) ________ in her offer
Contingency clause
This type of promotion provides an immediate savings for consumers.
Coupons
A service contract
Covers the repair costs of a product
Which of the following describes a growth company
Earnings are reinvested in the company for future growth
Judy and James have a four year-old child. They plan to purchase life insurance using the formula: Current income ? 7 ? 70 percent. Which method are they using to determine their life insurance needs?
Easy method
A bond backed by the full faith, credit, and unlimited taxing power of the government that issued it is called a
General obligation bond
Which of the following households most likely has the greatest need for life insurance?
Household with children
While Paul was shopping for a new chainsaw, he found a great deal on new drill and bought it. This is an example of
Impulse shopping
The best place to keep a household inventory is
In a safe deposit box
An advantage of personal financial planning is
Increased control of financial affairs
When choosing an investment, one should consider risk. The four primary risk components are:
Inflation, interest rate, business failure, market
The inability to pay debts when they are due is called:
Insolvency
The periodic charge for the use of credit is
Interest
A personal balance sheet presents
Items owned and amounts owed.
The tenant is the
Lessee
The owner/landlord is known as the
Lessor
If your main focus is to be able to buy or sell an investment quickly without substantially affecting the investment's value, you are most concerned with
Liquidity
Many mutual funds charge a commission when they are purchased by investors. These are called
Load Funds
All of the following are advantages of a mutual fund except
Loads of up to 8.5%
A credit card is a type of
Loan
A drawback of a savings account is
Low rate of return
The type of health insurance coverage that takes up where basic health insurance coverage leaves off is
Major medical expense
Discretionary income equals
Money left over after paying for housing, food, and other necessities
A debt security issued by a state or local government is known as a
Municipal bond
These products are highly advertised and available at many stores
National-brands
The amount you would have if everything of value would be sold and all debts would be paid in full.
Net worth
This shopping device is used primarily on perishable products
Open Dating
Trenton wants to buy a house, but can only provide a 10 percent down payment. He probably will be required to have _______________
PMI
If your primary investment objective is to receive income, which of the following would NOT be appropriate for your portfolio?
Passbook Savings account changed to municipal bond
What is the primary purpose of medical expense insurance?
Pay medical costs for illness or injury.
Rebecca paid extra money to reduce her mortgage interest rate. That extra money is called
Points
Which of the following would increase the interest rate for a loan?
Poor credit rating
The text identifies several phases in the buying process. The correct order of the phases is
Pre-shopping activities, evaluating alternatives, selection and purchase, post-purchase activities
What is the fee that a policyholder pays when an insurance company agrees to take on the risk?
Premium
Most people buy life insurance to
Protect the people who depend on the insured from financial losses caused by his or her death
Earnings on savings can be measured by the
Rate of return
The tax that is a major source of revenue for local governments is called a(n)
Real estate tax
Which of the following is an advantage of renting?
Renters have fewer responsibilities than homeowners
Megan decided to start investing in stocks. Which of the following should she do first?
Research the corporations she is interested in as well as their industries
If you choose to avoid the risk of a traffic accident by not driving to work, you are using
Risk avoidance
If you choose to wear your seatbelt, you are using
Risk reduction
Insurance allows someone to
Shift risk
Payroll deductions for federal government retirement benefits (such as old-age, survivor, and disability) are called
Social security taxes
Fran is interested in purchasing health insurance that limits the total out-of-pocket amount that she will have to pay. She should consider a
Stop-loss provision
The opportunity to have another person take over rent payments and live in the rental unit is called a
Sublease
Disposable income equals
Take-home pay
Another name for temporary life insurance is
Term
The consumer price index reflects:
The change in prices of products and services of urban consumers
The failure to take ordinary or reasonable care to prevent accidents from happening is called
The failure to take ordinary or reasonable care to prevent accidents from happening is called
A line of credit is
The maximum dollar amount of credit the lender has made available
Many think that perhaps the greatest disadvantage of using credit is
The temptation to overspend
Many people expect
Their incomes to increase to make it easier to make payments
As people approach retirement, which of the following holds true for most?
They choose more conservative investments.
A legal arrangement that helps manage the assets of your estate for your benefit or that of your beneficiaries is called a
Trust
These products are sold by one chain of stores and are low-cost alternatives to famous-name products
Two of the above are correct
A standard measurement used to compare packages of different sizes is
Unit pricing
Another name for permanent life insurance is:
Whole life
Which of the following steps should be completed before starting an investment program?
Work to balance your budget.
Your will must be signed by
You.