Finance Exam 2

Steps to the consumer compliant process are: (4).

1. Initial communication 2. Communicate with the company 3. Consumer agency assistance 4. Legal action

_____, ______, and _______ are usually covered by a new car warranty.

1. engine, transmission, and drive train 2. corrosion coverage for holes due to rust 3. basic parts covered against defects

The benefits of U.S. savings bonds are: (3).

1. low minimum deposit 2. exemption from state & local taxes 3. government guarantee

Types of CD: (4).

1. rising rate 2. stock indexed 3. promotional 4. callable

Example Problem: 25% tax bracket, 8% yield on savings account. The after savings rate of return is ____.

6% 1.0-0.25 = 0.75*0.08 = 0.06 or 6%

Unauthorized use of your debit card should be reported within _____ of receiving your statement.

60 days

Credit history remains on file for _____ if you do not declare personal bankruptcy.

7 years

______ is straight bankruptcy where many, but not all debts are forgiven.

Chapter 7 bankruptcy

_______ = total liabilities ÷ net worth

Debt-to-equity ratio

______ earn interest past their maturity date.

EE bonds

Two important sources of used car prices are ______ and _______.

Edmund's Used Car Prices & Kelley Blue Book

________ include life insurance companies, investment companies, and brokerage firms.

Non-deposit institutions

_________ includes overdraft protects, department store credit cards, and using a bank credit card.

Open-end credit

A _____ is the specified amount of money that is accessed with special checks.

Prearranged loans

In a _____, all affected parties are notified as to whether or not they want to participate or file an individual lawsuit.

class action lawsuit

A(n) _____ is in writing, is created by the seller or manufacturer, and has two forms.

express warranty

A)n) ________ is an agreement between a business and a consumer to cover repair costs of a product in return for a fee.

extended warranty or service contract

Paper (non-electric) EE savings bonds are sold at ________.

half the face value

______ refers to loans made on a continuous basis and billed periodically for partial payment.

Open-end credit

_______ specializes in savings accounts and mortgage loans.

Savings and Loan Association

______ or ______ is when the value of the car is less than the loan still owed.

Upside down/negative equity

The trade off for using credit is _________.

a decrease in future available income.

In _____, a third party tries to settle a grievance and the process is legally binding.

arbitration

Examples of prearranged loans include _____ and _____.

bank line of credit, and revolving check credit

A ______ endorsement is just a signature.

blank

A used car dealer must display a _______ telling whether the vehicle comes with a warranty and, if so, what protection the dealer will provide.

buyer's guide sticker

An ATM is also called a ______.

cash machine

Asset management account is also known as a _________.

cash management account

A _______ is a check withdrawal on a financial institution.

cashier's check

A _______ is a personal check with guaranteed payment.

certified check

To achieve long term goals, many people trade off _____ for a higher return.

liquidity

The range available for negotiation for a new car is the difference between the _____ and the ______.

sticker price & invoice cost

A _____ is usually created by a commercial bank or lawyer.

trust

A _____'s role in a Chapter 13 bankruptcy involves distributing money to creditors.

trustee

______ charge a fee for each check written and sometimes for each deposit transaction.

Activity accounts

_______, one of the 5 C's of credit, refers to the borrower's attitude toward credit obligations.

Character

______ are checking accounts and other payment methods.

Demand deposits

A ________ is a financial institution that offers a full range of services.

commercial bank

A _____ is a loan based on the difference between the current market value and the amount owed on the mortgage.

home equity loan

In a _______, interest is calculated on the full amount of the original, no matter how frequently the payments are made.

loan with add on interest

The main function of a finance company is to __________.

make loans to consumers and small businesses

In _____, a third party tries to settle a grievance, but the process is non-binding.

mediation

The ______ is when you make the minimum payment to remain in good standing without making progress on reducing the outstanding balance.

minimum monthly payment trap

What are the 6 steps for writing a check?

1. Record the date. 2. Write name/organization receiving the payment. 3. Record amount in numerals. 4. Write amount in words. 5. Sign check. 6. Note reason for payment.

Assets usually protected in Chapter 7 bankruptcy are: (8).

1. Social security payments 2. unemployment compensation 3. net value of your home 4. vehicle 5. household goods 6. appliances 7. tools used in your work 8. books

The benefits of money market accounts/funds include: (3).

1. favorable rate of return 2. allows limited number of checks to be written 3. insured (money market accounts)

The criteria of selection for a savings plan are: (3).

1. restrictions and fees 2. safety 3. rate of return

Each person is typically insured up to ________ to each financial institution.

$250,000

The 5 C's of credit are: _____.

1. Character 2. Capacity 3. Capital 4. Collateral 5. Conditions

The current types of federal savings bonds are: (2).

1. EE 2. I

The two forms of an express warranty are _____ and ____.

1. full warranty 2. limited warranty

The drawbacks of money market accounts/funds include: (3).

1. higher minimum balance than regular savings accounts 2. service charge and/or lower rate if below certain balance 3. not insured (money market funds)

Two parts of interest on an I bond are: (2).

1. inflation rate that changes semi-annually 2. fixed rate of interest for the life of the bond

Fixed ownership costs based on the size of the vehicle include: (4).

1. insurance 2. registration fees 3. interest on car loans 4. depreciation

The advantages of EE bonds are: (2).

1. interest is exempt from state & local taxes 2. no federal income tax until redeemed

When interest rates are falling, you should: (2)

1. lock in current rates by choosing long-term savings options 2. lock in short term goals

When the # of days is 365 in the term, the APY can be expressed as:

APY = 100(interest/principal)

________ is the percentage rate expressing the total amount of interest that would be received upon time and compounding.

Annual percentage yield

_______, one of the 5 C's of credit, refers to the borrower's financial ability to meet the credit obligations.

Capacity

_______, one of the 5 C's of credit, refers to the borrower's assets that exceed liabilities.

Capital

A ______ bankruptcy plan can be in place for 5 years.

Chapter 13

________ is the earnings based on performance of the stock market.

Indexed CD

______ is a closed end loan from the bank for personal purposes, home improvements, or vacation expenses.

Installment cash credit

______ is the periodic charge for the use of credit.

Interest

_______ is a network of community-supported law offices that provide legal assistance to people who cannot afford their own attorney.

Legal Aid Society

_____ allows you to withdraw money on short notice without a loss of principal or fees.

Liquidity

A _____ requires a certain amount of money to be left for a stated time period to earn a specific rate of return and imposes penalty for early withdrawal.

certificate of deposit

Your ______ contains your detailed personal information.

credit file

A ______ is a measure of a person's ability and willingness to make credit payments on time.

credit rating

A _________ is used to add funds to a checking account.

deposit slip/ticket

A(n) ______ of merchantability covers a product's intended use or other basic understandings that are not in writing.

implied warranty

Asset management accounts are commonly offered by _________.

investment companies

A _______ guarantees payment.

money order

A _____ is a document that records the official signatures of the person or persons allowed to write checks on the account.

signature card

The face dollar value for purchase of I & EE bonds is ___.

$20,000

_______ is comparing your checkbook balance to the bank balance.

Reconciliation

_______ usually have a monthly service charge that you can avoid by keeping a minimum balance in the account.

Regular checking accounts

______ = Principal x Rate of Interest x Time

Simple Interest

______ offer electronic services such as transaction records, account balances, medical history, and insurance information.

Smart cards

______ are money in savings accounts and certificates of deposit.

Time deposits

3 names of credit bureaus are _____, _____, & _____.

TransUnion, Equifax, and Experian

The main purpose of life insurance is to ______.

provide financial security for dependents

The _____ is the percentage increase in the value of savings as a result of interest earned.

rate of return

The three main types of endorsements are ____, ____, and ____.

restrictive, blank, special

A money market fund is a ________.

savings instrument

The main reason HH bonds are used more frequently for retirement income is _______.

semiannual interest

A _______ is an interest-bearing checking account at a credit union.

share draft account

A limited warranty covers only certain aspects of the product and requires the buyer to pay part of the costs for _______.

shipping and repairs

A ______ is comprised of "pay to the order of," the name of the payee, and your signature.

special endorsement

A _________ order given to a bank is designed to avoid paying specific check that is lost or stolen.

specific stop payment

A credit union is owned by ____.

the members

The 4 steps to dispute a billing error are: ____.

1. Write a letter of complaint. 2. Pay the portion of the bill not in dispute. 3. Receive acknowledgement from credit company. 4. Purchase removed or credit issued to account.

A trust is a legal agreement that provides for: (3).

1. management of assets 2. control of assets 3. created by one party for benefit of another

Life insurance uses: (3).

1. savings alternatives 2. providing for dependents 3. investment options

Financial institutions with federal deposit insurance through the FDIC include: (2).

1. savings and loans 2. commercial banks

When interest rates are falling, you should: (2).

1. use short-term loans to take advantage of lower rates when you refinance 2. select long-term savings instruments to "lock in" earnings at current high rates

Stale dated checks are older than _____.

6 months

_________ are organized as cooperations, with investors contributing the capital for operations.

Commercial banks

_____ is the process that calculates interest based on previously earned interest.

Compounding

_______, one of the 5 C's of credit, refers to the general economic conditions that can affect the borrower's ability to repay a loan.

Conditions

________ pay off the credit card balance in full each month.

Convenience users

A _______ is a reporting agency that collects information on how promptly people and businesses pay their bills.

Credit Bureau

The ________ is to protect consumer credit ratings.

Fair Credit Billing Act

A __________ is owned by depositors and specializes in savings and mortgages.

mutual savings bank

EE bonds have a minimum holding period before it can be cashed of _____.

one year