BUS112 Final Exam

When creating a budget, it is important to

"Pay yourself first" by setting aside savings before other expenses are budgeted.

The appearance of a used car can be deceptive. When purchasing a used vehicle, it is a good idea to

Have a trained and trusted mechanic of your choice check out the vehicle.

Which of the following long-term goals is stated most clearly using the SMART approach?

Invest $50 per month for the next 12 years for my nephew's college fund

Which is NOT true about the Fair Credit Reporting Act?

It gives borrowers the right to know why they are denied credit.

After having established a spending plan, it is important to

Keep track of your actual income and expenses.

Which of the following refers to the opportunity to withdraw your money on short notice without incurring a loss in value?

Liquidity

Home equity loans should be used for

Major expenses such as home improvements or education.

The main goal when setting insurance goals is to

Minimize personal, property, and liability risks.

Deductibles are a combination of risk assumption and risk shifting where the insured person pays the first part of the claim (deductible) and the rest of the claim is shifted to the insurance company.

True

At the end of the year, employees receive a ____ form that reports annual earnings and the amounts deducted for taxes from their employers.

W-2

Louise got caught in a cash flow trap and desperately needed money quickly. Unfortunately, she didn't shop around and she went to a _____. As a result, her annual percentage rate was higher than 780%!

payday loan company

If you choose to take responsibility for the negative results of a risk, you are using

risk assumption

If a $10,000 investment earns a 4 % annual return, what should its value be after one year?

$10,400

Jason's household consists of himself, his wife, and their 2-year-old daughter. How much can Jason claim for his exemptions in 2012?

$11,850

Carrie bought a house five years ago for $150,000. At that time she borrowed $140,000 from her bank. The house is now worth $162,000. Her PMI will automatically be dropped when her mortgage balance drops to

$117,000.

Timothy Carter went out to eat with his girlfriend at a fancy restaurant. When he tried to pay the bill with his Mastercard credit card, he was told that the restaurant accepted only cash or American Express. His waiter suggested that he use the ATM across the street to withdraw cash using his credit card. Tim did as suggested and didn't pay attention to any fees until he received his credit card statement one month later. He was shocked to see the total fees (3% cash advance), and his APR was increased to 21%. Given the cost of the meal ($125) plus the associated fees, how much did his meal cost him?

$130.94

If you have a $150,000 30-year 5% mortgage, how much of your first monthly payment of $805.50 would go toward principal?

$180.50

Rebecca Wilson budgeted $1,200 for housing and utilities in July. She actually spent $1,160. What is her budget variance?

$40 surplus

What is the APY for a one-year $4,000 certificate of deposit with $280 interest?

7%

A demand deposit is also known as

A checking account

An individual who purchases an insurance policy is called

A policyholder

A budget deficit would result when a person's or family's

Actual spending exceeds planned spending.

Which of the following about individual health insurance policies is NOT correct?

All insurance companies that offer this type of policy are required to charge the same rates.

The most common risks are

All of these are common risks

The duration of benefits for a disability income insurance plan can be

All of these are possibilities

All of the following are sources of disability income except

All of these are sources of disability income.

Which of the following is a valid reason for using credit?

All of these are valid reasons for borrowing

Carrie thought she misplaced her checkbook for a few days. When she found it, she noticed that two checks, her cash, and her debit card were missing. She immediately thought about the increase in identity theft in her area and decided to take some action. She should take all of the following steps except

All of these steps are appropriate to take if she suspects identity theft.

Miguel is concerned that the health insurance option he is considering plays upon unrealistic fears. He is most concerned about a

Dread-disease policy

A vehicle lease has several costs. Which of the following is the price of the vehicle?

Capitalized cost.

Craig wants to get his old car repaired, but he doesn't want to spend much money. He probably will NOT want to go to the most expensive repair service, which is from a(n)

Car dealer

Nora bought a used car and was told that she needed a personal check with guaranteed payment. She obtained a

Certified check

Adjustments to income include all of the following except

Charity contributions.

Annie was required to clarify or document minor questions about her tax form by a mail inquiry. She participated in a(n)

Correspondence audit.

When evaluating your credit application, a lender may NOT

Deny you credit if you receive public assistance.

When Stanley was visiting Elaine, he tripped on her front porch step and sprained his ankle. His injuries were covered by

Elaine's medical payments coverage.

A tax imposed on the value of a person's property at the time of death is called a(n)

Estate tax.

A vehicle lease has several costs. Which of the following is the interest rate used to calculate the monthly cost?

Money factor.

This shopping label is used primarily on perishable products.

Open dating

What is the primary purpose of medical expense insurance?

Pay actual medical costs for illness or injury.

A vehicle lease has several costs. Which of the following is the amount paid monthly and the number of payments?

Payment schedule

A reverse mortgage

Provides older home owners with tax-free income in the form of a loan that is repaid when the home is sold or the home owner dies.

Which of the following is an advantage of renting?

Renters have fewer responsibilities for maintenance than home owners.

Changes in personal, social, and economic factors may require you to

Review and revise your financial plan more frequently.

A health insurance policy with this provision lists coverage in terms of services, not dollar amounts.

Service benefits

The document that would tell you what you received and spent over the past month is the

cash flow statement

The rising or falling of prices that causes changes in buying power is referred to as ____________ risk

inflation

Changes in the cost of money is referred to as ____________ risk.

interest-rate

This provides the tenant protection from rent increases.

lease