FIN 1050
A family with $45,000 in assets and $22,000 of liabilities would have a net worth of:
$23,000
The Capitalist Mutual Fund's portfolio is valued at $45 million. The fund has liabilities of $3 million, and the investment company sponsoring the fund has issued 1,600,000 shares. What is the fund's net asset value?
$26.25
Ted Riley owns a 2005 Lexus worth $25,000. He owns a home worth $225,000. He has a checking account with $500 in it and a savings account with $1500 in it. He has a mutual fund worth $85,000. His personal assets are worth $90,000. He still owes $10,000 on his car, $100,000 on his home and has a balance on his credit card of $1,000. What is Ted's net worth?
$316,000
Assume that you purchased a $1,000 Exxon bond that pays 9.5 percent interest. What is the amount of interest you would receive each six months?
$47.50
Bob Turbyfil purchased 100 shares of IBM for $72. Bob also paid $55 commission. What was the total purchase price for this transaction?
$7,255.00
The annual mutual fund management fee typically ranges between ____________ percent of the fund's asset value.
0.25 to 1.5
Many financial planners recommend that investors pick a mutual fund with an expense ratio that is:
1 percent or less
The maturity dates for most bonds range between ____________ years.
1 to 30
If you have declared personal bankruptcy, that fact may be reported to credit bureaus for: ____________ years.
10
A fee that some investment companies charge to defray the costs of distribution and marketing a mutual fund is called a:
12b-1 fee
A good rule of thumb is to limit consumer credit payments to ____________ percent of your net monthly income.
20
Experts suggest that you spend no more than ____________ percent of your net income on credit purchases.
20
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?
24 years
The grace period allows ____________ days to elapse, during which time the premium may be paid on an insurance policy.
28 to 31
When do you apply for Social Security?
3 montjs before you retire
Last year, High-Tech Electronics earned $1.50 per share. If the current market value for a share of stock is $45, what is the firm's PE ratio?
30
Spike goes to a payday loan company to borrow $100. He gives them a check for $115. 14 days later he returns & redeems the check for $115 cash. What APR is he paying?
391%
According to the "Rule of 72", if the interest rate your earn is 16% your money will double in value in:
4.5 years
Which of the following is a retirement plan sponsored by an employer?
401(k) Plan
A 32-ounce package selling for $1.60 would have a unit price of:
5 cents an ounce
Most of the information in your credit file may be reported for ______ years.
7
There are about _____ exchange-traded funds.
775
With an inflation rate of 9 percent, prices would double in about __________ years
8
The commission charge for purchasing shares of a load fund may be as high as ___ percent.
8 1/2
An investment account that increases from $3,000 to $3,271 in one year is earning about ___ percent.
9%
Approximately ____________ percent of all mutual funds are open-end funds.
92
Which one of the following statements is correct?
A large percentage of people do little or nothing to provide for those who will survive them.
Which statement is correct regarding stock life insurance companies?
A stock company generally sells nonparticipating (nonpar) policies
The highest bond rating issued by Moody's is:
Aaa
Which of the following is a true statement?
An investment bank is a financial firm that assists organizations in raising funds.
____________ is the settlement of a difference by a third party whose decision is legally binding.
Arbitration
Another name for a mutual fund that charges a contingent deferred sales load is a(n) ____________ fund.
B
Why have a growing number of students been without health insurance?
Because an older student population is not covered by family policies
According to the Investment Pyramid, which of the following investments would rank the highest with regard to safety?
CD's (Certificates of Deposit)
The information in your credit report is used to:
Calculate your FICO credit score
Mohammad Ishaque has checked his credit report with Experian and believes there is an error in it. Which consumer protection law specifies that he has the right to have errors in his credit report investigated?
Fair Credit Reporting Act
Which consumer credit law prohibits abusive, deceptive, and unfair practices by debt collectors?
Fair Debt Collection Practices Act
Which of the following statements is true?
In bond quotations, prices are given as a percentage of the bond's face value.
Which of the following would be a benefit of establishing a trust?
It can reduce or provide payment for estate taxes It can allow you to avoid probate and transfer assets immediately to beneficiaries It can free you from managing your assets, while providing you a regular income It can ensure that your property serves a desired purpose after you die
Which of the following is correct about the "Rule of 78s?"
It favors lenders and dictates that you pay more interest at the beginning of a loan
Which of the following statements is true?
It is possible to obtain financial information about a corporation that issues stock by using the Internet.
Which one of the following statements is false?
Since mutual fund managers are professionals, there is no need to evaluate a mutual fund.
Which of the following statements is correct for term insurance?
Term insurance is protection for a specified period of time
The Feds refers to:
The Federal Reserve System
The law that requires financial institutions to disclose fees on deposit accounts, the interest rate, the annual percentage yield and other terms and conditions of the savings plan is called:
The Truth in Saving Law
Which of the following statements is true?
The common stockholders elect the Board of Directors and must approve major changes to corporate policies.
Which of the following is an advantage of using credit?
The use of credit permits the purchase of goods even when funds are low
The assessed value of your home is:
The value of your home used to calculate property taxes
Which of the following statements is true with respect to U.S treasury issues?
Treasury notes are issued in $100 units with a maturity of more than 1 year, but not more than 10 years.
Which federal consumer credit law regulates the advertising of credit terms?
Truth in Lending Act
Which federal credit law protects you against an unauthorized use of your credit card to $50?
Truth in Lending Act
Which country has the highest per capita medical expenditures of any industrialized country in the world?
U.S.A
Which organization has the purpose of testing products for electrical and fire safety?
Underwriters Laboratories
Which of the following is another name for permanent insurance?
Whole life insurance Straight life insurance Ordinary life insurance Cash value life insurance
Which of the following statements is false?
With an exchange-traded fund, there is more need for a portfolio manager to make decisions.
Which is NOT an example of open-end credit?
a 36-month car loan
George Wade has been selected to receive the assets of his brother Kyle in the event of Kyle's death. What is George?
a beneficiary
Tom McCallister buys a bond that the company can retire before maturity if they wish? What type of bond has Tom purchased?
a callable bond
Which of the following presents a summary of income and outflows for a period of time?
a cash flow statement
Liquidity allows you to withdraw your money on short notice without a loss of principal or fees. Which account would be considered the most liquid?
a checking account
Which type of audit is the least complicated for taxpayers?
a correspondence audit
Which of the following is an example of a conventional mortgage?
a fixed rate mortgage
The funds deposited in a checking account can be restricted for use by:
a holding period
For which of the following types of credit plans is the interest tax deductible?
a home equity loan
You have a two-year-old daughter named Chloe. You want to have enough money so you can pay for her college education when she starts college in sixteen years. What type of goal is this?
a long-term financial goal
Which of the following savings plans is not covered by federal deposit insurance?
a money market fund at an investment account
Which of the following would be considered a long-term liability?
a mortgage
A financial institution organized for the main purpose of providing loans to purchase homes is a:
a mortgage company
Which of the following institutions makes loans based on the value of tangible possessions?
a pawnshop
Which lender is likely to ask you to write a check for $115 for a $100 loan?
a payday advance company
Georgette Valentine has expensive photography equipment for use in her hobby. Which one of the following types of coverage would pay for damage or theft of this equipment?
a personal property floater
Nick Rodr owns a home in Edmond, Oklahoma and pays $665 per year in insurance on the home. The $665 is an example of:
a premium
Margaret Wilson has a piece of paper that she can mail in to the manufacturer of the product she just purchased that allows her to get part of her purchase price back. What is she most likely using?
a rebate
When a lender uses the borrower's house as collateral to buy an annuity for the borrower from a life insurance company, it is called:
a reverse annuity mortgage
The most popular type of home ownership is:
a single family dwelling
You probably have little or no need for life insurance if you are:
a single person living alone or with parents
Which of the following payments would be considered a variable expense?
a telephone bill
Brad Opper has a goal of "saving $50 a month for vacation." Brad's goal lacks:
a time frame
Ben Carmichael has been making contributions into an individual retirement account for his retirement. His contributions are tax deductible. What type of individual retirement account does he have?
a traditional IRA
Joseph Vu has assets worth $1,200,000. He has written a legal document that specifies that upon his death these assets be divided equally between his wife and his two sons. What is this legal document?
a will
By using the Yahoo! Finance Web site, an investor can find information on all of the following except:
actual market values in the future
A call feature:
allows the corporation to buy outstanding bonds from current bondholders before the maturity date.
As a shareholder, the investment company will send you:
an annual report
Which type of tax expert would be of most value when you have a difference of opinion with the IRS?
an attorney
Gerald Wilkins owns a home worth $250,000, a car worth $15,000, various investments worth $600,000 and other personal assets worth $25,000. What are these things to Gerald?
an estate
Private label products are those that:
are sold by one chain of stores
An individual can reduce the amount of risk associated with an investment program by using:
asset allocation
Cash & items that you own with a monetary worth are referred to as:
assets
For most mutual funds, the net asset value is calculated:
at the close of trading each day
The use of legitimate methods to reduce one's taxes is tax __________.
avoidance
To determine a person's solvency, which financial document should be consulted?
balance sheet
A short-term mortgage with a very large final payment is called a ____________ mortgage
ballon
Most people who are in debt over their heads are:
basically honest people
The type of bond that is not registered in the investor's name is a ___________ bond.
bearer
A very safe investment that generally attracts conservative investors is called a(n) ____________ stock.
blue chip
The actual legal conditions for a corporate bond are described in the:
bond indenture
Today, most bond ownership records are maintained using a process called:
book entry
The problem of bankruptcy is associated with poor decisions in the ______________ component of financial planning.
borrowing
David Wynn gets a personal loan from his credit union for $1000. David will make monthly payments $85.15 over the next year to repay the loan. What type of financial service is David using?
borrowing service
Unsuccessful products or bad management may result in investors experiencing ____________ risk
business failure
Joan Wilder receives a phone call from a salesman who tries to sell her an insurance policy by scaring her about her high risk of death from this disease. She knows that this type of insurance policy has a notoriously poor value so she politely declines. What type of insurance policy did this salesman likely try to sell her?
cancer insurance policy
The borrower's financial ability to meet credit obligations is called:
capacity
A term that refers to the borrower's assets or net worth is called:
capital
A personal check with guaranteed payment is called a:
cerified check
Which bankruptcy allows a debtor with a regular income to extinguish his or her debts from future earnings or other property over a period of time?
chapter 13
Recently, Jim Dahl was on a bus tour in a mountain area. The bus broke down forcing the group to stay overnight. Group members had to pay for their own hotel bills. Jim believes that the hotel cost for the group should be paid by the tour company. Which legal action would be most appropriate?
class action suit
A mutual fund in which shares are issued only when the fund is organized is called a(n) ____________ fund.
closed-end
Which of the following expenditures for retirees is likely to decrease?
clothing expenses federal income taxes work expenses housing expenses
Which document explains, adds, or deletes provisions in your existing will?
codicil
Which of the following would most likely be stored in a safe-deposit box?
collectibles such as rare coins
Which of the following investments often offers the greatest opportunity for growth?
common stock
Who financially supports a Consumer Credit Counseling Service?
community-minded organizations and individuals
Paul Carter is applying for a loan from a bank. The bank is concerned because Paul is an airline pilot for United Airlines. The bank thinks that Paul may be laid off in the near future. Which of the 5Cs of credit is the bank concerned with?
conditions
Warranties are commonly associated with ____________ purchases.
consumer
If you have incorrect information in your credit file:
contact both the credit reporting agency and the company that provided the information to the credit bureau.
If you find that you cannot make your payments:
contact your creditors at once and try to work out a modified payment plan with them
A 1 to 5 percent charge that shareholders pay when they withdraw their investment from a mutual fund is called a(n):
contingent deferred sales load
In recent years, membership in credit unions has:
continued to increase
Nathanial Drummond has three different insurance policies. He has been injured in an accident and has incurred $30,000 in medical bills. There is a clause in all of his insurance contracts the makes sure that he receives no more than $30,000 in payments from his insurance companies. This clause is called:
coordination of benefits
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?
corporate bond
Which type of credit insurance repays your debt in the event of a loss of income due to illness or injury?
credit accident and health insurance
Which of the following financing methods provides a float period?
credit card
The most commonly purchased type of credit insurance is:
credit life insurance
A cash flow statement reports a person's or a family's:
current income and payments
Ben Chase needs to pay off some of his debts over the next few months. Which item on his balance sheet would help him decide what amounts are due in the near future?
current liabilities
A stock that follows the business cycle of advances and declines in the economy is called a(n) ____________ stock.
cyclical
Savings compounded ____________ would have the highest effective yield.
daily
Comprehensive coverage would cover financial losses due to:
damage to your car caused by wind or hail
Consumer credit:
dates back to colonial times
A bond that is backed only by the reputation of the issuing corporation is called a(n) ____________ bond.
debenture
The debit card:
debits your account at the moment you buy goods or services
In a bankruptcy, a person filing for relief is called a:
debtor
Liabilities are amounts representing:
debts
Easing of international tensions or disinflation causes gold price to:
decline
If overall interest rates in the economy rise, a corporate bond with a fixed interest rate will generally:
decline in value
When the board of directors approves a two for one stock split, the price for each share of stock most likely:
decrease in value
Renee Warning has a life insurance policy where the payments to beneficiaries get smaller as time passes. What type of life insurance does Renee likely have?
decreasing term insurance
Sophie Bennett must pay $500 in doctor's visits before her insurance company will make any payments for doctors visits. This is called:
deductible
Which document is used to transfer ownership of property from one party to another?
deed
A stock that remains stable during declines in the economy is called a(n) ____________ stock.
defensive
Which employer retirement plan specifies the benefits promised to the employee at the normal retirement age?
defined-benefit plan
Which employer pension plan has an individual account for each employee?
defined-contribution plan
Checking accounts are frequently referred to as ____________ deposits.
demand
Preparing a list of current asset and debt balances and amounts will help with which step of of The Financial Planning Process?
determining your current financial position
In what type of real estate investment does the investor hold legal title to the property?
direct investment
A plan which allows stockholders to purchase stock directly from a corporation without having to use a brokerage firm is called:
direct investment plan
Real estate investments are classified as:
direct or indirect
Which type of insurance is probably the most neglected form of available insurance protection?
disability
The rate that the Federal Reserve charges banks for loans is the:
discount rate
Federal law requires REIT to:
distribute at least 90 percent of their taxable annual earnings to shareholders.
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?
diversification
Which type of health insurance is simply a bad buy?
dread disease and cancer policy
Money received by an individual for personal effort is ____________ income.
earned
One of the following is not an advantage of the Social Security retirement income:
earned income partially offset benefits
Paul Spoon has noticed that interest rates have risen in recent months. He is worried that this may make it more difficult for him to finance the purchase of a car. This would be an example of a(n) _______________ that influences his purchasing decision.
economic factor
The study of how wealth is created and distributed is:
economics
An investment theory based on the assumption that stock price movements are purely random is called the ____________ theory.
effecient market
The waiting period in disability income insurance is called ____________ period.
elimination
In the budgeting process, which of the following is budgeted first?
emergency fund & savings
Most private insurance companies sell health insurance policies are sold to:
employers, who in turn offer the benefits to employees
What type of tax is imposed on the value of an individual's property at the time of his or her death?
estate
The purpose of an appraisal is to:
estimate the current value of a property
Which of the following statements is correct regarding wills?
every adult should have a will
Which of the following would result in a reduction of taxable income?
exclusions
All the different fees and fund operating costs are often referred to as a(n)
expense ratio
Negligence refers to:
failure to take ordinary or reasonable care
Which of the following is an advantage to renting?
fewer responsibilities
The total dollar amount you pay to use credit is called the:
finance charge
Of the following, which is generally the most expensive lender?
finance companies
A formalized report that summarizes your current financial situation analyzes your financial activities is a:
financial plan
Payments that do not vary from month to month are ____________ expenses
fixed
In general, the price of gold:
fluctuates daily
Which type of will is usually prepared with an attorney's assistance?
formal will
Open dating provides information on:
freshness or shelf life
The principle purpose of taxes is to:
fund government programs
An investment theory based on the assumption that a stock's intrinsic or real value is determined by the future earnings of the company is called the ____________ theory.
fundamental
If a person deposited $50 a month for 6 years earning 8 percent, this would involve what type of computation?
future value of a series of deposits
A prime reason for buying an annuity is to:
give you retirement income for the rest of your life
A person who assumes the responsibilities of providing the children with personal care and managing the estate for them is called a(n):
guardian
Estate planning involves:
handling your property while you are alive dealing with what happends to that property after your death building your estate through saving, investments and insurance transferring your estate as you have specified
The definition of disability:
has several definitions
Most people pay federal income tax by:
having amounts withheld from income
Defective house wiring is an example of a:
hazard
Excessive indebtedness can result in:
heavy drinking, a neglect of children, marital difficulties, drug abuse
Sean Carter needs to store monthly statements from his bank, his credit card company and from his savings and loan. Where is the most appropriate place for Sean to store this information?
his home file cabinet and/or personal computer
A handwritten will is called a(n):
holographic will
Who has the greatest need for life insurance?
households with small children
A stock that pays higher than average dividends is called a(n) ____________ stock.
income
Drew Davis earns $4500 per month from his job at Cisco Systems; $900 is withheld from this amount each month for taxes. What type of tax is this most likely to be?
income tax
The time value of money refers to:
increase in an amount of money as a result of interest
An example of ____________ risk occurs when an investment does not keep up with prices that are increasing in the overall economy.
inflation
Investors buy precious metals as a hedge against:
inflation
____________ risk refers to the changes in buying power.
inflation
Investors purchase corporate bonds for:
interest income dollar appreciation of bond value bond repayment at maturity
An example of a tax-exempt investment is:
interest income on municipal bonds
Gerry Legere has died without writing a will. What is the legal term for this?
intestate
One aspect of financial planning is to buy stocks, bonds, mutual funds and other investments with the potential for long-term growth. Which component of personal financial planning does this deal with?
investing
An individual retirement account is an example of an ____________ asset.
investment
Money received in the form of dividends or interest is ____________ income.
investment
Brian Wilson has a baseball card collection passed down to him from his grandfather. He is particularly proud of the signed Hank Aaron baseball card that he has. What type of investment does he hold?
investment in collectible
Lynn Roy owns three two carat diamonds that she received from her grandmother who did not believe in banks or stocks and bonds. What type of investment does she hold?
investment in gems
Jeremy Fischer has just purchased 20 American eagle gold coins from a broker. What type of investment does he hold?
investment in precious metals
Standard & Poor's and Mergent's are companies that would be examples of:
investor's services
If you establish a(n) ____________ trust, you cannot change its terms or end it
irrevocable
A beneficiary is a person who:
is desginated to recieve life insurance proceeds
If a gold bullion bar does not remain in the possession of the dealer or bank that sells it, what must happen before it can be resold?
it must reassayed
_____________ are expenses that a taxpayer is allowed to deduct from adjusted gross income.
itemized deductions
A personal balance sheet presents:
items owned and amounts owed
A home file should be used to:
keep financial records for current needs and documents with limited value
What are the two most popular personal retirement plans?
keogh accounts and individual retirement accounts
Which retirement plan is specifically designed for self-employed individuals and their employees?
keogh plan
The basic unit of gold bullion is one:
kilogram
A stock that is issued by a corporation that has a large amount of capitalization is called a(n) ____________ stock.
large cap
The legal document involved in renting an apartment is called a(n):
lease
Which of the following legal techniques best serves low-income consumers?
legal aid societies
Possible losses due to negligence resulting in bodily injury or property damage to others are called ____________ risks.
liability
The legal responsibility for the financial cost of another person's losses or injuries is referred to as:
liability
One of the advantages of being a limited partner in a real estate investment venture is that you have ____________ liability
limited financial
The ability to buy or sell an investment quickly without substantially affecting the investment's value is called the:
liquidity factor
Some savings and investment choices have the potential for higher earnings. However, these may also be difficult to convert to cash or sell when you need the funds. This problem refers to:
liquidity risk
A(n) ____________ trust is a property management arrangement that you establish while you are alive.
living
A mutual fund in which investors pay a commission every time they purchase shares is called a(n) ____________ fund.
load
The most commonly considered factor when selecting a home is the:
location of the home
Which of the following is a possible disadvantage of real estate investments?
long periods of depreciation
Karen Blumenthall was seriously injured in a car accident and is paralyzed from the waist down. Luckily she has an insurance policy that will pay for someone to come in and help with her day to day activities such as bathing, dressing and household chores. What type of insurance policy is this likely to be?
long-term care insurance
An advantage credit unions may have over other financial institutions is:
lower fees and lower loan rates
Brenda Williams plans to rent instead of buy her housing. What advantage of renting will Brenda encounter?
lower initial costs
The main financial benefit of renting is:
lower initial costs
The main responsibility of The Feds is to:
maintain an adequate supply of money
Homeowners without children benefit from strong schools because the educational advantages of a community help:
maintain property values
____________ is considered a variable operating expense of an automobile.
maintenance
The purpose of a debit card is to:
make purchases and have them deducted from from your checking or other bank account.
Which of the following is a part of estate planning?
making a will setting up a trust accumulating funds for your family providing for your familys financial security after your die
Personal financial planning is the process of:
managing your money to achieve personal economic satisfaction
The process of resolving consumer complaints with the use of a third party who suggests a solution through discussion and negotiation is:
mediation
Which health care plan is administered by each state within certain broad federal requirements and guidelines?
medicaid
Which one of the following expenditures for retirees may increase?
medical expenses
Which of the following expenditures for retirees is likely to increase
medical expenses insurance, both health and life leisure activities gifts and contributions
Hospital insurance (Part A) and medical insurance (Part B) are parts of:
medicare
A VA-guaranteed loan program provides assistance to:
military veterans
A type of investment that combines and invests the funds of many investors and manages it with a professional manager is called a(n):
mutual fund
Investment companies are also called:
mutual funds
The highest consistency of quality is associated with ____________ brand items.
national
If a homeowner leaves toys on stairs that results in injury to a delivery person, this may be ruled as:
negligence
The current market value of the securities in the mutual fund's portfolio minus the mutual fund's liabilities divided by the number of shares outstanding is called the:
net asset value
If you default on your automobile loan:
no advance notice is required before repossession
Which of the following is a system in which drivers involved in an accident collect medical expenses, lost wages, and related injury costs from their own insurance company?
no-fault insurance
A mutual fund in which no sales charge is paid by the individual investor is called a(n) ____________ fund.
no-load
Which of the following would increase the speed of equity growth for a homebuyer?
obtaining a 15-year mortgage instead of a 30-year mortgage
Andrea Mitchell has joined a real estate syndicate. The syndicate she belongs to was formed by one individual who sold participation units to Andrea and several others. The individual who sold the participation units has unlimited liability and provides professional management. Andrea and the others can only lose their initial investment. What type of real estate syndicate has Andrea joined?
one organized as a limited partnership
A mutual fund in which new shares are issued and redeemed by the investment company at the request of investors is called a(n) ____________ fund.
open-end
For an investor who wants to speculate, which of the following investments would be appropriate?
options
What is likely to be an individual's single biggest asset?
owned home
Which is often the source of the least expensive loan?
parents or family members
To avoid high fees for loans, you should not borrow from a:
payday loan company, rent-to-own center, pawnshop, check-cashing outlet (ALL OF THE ABOVE)
Typical examples of uses of life insurance proceeds are:
paying off a home mortgage endowment to children making charitable bequests paying estate taxes
What is (are) the danger signal(s) of potential debt problems?
paying only the minimum balance on credit cards each month missing payments or paying late using savings to pay routine bills depending on overtime or bonuses to meet normal expenses
An umbrella policy is designed to cover:
personal injury, bodily injury and property damage.
Brett Johnson owns a home in Yukon, Oklahoma. A babysitter he hires breaks her leg when she trips over the dog. What part of his homeowner's insurance would cover this loss?
personal liability
Renter's insurance would include coverage for:
personal property
What is prepaid interest charged by a mortgage company?
points
A documentary agreement between spouses before marriage in which one or both parties often waive a right to receive property under the other's will or under state law is called a:
prenuptial agreement
Grady Perdue has assets worth $1,500,000 and has written a legal document that specifies that all of his money go to his children. After he dies, there is a legal process to determine whether his document specifying how his assets be divided is valid. This is also the legal process by which his executor manages and distributes his property. What is this legal process called?
probate
Capital gains refer to:
profits from the sale of a capital asset such as stocks, bonds or real estate.
The uncertainties of direct and indirect losses to personal or real property due to fire, windstorms, accident, theft, etc., are called ____________ risks.
property
The 25 in 50/100/25 refers to ____________ coverage
property damage liability
A cost associated with home buying would be:
property taxes
Which of the following expenses is paid from an escrow account?
property taxes and homeowner's insurance
A financial risk of home ownership is that:
property values may decrease
Details relating to management fees, sales fees, 12b-1 fees and other expenses must be disclosed in an investment company's:
prospectus
Most people buy life insurance to:
protect someone who depends on them from financial losses caused by their death
The purpose of financial responsibility laws is to:
protect the public from physical harm and property damage losses caused by drivers
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?
proxy
A taxpayer whose spouse recently died is most likely to use the ____________ filing status.
qualifying widow or widower
For a dependent to qualify as an exemption, he or she must
receive more than one half of his or her support from the taxpayer
Which of the following is a problem with direct investment in real estate?
responsibility for maintaining the rental property
The purpose of zoning laws is to:
restrict property use
Brenda Lee has received a $10,000 gift from her mother and is trying to decide how to invest it. She thinks she would like to invest it in stocks because she knows that stocks have been earning about a 10% rate of return over the last several years. What aspect of investing is Brenda most concerned about?
return
Most consumer complaints are resolved by:
returning to the place of purchase
The financial planning process concludes with efforts to:
review and revise the financial plan
Robert Plant pays a premium each month to State Farm Insurance for automobile insurance on his 2003 Dodge Ram pick up truck. How is Robert managing his risk?
risk shifting
When selecting a financial institution, you should consider:
safetly (deposit insurance), fees and charges, services offered, convenience. (ALL OF THE ABOVE)
After the death of her husband, Gina Baker, 35, received a check for $350,000 from a life insurance company. Gina has two small children and wants to make sure that both she and the children are taken care of in the future. Based on this information, which of the investment factors listed below would be the most important to Gina in her investment program?
safety
Sarah Logan's employer makes nontaxable contributions to a plan in her name and reduces her taxable income by the same amount. What type of retirement plan does Sara have?
salary reduction plan or 401K
The storage of funds for future use is a purpose of ____________ services.
saving
Which of the following investments offers the greatest liquidity?
savings accounts
A mutual fund that invests in companies in the same industry is called a(n) ____________ fund.
sector
An investor concerned with a predictable source of income provided by an investment would choose:
securities issued by the U.S government
Earnest money has the purpose of:
serving as evidence of good faith indicating a serious purchase offer
The purpose of small claims court is to:
settle legal differences involving amounts below a set limit.
A savings account at a credit union is called a ____________ account.
share
Select the two (2) correct statements regarding the "Easy Method" of determining your life insurance requirements:
simple, but remarkably useful for a "typical" family
Types of closed-end credit are:
single lump-sum credit and installment sales credit
An example of a direct real estate investment is a:
single-family dwelling
A fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue is called a(n) ____________ fund.
sinking
Greg Rossman likes to play golf. This would be an example of a(n) _________ that influences his purchasing decision.
social factor
Hospital insurance (Part A) of Medicare is financed from part of the ____________ taxes.
social security
Which one of the following is the most widely used source of retirement income?
social security
Possible sources of income for many retirees include:
social security other public pension plans employer pensions plans personal retirement plans and annuities
"Junk" bonds are in which category?
speculative
Starting a small business that may or may not succeed is an example of ___________ risk.
speculative
An order to sell a particular stock at the next available opportunity after the market price of the stock reaches a specified price is called a ____________ order.
stop
Sophie Bennett has met the deductible for her doctor's visits. She has also paid out 20% of all expenses above this deductible amount. She has paid a total of $5000 in doctor's visits. At this point there is a clause in her insurance contract that make her insurance company pay for 100% of all expenses. What clause is this likely to be?
stop-loss provision
A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders with respect to interest payments, repayment and assets is called a(n):
subordinated debenture
You can determine your net worth by:
subtracting your liabilities from your assets
____________________ play an important role in setting prices:
supply and demand
Which type of health insurance pays part or all of the surgeon's fee for an operation?
surgical expense
Joe Johnson needs surgery for appendicitis. Which part of his basic insurance coverage should help pay for this surgery?
surgical expense insurance
Mr. and Mrs. Dowright want to give their son Dudley a total of $24,000. They each write him a check for $12,000 so they won't have to pay any gift tax. This is an example of
tax avoidance
In what type of ownership is each individual considered to own a proportionate share for tax purposes with only your share being included in your estate?
tenants in common
What has made it much easier to find and trade in collectibles?
the advert of the World Wide Web
One of the disadvantages of borrowing on financial assets (collateral) is that:
the assets are tied up until you have repaid the loan.
Peril is defined as:
the cause of a possible loss
If there is incorrect information in your credit file:
the credit bureau must reinvestigate and modify or remove inaccurate data
Aside from a home, the real property investment most widely favored by the small investor is:
the duplex, four-plex, or small apartment building
If you cosign a loan & the borrower misses a payment:
the lender can collection the entire debt from you immediately without pursuing the borrower first.
The 100 in 100/300/50 refers to:
the limit for bodily injury claims that can be paid to one person.
To raise capital, many corporate financial managers prefer selling common stock because:
the money obtained from stockholders does not have to be repaid.
Some experts claim that credit life insurance policies are:
the nation's biggest rip off
Jane Curtain has a participating life insurance policy that returns part of her premiums at the end of the year. The money that is refunded to Jane at the end of the year is called:
the policy dividend
Which of the following items is a set amount on which no taxes are paid?
the standard deduction
Financial leverage refers to:
the use of borrowed funds for investment purposes
What are some possible reasons for high and rising costs of health?
the use of sophisticated, expensive technologies increasing number of accidents and crimes that require emergency medical services duplication of tests the increasing number and longevity of elderly people
An implied warranty that comes with a used car is that:
the vehicle is guaranteed to run - at least for a while.
Why do corporations sell bonds?
to improve the corporation's financial leverage. because the corporation doesn't have enough money to pay for major purchases. to reduce the federal and state taxes paid by the corporation by using the interest paid to bond owners as a tax-deductible expense. to finance the corporation's ongoing business activities.
Estate planning has two parts. The second part of estate planning consists of:
transferring your estate in the manner you have specified
A government security issued in minimum units of $100 with a 30-year maturity is called a:
treasury bond
A person or institution that holds or generally manages property for the benefit of someone else under a trust agreement is called a(n):
trustee
The financially independent firm or individual that acts as the bondholders' representative is the:
trustee
Good disability plans pay when you are:
unable to work at your regular job
Henry Edwards was injured in an accident caused by another driver who did not have insurance. Henry's medical expenses would be covered by:
uninsured motorists protection
Which type of housing is designed to allow people to stay in their homes as they grow older?
universal design
Subject to certain minimums, which life insurance is designed to let you pay premiums at any time in virtually any amount?
universal life
Which type of life insurance policy combines term insurance and money market account?
universal life
impulse buying refers to:
unplanned buying
Federal Trade Commission regulations require that:
used car buyers be informed if the vehicle comes with a warranty.
One aspect of borrowing from parents or family members is that such loans are:
usually the least expensive
The cash values of a ____________ life insurance policy fluctuate according to the yields earned by a separate fund, which can be a stock fund, a money market fund, or a bond fund.
variable
Opportunity cost refers to:
what a person gives up by making a choice
Current liabilities differ from long-term liabilities based on:
when the debt is due
Which statement is correct about whole life insurance?
whole life insurance increases cash value
The most common type of permanent life insurance is called:
whole life policy
When did installment credit explode on the American scene?
with the advert of the automobile in the early 1900s
John Gleason is permanently disabled while on the job. Which of the following is the most likely source of disability income for John?
worker's compensation
Why is financial planning for retirement critical?
you can expect to live in retirement for many years. social security and private pension may be insufficient to cover the cost of living. inflation may diminish the purchasing power of your retirement savings.
Which one of the following is a true statement about retirement planning?
you can expect to spend about 16 to 30 years in retirement. it's never too early to begin planning for retirement. don't let your 45th birthday roll by without a comprehensive retirement plan. retirement planning has both emotional and financial components.
Illiquidity in real estate means that:
you cannot quickly sell the property
An advantage of U.S Saving EE Bonds is:
you do not have to pay federal income tax on earnings until the bonds are redeemed.
John Peterson purchased a bond at a price far below its face value, makes no interest payments and will be redeemed at its face value at maturity. In all likelihood, he purchased a(n) ____________ bond.
zero-coupon
The method of determining life insurance requirements that does not ignore such important factors as social security and your liquid assets is called the:
"family need" method
Barker Creek Clothing has after-tax income of $12.8 million. It also has 32 million shares of stock outstanding. What is the firm's earnings per share?
$0.40 a share
If you borrow $100 at 10 percent simple annual interest and repay it in one lump sum at the end of one year, you will have to pay:
$110
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 Jamie's net worth?
$162,000
Itemized deductions are recorded on:
Schedule A
Which of the following statements is true?
Selling short is selling stock that has been borrowed a from brokerage firm.
Which of the following statements is true?
Long-term corporate bonds have maturities over 15 years.
Which of the following is not a business and general periodical?
New York Stock Exchange Report
Which of the following are correct about service contracts?
Oten called "extended warraties" Limited coverage of repairs Because of costs and exclusions they may not be a wise financial decision
Hector Ramirez has purchased a new Honda Accord with power windows, locks and anti-lock brakes. He is reading his owner's manual to know when he needs to take it in for its regular servicing at the dealer. He wants to make sure this car lasts a while. What step in the purchasing process is Hector carrying out?
Post purchase activities
Which of the following is a true statement?
Professional management is an especially important factor for investors purchasing a mutual fund.