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.