FIN 353 online homework (ch. 7-12)
T/F: If the corporation that issued a bond goes bankrupt, the bondholders are paid before stock holders are paid from any remaining assets of the corporation.
true
T/F: If you earned a negative 5% return on your investments while the overall stock market was down 9% then you have outperformed the market.
true
T/F: If your stock's beta was greater than 1.0 that indicates that your stock is more susceptible to movements in the market.
true
T/F: In dealing with risk, one can either avoid it, manage it, or transfer it for a fee.
true
T/F: Investing in assets such as collectable Barbie Dolls or Beanie Babies are both example of speculating.
true
T/F: Investing in bonds is generally less risky than investing in stocks.
true
T/F: It is very tough to consistently beat the market.
true
T/F: Life insurance and health insurance are designed to transfer the catastrophic risk you can't afford to keep onto the insurance companies.
true
T/F: Life insurance is not meant to benefit you, its purpose is to protect others in the event of your death.
true
T/F: Limited liability associated with stock ownership means that shareholders can only lose the amount of money they have invested in the company.
true
T/F: One way to lower the premiums you pay on your insurance is to have a higher deductible.
true
T/F: Personal liability insurance protects you from financial losses incurred if someone is injured on your property or as a result of your actions.
true
T/F: Property insurance protects you from the financial risk associated with property losses.
true
T/F: Since most homeowners' claims are for relatively small amounts, high deductibles will keep your insurance costs down.
true
T/F: Stocks are initially sold in the primary markets with the help of an investment banker serving as the underwriter.
true
T/F: Stretching a car loan from 48 months to 60 months means the car will end up costing you more when you have paid in full
true
T/F: Technical analysis focuses on supply and demand, using charts and computer programs to project stock trends.
true
T/F: The 28/36 rule says that as long as your total debt payments are under the 36% of your gross income then you are not overextended
true
T/F: The Securities Act of 1934 created the SEC to enforce trading laws.
true
T/F: The beneficiary is the individual designated by the owner of the life insurance policy to receive the insurance policy's proceeds upon the death of the insured.
true
T/F: The discounted dividends valuation model states that the value of a share of stock is the present value of its future dividends.
true
T/F: The earnings multiple approach is based on the notion that you want to replace a stream of annual income that's lost due to the death of a breadwinner.
true
T/F: The monthly payments on a 36-month lease on a car will often be smaller than the monthly payments on a 36-month loan to purchase the car
true
T/F: The more efficient the market, the faster prices react to new information.
true
T/F: The nominal rate of interest that investors demand will increase with an increase in the expected rate of inflation.
true
T/F: The real rate of return is the nominal rate of return adjusted for inflation.
true
T/F: The typical down payment is 20% for traditional mortgage loans
true
T/F: Using the earnings multiple approach is determining the present value of an annuity as a means to determine the face value of the insurance policy one needs to purchase.
true
T/F: When it comes to tax advantages, capital gains and dividend income are taxed at a lower rate than ordinary income.
true
T/F: With a PPO, it is much more expensive to go to out of network healthcare providers.
true
T/F: With short selling you are hoping for the stock price to fall.
true
T/F: With term life insurance, the beneficiary receives a fixed death benefit.
true
T/F: With the needs approach, you should take into consideration any additional insurance policies that have been taken out on your life.
true
T/F: You, not your lender, should determine the amount you want to borrow for a mortgage
true
T/F: Your insurance credit score depends on, among other things, your payment history and the types of credit used.
true
T/F: Your insurance's copayment and deductible are the expenses that the insured must pay before the insurance company will pay any benefits.
true
T/F: the first step at the car dealership is to negotiate the best price that you can on the car that you need
true
T/F: Historically, U.S. government securities have been considered the safest, lowest-risk investment available.
true
T/F: Typically, the closer you get to retirement, the smaller the proportion of your retirement funds that should be invested in common stocks.
true
T/F: Bridge loans provide short-term funding until longer-term or additional financing is found
true
T/F: Call risk is the risk to bondholders that a bond may be called away from them before maturity.
true
A ________ increases the number of stock shares outstanding by replacing each existing share of stock with a stated number of new shares. A) stock split B) stock repurchase C) dividend reinvestment D) stock reissue E) none of the above
A
Name the items that are deposited in an escrow account. A) Property taxes, property insurance B) PMI premiums, homeowner's association dues C) Utility payments, homeowner's association dues D) Principal, interest, title fee, insurance E) Liens, closing costs, points
A
PITI stands for the total of your monthly: A) principal, interest, taxes, and insurance B) principal, income, taxes, and insurance C) premiums, interest, taxes, and insurance D) principal, interest, taxes, and income
A
Reggie was hosting a BBQ when the deck fell off his house. Several of his friends were hurt in the accident. Luckily for Reggie he has ________ coverage on his home owner's insurance. A) personal liability B) loss of use C) personal articles D) none of the above
A
The Beta of the market is equal to: A) 1 B) .5 C) 0 D) 2
A
The ratio of the annual dividend to the market price of the stock is called the: A) dividend yield B) retention ratio C) plowback ratio D) current ratio E) none of the above
A
The replacement value of the house less accumulated depreciation (which is the decline in value over time due to wear and tear) is known as: A) actual cash value B) market value C) replacement value D) depreciation E) none of the above
A
The "ask" price should always be ________ the "bid" price. A) above B) near C) equal D) below
A
The ________ date is the date at which the bond issuer must repay the loan or borrowed funds. A) maturity B) premium C) ending D) completion E) none of the above
A
The ________ date is the date the stock begins trading without dividend, meaning that if you buy it after this date you will not get the dividend for that year. A) ex-dividend date B) declaration date C) reinvestment date D) payment date E) maturity date
A
The ________ is a common stock indicator, consisting of 30 large industrial firms, and is used to indicate how well stocks have done. A) DIJA B) CMIA C) DAIA D) SPFA E) none of the above
A
What is the number one natural disaster in the united States? A) floods B) wildfires C) earthquakes D) tornados
A
When a company buys back its own common stock it is engaging in a: A) stock repurchase B) stock repo C) stock reissue D) stock split E) none of the above
A
When you purchase a(n) ________, you are obtaining an extension to a homeowner's insurance policy that provides coverage for all personal property regardless of where it is located. A) personal articles floater B) uninsured property addendum C) personal rider D) property addendum E) none of the above
A
You are considering the purchase of an acre of land out in the country to build your future house on. You pay for an investigation of the public record to determine the current legal owner of the property. This is called a(n) A) title search B) legal entity search C) appraisal search D) escrow search E) none of the above
A
You are in the process of purchasing a new home. Expenses that the buyer and seller incur when finalizing the transfer of the ownership of the house are called: A) closing costs B) finalization costs C) transfer fees D) end costs E) none of the above
A
You have decided to give your stockbroker the power to make trades in the market on your behalf, without notifying you of the trades prior to execution. This is an example of: A) a discretionary account B) a power agreement C) an independent account D) none of the above
A
A ___ is tied to a market interest rate, such as the prime rate or the six-month treasury bill rate A) convertible-rate loan B) flexible-rate loan C) variable-rate loan D) prime-rate loan
C
A federal direct subsidized loan has tremendous advantages over other types of loans, including: A) they have low monthly payments and a 20% balloon payment after 5 years B) they use the add-on method to determine your monthly payment C) the interest is deferred while you are in school D) none of the above
C
Another name for a closed-end lease is a(n): A) end-purchase lease B) terminal lease C) walk-away lease D) take-out . lease E) none of the above
C
The ________ is the amount that you agree to pay before insurance coverage kicks in. A) allowance B) pro rata share C) gratis D) deductible E) none of the above
D
The ________ rate is the interest to be paid annually on a bond as a percentage of its par value. A) face interest B) compound interest C) base D) compound interest E) none of the above
D
What are the disadvantages of group term insurance? A) The premiums are usually subsidized by the employer. B) Relying on group insurance may hinder your decision to leave the company. C) The cost to covert from group coverage to individual coverage if you leave the company may be cost prohibitive. D) Both B and C are correct.
D
T/F: Churning occurs when a broker engages in excessive trading in a client's security account to generate more commissions for the broker.
true
What are the risks to the borrower with adjustable-rate loans? A) During times of inflation your salary may increase during the term of the loan. B) That the market rates of interest may increase during the term of the loan. C) It is harder to budget for loan payments that may increase during the term of the loan. D) Both B and C are correct.
D
T/F: Defaulting on a secured loan may lead to the collateral being repossessed
true
What factors are considered when insurance companies decide what rates to charge you for homeowner's insurance? A) your credit score B) whether you have an in-home sprinkler system C) what type of building materials were used in the house D) all of the above E) all but B are correct
D
T/F: During a "bear market" stocks prices typically fall.
true
Which of the following investors will potentially receive dividends on their investments? A) bondholders B) stockholders C) debt holders D) derivative holders E) both B and D are correct
B
Which of the following is the correct formula to calculate the after-tax cost of a home equity loan? A) After-tax cost of a home equity loan = before-tax cost (1 + marginal tax rate) B)After-tax cost of a home equity loan = before-tax cost (1 - marginal tax rate)
B
Which of the following statements is true? A) The higher your insurance credit score, the higher your homeowner's insurance rate will be. B) The lower your insurance credit score, the higher your homeowner's insurance rate will be.
B
What is the name of the interest rate banks charge to their most creditworthy customers? A) blue chip rate B) premier rate C) main rate D) prime rate E) none of the above
D
With private mortgage insurance, many lenders will allow you to borrow more than 80% of the appraised value of the home. What is the purpose of this action? A) It is required by federal and state law. B) It protects the lender in the event the borrower is unable to make the mortgage payments. C) The insurance will pay for damages to the home during the course of the mortgage. D) It protects the borrower from foreclosure. E) None of the above
B
You are a newlywed, and you and your spouse have just found your dream home. Problem is, you do not have 20% for a down payment on the house. You will probably need to obtain: A) PTI B) PMI C) EAR D) APR E) none of the above
B
A(n) ________ is a marketable document (a receipt) that certifies a bank holds shares of a foreign firm's stock that backs the receipt. A) FFS B) ADR C) FINRA D) MDR
B
________ is insurance that provides permanent insurance coverage as whole life does; however the policyholder, not the insurance company, takes on the investment risk. A) universal life insurance B) variable life insurance C) convertible life insurance D) none of the above
B
Juanita has determined that the PITI on the house she would like to purchase will be $1,260 per month. What is the minimum gross salary she will need to qualify for a mortgage from a reputable lender? A) $5,040 per month B) $4,500 per month C) $6,300 per month D) $3,500 per month
B ($1260/28%)
Andrew and Jackie are considering taking out a $400,000 mortgage to buy a house. How much would they have to have for a down payment to not be required to buy PMI? A) $60,000 B) $80,000 C) $20,000 D) $40,000
B ($400,000 x 20%)
T/F: Flood protection insurance is generally administered and subsidized by the federal government through the Department of Housing and Urban Development.
true
What is the purpose of companies such as A.M. Best, Moody's and Standard & Poor's? A) They provide reinsurance coverage to the insurance industry. B) They sell low cost term insurance via the Internet. C) They sell life insurance directly to consumers without agents. D) They evaluate and rate the financial stability of the insurance industry.
D
Which of the following statements regarding risk in investing is most correct? A) Avoiding risk is the best strategy to accumulate wealth. B) Trying to avoid risk is an exercise in futility. C) It is most important to avoid risk during the early years, up to age 54. D) It is hard to achieve a positive real return by avoiding risk all together.
D
You have just obtained a mortgage to purchase your home. The ________ that you paid to obtain the loan are charges that must be paid at the time of the sale and serve to raise the effective cost of the loan. A) closing fees B) security fees C) escrow fees D) points E) none of the above
D
You know you desperately need life insurance but don't have much money available for premiums. What is the best thing you can do to find affordable insurance? A) use the internet to shop around for the best quotes B) buy directly from the insurance company C) buy term insurance D) all of the above
D
Bob and Marilyn Hartin know the bank will carefully evaluate their situation before lending them the money for the mortgage for their new home. Which is not a consideration? A) their financial history B) their ability to pay C) their level of debt D) appraised home value E) the number of children they have
E
Life insurance may not be necessary if: A) you're married, a double-income couple, with no children B) you're single and don't have any dependents C) you're married but aren't employed D) you're retired E) none of the above
E
The purpose of a personal umbrella policy, as an addition to your homeowner's policy, is primarily to protect you from: A) flood damage B) acts of God, such as falling objects, hail, etc. C) contested title to your property D) faulty construction of your home E) lawsuits and judgments
E
When following smart buying to purchase a home you should: A) create a budget and determine what PITI you can afford. B) determine how much of a down payment you can afford. C) check out your FICO score and get a copy of your credit report. D) look at your overall financial plan to determine how big a loan you should take on. E) all of the above.
E
Which of the following characterize secured loans? A) they are typically easier to get B) they reduce the lender's risk C) interest rates tend to be lower than unsecured loans D) they are backed with either physical or investment assets E) all of the above
E
Which of the following factors plays a role in determining the monthly lease payment of a car? A) The agreed-upon price of the vehicle B) The value of the vehicle at the end of the lease C) Your down payment plus any trade-in allowance or rebate D) The length of the lease E) All of the above
E
You have just recently started your investment activities for retirement. You were happy to learn from your broker that your investor's account balance would be insured for up to $500,000 through the ________ in the event their brokerage firm goes bankrupt. A) FDIC B) FSLIC C) FTC D) NCUA E) SIPC
E
T/F: For investors with a long time in front of them, market volatility is not of great concern today.
true
Your boyfriend is living in an apartment complex that has had a recent rash of robberies. He has $5,000 worth of rare coins. What should he do to protect himself in case of a robbery? A) take out personal property replacement cost coverage B) add a personal articles floater to his policy C) take a written video tape inventory of his property D) only B and C are correct E) A, B, and C are correct
E
T/F: The suicide clause will pay double the face value to the beneficiary if the named insured commits suicide.
false
T/F: Unsecured loans are generally less risky to lenders than secured loans. Therefore secured loans typically charge a higher APR than unsecured loans
false
As a young college graduate, your biggest investment ally is: A) derivatives B) time C) leverage D) tax-free investments E) a windfall
B
Day trading has been called: A) "the long-term investors' preferred trading method." B) "a trading method for transferring wealth from unsophisticated investors to sophisticated investors." C) "the safest, most conservative trading method." D) "a trading method for transferring wealth from sophisticated investors to unsophisticated investors."
B
In addition to your own investment, you borrowed money from your broker to purchase shares of a stock. Your broker called to tell you that the price of your stock has fallen and you now need to contribute more of your own money to keep the account at the minimum level. This is termed a(n): A) stop-loss order B) margin call C) minimum validation D) account validation E) none of the above
B
John purchases a life insurance policy on his wife Betty where he pays the premium and he will receive the life insurance money when she dies. John is both the ________ and the ________ who will receive the ________ upon the death of Betty, the ________. A) policy owner; insured; face amount; beneficiary B) policy owner; beneficiary; face amount; insured C) insured; beneficiary; money; policyholder D) beneficiary; premium payer; face amount; policy holder E) none of the above
B
Principle 8, Risk and Return go hand in hand, tells us that you ________ as the length of the investment horizon ________. A) can afford to take on additional risk; decreases B) can afford to take on additional risk; increases C) cannot afford to take on additional risk; shortens D) cannot afford to take on additional risk; increases
B
Private mortgage insurance typically is not needed with a down payment of 20% or larger. Why? A) Buyers who have large down payments don't choose the extra insurance. B) Buyers who invest large down payments are more motivated to make their mortgage payments. C) Not true, all mortgage loans require PMI. D) All of the above E) None of the above
B
Sharing the financial consequences associated with risk in the insurance industry is sometimes called: A) risk splitting B) risk pooling C) risk deferring D) risk migration E) none of the above
B
That portion of a stock's risk or variability that cannot be eliminated through investor diversification is called ________ risk. A) unrealistic B) systematic C) unsystematic D) inflation E) volatility
B
The acronym DRIP stands for: A) Dividend Risk and Income Potential. B) Dividend Reinvestment Plan. C)Dividend Rates and Income Potential. D) Dividends, Returns, Interest, and Profits.
B
The disadvantage of actual cash value coverage of personal property compared to replacement cost coverage is that it: A) must be reported as a loss on your tax return. B) will reimburse you for replacement cost minus estimated depreciation. C) will reimburse you for the cash value of a new item. D) does not have to be reported as a loss on your tax return. E) none of the above.
B
The ________ is the entity who designates the beneficiary of the insurance policy. A) insured B) policy owner C) actuaries D) beneficiary
B
Using the needs approach to determine the amount of coverage looks from the perspective of the: A) policy owner B) beneficiary C) salesman D) named insured
B
T/F: Generally, a personal umbrella policy is an expensive policy that provides excess liability insurance over basic underlying contracts.
false
T/F: For many consumers, a good school district is an important consideration when purchasing a home.
true
Consumers should comparison shop for credit just as they would for any other consumer good or service. How might a consumer's stage of the financial life cycle, income, net worth, or credit score affect the availability of loan sources and the associated cost of the loans offered? Which of the following statements is correct? A) Typically, stages of the financial life cycle, income, net worth and your credit score move in unison, and the cost of the loans tends to be lower in early financial life cycle stages due to a sufficient supply of fund sources. B) Typically, stages of the financial life cycle, income, and net worth move inversely with credit score, and the cost of the loans tends to be lower in early financial life cycle stages due to a sufficient supply of fund sources. C) Typically, stages of the financial life cycle, income, net worth and your credit score move in unison, and the cost of the loans tends to be higher in early financial life cycle stages due to an insufficiency of credit scores. Your answer is correct. D) Typically, stages of the financial life cycle, income, and net worth move inversely with credit score, and the cost of the loans tends to be higher in early financial life cycle stages due to an insufficiency of credit scores.
C
In driving around town one day, you noticed most of the payday loan companies were located close to the college and the local military base and there were none out in the newer neighborhoods. Why do you think this is so? A) There are zoning laws that require these types of locations for these types of services. B) The rent on these locations is less expensive. C) Payday lenders tend to focus on less experienced borrowers who typically don't make a lot of money. D) Because their terms are so affordable people with low incomes really take advantage of them.
C
Interest rate risk says that if market interest rates rise the price of outstanding bonds will fall. This means that interest rates and bond prices have a(n) ________ relationship? A) exchange rate B) par C) inverse D) lock-step
C
Over the past decade, the number of new car sales are down and the number of new car leases are up. What is probably the main reason why this is true? A) The salesman makes a higher commission when cars are leased. B) The manufacturers prefer it when people lease instead of purchase. C) New cars are getting so expensive that the average person can't afford to buy them. D) Both A and B are correct.
C
Statisticians who specialize in estimating the probability of death based on personal characteristics are called: A) morbidity analysts B) insurance analysts C) actuaries D) morbidity statisticians E) none of the above
C
Suppose that you have decided to buy some life insurance. Which method of determining your life insurance needs calculates the annual loss of income stream? A) limited term approach B) whole life approach C) earnings multiple approach D) needs approach
C
The individual designated by the owner of the life insurance policy to receive the policy's proceeds upon the death of the insured is called the: A) policy holder B) insured C) beneficiary D) actuary
C
The letters or characters that represent a stock is known as the stock's: A) share B) code C) ticker D) acronym
C
Which of the following housing alternatives puts the responsibility for maintenance and repairs on the occupant? A) a rental unit B) a co-op C) home ownership D) a condo
C
Which of the following statements regarding the risk-return relationship is MOST accurate? A) longer loan length is associated with lower APRs B) lower credit scores are associated with lower APRs C) higher credit scores are associated with lower APRs D) shorter loan length is associated with higher APRs E) both B and D are correct
C
You are considered to be engaging in ________ when you purchase an asset whose value depends solely on supply and demand. A) investing B) optioning C) speculation D) hedging E) none of the above
C
You have the most popular house on the block for the neighborhood children to play at. You have a trampoline, tree fort and jungle gym. Your family also has two large German shepherd dogs. What should you consider given the described situation? A) purchasing personal property replacement cost coverage B) purchasing earthquake coverage C) purchasing an umbrella policy D) none of the above
C
Your agent has told you to think about immediate needs at the time of death, debt elimination funds, immediate transitional funds, dependency expenses, spousal life income, educational expenses for the children, and retirement income. What has he described? A) the long-term approach B) the standard approach C) the needs approach D) the combination approach E) the multiple earnings needs approach
C
Your apartment building burned down while you were on vacation. Fortunately, you have renter's insurance. What will your policy cover? A) your neighbor's personal property B) any damages to the building structure C) your hotel and additional expenses based on a percentage of your property coverage D) all of the above E) none of the above
C
A(n) ________ loan calls for the repayment of both the interest and the principal at regular intervals and is commonly referred to as loan amortization. A) simple interest B) term C) installment D) personal E) none of the above
C
Fire, theft, and windstorm damage are examples of: A) miscellaneous mishaps B) liabilities C) perils D) hazards
C
T/F: For the international investor, exchange rate risk is simply another layer of risk.
true
A security whose value is based solely on the value of other assets is called a ________ security. A) alternative asset B) hedging C) capital option D) derivative E) none of the above
D
A(n) ________ is a legal document that describes a securities issue and is made available to potential investors. A) tombstone B) offering contract C) disclosure statement D) prospectus E) none of the above
D
According to the Affordable Care Act, children are allowed to stay on their parents insurance policy until they turn: A) 21 B) 22 C) 24 D) 26
D
In evaluating your financial history, lenders generally focus on which of the following? A) your income B) your FICO score C) your credit report D) all of the above
D
In general, the maximum ratio the lender would like to see on a PITI to Monthly Gross Income is? A) 33% B) 30% C) 25% D) 28%
D
A ________ is a savings plan offered by some employers that allows each employee to have pretax earnings deposited into a specially designated account for paying qualified medical and dependent care bills. A) group practice plan B) planned provider account C) planned reimbursement account D) medical distribution account E) flexible spending account
E
Asset allocation has to do with how your money should be divided among which of the following? A) real estate B) corporate bonds C) stocks D) government bonds E) all of the above
E
T/F: From a financial perspective, the decision of whether to rent or buy is tied to how long to plan to live in the home
true
T/F: Growth stocks are issued by companies that have exhibited sales and earnings growth well above their industry average.
true
T/F: Holding several types of stock can greatly reduce the risk in your portfolio.
true
A stock market characterized by increasing prices is termed a(n) ________ market. A) bear B) bull C) animal D) none of the above
bull
T/F: A 60-year-old investor should not be too concerned about liquidity and market risk in their retirement portfolio.
false
T/F: A day trader is an individual who trades with a very long-term investment horizon.
false
T/F: A growth stock is known for its high dividend yields.
false
T/F: A lower insurance credit score generally results in lower homeowner's insurance rates.
false
T/F: A mortgage with 20% down payment will have a higher APR than one with less than 20% down
false
T/F: A payday loan is a reasonable option if you need a luxury item like a big screen TV
false
T/F: According to the Keown book, overconfidence afflicts women more often than men, and it also leads women to trade too often.
false
T/F: An appraisal is a typical but not required part of the mortgage approval process
false
T/F: As the owner of a corporate bond this means I hold an ownership position within that corporation.
false
T/F: Bonds are always a safe investment if held to maturity.
false
T/F: Common stockholders not only have the right to elect the board but also must approve day-to-day decisions of the chief executive officer.
false
T/F: Diversification eliminates all the risk from your portfolio.
false
T/F: Diversification lowers risk, but it also lowers the expected return.
false
T/F: Dividends are paid regardless if the company makes a profit.
false
T/F: Every company must pay dividends as a portion of the company's profits to its stockholders.
false
T/F: For most typical married couples, joint tenancy with the right of survivorship is not an appropriate form of account ownership.
false
T/F: Frank ran up a large credit card bill as an undergraduate student, he also took out as much in student loans as possible. He is now unable to pay his credit card debt and his student loan debt. However, he has decided to declare bankruptcy to eliminate his debt. Frank will be able to eliminate his federally subsidized student loan debt by declaring bankruptcy.
false
T/F: Income stocks pay relatively low dividends, and offer a high potential for capital appreciation.
false
T/F: Leasing a car may make sense if you drive over 25,000 miles a year
false
T/F: Long-term disability will replace 100% of your income while you are unable to return to work.
false
T/F: One of the best features of term insurance is that you are able to borrow against the face value.
false
T/F: Publicly traded stocks listed on a major exchange are not very liquid investments.
false
T/F: Real estate investments are more liquid than stocks most of the time.
false
T/F: Sandra is terrible at saving; therefore her insurance advisor suggested a term life insurance policy for her since it has a saving/investing aspect.
false
T/F: Smart buying means buying what you want first and figuring out how you'll pay for it later
false
T/F: Stocks represent a legal obligation for the issuing company to pay dividends, whether the company has made a profit or not.
false
T/F: The higher your marginal tax bracket, the less attractive tax-free investments become.
false
T/F: The inflation guard endorsement on your homeowners insurance policy automatically decreases your policy premiums each year due to the inflation rate.
false
T/F: The real rate of return can never be a negative number.
false
T/F: Actuaries are statisticians who specialize in estimating the probability of death based on personal characteristics, such as your age and general health, as well as lifestyle specifics such as whether or not you exercise.
true
T/F: All life insurance policies should have a contingent beneficiary designated.
true
T/F: An appraisal is an estimate of what your home and property are worth
true
T/F: An efficient market is one in which all relevant information about the stock is reflected in the stock price.
true
T/F: An initial public offering is the first time the company's stock is traded publicly.
true
T/F: An insurance policy is a contract with an insurance company that spells out what losses are covered, what the policy costs, and who receives the payment if a loss occurs.
true
T/F: As a general rule, your PITI shouldn't exceed 28% of your pretax monthly income
true
T/F: A 48-month lease on a car with a 36-month manufacturer's warranty is a gamble
true
T/F: A 529 plan is a tax-advantage savings plan designed to encourage parents to save for future college costs for their children. The plan comes in two forms: pre-paid tuition plans and college savings plans
true
T/F: A condominium is a good choice of housing for someone seeking an affordable, low-maintenance situation with some shared amenities.
true
T/F: A disadvantage of term insurance is that the cost rises each time the policy is renewed.
true
T/F: A firm may decide that the price per share for its stock is getting too high for the smaller investor so the company "splits the stock."
true
T/F: A limit order specifies a securities trade is to be made only at a certain price or better.
true
T/F: A mortgage for less tan 80% of the appraised value of the home will not require PMI insurance because they default less often
true
T/F: A proxy is a legal agreement a stockholder signs to allow someone else to vote for him or her at the corporation's annual meeting.
true
T/F: A recourse clause defines whatever actions a lender can take to recover money from you in case you default on the loan
true
T/F: A typical bond will pay semi-annual coupon payments until it matures, at which time it will surrender its par value to the owner of the bond.
true
