finance 1050

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

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?

Postpurchase activities

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

Which of the following is a true statement?

Professional management is an especially important factor for investors purchasing a mutual fund.

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 law limits a cardholder's liability for unauthorized use of a card to $50?

Truth in Lending Act

Which federal law, passed in 1969, requires creditors to state the cost of borrowing in common language?

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 type of life insurance policy combines term insurance and short-term investment elements?

Universal Life

Which of the following statements is false?

With an exchange-traded fund, there is more need for a portfolio manager to make decisions.

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

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

Which of the following savings plans is not covered by federal deposit insurance?

a money market fund at an investment account

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

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.

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.

The purpose of a service contract is to:

cover the repair costs of a product.

A tax ____________ is an amount subtracted directly from the amount of taxes owed.

credit

Which of the following financing methods provides a float period?

credit card

The most commonly purchased type of credit insurance is:

credit life insurance.

The type of stock in which stockholders are assured that omitted dividends will be paid to them before cash dividends are paid to common stockholders is called:

cumulative preferred stock

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.Which of the following financing methods provides a float period?

Liabilities are amounts representing:

debts

If overall interest rates in the economy rise, a corporate bond with a fixed interest rate will generally:

decline in value.

Easing of international tensions or disinflation causes gold price to:

decline.

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

Checking accounts are frequently referred to as ____________ deposits.

demand

Which of the following is usually the largest fixed expense for a new vehicle?

depreciation

The first step of the financial planning process is to:

determine your current personal and financial situation.

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.

Health insurance includes:

disability insurance.

Federal law requires REITs to:

distribute at least 90 percent of their taxable annual earnings to shareholders.

Although credit allows more immediate satisfaction of needs and desires, it:

does not increase total purchasing power.

A long-term technique used by investors who purchase an equal dollar amount of the same stock at equal intervals in time is called:

dollar cost averaging.

Money received by an individual for personal effort is ____________ income.

earned

The Roth IRA differs from the regular IRA in that:

earnings on the account are tax free after five years.

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

Most private insurance companies sell health insurance policies are sold to:

employers, who in turn offer the benefits to employees.

The purpose of an appraisal is to:

estimate the current value of a property.

What is the major reason(s) for consumer default on loans?

excessive use of credit card and loss of income

Which type of tax is imposed on specific goods and services at the time of purchase?

excise

Which of the following would result in a reduction of taxable income?

exclusions

A person who will follow your instructions specified in your will is called a(n):

executor or executrix.

Which of the following types of warranties is usually written and created by the seller or manufacturer?

express

Negligence refers to:

failure to take ordinary or reasonable care.

When one investment company manages a group of mutual funds, it is called a(n):

family of funds.

The total dollar amount you pay to use credit is called the:

finance charge.

Of the following, which is generally the mostexpensive lender?

finance companies.

A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends a direction for your financial activities is a(n):

financial plan

When it comes to savings, most Americans:

find saving difficult.

In general, the price of gold:

fluctuates daily.

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 federal and state tax levied on the privilege of making gifts to others is called a(n) ____________ tax.

gift

A stock issued by a corporation that has the potential of earning above-average profits when compared to other firms in the economy is called a(n) ____________ stock.

growth

Defective house wiring is an example of a:

hazard.

Which type of health insurance pays part or all of hospital bills for room, board, and other charges?

hospital expense

Who has the greatest need for life insurance?

households with small children

The first phase of the consumer buying process is:

identifying the problem.

A stock that pays higher than average dividends is called a(n) ____________ stock.

income

There are about _____ exchange-traded funds.

775

With an inflation rate of 9 percent, prices would double in about ___________ years.

8

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 is NOT an example of open-end credit?

A 36-month car loan.

Jeremiah Brown has been making contributions into an individual retirement account for his retirement. His contributions are not tax deductible but earnings accumulate tax free. What type of individual retirement account does he have?

A Roth IRA

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

Which of the following presents a summary of income and outflows for a period of time?

A cash flow statemen

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 of the following would be considered a long-term liability?

A mortgage

Which statement is correct regarding mutual insurance companies?

A mutual company refunds part of the premium to the policyholders annually.

Which lender is likely to ask you to write a check for $115 for a $100 loan?

A payday advance company

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

The most popular type of home ownership is:

A single family dwelling

Brenda Johnson has used a preprinted form to create her will. What type of will has she created?

A statutory will

Which statement is correct regarding stock life insurance companies?

A stock company generally sells nonparticipating (nonpar) policies.

Carol Fisher wants to sell the stock of Hathaway International at the next available price after the prices reaches $50 per share. What type of transaction is Carol making?

A stop order

Which of the following payments would be considered a variable expense?

A telephone bill

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

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

Which of the following is a true statement?

An investment bank is a financial firm that assists organizations in raising funds.

Which of the following situations is a person who could be insolvent?

Assets $40,000; liabilities $45,000

To determine a person's solvency, which financial document should be consulted?

Balance sheet

Which of the following are considered to be personal financial statements?

Balance sheet and cash flow statement

____________ provides coverage for the risk of financial loss due to legal expenses, medical expenses, lost wages, and other expenses associated with injuries caused by an automobile accident for which you were responsible.

Bodily injury liability

All except which one of the following are good ways to acquire money for starting an investment program?

Borrow money specifically for investment purposes.

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

The information in your credit report is used to:

Calculate your FICO credit score

Sophie Bennett has met the deductible for her doctor's visits. However, her insurance company requires her to pay 20% of all expenses above this deductible amount. This clause is called:

Coinsurance

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

A question associated with the saving component of financial planning is:

Do you have an adequate emergency fund?

Which type of health insurance is simply a bad buy?

Dread disease and cancer policy

In the budgeting process, which of the following is budgeted first?

Emergency fund & savings

Which federal consumer credit law prohibits credit discrimination based on sex and marital status?

Equal Credit Opportunity Act

Hector Ramirez has decided he needs he needs a new car. After doing some research, he has settled on a mid-sized four-door sedan. He likes the Honda Accord and is exploring what features needs and wants on this car. He is also trying to decide whether he would be better off purchasing a new car, a used car or leasing a car. He knows that if he purchases it new it would likely last him for many, many years. On the other hand a used car would be a lot cheaper. He is not sure a lease is for him because of the mileage requirements. What step in the purchasing process is Hector carrying out?

Evaluating alternatives

Which of the following statements is correct regarding wills?

Every adult should have a will.

Which of the following is a credit bureau?

Experian

Which federal law allows consumers to withhold payment for faulty or defective goods or services (within certain limitations) when purchased with a credit card?

Fair Credit Billing Act

Which of the following is an advantage to renting?

Fewer responsibilities

A ________________ allows a taxpayer to put pre-tax dollars into an employer-sponsored program to cover medical and child care costs.

Flexible spending account

John Camey goes into a local department store and purchases a new suit. He pays $43 in taxes on this purchase. What type of tax is this most likely to be?

General sales tax

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

If you find that you cannot make your payments:

If you find that you cannot make your payments:

Which of the following statements is true?

In bond quotations, prices are given as a percentage of the bond's face value.

____________ risk refers to the changes in buying power

Inflation

Gerry Legere has died without writing a will. What is the legal term for this?

Intestate

A financial benefit of home ownership is:

increased property value.

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

An example of a tax-exempt investment is:

interest income on municipal bonds.

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 a(n) ____________ asset

investment

A beneficiary is a person who:

is designated to receive life insurance proceeds

The Form 1040 is most helpful to a person who:

itemizes deductions.

The basic unit of gold bullion is one:

kilogram

Which of the following legal techniques best serves low-income consumers?

legal aid societies

During a divorce, division of pensions generally depends on the:

length of the marriage.

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.

A mutual fund in which investors pay a commission every time they purchase shares is called a(n) ____________ fund.

load

Which one of the following is a possible disadvantage of real estate investments?

long period of depreciation

As Jean Tyler plans to set aside funds for her young children's college education, she is setting a(n) ____________ goal.

long term

The main financial benefit of renting is:

lower initial costs.

The main responsibility of The Fed 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

The purpose of a debit card is to:

make purchases and have them deducted from from your checking or other bank account.

Personal financial planning is the process of:

managing your money to achieve personal economic satisfaction

Medigap is sold by:

many (private) companies.

Which of the following is not a business and general periodical?

New York Stock Exchange Report

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

Which is often the source of the least expensive loan?

parents or family members

The purpose of a security deposit is to:

pay for potential damages.

An umbrella policy is designed to cover:

personal injury, bodily injury and property damage.

Which type of health insurance pays for physician's care that does not involve surgery?

physician's expense

A legal document authorizing someone to act on your behalf is called a:

power of attorney.

Which type of housing is preferred by most persons who are approaching retirement?

present home

Capital gains refer to:

profits from the sale of a capital asset such as stocks, bonds or real estate.

The 25 in 50/100/25 refers to ____________ coverage.

property damage liability

Which of the following expenses is paid from an escrow account?

property taxes and homeowner's insurance

A cost associated with home buying would be:

property taxes.

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.

An expense that would normally be included in the itemized deductions of a taxpayer is:

real estate property taxes.

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.

Pam McNally is planning to use the services of the Better Business Bureau. A major purpose of the BBB is to:

resolve complaints against local merchants.

The purpose of zoning laws is to:

restrict property use.

A _______________ endorsement is especially useful when you are depositing checks.

restrictive

The financial planning process concludes with efforts to:

review and revise the financial plan.

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

Which of the following is an example of opportunity cost?

saving money instead of taking a vacation

The storage of funds for future use is a purpose of ____________ services.

savings

Which of the following investments offers the greatest liquidity?

savings accounts

Time deposits consist of:

savings accounts.

A market for existing financial securities that are currently traded between investors is called the ____________ market.

secondary

An investor concerned with a predictable source of income provided by an investment would choose:

securities issued by the U.S. government.

A cooperative is designed to:

sell products or services to members at reduced prices.

Bonds of a single issue that mature on different dates are called ____________ bonds.

serial

Which of the following goals would be the easiest to implement and measure its accomplishment?

"Save $100 a month to create a $4,000 emergency fund."

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

XYZ Corporation wants to retire a $60 million bond issue before the maturity date. In order to call the bonds in this issue, the corporation must pay the bondholders the face value plus a premium. What is the typical premium for bonds that have been called?

$10-$25

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

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

Your home insurance provides for replacement value for personal property losses. A microwave is stolen. It cost $300 two years ago and has an expected life of six years. A comparable microwave costs $400 today. What amount will the insurance company pay?

$400

The future value of $1,000 deposited each year for 5 years earning 4 percent would be approximately

$5,416

A family spends $40,000 on living expenses. With an annual inflation rate of 3 percent, they can expect to pay approximately _______ in 15 years.

$62,320

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

Assume that you purchase a $1,000 corporate bond that pays 9.25 percent interest. What is the amount of interest that you receive each year?

$92.50

In a marriage that lasts more than 15 years, there's generally a ____________ split of the marital assets.

50-50

The annual mutual fund management fee typically ranges between ____________ percent of the fund's asset value.

0.25 to 1.5

The average management fee for all mutual funds is:

0.50 to 1 percent.

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

Financial institutions, the sources of credit:

All of these choices are correct.

Why is financial planning for retirement critical?

All of these factors are vitally important.

After you buy new life insurance you have a "free look" period of ______ days.

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.

Approximately ____________ percent of all mutual funds are closed-end funds.

2

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

At a 3 percent rate of inflation approximately how many years will it take prices to double?

24 years

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 months 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

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

Be certain you don't let your ____________ birthday roll by without a comprehensive retirement plan.

45th

The highest bond rating issued by Standard & Poor's is:

AAA.

You should review your will if:

All are good reasons to review your will.

Which of the following is correct about a lost or stolen debit card?

All of the above.

Which one of the following expenditures for retirees is likely to decrease?

All of the choices

Which one of the following expenditures for retirees is likely to increase?

All of the choices

Which of the following is an advantage of an exchange-traded fund (EFT)?

All of the choices are advantages of EFTs.

Which of the following is another name for permanent insurance?

All of the choices are names for permanent insurance

Which of the following is a part of estate planning?

All of the choices are part of estate planning.

Typical examples of uses of life insurance proceeds are:

All of the choices are typical examples.

Investors purchase corporate bonds for:

All of the choices.

The federal government requires corporations selling new issues of securities to disclose information about itself in a prospectus. Which of the following must be disclosed?

All of the choices.

By evaluating your credit options, you can:

All of these choices are correct.

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 of the following statements is correct?

Corporate bonds are a form of debt financing.

Which of the following agencies assembles credit and other information about about consumers?

Credit Bureau

Which of the following publications does not provide readers with information about mutual funds?

Current Business Survey

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

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

Which of the following is an advantage of buying?

Deductibility of mortgage interest

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.

Which type of insurance is probably the mostneglected form of available insurance protection?

Disability

Which type of insurance provides regular cash income lost by employees as a result of an accident, illness, etc.?

Disability income

Because you feel young and healthy now, you may overlook the very real need for:

Disability income insurance.

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

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 collectibles.

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

Which of the following statements is false?

Investors who purchase mutual funds are guaranteed a higher rate of return than a comparable investment in stocks or bonds.

Which is correct with respect to life expectancy?

It is greater for a woman than a man.

Which of the following statements is true?

It is possible to obtain financial information about a corporation that issues stock by using the Internet.

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 be reassayed

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

Barbara Parrish has purchased a new car. Since then she has had to make six trips to the dealer in four weeks to fix several major problems without much luck. She knows that she is entitled to a refund. What type of law gives her the right to ask for a refund?

Lemon Law

Which is a correct statement about life insurance?

Life insurance is still more often sold than bought.

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

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

Jamal Walker gets infected with the West Nile Virus and ends up in the hospital for 6 weeks. What part of his insurance policy would be the most useful for helping to pay for this?

Major Medical Expense Insurance

Which one of the following statements is true about estate planning?

Many people give little or no thought to setting their personal & financial affairs in order.

Which health care plan is administered by each state within certain broad federal requirements and guidelines?

Medicaid

Which of the following statements is false?

Most individual investors that purchase treasury bills, notes, and bonds bid competitively once they have visited the Treasury Direct website.

Most people who are in debt over their heads are:

Most people who are in debt over their heads are:

Hugh Jackman is thinking about buying an investment. The investment option that he is thinking about buying is an investment where investors pool their money. One of the key features is that it is managed by professional managers. What investment is Hugh thinking about purchasing?

Mutual Fund

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

Which of the following is a problem with direct investment in real estate?

Responsibility for maintaining the rental property.

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

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

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

Itemized deductions are recorded on:

Schedule A.

Which one of the following statements is false?

Since mutual fund managers are professionals, there is no need to evaluate a mutual fund.

"Junk" bonds are in which category?

Speculative

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

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.

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

What has made it much easier to find and trade in collectibles?

The advent of the World Wide Web

Dave Harris buys a bond. He knows that he will receive $1000 on March 1, 2026. What is this date?

The maturity date of the bond.

Which one of the following is a true statement?

The over-the-counter market is a network of dealers who buy and sell the stocks of corporations that are not listed on a securities exchange.

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.

Brad Opper has a goal of "saving $50 a month for vacation." Brad's goal lacks:

a time frame

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

A will is:

a will is the legal declaration of a person's mind as to the disposition of his or her property after his or her death.

By using the Yahoo! Finance Web site, an investor can find information on all of the following except:

actual market values in the future.

What are some possible reasons for high and rising costs of health?

all are possible reasons for high health care costs

To avoid high fees for loans, you should not borrow from a:

all of the above.

When selecting a financial institution, you should consider:

all of the above.

Excessive indebtedness can result in:

all of the choices are possible results.

What is (are) the danger signal(s) of potential debt problems?

all of the choices are the danger signals of potential debt problems

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

A deduction from adjusted gross income for yourself, your spouse, and qualified dependents is:

an exemption.

The amount of interest is determined by multiplying the amount in savings by the:

annual interest rate and the time period

Comparisons of savings plans with different interest rates can best be accomplished using the:

annual percentage yield.

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.

An all-in-one account that provides several services is a(n):

asset management account.

Cash & items that you own with a monetary worth are referred to as:

assets

The use of legitimate methods to reduce one's taxes is tax ____________.

avoidance

A short-term mortgage with a very large final payment is called a ____________ mortgage.

balloon

When an investor purchases shares in a load fund, the average sales charge is usually ____________ percent.

between 3 and 5

A very safe investment that generally attracts conservative investors is called a(n) ____________ stock.

blue chip

Today, most bond ownership records are maintained using a process called:

book entry.

The difference between the amount budgeted and the actual amount received or spent is called a:

budget variance.

Estate planning has two parts. The first part consists of:

building your estate through savings, investments, and insurance.

Unsuccessful products or bad management may result in investors experiencing ____________ risk.

business failure

The borrower's financial ability to meet credit obligations is called:

capacity.

The borrower's attitude toward his or her credit obligations is called:

character.

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

Mortgage loans, automobile loans, and installment loans for purchasing furniture or appliances are examples of:

closed-end credit.

Which document explains, adds, or deletes provisions in your existing will?

codicil

Which of the following types of coverage would pay for damage to your automobile in an accident for which you were at fault?

collision

Traditionally, the greatest variety of financial services have been offered by a(n):

commercial bank.

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

Future value calculations involve

compounding

Warranties are commonly associated with ____________ purchases.

consumer

Which one of the following expenditures for retirees may increase?

medical expenses

The people who are in the best position to save are:

middle-aged.

A VA-guaranteed loan program provides assistance to:

military veterans.

A corporate bond that is secured by various assets of the issuing firm is called a(n) ____________ bond.

mortgage

A financial institution organized for the main purpose of providing loans to purchase homes is a:

mortgage company.

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.

Most participating policies are sold by

mutual life insurance companies

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

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

Earnest money has the purpose of:

serving as evidence of good faith indicating a serious purchase offer.

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 and 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

Starting a small business that may or may not succeed is an example of ___________ risk.

speculative

The items produced for retail stores are commonly sold under a ____________ brand.

store

You can determine your net worth by:

subtracting your liabilities from your assets.

___________________________ play an important role in setting prices:

supply and demand

Total earnings of a person minus the deductions for taxes and other items is called:

take-home or net pay.

A common deduction from a person's paycheck is for:

taxes:

An investment theory based on the assumption that a stock's market value is determined by the forces of supply and demand in the stock market as a whole is called the ____________ theory.

technical analysis

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

A trust established by your will that becomes effective upon your death is called a(n) ____________ trust.

testamentary

The Fed refers to:

the Federal Reserve System.

One of the following is not a source that provides data to credit bureaus:

the Internal Revenue Service

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.

you cannot quickly sell the property.Aside from a home, the real property investment mostwidely favored by the small investor is:

the duplex, four-plex, or small apartment building.

Howard Ramsell recently became aware of implied warranties that exist for consumer purchases. An implied warranty exists as a result of:

the intended use of a product.

The 100 in 100/300/50 refers to:

the limit for bodily injury claims that can be paid to one person.

Some experts claim that credit life insurance policies are:

the nation's biggest rip off

If you die without a valid will:

the state's law of descent and distribution becomes your will.

Financial leverage refers to:

the use of borrowed funds for investment purposes.

A government security issued in minimum units of $100 with maturities that are one year or less is called a:

treasury bill.

A government security issued in minimum units of $100 with a 30-year maturity is called a:

treasury bond.

A government security issued in $100 units with maturities of more than one year but not more than ten years is called a:

treasury note.

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.

Subject to certain minimums, which life insurance is designed to let you pay premiums at any time in virtually any amount?

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

An investor can make money on a common stock investment by:

waiting for the stock's value to increase and then selling it.

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.

The most common type of permanent life insurance is called:

whole life policy

When did installment credit explode on the American scene?

with the advent of the automobile in the early 1900s

The rate of return on a savings account is also referred to as:

yield.

Refinancing of a mortgage is recommended when:

you can get at least 1% lower rate than your current rate.

Illiquidity in real estate means that:

you cannot quickly sell the property.

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