Personal Finance Final

Alaina makes $50,000 per year. According to the basic rule of thumb, she can borrow about _________ for her home.

$125,000

Rubin recently purchased a new car insurance policy. The policy was classified as 200/400/150 coverage. If she were to get in an accident, how much property damage would be covered?

$150,000

When looking at our acronym S.P.E.N.D., the letter "N" refers to whom? A. Co-workers B. Family C. Salespeople D. Friends E. All the answers are correct.

E. All the answers are correct.

Vladimir placed $5,000 in a money market account at the local branch of a large bank. Unfortunately, the bank went bankrupt and shut down. He was still able to get his $5,000 because the bank was:

FDIC-insured.

Gregg purchased 10 shares of stock that cost $ 10 per share. Later, he sold the same 10 shares of stock for $11 per share. Since he was using an online brokerage firm that charged $10 per trade, how much money did he make (or lose)?

He lost $10.

Anderson was doing very well in his negotiations until he mentioned how much he loved his current car and was upset he had to trade it in. At this point, the dealer smiled as she knew what Anderson's _______ would be.

emotional trigger

Tyrone just graduated and started a new full-time job. Now that he has some income, his first goal should be to:

start an emergency fund.

Jacob can no longer pay his debts due to his recent job loss. The judge determined he would have to liquidate all his non-exempt assets and pay that amount to his creditors, but then they could no longer collect any more from him. The judge determined he would go through:

Chapter 7 bankruptcy.

Marlee was using itemized deductions on her tax return. She was informed by the IRS that she made a mistake. Which item(s) did she incorrectly classify as (an) itemized deduction(s)?

Child tax credit.

Cormac purchased furniture from a local business with no payments for 12 months at 0% interest. Six months later, he was told he owed the original amount, plus interest and late fees. When he finally reported the company, he correctly reported them to the:

Consumer Financial Protection Bureau.

Jaiden was walking through the airport, and heading to her first flight ever. She was very nervous, but noticed they were selling flight insurance for $50, which would provide $10,000 of coverage. She immediately bought the policy. Which rule(s) of buying insurance did she break? A. Insure only for the big stuff. B. Shop around. C. Choose the right agent. D. Buy the broadest coverage possible. E. All the answers are correct.

E. All the answers are correct.

Chia is working with a financial planner who is concerned about the potential that interest rates could start rising soon, just before Chia is ready to buy a house. Her financial planner is focused on which common lifestyle force?

Macroeconomic conditions.

Neville was talking to his brother, Stan, about mortgages. He kept referring to his new mortgage as an equity mortgage. What he was really referring to was:

a 15-year mortgage.

Bryan wants to purchase a car, but due to several missed payments in the past, identified on his credit report, his loan is denied. The dealership says they will loan him the money, but he will have to bring in a much larger down payment. The dealership, using the five Cs of credit, denied his loan due to his _________ but will still give him the loan if he improves his ______.

character; capital.

Tabatha forgot to _________, which is the very first step of the investment process. This caused her to commit to some investments that she really could not handle.

check her budget

Neil is an aggressive loan officer. He really wants to make as many loans as possible to earn his commission. No matter what anyone's history with payments has been, or their income level, he approves auto loans at nearly 100% since the car itself has value and can be repossessed to pay off the loan. Neil is basing his decisions on auto loans almost entirely on:

collateral.

Adaline is single and has two dogs. She never made a will, but really wants her brother to take care of her dogs when she dies. It is important for her to ___________ her wishes; otherwise, they may not happen.

communicate

Nathaniel paid a local contractor to clean out his rain spouting. After the contractor left, he noticed a section of the spouting that the contractor missed. His first course of action should be to:

contact the contractor.

John is a famous athlete that made over $30 million during his professional athletic career. However, within three years after retiring from sports, he went bankrupt. Like many famous people who go broke, John most likely does not know how to:

control his spending.

Victor was denied his application for a credit card. The reason is that his ____________ was only 620.

credit score

Lindsey's investments are earning 7.5% per year on average. Her brokerage firm charges a 1.5% commission annually on her portfolio. At what approximate rate is her wealth really growing each year?

6.0%

Malik is looking to purchase a fixed-rate mortgage. This means his only option is a ___________ mortgage. A. conforming B. conventional C. government-backed D. non-conforming E. All the answers are correct.

E. All the answers are correct.

Blanche is trying to decide if she should invest outside of retirement. Her friend, Cecilia, asks her why she wants to invest. Cecilia says she certainly picked a good reason. Most likely, Blanche's reason was: A. she wants to build up a fund to purchase a car within the next two years. B. she hates taking risk and prefers to play it as safe as possible. C. she wants to establish a small emergency fund. D. she hates paying taxes and wants to minimize them as much as possible. E. None of the answers are correct.

E. None of the answers are correct.

Fillipe has a much lower credit score than Jane. If they both apply for the same loan what is likely to happen?

Jane and Fillipe will be approved, but Fillipe will pay a higher interest rate.

Jade has had a credit history for nearly ten years. In that time, she has opened five credit cards, taken out no loans, and not opened a new card recently. She has also never been late or missed any payments, and only owes about 20% of her available balance. Her score is lower than she expected. What element of her credit score is likely preventing it from being higher?

Types of credit.

Enrique wanted to start his own band. He purchased all his sound equipment and instruments on his credit card with 12 months financing at only 3%. After his first year, his monthly payments suddenly jumped way up and he was unable to keep up with the minimum monthly payments and had to sell his equipment. The damage was done because he had:

increasing finance charges.

Orville is interested in setting money aside that he will not need for at least ten years. He correctly chose to _________ his money by purchasing shares of company stock.

invest

Josef was approved for a $200,000 mortgage and bought a house for that amount. Six months after purchasing his home, he fell behind on his monthly mortgage payments and couldn't understand why he was struggling when his income had not decreased. He didn't understand that:

lenders can approve a borrower for more money than they can afford.

Lisa has developed her goals and is managing her budget. The next step she should take in the financial planning process is:

monitor and review.

Sylvie is trying to complete her financial plan by including information about her taxes. To do so, she needs to know: A. How to minimize what she owes. B. How much she owes. C. How much she will owe next year. D. How to avoid penalties. E. All the answers are correct.

E. All the answers are correct.

Ozella was surprised by how much her monthly mortgage payment was. She had made her decisions using an online calculator but failed to account for the entire monthly payment, also referred to as:

PITI.

Yana has just completed her budget. Her take-home pay is $2,800 per month. Her monthly total household expenses are $1,560, her total debt payments are $910, and she spends $550 on food and entertainment and $200 on clothes. Her budget indicates a monthly:

budget deficit.

Assuming Dino is not going to pay cash for his next car, to determine what he can afford for a car payment, his first step should be to look at his:

budget.

Bob's friends invited him to a concert this weekend, but he doesn't have any cash to pay for the tickets. Bob decides to use his credit card and purchase a ticket anyway. In other words, Bob is using ______ to buy the tickets.

credit

Dion just purchased a new television. The cashier at BigMart asked if he wanted a(n) ____________ for $99 to give him three more years of coverage on his TV. He politely declined.

extended warranty

Lucio listened to his finance professor and was determined to make a(n)________ decision when negotiating his car and not a(n) ______ one.

financial; emotional

Sherice prefers to use cash most of the time, but her employer direct-deposits her paycheck into her bank account every two weeks. When choosing her bank or credit union, Sherice might want to prioritize finding one that:

has convenient access to ATMs.

Randall wanted to purchase common stock because it was important for him to:

have ownership in a company.

Drew, who graduated college two years ago, was trying to convince his parents why he should be renting instead of buying a home. His parents were on board once he explained:

he needed to be mobile since he was still early in his career.

Cristine was visiting her parents in her home town and stopped by the local store where she used to buy her favorite candy. She remembered paying $1 for her candy, but now the same candy costs $1.45. What she experienced is called:

inflation.

Hector only had $50 in his checking account, but when he tried to purchase a $75 item with his debit, the sale went through. This is because he has _____________ through his bank or credit union.

overdraft protection

Zena opened up her first credit card account about three months ago. Her friends wanted her to join them on a last-minute trip to Vegas. She didn't have enough cash, so she charged her flight and hotel to her credit card since she knew she could pay it off over the next six months. Which credit rule did Zena break?

Credit cards are not to be used to supplement your income.

Shauna is married with two children. She wants to protect herself and her family from financial loss. Which of the following is likely to cause financial loss?

Disability, Illness, Property Loss and Legal liability

Bradley received an email from a person in another country claiming that his name was randomly selected to win an international lottery of $1,000,000. To claim the prize, all he had to do was confirm his information and pay a small $500 processing fee to cover international transfer fees. He wisely deleted the email because he understood that: A. if the prize money comes from another country, he should leave it alone. B. since he did not initiate the contact, he should not agree to pay anything. C. it sounded too good to be true, so it probably was. D. if he has to pay any amount of money to claim a prize, he didn't really win. E. All the answers are correct.

E. All the answers are correct.

Kevin asks his professor where he should keep his money. After Kevin explains that the purpose of this money is to be able to spend it for his regular bills, his professor recommends a local bank or credit union. This is because Kevin's money in this instance is about: A. keeping the money safe. B. preserving the money. C. access to cash. D. short-term goals. E. All the answers are correct.

E. All the answers are correct.

Lloyd just purchased a home. Unfortunately, he did not account for the costs of customizing his home. These specific costs are likely associated with: A. landscaping. B. adding outdoor space. C. renovating. D. interior decorating. E. All the answers are correct.

E. All the answers are correct.

Michael asks an investment adviser about investing outside of retirement. His adviser says he must first understand there are disadvantages to investing outside retirement, such as: A. paying taxes on earnings. B. missing out on tax deferral. C. paying more money in fees. D. not maximizing the company match for investments. E. All the answers are correct.

E. All the answers are correct.

Wilma wants to make sure she does not pay any fees to her bank if possible. To avoid fees she can: A. choose direct deposit. B. choose basic checking. C. avoid ATM fees. D. maintain a high average daily balance. E. All the answers are correct.

E. All the answers are correct.

Colleen was looking to purchase a bond, but wanted some assurances that the bond issuer would not end up too far in debt. She really liked one particular bond because it had a _________ provision that specified that the issuing company would periodically set aside funds to redeem a portion of the issued bonds.

sinking fund

Jesse is writing his letter of last instruction and wants to follow the National Caregivers Library suggestions on what to include. All the following items should be included except: A. the location of his safe deposit boxes and keys. B. the location of his will. C. the list and location of all bank accounts (checking and savings), stocks, bonds, real estate, and other major property (personal and business). D. an explanation of actions taken in his will, such as disinheritance. E. All the items should be included.

E. All the items should be included.

Logan makes $1,500 per month. He has $500 per month available after he pays his expenses. When he decided to buy his new TV for $750, he felt it was a reasonable price since it is only 50% of his income. Instead, he should have:

computed the cost as a percentage of discretionary income.

Sharice was concerned that she would not be able to afford the payments on her new credit card. Even though she has not used it for any purchases, they issued her a credit line of $10,000—and now she is really upset and doesn't know what to do. Sharice's concern is probably because she is confusing the concepts of:

credit and debt.

Kyle was comparing two of his credit reports. He noticed that the credit card he has from his local credit union was on his Experian but not his TransUnion report. Most likely this is because:

his credit union only reports to Experian.

Domenica was negotiating for the purchase of a new car. The dealer showed her the invoice and offered to sell the car for only $1 over his invoice price. She knew there was more room to negotiate because she understood _____ and dealer incentives.

holdbacks

Gordon is the type of person who likes to have checklists and cross things off as he goes. He likes to start with easy tasks to get them out of the way. The best approach for him to pay off debt is likely to:

pay off the smallest debt first.

Franklin invested his $4,000 bonus at work in an account that had the potential to earn up to 10% compounded annually. He asked his advisor how risky the investment was because he was more concerned about protecting his $4,000 investment than about earning much interest. In other words, he really wanted to protect his:

principal.

Kevin was asking his friend Regina, who is a loan officer, about the entire loan process. Regina explained a lot of details that confused Kevin. She finally summarized the whole process and said the bank wants to determine what type of _______ the borrower will present.

risk

Bertram wants to find the right car loan. Each of the following steps should help him except:

save cash by putting everything on his credit card.

Kris and Bobbi just bought their first house together in an upscale neighborhood. They were jealous of the swimming pools, nice SUVs and fancy vacations of their neighbors. Because they did not want to seem out of place, they borrowed money and used their credit cards to purchase the same things as their neighbors. Bobbi's parents told her she was spending so much because:

she wanted to keep up with the Joneses'.

Amos is willing to take more risk with his investing because he wants to earn large returns over the long term. He is considered a(n) ___________ investor.

aggresive

Maggie's investment adviser told her she has the chance to purchase stock from a company that has never issued stock before. She was so excited because this will be the first time she gets to buy stock as part of:

an initial public offering.

Carol was not intimidated when it came time to start her investing, because she approached investing as:

any other purchase.

Peter wrote a check to cover his rent payment this month for $650. Unfortunately, he only had $500 in his account at the time the landlord tried to cash his check. Since his account had less than the check amount, his check:

bounced.

Pierre is very practical when it comes to shopping for a car, realizing that the car will only last a limited amount of time. He doesn't care what it looks like so long as it gets him where he needs to go. Basically, he sees a car as nothing more than a:

box of miles.

Jenna has always been told to avoid debt for any reason whatsoever and always saw it only as something bad. She was surprised when her professor correctly explained that:

debt is important to the economy.

Rebecca found a great job after graduation that paid $60,000 per year. She went ahead and purchased a new car, rented an expensive apartment, and furnished the apartment using her credit card. A few months after she was hired, the company had budget cuts and had to fire everyone who was hired in the past year. Since Rebecca could not find another job that paid as much, she was unable to make her payments anymore. She learned that:

debt is risky.

Gloria's employer has told her that if she works for them for 20 years, she will be guaranteed a retirement plan that pays her 75% of her average salary for her highest 5 years of pay. In other words, Gloria's is in a ______________ plan.

defined benefit

Caleb had a good part-time job that paid $2,000 per month and over $1,800 in expenses every month. That means he only had $200 available in ________ income.

discretionary

To make sure your money is spent on your highest priorities, you should:

establish financial goals.

Kai wants to save some money over the next 12 months for vacation. Unfortunately, he chose the wrong place to save his money. Where did he likely put the money that made it a wrong choice?

Stock mutual fund.

Floyd believes he was not treated fairly by the IRS, and the IRS has not responded by the date promised. He should contact the government organization _____________ for resolution.

Taxpayer Advocate Service (TAS)

Lamar is investing for retirement outside of his employer. His investment does not provide immediate tax benefits, but all of his earnings are tax-free and he will not pay taxes when he withdraws his money at retirement, if he abides by the rules. Lamar is investing in a:

Roth IRA.

Benjamin recently used small claims court to settle a dispute. Most likely, his dispute was:

None of these disputes can be settled in small claims court.

Allyn just borrowed money to purchase a car to drive to work each day. The convenience of the car will allow her to stay later at work and impress her boss. Her financial adviser says the car loan is still bad debt because:

the car depreciates in value.

The dishwasher in Jermaine's apartment quit working only 3 months into his 12-month lease. His landlord said he was not obligated to fix it and Jermaine would have to do without a dishwasher. The landlord could do this legally because:

the dishwasher was not included in the list of appliances on the lease.

Leslie could invest some money for a few years. Despite only investing $1,000, Leslie was surprised to see that his money had grown to $3,000 in just eight years. Leslie was surprised because he didn't understand the concept of:

time value of money.

Jettie was discussing some closing costs on her recent home purchase with her friend, Marcelino, who is studying real estate. When she mentioned her list of expenses, Marcelino said they were all legitimate except:

title refinancing fee.

When Katie applied for a loan at the bank, the loan officer said the final decision would not be made until after they completed their _____________. He said it was important to evaluate her riskiness and then they could determine the amount they would lend and at what rate.

underwriting

Doug wants to purchase something from the store, but would also like to get cash back. To do this he will need to:

use his debit card, press "Debit", and enter his PIN.

Amee went to CarFax and got a __________. As a result, she discovered the used car she was going to purchase had been in two accidents!

vehicle history report