Personal Finance- Chapter 11- Planning for Health Care Expenses, Personal Finance (other), Personal Finance Ch. 11 & 12 (other), FINAL EXAM UNL, Chapter 1, Chapter 3 (try 1), Chapter 3 (try 2), Chapter 3 (try 3), Chapter 5, Chapter 6, Chapter 7, Midt...

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Negative aspects of using credit include which of the following?

Negative aspects of using credit include both loss of financial flexibility as well as overspending.

Which of the following is not true regarding service contracts on new cars?

Often there is a deductible that must be paid each year the contract is in force.

waiver of premium (p. 362)

Sets certain conditions under which an insurance policy would be kept in full force by the company without the payment of premiums.

Of these four items, which is most aptly described as a need?

Shelter

Which of the following is not true regarding loans based on the cash values built up in cash-value life insurance policies?

Should the insured person die before repaying the loan, the life insurance company will forgive the loan.

Which of the following is not an example of an open-end credit account?

Single-payment loans

Health care plan

a generic name for any program that pays or provides reimbursement for direct health care expenditures.

A consumer can save money by stocking up on advertised specials. (all of these) avoiding buying on impulse. paying cash for purchases.

all

A factor in the development of credit scores is amounts owed. types of credit you use. payment history. All of these.

all

A factor in the development of credit scores is payment history. All of these. amounts owed. types of credit you use.

all

Adjustments to gross income are subtracted from gross income. help one qualify for other deductions. can be taken even if one takes the standard deduction. all of these.

all

Before searching for a house to buy, you should prequalify for a mortgage. adjust your budget accordingly. obtain a copy of your credit report. All of these

all

Cash advance checks can be used for which of the following purposes? Make a purchase or pay a bill All of these. Cashed to obtain liquid funds Pay the balance of another credit card

all

Cash advance checks can be used for which of the following purposes? Make a purchase or pay a bill Pay the balance of another credit card Cashed to obtain liquid funds All of these.

all

Credit bureaus compile information from banks. creditors. court records. All of these.

all

Credit card costs can include transaction fees. interest. annual fees. all

all

Financial plans should include objectives and goals in which of the following areas? Spending Risk management Capital accumulation All of these

all

If no payment is received by the due date on a credit account, the cardholder may be declared in default. a credit bureau may be notified of slow payment. the company may begin collection efforts. all of these

all

A budgeting device on which annual estimated income and expenses are recorded for each month in an effort to look at surplus or deficit situations is called a

cash-flow calendar

The two most useful financial statements are ____ and ____.

cash-flow statements; balance sheets

A check drawn on a financial institution, backed by the financial institution's finances, and made out to a specific payee is called a

cashier's check

A check drawn on a financial institution, backed by the financial institution's finances, and made out to a specific payee is called a certified check. money order. cashier's check. traveler's check.

cashiers check

Common financial services offered by depository institutions include

checking, lending, and saving

Which of the following pieces of information does not have to be disclosed in credit card ads and applications?

credit limit

A ____ on your credit report tells the credit bureau not to release your financial records to anyone without your consent.

credit report freeze

Mortgage lenders charge interest rates based on your credit score. front-end ratio. liability. escrow.

credit score

Mortgage lenders charge interest rates based on your

credit score.

Not-for-profit, common-bond financial institutions that are owned by their members are called

credit unions

Depositors are the owners of

credit unions and mutual savings banks.

The declining-balance method is widely used to calculate interest on installment loans made by

credit unions.

The percentage of your total credit limits that is actually owed is called your

credit utilization ratio

Services which allow one to access his/her credit report as often as daily and obtain a personal FICO credit score is called a

credit-monitoring service

Services which allow one to access his/her credit report as often as daily and obtain a personal FICO credit score is called a

credit-monitoring service.

Credit bureaus compile information from (3 things)

creditors. banks. court records.

Taxable income is determined by subtracting all but which one of the following from gross income. exemptions Adjustments exclusions credits

credits

Savers should select an institution that calculates interest

daily

A customer who wanted to directly transfer funds from his or her bank account to a retailer's bank account would use a(n)

electronic funds transfer.

The disability income insurance feature that provides a reduced level of benefit when you suffer a partial disability is called a

residual clause

Episode limits

specify the maximum payment for health care expenses arising form a single episode of illness or injury, with each episode being considered separately.

Item limits

specify the maximum reimbursement for a particular health care expense.

Which of the following is classified as an investment asset? Primary residence Money market accounts Stocks Certificates of deposit

stocks

The contract for a loan is called the

promissory note.

Never discuss ____ with an auto dealer.

NOT: the need for a loan

The formula for calculating surplus (loss) is

NOT: total income minus liabilities.

A secured loan requires

either collateral or a cosigner.

Discretionary income is used to pay for things like

food

The contract supporting an installment loan is called a(n)

promissory note.

The writer of a put may incur a loss when the market price of an optioned asset rises above the striking price.

False

Discretionary income is used to pay for things like auto loans. food. rent. insurance.

food

A service contract offers free or low-cost repairs to the product

for a specified period of time

A service contract offers free or low-cost repairs to the product

for a specified period of time.

Medicare Part A

is the hospitalization portion of the program; it requires no premium.

Term Life Insurance (p. 351)

"Pure protection" against early death; pays benefits only if the insured dies within the time period (term) that the policy covers.

NARRBEGIN: Figure 14-2 Figure 14-2 Toni and Felix are considering buying stock. They would like to purchase 600 shares of Sudsy Soap stock at $35 a share. Sudsy Soap had the following figures for the past year: Annual earnings $ 100,000 Shares of stock 10,000 Corporate assets $1,500,000 Corporate liabilities $ 800,000 Cash dividends (annual) $ 5,000 Market price of stock $ 35 Growth rate 8 percent NARREND Refer to Figure 14-2. What is Sudsy Soap's dividend per share?

$0.50

To qualify as a high-deductible health care plan, the deductible must be at least

$1,000

Paul's marginal tax bracket is 28 percent. He has taxable income of $5,000 on his real estate investment. His tax liability on this income is

$1,400

Use the following financial information about Maria Espinoza: she earns $625 in wages from her job at the bookstore every 2 weeks her parents give her $400 every month she averages $100 in income each month by dog-sitting she has $800 in her savings account she has $350 in her checking account she has a car worth about $3,500 she rents an apartment with roommates, her portion of the rent is $420 every month she deposits $100 every month into her savings account her utilities and cell phone expenses run her about $250 per month she spends about $85/week on food she allows herself $40/week for entertainment her car payment is $165/month her car insurance is $300 every 6 months the balance on her car loan is $1,450 the balance on her credit card is $545 and she makes $50 payments monthly to the company for the balance on this account she has an outstanding balance for medical expenses of $385 and she makes $25 payments monthly to the medical office owed Maria's income for one month is. $1,750.00 $1,725.00 $1,125.00 $1,350.00

$1,750.00

Matt has a three-year closed-end lease on his Prius V. His contract stipulates a $0.31 per mile excess mileage charge in excess of 39,000 miles. If he actually drove the vehicle 45,000 miles during the three years, he would be charged an extra ____.

$1,860

Step 7: What is their Final Tax Liability (Subtract Tax Credits for which you qualify): Part A: What is the TOTAL of their Tax Credits?

$10,269

To qualify as a high-deductible health care plan, the deductible must be at least

$1000

Jackson and his wife Cora along with their friends have planned an extravagant trip to Paris and Rome when their oldest child graduates from high school. The group of friends have agreed that they will take this trip together in the summer of 2024 (7 years from now). To cover all of their expenses, Ian and Cora would like to have $12,000 for this trip. They have an opportunity to invest a lump sum at an annual interest rate of 4%. The Future Value of their savings goal is. $15,000.00 $12,000.00 $84,000.00 $9,118.80

$12,000.00

With decreasing term insurance, often the face amount of coverage declines annually while the premiums also decline

False

Please use the following information for the "Eight Steps In Calculating Your Income Taxes" and Table 4-2 "The Steps in Calculating Your Income Taxes (page 119): Lindsay and Bobby are a married couple filing jointly. They have 4 dependent children; Conner (age 6), Lucy (age 10), Melinda (age 14) and Ben (age 16). Lindsay's Total Income is $70,000, but $5,000 qualify as "Exclusions" Exclusion of $5,000 for "Employer payments (up to $5,000) for dependent care assistance (for children and parents)." pages 122-123 Bobby's Total Income is $56,800 with no Exclusions. Together, their Adjustments Total $10,750 Contributions to qualified personal retirement accounts (IRA deduction of $4,000) and health savings accounts (up to $3,350 for singles and $6,750 for family coverage). Refer to page 124. Their Itemized Deductions Total $10,750 Medical and Dental Expenses, Taxes You Paid, Interest You Paid, Gifts to Charity Refer to page 126-128 The Standard Deductions for a Married Couple Filing Jointly is $12,600 Refer to page 126. Personal Exemptions are $4,050 each Refer to page 129. They are eligible for Earned Income Credit (EIC) and Child Tax Credits (CTC) EIC; Maximum credit $6,269 with three or more children CTC; Nonrefundable credit of up to $1,000 per child under age 17 Refer to page 131

$126,800

Iqbal Ahmed had 4 Credit Cards in his billfold when his wallet was stolen. He reported the cards missing as soon as he discovered the loss (after 2 days), but the following charges were incurred before he reported the stolen cards; $175 on Kohl's $150 on Visa $120 on Shell Fuel Card $35 on MasterCard What is Iqbal's Maximum Legal Liability for the fraudulent charges on these cards:

$185

Mary Kay has decided she would like to negotiate on a new car with a sticker price of $22,000. The typical dealer cost on this vehicle is approximately ____.

$19,360

$190.00

Compare the cost of the following leasing agreement with the finance charge on a loan for the same time period. The price of the car is $14,000, and its projected residual value at the end of four years is $3,000.

$2,200

$2,380.00

The Amalgamated Fund has assets with a market value of $25 million dollars, liabilities of $1 million dollars and 10 million shares outstanding. Its net asset value is

$2.40

Invest now or later? Twins Samantha and Adam are both age 26. Beginning at age 26, Samantha invests $2000 per year for 10 years and then never sets aside another penny. Adam waits 10 years and then invests $2000 per year for the next 30 years. Assuming they both earn 8%, how much will each twin have at age 66? Step 3: At age 36, Adam begins to invest $2,000 annually at 8% and continues for 30 years. When Adam reaches age 66, his investment has grown to:

$226,566.40

The Federal Deposit Insurance Corporation (FDIC) currently insures against loss of up to ____ per person in an individual account at any one institution.

$250,000

Invest now or later? Twins Samantha and Adam are both age 26. Beginning at age 26, Samantha invests $2000 per year for 10 years and then never sets aside another penny. Adam waits 10 years and then invests $2000 per year for the next 30 years. Assuming they both earn 8%, how much will each twin have at age 66? Step 1: Samantha starts investing $2000 annually for 10 years and then stops. When Samantha reaches age 36 she has accumulated:

$28,973.20

Invest now or later? Twins Samantha and Adam are both age 26. Beginning at age 26, Samantha invests $2000 per year for 10 years and then never sets aside another penny. Adam waits 10 years and then invests $2000 per year for the next 30 years. Assuming they both earn 8%, how much will each twin have at age 66? Step 2: After Samantha stopped contributing to her investment she left the total she had accumulated in the account to continue earning 8% annually. When Samantha reaches age 66, her investment has grown to: $291,548.61 $201,254.00 $226,566.40 $2,265,664.00

$291,548.61

The maximum annual deposit into a health savings account is ____ for an individual and ____ for a family.

$3,300 / $6,500

QuintCo produces fertility medication. The recipe calls for 12 ounces of an ingredient, which has a standard cost of $5 per ounce. In November, QuintCo produced 1,400 pills and was forced to pay $5.15 per ounce for material. QuintCo experienced a $1,200 unfavorable quantity variance. There was no change in Direct Material inventory. What was the direct material flexible budget variance for November? a. $3,684 unfavorable b. $2,436 unfavorable c. $3,756 unfavorable d. Cannot be determined from the data given.

$3,756 unfavorable \\ Actual | Standard Cost | Flexible Budget AQ x AP | AQ x SP | (SQ x AU) x SP AQ x $5.15 | AQ x $5 | (12 x 1,400) x $5 17,040 x $5.15 | 17,040 x $5 | 16,800 x $5 $87,756 | $85,200 | $84,000 Price $2,556 U Quantity $1,200 U Flexible Budget $3,756 U

Using a Back-End Ratio of 30 percent. A person with a $300 monthly auto loan payment would need a Gross Monthly Income of approximately $______ to buy a home with total monthly payments of $900. $3,666.67 $4,000.00 $1,200.00 $2,400.00

$4,000.00

Use the following financial information about Maria Espinoza: she earns $625 in wages from her job at the bookstore every 2 weeks her parents give her $400 every month she averages $100 in income each month by dog-sitting she has $800 in her savings account she has $350 in her checking account she has a car worth about $3,500 she rents an apartment with roommates, her portion of the rent is $420 every month she deposits $100 every month into her savings account her utilities and cell phone expenses run her about $250 per month she spends about $85/week on food she allows herself $40/week for entertainment her car payment is $165/month her car insurance is $300 every 6 months the balance on her car loan is $1,450 the balance on her credit card is $545 and she makes $50 payments monthly to the company for the balance on this account she has an outstanding balance for medical expenses of $385 and she makes $25 payments monthly to the medical office owed Maria's current assets are: $800.00 $350.00 $3,500.00 $4,650.00

$4,650.00

Using a Front-End Ratio of 27 percent, one would need an ANNUAL Gross Income of at least $__________ to buy a home with Total Monthly Payments of $900. $35,555.56 $10,800.00 $40,000.00 None of the above

$40,000.00

NARRBEGIN: Figure 14-3 Figure 14-3 Use the following stock listing for transactions on December 12 to answer the questions: [ED: the red colored cells must be merged and the word "net" deleted] 52 Net High Weeks Low Stock Div Yld % P/E Vol 100s Last Chg 44.75 25 QPZ .30 0.7 26 3289 44.25 +0.75 NARREND Refer to Figure 14-3. What was QPZ's closing price on December 12?

$44.25 per share

Tom has a four-year closed-end lease on his Land Cruiser. His contract stipulates a $0.42 per mile excess mileage charge in excess of 48,000 miles. If he actually drove the vehicle 60,000 miles during the four years, he would be charged an extra ____.

$5,040

Isabelle works at the mall in a sunglasses kiosk and has a habit of shopping during her breaks. In order to put the money she spends shopping in the context of the time she spends working, Isabelle has decided to figure out what her purchases costs in hours of her time. Use the following information to calculate Isabelle's Real Hourly Wage. * Works a 4 hour shift 5 days per week * Earns $160 per week after taxes * Takes the bus to and from work @ $1.50 per ride * Grabs dinner in the food court @ 7.00 per meal Isabelle's Real Hourly Wage is: $5.87 $5.50 $7.58 $8.00

$5.50

Antonio and Trina are a young couple with two small children, Jason (age four) and Claudia (age two). Trina is an account executive for a brokerage firm while Antonio has taken a couple years off from his profession as a civil engineer to work on an MBA degree. Right now Antonio and Trina's budget is very tight, as they are accustomed to living on two incomes, but Trina's employer has just circulated employer benefit information, so Antonio and Trina believe this is a good time to evaluate their life insurance needs. They have listed the financial information they believe is relevant. Current life insurance (Antonio) $ 75,000 Current life insurance (Trina) $ 50,000 Assets available for living expenses 0 Present value of Social Security benefits if Antonio dies $132,397 Present value of Social Security benefits if Trina dies $151,905 Antonio's income before he went back for the MBA $ 45,000 Trina's income $ 50,000 Percent of income that needs to be replaced 75 percent Projected final expenses $7,000 Projected readjustment-period needs $5,000 Projected debt-repayment needs $ 15,000 Projected college-expenses $ 80,000 Number of years income replacement is needed 20 Assumed rate of return on invested funds 5 percent Appropriate interest rate factor 12.5 NARREND Refer to Figure 12-1. Antonio and Trina decide to purchase a $300,000 policy on Trina and a $250,000 policy on Antonio. How much would these policies cost if they were $0.92 per $1,000 of coverage for Tina and $0.98 per $1,000 for Antonio?

$521

Shad wants to consider the cost per use of a high-end, desk-top computer server he is considering for his web site business. The computer costs $3,750 and has a life expectancy of four years. If Shad feels he would use the computer three days a week, on average, what is Shad's cost per use?

Emma, 23, just graduated from college in Child, Youth and Family Studies and has been working in outreach for the past 12 months. She doesn't make a lot of money at her job, but she learned in her financial management class that she should do what she can to save and invest her money for her future financial goals. Currently, in her budget, she has been able to save $50.00 each month and at the end of her first year of working, she has accumulated $600.00. She has decided to invest her $600.00 in a Certificate of Deposit that will pay annual interest rate of 3% if she leaves the money on deposit (in the account) for 4 years. The Future Value (using the table in the Appendix) of Emma's savings will be.

$675.30

Lindsay and Michael are a married couple filing jointly. They have 4 dependent children; Conner (age 6), Lucy (age 10), Melinda (age 14) and Ben (age 16). Based on the information below, their Taxable Income is: Lindsay's Total Income is $60,000, but $5,000 qualify as 'Exclusions' Michael's Gross Income is $54,000 Together, their Adjustments total $9,000 Their Itemized Deductions total $10,500 The Standard Deductions for a Married Couple Filing Jointly is $11,400 Personal Exemptions are $3,650 Each They are eligible for the Child Tax Credit which is $1,000 per qualifying child under the age of 17 $67,700 $71,700 $79,000 $76,700

$76,700

What is the monthly payment for a $15,000, 2-year, 14 percent loan with interest calculated using the Add-On Method? $174.99 $625.00 $712.50 $800.00

$800.00

Jackson and his wife Cora along with their friends have planned an extravagant trip to Paris and Rome when their oldest child graduates from high school. The group of friends have agreed that they will take this trip together in the summer of 2024 (7 years from now). To cover all of their expenses, Ian and Cora would like to have $12,000 for this trip. They have an opportunity to invest a lump sum at an annual interest rate of 4%. The Present Value (using the table in the Appendix) needed to meet their savings goal is.

$9,118.80

Jackson and his wife Cora along with their friends have planned an extravagant trip to Paris and Rome when their oldest child graduates from high school. The group of friends have agreed that they will take this trip together in the summer of 2024 (7 years from now). To cover all of their expenses, Ian and Cora would like to have $12,000 for this trip. They have an opportunity to invest a lump sum at an annual interest rate of 4%. The Present Value (using the table in the Appendix) needed to meet their savings goal is. $11,193.00 $9,118.80 $12,000.00 $72,025.20

$9,118.80

Step 4: Subtract either the IRS's Standard Deduction amount for your tax status OR Itemized Deductions. What is the Subtotal?

$98,450

A form of alternative dispute resolution that is legally binding at least one party is civil court. small claims court. mediation. arbitration.

A disadvantage of real estate investment is

-Large initial investment -Financial risk -Illiquidity

Kris has just received her credit card bill. The APR on this account is 13.9% applied over 12 billing cycles per year. Her Account Balance is $3,633.00. The statement lists her Average Daily Balance as $3,545.00. What is the Periodic Rate that will be applied to her balance?

.0116

Use the following financial information about Maria Espinoza: she earns $625 in wages from her job at the bookstore every 2 weeks her parents give her $400 every month she averages $100 in income each month by dog-sitting she has $800 in her savings account she has $350 in her checking account she has a car worth about $3,500 she rents an apartment with roommates, her portion of the rent is $420 every month she deposits $100 every month into her savings account her utilities and cell phone expenses run her about $250 per month she spends about $85/week on food she allows herself $40/week for entertainment her car payment is $165/month her car insurance is $300 every 6 months the balance on her car loan is $1,450 the balance on her credit card is $545 and she makes $50 payments monthly to the company for the balance on this account she has an outstanding balance for medical expenses of $385 and she makes $25 payments monthly to the medical office owed According to the Basic Liquidity Ratio, if Maria lost her income, she could maintain her current spending for _____ months.

.74

The ________ budget is the only budget stated only in units, not dollars. manufacturing overhead sales production direct materials

Production

Use the following financial information about Maria Espinoza: she earns $625 in wages from her job at the bookstore every 2 weeks her parents give her $400 every month she averages $100 in income each month by dog-sitting she has $800 in her savings account she has $350 in her checking account she has a car worth about $3,500 she rents an apartment with roommates, her portion of the rent is $420 every month she deposits $100 every month into her savings account her utilities and cell phone expenses run her about $250 per month she spends about $85/week on food she allows herself $40/week for entertainment her car payment is $165/month her car insurance is $300 every 6 months the balance on her car loan is $1,450 the balance on her credit card is $545 and she makes $50 payments monthly to the company for the balance on this account she has an outstanding balance for medical expenses of $385 and she makes $25 payments monthly to the medical office owed According to the Basic Liquidity Ratio, if Maria lost her income, she could maintain her current spending for _____ months. .74 1.12 1.95 .33

.74

Iris Rosales is an unmarried college student age 21, and is claimed as a dependent on her married parents' tax return. What is the maximum number of personal exemptions Iris can legally claim on her own tax return?

Last year, Samantha earned a total income of $63,450. Her taxable income was $12,300 less than her total income. She paid $9,211 in federal income taxes. Samantha's Average Tax Rate is: 0.18 0.15 0.74 $9,211

0.15

Nicole and Matt Jones have a combined Disposable Monthly Income of $3,300. They also have committed themselves to the following monthly payments: Auto Loan $500 Education Loan $280 Home Mortgage $900 What is their Debt-Payments-to-Disposable-Income Ratio?

0.236 or 23.6%

Melissa Roth is a single parent with a young son. She has a disposable income of $45,000 annually. Her total assets are $165,000, of which $125,000 is the value of the home she owns. And her total liabilities are $115,000, of which $105,000 is the balance on the mortgage loan she took to purchase her home. Given this information, what is her Debt-to-Equity Ratio? 0.33 0.69 0.84 0.92

0.33

Jackson and his wife Cora along with their friends have planned an extravagant trip to Paris and Rome when their oldest child graduates from high school. The group of friends have agreed that they will take this trip together in the summer of 2024 (7 years from now). To cover all of their expenses, Ian and Cora would like to have $12,000.00 for this trip. They have an opportunity to invest a lump sum at an annual interest rate of 4%. What is the multiplier (the number from the table in the Appendix) used to calculate the Present Value of their savings.

0.7599

A point, as defined in the real estate market, is ____ percent of the loan amount. 1 2 1 and one-half one-half of

Because certificates of deposit require that the deposited funds remain on deposit for a specified period of time they are subject to interest rate risk. fixed withdrawal risk. market risk. systemic risk.

1.4%

Data on bankruptcy can be included in your credit file for ____ years.

The prudent investor limits high-risk investments to less than ____ percent of his or her overall investment mix.

Jason and Larissa would like to accumulate three times their monthly expenses in monetary assets. They currently have $2,800 in their money market account, and their monthly expenses are $4,500. How much more do they need in their money market account to reach their goal?

10,700

Which of the following forms is used to notify you of the taxable interest you have earned in a given year from a checking or savings account?

1099 Form

Totz Company produces jump ropes. Totz Company has the following sales projections for the upcoming year: First quarter budgeted jump rope sales in units 21,000 Second quarter budgeted jump rope sales in units 35,000 Third quarter budgeted jump rope sales in units 22,000 Fourth quarter budgeted jump rope sales in units 30,000 Totz Company wants to have 20% of the next quarter's sales in units on hand at the end of each quarter. How many jump ropes should Totz Company produce during the first quarter? 18,200 21,000 23,800 23,900

23900 // Unit Sales 2nd Qtr. 35,000 × 20% = 7,000 EI Sales 21,000+ Des. End.+ 7,000-Beg. Inv.- 4,100(use in given, do not estimate) Production Units2 3,900

What percentage of product rebates go unclaimed?

An investment costs $6,000,000 and generates $500,000 cash each year for 15 years. The investment will be depreciated using the straight-line method, the minimum required rate of return is 6%, and there is no residual value. What is the payback period? a. 15 years b. 18 years c. 12 years d. None of the above

12 years \\ PB period = Investment ÷ Annuity = $6,000,000 ÷ $500,000 = 12 years

A debt-payments-to-disposable-income ratio of ____ percent or more is considered to be problematic.

A price-to-rent ratio above the national average of_____ indicates that home prices may relatively high in a community.

Juan is carrying $6,150 in debt. Currently, he has a medical bill with a balance of $150 that is due immediately. He will make a payment of $150 this month to pay it off. He also has a credit card with a 13.7% APR with a balance of $2,000 and will make a payment of $200 this month. Finally, he has an education loan with a 4.3% APR and a balance of $4,000 and will make a payment of $280 this month. His monthly debt repayment total is $630. Using the Folddown plan, NEXT MONTH (after this month's payments); Richard will pay $ ___________ to his medical bill $ ______________ to his credit card and $ _____________ to his education loan

150

San Bernardino Industries has three product lines, A, B and C. The following information is available: A B C Sales $100,000 $90,000 $88,000 Variable costs - 76,000 - 48,000 - 79,000 Contribution margin $24,000 $42,000 $9,000 Fixed costs: Direct - 9,000 - 18,000 - 11,000 Common - 6,000 - 9,000 - 4,400 Operating Income $9,000 $15,000 $(6,400) If product line C is discontinued and the space formerly used to manufacture product C is rented for $15,000, operating income will increase by: $13,000 $6,000 $17,000 $21,400

17000 // Drop Product C Contribution margin $9,000 - Direct fixed costs 11,000 = Segment margin (-$2,000) Product A Op. Income $9,000 + Product B Op. Income $15,000 - Product C Common Fixed Costs $4,400 + Rent revenue 15,000 = $34,600 Total New Operating Income. Old Op. Income = $9,000+$15,000-$6,400=$17,600 so by dropping Product C Op. income would increase by $34,600-$17,600=$17,000. OR Since the segment margin is negative, operating income will increase when product C is dropped. Drop Product C and Rent Increase by dropping C $2,000 + Rent revenue 15,000 = Total operating income increase $17,000

The Great Recession that began in December, 2007 lasted how long

18 months (pg 9)

The Stemple Corporation has the following data for the prior and current year: Account | Prior year | Current year Current assets | $51,240 | $42,000 A/R | $73,800 | $60,000 Inventory | $67,500 | $50,000 Total Assets | $192,540 | $152,000 Current liabilities | $41,400 | $30,000 Long-term liabilities | $26,600 | $28,000 Total Liabilities | $68,000 | $58,000 Common stock | $41,000 | $35,000 Retained earnings | $83,540 | $59,000 Net sales revenue | $595,000 | $500,000 Total Expenses | -$540,500 | -$465,000 Net Income | $54,500 | $35,000 What is the vertical analysis report with respect to long-term liabilities for the current year? a. 13.82% b. 18.42% c. 5.263% d. 5.60%

18.42 \\ $28,000/$152,000=18.42%

Isabelle sees a "deal" on a pair of Dr. Marten Airwair boots she wants. The boots are normally $125 but are currently marked down 20%. Assuming a 7.25% sales tax, use Isabelle's Real Hourly Wage, to determine how many HOURS would she need to work to buy the boots on sale. 18.875 hours 14.15 hours 19.50 hours 13.40 hours

19.50 hours

Stephen Scott's monthly pay stub indicates that his monthly gross income is $3,800. However, $800 is withheld for income and Social Security taxes and $200 is withheld for his health and disability insurance. How much is Stephen's disposable income?

2,600

An initial investment of $42,000 is expected to generate the following net income: Year 1 $10,000 Year 2 $8,000 Year 3 $6,000 Year 4 $10,000 Year 5 $12,500 The investment will be depreciated using the straight-line method over the 5 year useful life, with no residual value. Management requires a 6% minimum rate of return. What is the payback period? a. 2.5 years b. 4.52 years c. 4.64 years d. longer than 5 years

2.5 years \\ Calculate depreciation expense Straight-line depreciation expense = (Investment - Residual value) ÷ Useful life Depr. = ($42,000 - $0) ÷ 5 Depr. = $8,400 Convert net income to cash flow Net Income | Deprec. Exp. | Cash Flow | Cumulative Cash Flow Year 1 $10,000 | $8,400 | $18,400 | $18,400 Year 2 $8,000 | $8,400 | $16,400 | $34,800 Year 3 $6,000 | $8,400 | $14,400 | *$42,000 Year 4 $10,000 | $8,400 | $18,400 Year 5 $12,500 | $8,400 | $20,900 In year 3, we only need $7,200 of the $14,400 cash flow (50%) to reach our original investment.

Less than ____ percent of households headed by persons aged 55 to 64 are renters.

Federal law states that bills must be mailed to cardholders at least ____ days before payments are due. 7 10 14 21

Hill Country Pools, Inc., had after-tax earnings of $750,000 and paid out dividends of $325,000. There are 275,000 shares of Hill Country Pools common stock outstanding with a current market value of $27 a share and no preferred stock. What is the dividend payout ratio for this company?

43 percent

If the credit bureau cannot reinvestigate an item on your credit report in ____ days, the item must be removed from your file.

Columbia Company budgeted to produce 2,600 units but actually produced 2,500 units. Each unit was budgeted to require 2 direct labor hours at a cost of $10 per hour. Total actual direct labor cost was $55,250 for 4,750 hours worked. What is the direct labor efficiency variance? a. $2,500 favorable b. $4,500 favorable c. $4,500 unfavorable d. $2,500 unfavorable

Buster Evans is considering investing $20,000 in equipment with the following annual cash sales and cash expenses: Cash Sales | Cash Expenses Year 1 $22,000 | $8,000 Year 2 $20,000 | $8,000 Year 3 $19,000 | $9,000 Year 4 $17,000 | $10,000 Year 5 $15,000 | $10,000 The equipment will not have any residual value. Buster Evans will depreciate the equipment using the straight-line depreciation method over 5 years and has a policy for new investments that requires a 4 year or less payback period and a 12% minimum rate of return. What is the accounting rate of return on the investment? a. 10% b. 28% c. 48% d. 15%

28% // Cash Sales -Cash Exp. =Net Cash Flow-Deprec. Exp.* =Net Income Year 1 $22,000 -$8,000= $14,000 -$4,000= $10,000 Year 2 $20,000 -$8,000= $12,000 -$4,000= $8,000 Year 3 $19,000 -$9,000= $10,000 - $4,000= $6,000 Year 4 $17,000 -$10,000= $7,000 -$4,000= $3,000 Year 5 $15,000 -$10,000= $5,000 -$4,000= $1,000 $28,000 Total Net Income Total Net Income $28,000/ 5 Useful Life = Average Annual Net Income $5,600 Average Annual Net Income $5,600/Investment $20,000 = Accounting Rate of Return 28% *Depreciation expense = (Investment - Residual Value) / Useful Life Depreciation expense = ($20,000 - $0) /5 = $4,000

The following sales budget has been prepared: Month Cash Sales Credit Sales September $123,000 $210,000 October $125,000 $180,000 November $167,000 $260,000 December $189,000 $190,000 Collections are 50% in the month of sale, 40% in the month following the sale, and 10% in the second month following the sale. No uncollectible accounts are anticipated. What is the estimated cash collections in October? $215,000 $90,000 $299,000 $125,000

299000 // Sept OctNov Sept 50% 40%10% Oct NA 50%40% Nov NA NA 50% October cash sales $125,000October credit sales $180,000 x 50% =90,000Sept credit sales collected in Oct. $210,000 x 40% = 84,000Total $125,000+90,000+84,000=$299,000

The Consumer Leasing Act limits end-of-lease payments to a maximum dollar amount equivalent to ____ times the monthly payment.

Auto leasing is becoming an attractive option and about ____ percent of new cars "sold" each year are actually leased.

Genie Corporation recently declared a three-for-one stock split. Before the split the stock was worth $100 per share. If you owned 100 shares before the split occurred, you now own ____ shares worth approximately ____ per share.

300 ; $33

Your total liabilities excluding mortgage debt should not exceed what percentage of your net worth excluding the value of your home if you are to have a manageable level of debt?

At the beginning of the year, Jeffords Company estimated annual manufacturing overhead costs at $450,000 and annual direct labor hours at 90,000. Jeffords allocates manufacturing overhead on the basis of direct labor hours. For the month of November, actual direct labor hours worked equaled 7,300. Actual manufacturing overhead for November totaled $41,750. Calculate the manufacturing overhead allocated to production in November. $73,000 $36,500 $450,000 $90,000

36500 // First, calculate predetermined manufacturing overhead rate. Estimated annual manufacturing overhead $450,000 / Estimated annual direct labor hours 90,000 = Predetermined MOH rate $5 Second, calculate allocated manufacturing overhead. Predetermined MOH rate $5 X Actual direct labor hours 7,300 = Allocated MOH $36,500

Refer to the present value tables in the text book if necessary. Oteri Inc. is evaluating an investment in a new machine that will cost $445,000. The machine has a useful life of 4 years, $25,000 residual value, and will be depreciated using straight-line depreciation. Oteri requires an 8% minimum rate of return on all investments. The machine is expected to generate the following operating income: Year 1 $25,000 Year 2 $25,000 Year 3 $25,000 Year 4 $25,000 What is the net present value of this investment? a. $8,710 b. $3,935 c. $448,935 d. ($14,440)

3935 // 1. Calculate cash flows by adding depreciation exp. to operating income ($445,000-25,000) /4 = $105,000 deprec. exp + $25,000 op.income= $130,000 cash flows 2. Calculate the present value of the 4-year annuity using the PVof $1 Annuity table (table B), period 4, 8% 3. Calculate the present value of the residual value using PV of $1 table (table A), period 4, 8% PVF | Cash Flow | Present Value 3.312 | $130,000 | $430,560 .735 | $25,000 | +18,375 Present Value of Future Net Cash Flows $448,935 Initial Investment - 445,000 Net Present Value $3,935

Using the continuous-debt method of setting your debt limit, you should be able get completely out of debt (other than your mortgage) at least once every ____ years

The Warren Company is considering investing in two alternative projects: Project 1 | Project 2 Investment $400,000 | $250,000 Useful life (years) 5 | 6 Estimated annual net cash inflows for useful life $100,000 | $45,000 Residual value $25,000 | $15,000 What is the payback period for Project 1 and 2, respectively? a. 4.00 years, 4.00 years b. 4.00 years, 5.56 years c. 5.56 years, 4.00 years d. 5.56 years, 5.56 years

4.00 years, 5.56 years \\ Payback = Investment/annual cash flow $400,000/$100,000=4 years, $250,000/$45,000.00 = 5.56 years

Employer-sponsored retirement plans include all of the following except 401(k). 403(b). 457. IRA.

403(b)

Kris has just received her credit card bill. The APR on this account is 13.9% applied over 12 billing cycles per year. Her Account Balance is $3,633.00. The statement lists her Average Daily Balance as $3,545.00. Kris is being charged $_____ in interest to Finance this debt. 42.14 41.12 13.9% A LOT!

41.12

Paris Plastics has monthly fixed costs of $90,000, while its variable costs are $4.00 per unit. If the sales price of a unit is $16.00 and Paris Plastics has total sales revenue of $192,000, the company's total variable costs will be: $90,000 $192,000 $48,000 $144,000

48000 // Find the number of units sold Total sales revenue $192,000 / Sales price per unit $16.00 = Units sold 12,000. Find total variable costs Units sold 12,000 X Variable cost per unit $4.00 = Total variable cost $48,000

Sellers of homes generally set a sales asking price ____ percent higher than what they expect to get for it. 5 to 15 5 to 10 0 to 5 15 to 20

5 to 15

Your credit card liability for fraudulent usage of your lost or stolen credit card is limited to $____ if you report the loss. 0 50 500 unlimited

A company reported the following amounts of net income: Year 1 $15,000 Year 2 $21,000 Year 3 $31,500 Which of the following is the percentage change from Year 2 to Year 3? a. 40.00% b. 50.00% c. 110.00% d. 150.00%

50.00% \\ Year 2 $21,000 Year 3 31,500 Increase 10,500 /21,000 = 50%

Dakota Company provides the following information about its single product: Target profit $40,000 Selling price $3.50 Variable cost per unit $1.05 Total fixed cost $90,000 What is the breakeven point in units? 37,235 53,062 25,714 36,735

53062 // BEu = FC/CMu BEu = $90,000/($3.50 - $1.05) BEu = $90,000/$2.45 = 36,735

Nesco incurred an unfavorable direct labor rate variance of $3,700. The actual direct labor hourly wage rate was $6.50 and 24,667 total direct labor hours were incurred, based on actual finished units produced. What is the standard direct labor hourly wage rate? a. $6.65 b. $6.35 c. $6.80 d. $6.85

6.35 \\ Actual | Standard Cost AH x AR | AH x SR 24,667 x $6.50 | 24,667 x SR $160,335.50 | Standard Cost Rate $3,700 U Standard Cost = $160,335.50-$3,700=$156,635.50 Standard Cost/AH = SR $156,635.50/24,667=$6.35

According to financial advisers, a person with monthly living expenses of $2,500 should maintain readily accessible savings of at least

7,500.

More than ____ percent of service contracts are never used.

The Thomas family projects a budget deficit of $250 in January and $450 in February with surpluses the rest of the year. Their revolving savings fund should be at least

700

The typical required loan-to-value ratio today is no more than

80 percent

The typical required loan-to-value ratio today is no more than 90 percent. 80 percent. 70 percent. 50 percent.

80 percent

Birrell Company manufactures pottery. Production of large garden pots for the coming three months is budgeted as follows: May 20,000 June 40,000 July 35,000 Each garden pot requires 30 minutes of direct labor time. Direct labor wages average $15 per hour. Monthly variable manufacturing overhead averages $4 per direct labor hour, plus fixed manufacturing overhead of $2,100 per month. What is the total direct labor budgeted for the month of June? $300,000 $82,100 $150,000 $600,000

82100 // Units to produce 40,000 X Direct labor hours per unit (30min./60min.) =.5 Total direct labor hours required 20,000 Manufacturing Overhead budget June Total direct labor hours required 20,000 X Variable MOH rate per DLH $4= $80,000 (Total variable MOH $80,000 + Total fixed MOH 2,100 Total MOH $82,100)

Nearly ____ percent of households headed by persons under age 25 are renters.

Refer to Table 9-5 on Page 286: You are considering purchasing a new home. Use the information provided and answer the following questions: Loan Amount = $165,000 Length of Loan = 25 years Interest Rate = 4.5% What will your monthly payment amount be?

914.10

What is the monthly payment for a 30 year mortgage for $165,000 at a 6% interest rate? (Use table 9.5). $600 $990 $1,062.60 $330

990

Earnest money is the sum of money the home buyer pays to the realtor for his or her help in finding the desired home. the realtor for his or her help in finding desirable financing. the lender to originate the mortgage loan. hold the house while negotiating.

Sarah is managing her finances and has an opportunity to earn some extra money developing a webpage for a start-up business. The owners of the new business have agreed to pay her $7,500 once the project has been completed. Sarah is in the 15% Marginal Tax bracket this year. Next year, after she gets married, she will be in the 25% Marginal Tax bracket. If Sarah pushes to finish the project this calendar year, her estimated income tax liability on the extra earnings will be _____________ If she takes longer and completes the work next calendar year (after January 1) her estimated income tax liability on the extra earnings will be _____________

The tax credit(s) for qualifying higher education expenses is American Opportunity credit. earned income credit. lifetime learning credit. American Opportunity credit and lifetime learning credit.

Both commercial bank and savings bank accounts are insured by the FDIC through a fund called the bank insurance fund. deposit insurance fund. savings bank insurance fund. fiduciary trust fund.

The Consumer Leasing Act limits end-of-lease payments to a maximum dollar amount equivalent to ____ times the monthly payment. two three four five

In-Force Illustration (p. 361)

A chart that shows the cash-value status of the policy and projections for future years given the rate of return current at the time of the illustration (rather than the rate used at the inception of the policy).

A vehicle that allows employee-paid expenses for medical or dependent care to be paid with pretax dollars. This is an example of...

A flexible spending account (FSA)

Cost Index (p. 370)

A numerical method used to compare the costs of similar plans of life insurance.

Beneficiary (p. 348)

A person or organization designated to receive a benefit from a life insurance policy or estate or investment/savings account.

Primary Care Physician

A professional that must order all procedures and approve referrals to specialized health care providers within the HMO.

Living Benefit Clause (p. 352)

A provision in cash-value life insurance policies that allows the payment of all or a portion of the death benefit prior to death if the insured contracts a terminal illness.

needs-based approach

A superior method of calculating the amount of insurance needed that considers all of the factors that might potentially affect the level of need.

If you are a person who always pays off the total outstanding balance on your credit card each month, which of the following aspects of the credit card agreement will you be least interested in? (Assume there is a 21-day grace period.)

APR

The total cost of credit on a yearly basis stated as a percentage rate is its

APR

Which of the following is (are) required to withdraw money from an automated teller machine (ATM)?

ATM card and personal identification number

Which of the following credit contract clauses requires that all remaining payments on an installment debt be paid on demand of the creditor after a specific number of payments are unpaid?

Acceleration

Which of the following is not a benefit of a savings account?

Account holders must give 30 to 60 days' notice for withdrawals.

The capital budgeting method calculated as "Average Annual Net Income ÷ Investment" is called the: a. Internal rate of return b. Accounting rate of return c. Payback period d. Residual income

Accounting Rate of Return

An example of a favorable variance is: Material prices are higher than budgeted. Actual sales are less than budgeted. Budgeted direct labor costs are less than actual costs. Actual expenses are less than budgeted.

Actual expenses are less than budgeted

An example of a favorable variance is: a. Material prices are higher than budgeted. b. Actual expenses are less than budgeted. c. Budgeted direct labor costs are less than actual costs. d. Actual sales are less than budgeted.

Actual expenses are less than budgeted.

Raynelle, an active environmentalist, has a MasterCard with the Sierra Club logo on it. What type of card is this?

Affinity card

Financial plans should include objectives and goals in which of the following areas? Spending Capital accumulation Risk management All of these

All of these

In addition to the price of the auto, ____ may be a price variable in an auto negotiation.

All of these

Interest paid on deposits in financial institutions is based on how much money is on deposit and all of these. how the balance is determined. the interest rate applied. the frequency of compounding.

All of these

The three broad areas of financial plans include financial plans for spending. All of these. capital accumulation. risk management.

All of these

When the final balloon payment is due on a balloon auto loan, you can generally

All of these

Which of the following is a characteristic of a cash-flow statement? It covers a period of time, usually one month or one year. All of these. It shows if you were able to live within your income for the period covered. The statement includes three sections: income, expenses, and surplus (or deficit).

All of these

____ should be completed before interacting with sellers.

All of these

High-risk investments include

All of these- futures contracts, options, collectibles

20-Pay Life Policies (p. 354)

Allow premium payments to cease after 20 years

Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)

Allows a former employee to remain a member of a group health plan for as long as 18 months if the employee worked for an employer with more than 20 workers.

Free-Look Provision (p 369)

Allows consumers that period of time to study a newly written policy and, if desired, cancel it and receive a full refund.

Flexible Spending Arrangements

Allows employees to place a portion of their salary into an account that is used to pay some of their health care expenditures, including employee-paid heath plan premiums.

Suicide Clause (p. 358)

Allows life insurance companies to deny coverage if the insured commits suicide within the first few years after the policy is issued.

Variable Life Insurance / Flexible-Premium Variable Life Insurance (p. 356-357)

Allows you to choose the investments made with your cash-value accumulations and to share in any gains or losses.

Adjustable Life Insurance (p. 354-355)

Allows you to modify any one of these three components, with corresponding changes occurring in the other two.

Jason took his friend Jennifer out for her 21st birthday. He paid for the dinner with his Visa card and purchased a dozen red roses using his American Express green card. John will have to pay his ____ bill upon receiving the statement, but he will have the option of paying his ____ bill over several months.

American Express; Visa

death benefit (p. 359)

Amount that will be paid to beneficiary when the insured dies.

nonforfeiture values (p. 361)

Amounts stipulated in a life insurance policy that protect the cash value, if any, in the event that the policyholder chooses not to pay or fails to pay required premiums.

Life Insurance (p. 346)

An insurance contract that promises to pay a dollar benefit to a beneficiary upon the death of the insured person.

If the actual quantity of direct material used in production exceeded the standard quantity allowed (based on actual units produced), there was: a. A favorable direct materials quantity variance. b. An unfavorable direct materials quantity variance. c. An unfavorable direct materials price variance. d. An unfavorable flexible budget variance.

An unfavorable direct materials quantity variance

Out-of-Pocket Costs

Any dollar amounts for care that people covered by health care plans must pay themselves

People seeking aggressive returns should consider investing in

Any of these- fast growing companies, stock-index and commodity futures, high-yielding junk bonds

A bond is an interest-bearing negotiable certificate of long-term debt issued by

Any of these- the federal government, a corporation, a municipality

Intermediate care (p. 338)

Appropriate for people who do not need around the clock nursing but who are not able to live alone.

A form of alternative dispute resolution that is legally binding at least one party is

Arbitration

Which of the following would most likely be considered a need rather than a want?

Automobile

A charge that often decreases 1 percent each year the investor owns shares in the fund is called a

Back-end load

Which of the following provides information about a person's financial condition at a specific point in time?

Balance sheet

Which type of credit card allows the holder to make purchases almost anywhere?

Bank credit card accounts

Which type of credit card is issued through commercial banks and other financial institutions?

Bank credit card accounts

Which is not a method for taking your funds out of a mutual fund?

Borrowing against your fund account

Which of the following is a characteristic of a capital asset? a. The item will be used for a long period of time. b. The item involves a significant sum of money. c. None of these characteristics are correct. d. Both A and B are correct.

Both A and B are correct.

Miako has just applied for a credit card that offers a 1.9 percent interest rate for 12 months. At the end of 12 months, the interest rate will be "prime plus 9 percent." Which of the following characteristics does this card have?

Both variable interest rates and teaser rates

Which of the following is the best example of a well-stated financial goal? Buy a $2,000 stereo Purchase a three-bedroom home in five years Pay off your credit cards as soon as possible Buy a $3,000 computer in 18 months

Buy a $3,000 computer in 18 months

Investors that follow a(n) ____ strategy buy a widely diversified mix of stocks and/or mutual funds, reinvest the dividends, and hold on to those investments almost indefinitely.

Buy-and-hold

The ____ outlines the specific vehicle to be purchased and all charges for the purchase.

Buyer's order

Which of the following government programs is jointly funded by federal and state governments?

Medicaid

the Better Business Bureau is an example of which channel of complaint?

Self-regulatory organizations

The regulator of commercial banks and saving banks is the

Comptroller of the Currency.

To reduce interest rate risk and smooth out interest rate fluctuations when purchasing certificates of deposit (CDs) you can engage in

CD laddering

Which of the following plans, often provided to workers by their employer, allows the employee to choose among a listing both tax-sheltered and non-tax-sheltered benefits?

Cafeteria plan (pg 22)*

Optionally Renewable Policies

Can be canceled or changed by the plan provider but only at the time of expiration and renewal, often with 30 days' notice.

High deductible health care plan

Can either be traditional health insurance or an HMO that follows the consumer-driven health care philosophy by charging relatively high deductibles.

A hedge fund

Can profit in times of market volatility as well as in a falling market

The term ________ is described as a "formal means of analyzing long-range investment alternatives." a. annuity b. time value of money c. payback period d. capital budgeting

Capital Budgeting

Dividend Yield

Cash Dividend per share/ market price

Molly went to her bank, gave the teller $200 plus a small fee, and received a check drawn on the financial institution itself. What kind of checks were these?

Cashier's checks

settlement options (p. 360)

Choices from which the policyholder can choose in how the death benefit payment will be structured.

Which of the following is not true about commercial banks?

Commercial banks generally pay depositors an interest rate about 0.10 to 0.20 percentage points higher than the rate found at savings banks.

Daily Limits

Common in low-cost and supplemental hospital insure plans.

A disadvantage for a buyer who places a limit order is that the investor might miss an excellent opportunity if the stock price rises.

True

____ publishes a list of recommended used cars in various price ranges each April

Consumer Reports

____ make both secured and unsecured small loans and require repayment on a monthly installment basis.

Consumer finance companies

____ publishes a list of recommended used cars in various price ranges each April.

Consumer reports

Government agencies and media action lines are examples of which channel of complaint?

Consumer-action agencies

Workers' Compensation Insurance (p. 336)

Covers employers for liability losses for injury or disease suffered by employees that result from employment related causes.

____ typically pay the highest rates of interest on savings.

Credit Unions

Which of the following would be classified as a short-term liability? Education loans Credit card debt Next month's rent A car loan

Credit card debt

____ typically pay the highest rates of interest on savings.

Credit unions

Activities of Daily Living (ASLs) (p.337)

Criterion for deciding whether the insured becomes eligible for long-term benefits. If he/she cannot perform specified activities they are eligible.

The present value of an annuity is the ____ worth of a stream of payments to be received in the future

Current Worth (pg 21)

Social Security disability income payments are available to covered workers who are either partially or totally disabled.

False

Target-date retirement funds are recommended for those who wish to actively manage their own investments.

False

Interest assessed during each payment period (usually each month) based on the current outstanding balance of the installment loan is referred to as which method of calculating interest?

Declining-balance

How does depreciation affect the calculation of a project's accounting rate of return (ARR)? a. Depreciation is added to the annual cash inflows. b. Depreciation is deducted from the annual cash inflows. c. Depreciation does not affect ARR. d. Depreciation is only deducted if the ARR is less than the minimum required rate of return.

Depreciation is deducted from the annual cash inflows.

Which of the following costs would a computer manufacturer include in manufacturing overhead? cost of disk drives depreciation on equipment that is used in the production facility cost of memory chips wages earned by computer assemblers

Depreciation on equipment that is used in the production facility

The ________ budget starts with the number of units to be produced. operating expense direct labor sales production

Direct labor

A company receives an unusually high number of orders in a month. To produce all of the orders within the scheduled dates of delivery, the company pays employees an extra $8 per hour for every hour of overtime the employees work. Which of the following variances may be directly impacted? a. Direct materials price variance b. Direct materials quantity variance c. Direct labor efficiency variance d. Direct labor rate variance

Direct labor rate variance

A company's purchasing department negotiates all of the purchasing contracts for raw materials. Which variance is most useful in assessing the performance of the purchasing department? a. Direct materials quantity variance b. Direct materials price variance c. Direct labor rate variance d. Direct labor efficiency variance

Direct materials price variance

Which variance is directly impacted if a worker drops the raw material during production and the raw material must be discarded? a. Direct materials quantity variance b. Direct materials price variance c. Direct labor rate variance d. Direct labor efficiency variance

Direct materials quantity variance

Certificate of insurance

Document or booklet that outlines group health insurance benefits. You will receive this if you have a group plan.

Brice is going to purchase a hi-def, flat-screen TV. He has decided on everything except the screen size. The unit with the 42-inch screen costs $600 while the unit with the 47-inch screen costs $750. In making this decision, which concept should Brice use?

Does marginal unity exceed marginal cost (pg 15) is it really so cool, that we are willing to pay more

Permanent Insurance (p. 353)

Does not need to be renewed and the coverage is maintained for the entire life of the insured as long as the premiums are paid. Cash-Value Insurance

face amount (p. 352)

Dollar value of protection as listed in the policy and used to calculate the premium.

A growing number of mutual fund companies now offer an option of A shares or B shares or C shares. Which of the following is true about the different classes.

Each class has a different fee structure

Term Life

Each of the following life insurance policies is being considered by a 25-year old. Which would have the lowest cost per $1000 of coverage?

Which of the following would be classified as a long-term liability? Education loan balance All of these Credit card debt Bank card debt

Education loan balance

Net Cost (p. 370)

Equals the total of all premiums to be paid minus any accumulated cash value and accrued dividends.

The average share price is the actual cost basis of the investment used for tax purposes.

False

The death benefit of a life insurance policy is always the same amount as the face value.

False

The major reason that people buy life insurance is to protect the person whose life is insured.

False

Multiple-of-Earnings Approach (p. 348)

Estimates the amount of life insurance needed by multiplying your income by some number, such as 5, 7, or 10. Life insurance agents often suggest this simple approach.

Which of the following is (are) a unique advantage(s) of investing in a family of funds?

Exchange privileges

The economic phase with conditions making it easy for consumers to buy homes, cars, and other goods is called

Expansion (pg 8)

If you find an error or omission on your credit report, you should notify the credit bureau that you wish to exercise your right to reinvestigation under the FCRA. FDIC. SEC. FICO.

FCRA

If you find an error or omission on your credit report, you should notify the credit bureau that you wish to exercise your right to reinvestigation under the

FCRA.

The most well-known of the many different types of credit scores used by lenders today is the

FICO score.

A life insurance policy irrevocably lapses when the premium is not paid by the stated due date.

False

A long-term investor generally has a high-risk investment philosophy.

False

A mutual fund whose objective focuses on growth in the value of the securities invests in companies expected to show average or better growth with steady or rising dividends.

False

A week order is good for five business days

False

After a divorce, the noncustodial parent will have no need for life insurance on their former spouse.

False

All of your employment income is subject to the FICA tax.

False

An HRA is a tax-deductible savings account into which individuals and/or their employers can deposit tax-sheltered funds for use to pay medical bills including the deductibles and other out-of-pocket costs required by a high-deductible plan.

False

An annuity is a good choice as an investment option within an IRA or inside your employer's 401(k) plan as you save for retirement.

False

An automatic premium loan provides an open-ended line of credit from which the policyholder can borrow money.

False

Deferred loads are a set percentage of the value of your portfolio

False

During times of high mortgage interest rates, real estate investors can expect a positive cash flow.

False

HMOs have dollar limits on their coverage.

False

Historically, both common stock and corporate bonds have performed well in times of inflation.

False

If you redeem an I bond within the first five years, you will forfeit the 3 most recent months' interest; after five years, you will forfeit the 12 most recent months' interest.

False

Income stocks are typically more volatile than the market as a whole.

False

Medicare is the only federal health care program currently in place.

False

Mutual fund quotations normally include the NAV, YTD Percentage Return, and the fund's expense ratio.

False

Ownership costs include the cost of capital improvements as well as the original cost of the property.

False

Publications that offer comparative performance information about mutual funds generally rank each fund according to one-year and ten-year performance only.

False

Secured bonds are always safer than unsecured bonds.

False

A service contract offers free or low-cost repairs to the product

For a specified period of time

Custodial care (p. 338)

For people who do not need skilled nurses but need supervision for some daily activities.

whole life insurance (p. 354)

Form of cash-value life insurance that provides lifetime life insurance protection and expects the insured to pay premiums for life. Also called straight life insurance.

variable-universal life insurance (p. 355)

Form of universal life insurance that gives the policyholder some choice in the investments made with the cash value accumulated by the policy. Also called flexible-premium variable life insurance.

Health Reimbursement account (HRA)

Funds that employers set aside to reimburse employees for qualified health expenses.

Social Security survivor's benefits (p. 347)

Government program benefits paid to a surviving spouse and children.

Which is not a characteristic of a true timeshare arrangement?

Grants legal real estate ownership to the purchaser

A mutual fund that provides the investor with some income and a good chance for long-term price appreciation has a ____ objective.

Growth and income

Health maintenance organizations (HMOs)

Health insurance plans that provide a broad range of health care services for a set monthly fee on a prepaid basis.

Which of the following is not an advantage of participating in your employer's retirement plan?

Higher take home pay (pg 25)

Which type of analysis compares the data of the current year to the data of the previous year in both percentage and dollar amount of increase or decrease? a. Vertical analysis b. Trend analysis c. Horizontal analysis d. Benchmarking

Horizontal analysis

interest-adjusted net payment index (IANPI) (p. 370)

If a policy will remain in force until death, this method allows you to effectively measure the cost of cash-value insurance. The lower the IANPI, the lower the cost of the policy.

Pre-existing conditions

Medical conditions or symptoms that the plan participant knew about or had diagnosed within a certain time period (usually one to two years) before the plan effective date.

insured (p. 357)

Individual whose life is insured.

Most people should not make buying decisions for expensive purchases

Inside a retail store or showroom

Which of the following costs incurred by the sporting goods department of a store is a direct cost if the sporting goods department is the cost object? Store manager salary Purchase price of women's lingerie Insurance on inventory of athletic shoes Depreciation expense—office equipment

Insurance on inventory of athletic shoes

Vanishing-Premium Life Insurance (p. 356)

Is designed to allow policyholders to cease making premium payments after just a few years.

Higher policy premiums will have to be paid.

Which of the following is generally true regarding conversion of group coverage to individual coverage?

Which of the following statements is true regarding home mortgages?

It is generally wise to take a longer repayment period even if you plan to pay off the loan more quickly.

Transfers at the death of a spouse usually are very uncomplicated because spouses generally own property together under

Joint tenancy with right of survivorship

Jonna purchased a $25,000 cash value policy with a guaranteed insurability option that can be exercised a maximum of four times at $25,000, each over the next 12 years. Which of the following statements is false?

Jonna will have to prove she is still insurable each time she exercises a purchase option

Which of the following is not a technique for reducing the risk whenever you conduct banking transactions on-line? Leaving the browser window open when finished making transactions. Avoid using someone else's computer to manage your account. Regularly change your password and keep it to yourself. When finished, always hit the log off button at the top of the page instead of just closing the browser window.

Leaving the browser window open when finished making transactions.

Using borrowed funds to make an investment is called

Leverage

Health care plans for Medicare eligible people that are purchased through a private company and provide both Medicare Parts A and B coverage are called.

Medicare Advantage Plans

participating policies (p. 359)

Life insurance policies that pay dividends.

not medically necessary

Long-term custodial care is not covered by health insurance because the care is

Claims Ratio (payout ratio)

Losses Paid ------------------ = premiums collected

The major financial loss resulting from premature death is the

Lost income of the deceased

Coinsurance and a deductible.

Lyle Coleman's health insurance policy will pay 80 percent of all covered expenses after he pays first $500 per year. This policy defiantly has

Companies that offer written express warranties must do so under the provisions of which federal act?

Magnuson-Moss Warranty Act

Companies that offer written express warranties must do so under the provisions of which federal act?

Magnuson-Moss Warranty Act

Which of the following ideas will not help you discuss money with more confidence and candor? Get to know yourself. Learn to manage financial disagreements. Make it clear that your needs and wants are more important than your spouse's. Be honest and talk regularly.

Make it clear that your needs and wants are more

Which of the following ideas will not help you discuss money with more confidence and candor? Get to know yourself. Learn to manage financial disagreements. Be honest and talk regularly. Make it clear that your needs and wants are more important than your spouse's.

Make it clear that your needs and wants are more important than your spouse's.

Bill and Alma are shopping for their first home. They have found two houses that are nearly identical except for their locations. One house costs $250,000 and is 15 miles from their places of employment. The second house costs $275,000, but it is within 5 miles of where they both work. Now Bill and Alma are trying to decide if living 10 miles closer to their workplaces is worth the extra $25,000 in the cost of the house. Which decision-making concept are they using?

Marginal analysis (pg 14,15)*

Marginal utility

Interest-Adjusted Cost Index (IACI) (p. 370)

Measures the cost of life insurance, taking into account the interest that would have been earned had the premiums been invested rather than used to buy insurance.

guaranteed minimum rate of return (p. 360)

Minimum rate that, by contract, the insurance company is legally obligated to pay.

Which of the following types of assets is primarily used for emergencies, maintenance of living expenses, savings, and payment of bills? Investment Monetary Capital Tangible

Monetary

Which of the following would be included in the category of assets known as monetary assets? Bonds Money market accounts Stocks Real estate

Money market accounts

Which of the following is classified as a tangible asset?

Motorcycle

Which of the following statements is true regarding mutual savings banks?

Mutual savings banks are quite similar to savings banks.

Net Asset Value formula

NAV = (market value of assets - market value of liabilities) / number of shares

State-chartered credit unions are often insured by

NCUSIF

NOT: 150, 350 630

Isabel and Jose would like to buy a home, but they aren't sure how large a house payment they can afford. Their combined Gross MONTHY Income is $3,600. They have a $250 Education Loan payment. Assuming a 35 percent Back-End Ratio, they would qualify for a maximum Total MONTHLY House Payment of $_______

NOT: $1,260.00

NOT: $8.00

NOT: 0.84

NOT: 19.50 hours

Molly went to her bank, gave the teller $200 plus a small fee, and received a check drawn on the financial institution itself. What kind of checks were these?

NOT: Traveler's checks

Under the Fair Credit Billing Act, you must make billing error complaints ____ to protect your legal rights.

NOT: both over the telephone and within 60 days after the first bill containing the error was mailed to you

The dollar value of the home in excess of the outstanding mortgage debt is called

NOT: collateral.

The method of paying off a loan through which a portion of each payment goes to the principal and a portion to interest with the interest portion declining and the principal portion increasing each month as the debt is paid down is called

NOT: garnishment

A good time to invest in stocks is when the economy is

NOT: in the prosperity of the expansion stage

Taylor Company reported the following information for the current year: Account | Current year | Percentage | Prior year Net sales revenue | $367,200 | 100% | $300,000 COGS | $220,320 | ? | $240,000 Gross Profit | $146,880 | 40.00% | $60,000 Selling/General Exp. | $69,768 | 19.00% | $12,000 Net income before tax | $77,112 | ? | $48,000 Income Tax | $7,344 | 2.00% | $3,000 Net Income | $69,768 | ? | $45,000 What would a vertical analysis report with respect to current year net income before income tax and income tax expense? a. An increase of $125,112 from prior to current year b. An increase of both net income before income tax and income tax of 22% c. A decrease of $29,112 in net income before tax d. Net income before tax of 21% and income tax of 2.00% of net sales revenue

Net income before tax of 21% and income tax of 2.00% of net sales revenue \\ Income before tax current: $77,112/net sales $367,200 = 21% Income tax current: $7,344/367,200 sales = 2%

The ________ capital budgeting methods are based on cash flows, profitability, and the time value of money. a. payback and accounting rate of return b. payback and net present value c. net present value and internal rate of return d. accounting rate of return and internal rate of return

Net present value and internal rate of return

____ tend to offer the more reliable and more expensive used cars.

New Car Dealerships

____ is not a community property state.

New York

____ tend to offer the more reliable and more expensive used cars

New car dealerships

Regarding capital rationing decisions for capital assets, which of the following is true? a. Companies should always choose the investment with the shortest payback period. b. Companies should always choose the investment with the highest NPV. c. Companies should always choose the investment with the highest ARR. d. None of the above are true.

None of the above are true.

Comparison shopping for a new vehicle includes

Obtain a loan pre approval

Open-Enrollment Period

Occur once each year in October and last for about one month. Requirements are generally waived for such family changes as births, adoptions, divorce, and marriage.

Medicare Advantage Plans

Offered by private companies (insurers or HMOs) approved by Medicare and they combine Parts A and B into one plan.

premium quote service (p. 366)

Offers computer-generated comparisons among 20 to 80 different companies.

convertible term insurance (p. 352-353)

Offers policyholders option of exchanging a term policy for a cash-value policy without evidence of insurability.

Child-Rearing Years

One's need for life insurance is generally greatest during what phase of the life cycle?

Final Expenses (p. 346)

One-time expenses occurring just prior to or after a death.

Gatton, Inc., provided the following information regarding its one and only product-scalpels: Fixed avoidable manufacturing cost $120,000 Fixed unavoidable manufacturing cost $300,000 Fixed selling and administrative $80,000 Variable manufacturing cost $1,150,000 Selling price $100 Units produced and sold 20,000 Assuming there is excess capacity, how will accepting a special order for 1,000 units at a price of $80 per scalpel affect operating income? Operating income would increase by $1,000 Operating income would increase by $22,500 Operating income would decrease by $2,500 Operating income would decrease by $200,

Operating income would increase by $22500 \\ Variable manufacturing cost $1,150,000 / Units produced 20,000 = Variable cost per unit $57.50 Special order price $80.00 - Relevant cost 57.50 = Contribution margin per unit $22.50 $22.50 x 1,000 units = Increase in operating income $22,500

Which of the following could be the most expensive way of protecting yourself from fees should you overdraft your checking account?

Opt-in overdraft/bounce protection

Which of the following is the best advice for people who want to start saving regularly?

Pay yourself first.

Which of the following capital budgeting techniques may completely ignore some of a project's cash flows? a. Payback Period b. Net Present Value c. Internal Rate of Return d. Accounting Rate of Return

Payback Period

Accident insurance

Pays a specific amount per day

Cash-Value Life Insurance (p. 351)

Pays benefits at death and includes a savings/investment element that can provide a reduced level of benefits to the policyholder prior to the death of the insured person.

First-to-Die Policies (p. 358)

Pays only when the first insured died.

Endowment Life Insurance (p. 355)

Pays the face amount of the policy either upon the death of the insured or at some previously agreed-upon date, whichever occurs first.

Survivorship Joint Life Policy (p. 358)

Pays when the last person covered dies.

Interest rates and inflation climb at what phase of the economic cycle?

Peak

Grace Period (p. 359)

Period of time during which an overdue premium may be paid without a lapse of the policy.

guaranteed insurability (guaranteed purchase option) (p. 362)

Permits the cash-value policyholder to buy additional stated amounts of cash-value life insurance at stated times in the future without evidence of insurability.

Health Savings Account

Persons who have no health insurance through their employer or their employer provides only a high-deductible plan can make tax-sheltered deposits into an investment account called a __________ from which they can pay medical expenses.

incontestability clause (p. 358)

Places a time limit on the right of the insurance company to deny a claim.

paid-up (p. 354)

Point at which the owner of a whole life policy can stop paying premiums.

Nonparticipating Polices (p. 359)

Polices that do not pay dividends

Guaranteed renewable policies

Polices that must be continued in force as long as the policyholder pays the required premium. Premiums may change but only if the change applies to an entire class of participants.

Fixed-Rate Policies (p. 355)

Policies that earn a guaranteed minimum rate of return, often 3 or 4 percent.

Group Term Life Insurance (p. 353)

Policy is issued to people as members of a group rather than as individuals. Most such policies are written for a large number of employees, with premiums being paid in full or in part by the employer.

Return-of-Premium Policy (p. 356)

Policy promises to return all the premiums paid if the insured person maintains the policy and lives past a certain number of years-usually 30.

Lapsed Policy (p. 359)

Policy that has been terminated because of nonpayment of premiums.

Coordination-of-Benefits Clause (p. 332)

Prevents an individual from collecting insurance benefits that exceed the loss suffered by noting the order in which plans will pay if the insured individual is covered by multiple plans.

The first consideration in any negotiation is

Price

The direct materials flexible budget variance can be divided into which of the following two variances? a. Price variance and the rate variance b. Price variance and the standard variance c. Price variance and the quantity variance d. Quantity variance and the efficiency variance

Price variance and the quantity variance

Nongovernmental ____ mortgage insurance is generally required for any mortgage loan where the down payment is less than 20 percent.

Private

Guaranteed Renewable Term Insurance (p. 352)

Protects you against the possibility of becoming uninsurable.

Social security rider (p. 336)

Provides an extra dollar amount of protection if a person fails to qualify for Social Security disability benefits. 70% of all applicants are rejected .

Multiple Indemnity Clause (p. 360)

Provides for a doubling or tripling the face amount if death results from certain specified causes.

Any-occupation policy

Provides full benefits only if the insured cannot perform any occupation

Comprehensive health insurance

Provides protection against financial losses resulting from hospital, surgical, and medical expenditures.

Long-term Care Insurance (p. 322)

Provides reimbursement for costs associated with custodial care in a nursing facility or at home.

Dread Disease Insurance

Provides reimbursement for medical expenses arising out of the occurrence of a specific disease.

universal life insurance (p. 355-356)

Provides the pure protection of term insurance and the cash-value buildup of whole life insurance, along with face amount variability, rate of cash-value accumulation, premiums, and rate of return.

automatic premium loan (p. 362)

Provision allows any premium not paid by the end of the grace period to be paid automatically with a policy loan if sufficient cash value or dividends have accumulated.

Guaranteed Portability

Provision that allows an individual to convert group coverage to individual coverage within 180 days before COBRA ends.

layering term insurance policies (p. 367)

Purchasing level-premium term policies so that coverage grows when you need it most and then can be decreased as your needs change.

Investing in a mutual fund rather than an individual stock reduces

Random Risk

Current Rate (p. 355)

Rate of return the insurance company has recently paid to policyholders.

current rate (p. 360)

Rate of return the insurance company has recently paid to policyholders.

One in Six

Ratio of Americans covered by Medicaid or the S-CHIP program

Which of the following should not be done when you find an error on your credit card statement?

Send all original documentation to the credit card issuer.

insurance agent (p. 367)

Representative of an insurance company authorized to sell, modify, service, and terminate insurance contracts.

cash surrender value (p. 361)

Represents the cash value of a policy minus any surrender charges.

Cash Value (p. 351)

Represents the value of the investment element in the life insurance policy.

The following is a sign of overindebtedness:

Requesting new credit cards and increases in credit limits

Paid-at-65 Policies (p. 354)

Require payment of premiums only until the insured turns 65

Re-Enter Provision (p. 352)

Requires proof of good health at the beginning of each five year interval.

Which is not an additional charge when leasing an automobile?

Residual value

Which type of credit card is issued through retail sellers and businesses?

Retail credit cards

During expansion, which of the following is high? Unemployment Retail sales Inflation Interest rates

Retail sales (pg 8)

owner/policyholder (p. 357)

Retains all rights and privileges granted by the policy, including the right to amend the policy and the right to designate who receives the proceeds.

To protect your credit card privacy, which of the following is recommended?

Review your credit bureau report at least once a year.

$150,000

Sarah Armstrong has an insurance policy that pays up to $500 per day for room and board, up to $150,000 per episode, and up to $500,000 per year. When Sarah had a stroke, she was in the hospital for 25 days. While the room and board charges were only $450 per day, the additional cost of the hospitalization was $140,000. How much would the insurance pay?

Which of the following goals is most clearly stated? Save $1,000 in one year for a vacation to San Diego Pay cash for a car Pay off all credit card balances Save enough for a down payment on a house in five years

Save $1,000 in one year for a vacation to San Diego

Matthew is concerned about his ability to save money regularly and has prepared a budget. Which of the following budget classifications would be most appropriate for Matthew's budget? Savings withheld from income and deposited directly to savings Savings as a variable expenditure Savings as a fixed expenditure Saving whatever may be left over

Savings withheld from income and deposited directly to savings

Split-definition policies

Some policies provide own-occupation coverage during the first two years of a disability, and then switch to an any-occupation basis with income replacement for the remaining years of the benefits is an example of this policy. these usually provide benefits for rehabilitation and retraining at its expense.

Viatical Companies (p. 362)

Specialize in buying life insurance polices from insureds for $0.50 to $0.80 per $1 of death benefit in return for being named beneficiary on the policy.

The study of personal finance involves how people _____, ____, and ____ their financial resources.

Spend, save, and invest (pg 4)

A(n) ________ is a carefully predetermined cost that is usually expressed on a per unit basis. a. allocated cost b. applied cost c. standard cost d. flexible cost

Standard Cost

High-deductible health care plan and health savings account

Which pair of terms is characteristic of consumer driven health care?

insurance dividends (p. 358 - 359)

Surplus earnings of insurance company when the difference between the total premium charged exceeds the cost to the company of providing insurance.

Which of the following is a way to receive free money to deposit into a tax-sheltered retirement plan?

Take advantage of your employer's "match."

Health Savings account (HSA)

Tax-deductible savings accounts into which individuals or employers can deposit tax-sheltered funds to pay medical bills.

Amy and Lance are newlyweds. This is Lance's second marriage. Because of problems that occurred before his divorce (his ex-wife took all the money out of their joint accounts), he is more cautious than most about setting up joint accounts. Which type of account would you recommend for Amy and Lance?

Tenancy by the entirety

level-premium term insurance/guaranteed level premium term insurance (p.352)

Term policy with long term under which premiums remain constant. Also called guaranteed level-premium term insurance.

Which of the following statements is not correct regarding straight bankruptcy or Chapter 7? Chapter 7 provides for an immediate liquidation of assets. Petitioners seeking to file Chapter 7 must pass a "means" test. The debtor submits a debt repayment plan to the court that is designed to repay as much of the debt as possible. Most of the bankrupt person's assets are given over to the bankruptcy trustee.

The debtor submits a debt repayment plan to the court that is designed to repay as much of the debt as possible.

Life Insurance Application (p. 358)

The policyholder's offer to purchase a policy. Provides information and becomes part of the life insurance policy (contract).

Replacement of the lost income stream

The potentially largest component of potential financial losses from premature death is

Single-Premium Life Insurance (p. 354)

The premium is paid once in the form of a lump sum.

The cash surrender value

The actual amount received when a cash-value life insurance policy is canceled by either the company or the policyholder is

When you have a consumer complaint, it is important to deal with ____ before moving to other channels.

The actual seller

Contingent Beneficiary (p. 357)

The back-up beneficiary if the original beneficiary dies.

Which of the following is (are) characteristic of a safe-deposit box?

The customer keeps all keys.

Premium Conversion Plans

The employee's share of the premiums is paid with pretax dollars; those amounts are not included when the employer reports the employee's income to the IRS

Decreasing Term Insurance (p. 352)

The face amount of coverage declines annually, while the premiums remain constant.

Medicare

The federal government's health care program for the elderly

Benefit period

The maximum period of time for which the benefits will be paid. Usually will not pay beyond age 65.

Jack and Jill have trouble keeping their checking account balanced. Because they never know how much is really in their account, they have an automatic funds transfer agreement with their bank. When Jack or Jill writes a bad check, what will happen?

The needed funds will automatically be transferred from their savings account

Owner

The person who controls all rights granted by a life insurance policy is the

A favorable direct materials price variance indicates which of the following? a. The actual cost of materials purchased was greater than the standard cost of materials purchased. b. The standard cost of materials purchased was less than the actual cost of materials purchased. c. The Actual Quantity (AQ) of materials used was less than the standard quantity of materials used for actual production. d. The standard cost of materials purchased was greater than the actual cost of materials purchased.

The standard cost of materials purchased was greater than the actual cost of materials purchased.

Waiting period (elimination period)

The time period between the onset of a disability and the date that disability benefits begin

Waiting period (elimination period)

The time period between the onset of a disability and the date that disability benefits begin.

Cash-Value Life Insurance

The type of life insurance that has pays a death benefit and has aspects of an investment is

Term Life Insurance

The type of life insurance that pays only if the insured person dies within the time period of the policy is called

Dying too soon; before you can provide for others.

The type(s) of financial risk reduced via life insurance is

Which of the following provisions is not legally required as part of a full warranty?

The warranty will cover the product for at least three years after purchase.

Which of these is a reason many people say they cannot save?

Their belief that they have no money left over at the end of the month

Indemnity Plans/Fee-for-Service Plans (p. 324-325)

These plans compensate the insured for the cost of care received.

What do credit bureaus do?

They collect and provide credit information

Which of the following sets NOW accounts apart from other checking accounts?

They pay interest.

Which of the following describes the way in which variable costs per unit behave? They will remain the same throughout production levels. They will decrease as production decreases. They will increase as production decreases. They will decrease as production increases.

They will decrease as production decreases.

Which of the following is the least appropriate reason for using credit?

To consolidate debts

Which of the following is an appropriate reason for using credit?

To enjoy the grace period of 21 days on new credit card purchases

Dividends per share

Total cash dividend / shares of stock

A limited management account allows workers saving for retirement through an employer-based plan to have the benefits of asset allocation without doing the reallocations themselves.

True

A living will is a written statement indicating that its signer does not wish extraordinary medical measures to be taken if he or she has no reasonable expectation of recovery from a desperate medical problem.

True

A mutual fund can be arranged to keep its proceeds out of probate, in case of the owner's death.

True

A risk premium constitutes the difference between the riskier investment's return and the totally safe return on the T-bill.

True

A stop order instructs a stockbroker to sell your shares at the market price if a stock declines to or below a specified price.

True

Cash dividends are paid only on participating life insurance policies.

True

Employers are more likely to offer short-term rather than long-term disability income insurance as a free employee benefit.

True

Federal income tax on interest earned on a Series EE U.S. government savings bond may be deferred until the bond is redeemed.

True

Financial risk relates to the possibility that the investment will fail to pay a return to the investor.

True

Generally speaking, there is a trade-off between risk and rewards on investments.

True

Growth companies typically pay little or no cash dividends.

True

If you invest the difference in the cost of term insurance and that of another type of policy, you will always be ahead financially.

True

No-load funds may have "service fees" of 0.25 percent or less.

True

Planting trees and shrubs on your rental property is an example of a capital improvement.

True

Puts allow the holder of the contract to sell an asset at a specific striking price for a certain time period before the expiration date.

True

Short-term investors are usually more interested in current income than capital gains

True

The basis for the buy-and-hold philosophy is that investments go up over time and it is best to think long-term after selecting well positioned investments.

True

The policyholder may increase or decrease the amount of premium paid with a variable life insurance policy

True

The premiums for a $100,000, 20-year, decreasing term policy would be less than the premiums for a $100,000, 20-year policy with a fixed face value, other things being equal.

True

Timesharing should be considered vacation plans rather than real estate investments.

True

To earn the best returns, you should be invested in the market for only a handful of days each year.

True

To employ leverage, you should borrow funds to make an investment with the goal of earning a rate of return in excess of the after-tax costs of borrowing.

True

Universal life insurance provides both the pure protection of term insurance and the cash-value buildup of whole life insurance.

True

When directly owning a real estate investment, the actual title is held by the investors.

True

When directly owning a real estate investment, the actual title is held by the investors.

True

Whole life insurance is a form of cash-value life insurance that provides lifetime insurance protection and expects you to pay premiums for life.

True

Marina is coming up on the end of a closed-end lease on her 2007 Ford Edge. Her contract stipulates a $0.35 per mile excess mileage charge in excess of 39,000 miles. If she actually drove the vehicle 35,000 miles during the three years, which of the following is not one of her options?

Turn the vehicle back over the leasing company and receive $1,400 ($.35 x 4,000) refund for driving the car fewer miles than anticipated.

Own-Occupation Policy

Which of the following types of disability income insurance policies will only provide benefits if you can no longer perform the occupation you had at the time you became disabled?

Variable Life Insurance

Which of the following types of life insurance allows the insured to choose the types of investments made with their cash value accumulations?

Which of the following characteristics would cause a person to prefer renting over buying housing? Enjoying the responsibilities of home maintenance Large amount of funds available for front-end expenses Unknown job stability in the geographical area All of these

Unknown job stability in the geographical area

Index funds are

Unmanaged

Which of the following will not help you become a better on-line shopper?

Use a debit card for on-line purchasing

Which of the following will not help you become a better on-line shopper?

Use a debit card for on-line purchasing.

____ tend to have the widest range of choices and quality for used cars.

Used car dealerships

A _______ _________ report lists prior ownership, odometer readings, accident reports, flood damage, total-loss information, and any title fraud on a used vehicle

Vehicle history

Which of the following types of deeds is the safest?

Warranty deed

Health Care Plan

Which of the following is a general term used to describe an HMO, health insurance or another plan that pays for or provides reimbursement for direct health care expenditures?

Modified Life Insurance (p. 355)

Whole life insurance for which the insurance company charges reduced premiums in the early years and higher premiums thereafter.

limited-pay whole life insurance (p. 354)

Whole life insurance that allows premium payments to cease before the insured reaches the age of 100.

Cost of living adjustments clause (p. 336)

Will increase your benefit amount to keep up with inflation.

Credit Term Life Insurance (p. 353)

Will pay the remaining balance of a loan if the insured dies before repaying the debt.

Mortgage Life Insurance (p. 353)

Will pay the remaining mortgage if the insured dies before repaying the debt.

Own-occupation policy

Will provide benefits if you can no longer perform the occupation you had at the time you became disabled.

Life Insurance Policy (p. 357)

Written contract between the insurer and the policyholder.

Waiting Period

You can help yourself afford a longer benefit period under a disability income insurance plan by selecting a longer

What does it mean in auto leasing and auto financing when you are said to be upside down?

You owe more on the car than it is worth.

Buy term and invest the rest

Your approach to life insurance should be to

Health Maintenance Organization (HMO)

_____ provide(s) preventative care as well as other types of care for a set monthly fee which is considered to be advance payment for the care recieved.

Hillary borrowed $2,000 from her credit union to purchase a new computer. This is an example of All of these. a cash loan. a sales credit. a purchase loan.

a cash loan

If you purchase an item using a credit card and later take it back for a refund you will receive

a credit receipt and the amount will be charged back to the merchant by your card issuer.

Residual clause (p. 335)

a feature of own-occupation policies that allows for some reduced level of disability income when a partial rather than full disability occurs. Pay cut % * $ Benefit per month=

Medicaid

a government healthcare program funded jointly by the federal and state governments for low income families or individuals. Eligibility is based on household income and net worth.

S-CHIP program

a government program similar to Medicaid, it covers children whose parents are middle income but do not have access to a private health care plan. No premiums.

If you are likely to pay your balance in full each and every month, select a credit card with

a grace period and no annual fee.

Provider sponsored network (PSN)/ Provider-sponsored association

a group of cooperating physicians and hospitals who have banded together to offer a health insurance contract.

Preferred provider organization (PPO)

a group of health care providers (doctors, hospitals, and other health care providers) who contract with a health insurance company to provide services at a discount.

A mortgage applicant who anticipated increasing interest rates would be most interested in a due-on-sales clause. refinancing a mortgage. a settlement statement. a mortgage lock-in.

a mortgage lock-in

A mortgage applicant who anticipated increasing interest rates would be most interested in

a mortgage lock-in.

With ____, the agreement stays in effect unless either party gives proper notice.

a periodic tenancy lease

A vehicle lease is essentially a rental of a vehicle. buying a vehicle on credit. always a bad deal. a way to get a rebate.

a rental of a vehicle

A vehicle lease is essentially

a rental of a vehicle.

Individual practice organization

a structure in which the HMO contracts with-rather than hires-groups of physicians.

Copayment

a variation of a deductible, requires you to pay a specific dollar amount each time you have a specific covered expense item.

A flexible spending account (FSA) is

a vehicle that allows employee-paid expenses for medical or dependent care to be paid with pretax dollars.

You might find yourself obligated to pay an entire debt in full if you miss several payments because of the ____ clause found in most installment loan contracts.

acceleration

The product that is the best buy will be the one with the

acceptable quality at a fair price.

The type of mortgage where the interest rate can fluctuate up and down according to an index of interest rates is the ____ mortgage.

adjustable-rate

Qualifying contributions to personal retirement accounts are subtracted as

adjustments to income

A(n) ____ refers to treatment preferences and the designation of a surrogate decision maker in the event that a person should become unable to make decisions on her or his own behalf as a result of coma, dementia, brain tumor or other serious medical condition.

advanced medical directive

Never discuss ____ with an auto dealer.

affordable monthly payments

Disposable income is income

after all employer withholding including taxes (take-home pay)

Creditors can legally require information about ____ on a credit application.

age

If no payment is received by the due date on a credit account, a credit bureau may be notified of slow payment. the cardholder may be declared in default. the company may begin collection efforts. all

all

In addition to the price of the auto, ____ may be a price variable in an auto negotiation. financing terms service contract costs trade-in value all of these

all

Monthly fees assessed to buyers of cooperatives include funds for insurance covering the building(s). payment on the cooperative's debt. All of these management fees.

all

Preshopping research for new cars should focus on trade-in value. prices. all of these. financing.

all

Revenues for depository institutions that issue bank credit cards are generated from annual membership fees. fees paid by participating merchants. finance charges. All of these.

all

Taxes withheld for Social Security and Medicare are also known as Social Security and Medicare taxes. FICA. the Federal Insurance Contributions Act. (all of these)

all

The study of personal finance involves how people _____ their financial resources. spend save invest All of these.

all

Under the Fair Credit Reporting Act, the law requires accurate, relevant, and recent information. access to the information in your credit file. All of these. investigation of disputed information.

all

Under the Fair Credit Reporting Act, the law requires accurate, relevant, and recent information. investigation of disputed information. access to the information in your credit file. All of these.

all

When negotiating to purchase a vehicle, besides the price, what other variables should be considered? Prices of options Interest rate All of these Trade-in value

all

When negotiating to purchase a vehicle, besides the price, what other variables should be considered? Trade-in value Prices of options Interest rate All of these

all

When the final balloon payment is due on a balloon auto loan, you can generally pay the balloon payment and keep the car. sell the car and pay the balloon payment with the proceeds. (all of these) return the car to the lender.

all

Which of the following is (are) typical when a mortgage is assumed? All of these. The mortgage is not assumable if there is a due-on-sale clause. The buyer takes responsibility for the mortgage payments. The buyer obtains the loan at a rate of interest below current market rates.

all

Which of the following is a characteristic of a cash-flow statement? It covers a period of time, usually one month or one year. It shows if you were able to live within your income for the period covered. The statement includes three sections: income, expenses, and surplus (or deficit). All of these.

all

With a closed-end lease, there is the possibility of some end-of-lease charges on excess wear. the possibility of some end-of-lease charges on excess mileage. (all of these) no charge if the end-of-lease value of the vehicle is lower than the originally projected residual value.

all

To construct a balance sheet, you need to compile dollar values for your assets and liabilities. Good sources from which to begin are receipts of various payments. checkbook or savings account records. investment account statements. all of these.

all of the above

A net surplus at the end of the month could be all of these. invested in a retirement account. carried forward to the next month. used to pay down credit card debt.

all of these

Bankruptcy permits people to ask a court to find them officially unable to meet their debts. is a constitutionally guaranteed right. is available in two forms: Chapter 13 and Chapter 7. all of these

all of these

Credit bureau files are used to help evaluate applications for employment. insurance. All of these. credit.

all of these

Electronic funds transfers (EFTs) can be used in place of checks. can transfer funds electronically. all of these. are paperless

all of these

Electronic funds transfers (EFTs) can transfer funds electronically. are paperless. can be used in place of checks. all of these.

all of these

Electronic funds transfers (EFTs) all of these. are paperless. can be used in place of checks. can transfer funds electronically.

all of these

Financial plans should include objectives and goals in which of the following areas? All of these Capital accumulation Spending Risk management

all of these

Monthly fees assessed to buyers of cooperatives include funds for All of these. management fees. payment on the cooperative's debt. insurance covering the building(s).

all of these

The advantages of having organized financial records include helping you take advantage of all available tax deductions. enabling you to review the results of financial transactions. all of these. helping you save money as well as make money.

all of these

Which of the following can be obtained using credit? Money All of these Services Goods

all of these

Wise money managers should select the savings option that all of these. pays the highest annual percentage yield (APY). avoids excessive fees. avoids excessive penalties.

all of these

Wise money managers should select the savings option that avoids excessive fees. pays the highest annual percentage yield (APY). avoids excessive penalties. all of these.

all of these

Wise money managers should select the savings option that pays the highest annual percentage yield (APY). avoids excessive penalties. all of these. avoids excessive fees.

all of these

A lender can legally discriminate in granting credit based on age. credit history. marital status. gender.

credit history

____ is (are) generally part of the monthly house payment. Principal and interest Real estate property taxes Homeowner's insurance premium All of these

all of these

A way to defer income taxes to later years is to contribute to individual retirement accounts. defer income to a later year. contribute to defined-contribution retirement plans. all of these.

all of these

Credit bureaus compile information from banks. creditors. court records. All of these.

all of these

Under the Fair Credit Reporting Act, the law requires accurate, relevant, and recent information. investigation of disputed information. access to the information in your credit file. All of these.

all of these

Usury laws establish maximum interest rates. credit-related fees for various types of loans from various sources. maximum loan amounts. All of these.

all of these

What basic factor(s) affect(s) the monthly payment on a mortgage loan? All of these Time period of the loan Interest rate charged Amount borrowed

all of these

Which of the following is a reason why you should reconcile your bank accounts regularly? You or your bank may have made a computational error. Checks you have written may not have cleared your account. Fees may have been assessed lowering your balance below what you think you have on deposit. All of these

all of these

Same as cash offers often carry the risk that

all prior interest will be owed if full payment is not made within the agreed time period.

Consumer driven health care

an approach to health care protection where the consumer elects the health care plan with a high deductible and high overall policy limits.

Which of the following is the least expensive way of protecting yourself from fees should you overdraft your checking account. An automatic funds transfer agreement An automatic overdraft loan agreement Opt-in overdraft/bounce protection Paying the overdraft/bounced check fee

an automatic funds transfer agreement

Which type of bank agreement will result in the lowest fees?

an automatic funds transfer agreement.

In ____ lease, you must pay any difference between the projected residual value of the vehicle and its actual market value at the end of the lease period. a closed-end an open-end a walkaway none of these

an open-end

Which of the following would be classified as a long-term liability?

education loan balance

The best measure of the true cost of credit is the

annual percentage rate of interest.

The only real source for a free credit report is through annualcreditreport.com. freecreditreport.com. myfico.com. fcra.com.

annualcreditreport.com

Which of the following is generally not part of the process of opening a credit account? Having your credit history investigated Filling out a credit application Credit scoring of your application Appraisal of assets

appraisal of assets

Consumer Reports comprehensive review of makes and models of vehicles occurs annually in its ____________ edition.

april

A dispute solution that is legally binding on at least one party is

arbitration

Deductibles

are clauses in health care plans that require you to pay an initial potion of medical expenses annually before receiving reimbursement.

Property taxes are based on the ____ of the house.

assessed value

Property taxes are based on the ____ of the house. loan value assessed value purchase price replacement price

assessed value

Which of the following accounts could accurately be called a money market account?

asset management account

The formula for calculating net worth is

assets minus liabilities

The formula for calculating net worth is income minus expenses. assets minus liabilities. income minus liabilities. assets minus expenses.

assets minus liability

A balance sheet includes ____, ____, and ____.

assets, liabilities, and net worth

A personal identification number (PIN) is required when using a(n)

automated teller machine and point-of-sale terminal.

Compounding is attained in mutual fund investing through

automatic reinvestment of dividends

The fairest method for calculating interest on an account used ____ method for determining the balance to which the interest rate is applied.

average daily balance

There should be enough money in a revolving savings fund to

avoid running out of money

Which of the following provides information about a person's financial condition at a specific point in time? Balance sheet Federal tax return Income and expense statement All of these

balance sheet

Which type of credit card is issued through banks, savings and loans, and credit unions across the country? Travel and entertainment accounts Bank credit card accounts Retail accounts Thirty-day charge accounts

bank credit card accounts

A cash advance can be obtained by using

bank credit card accounts.

Real estate property taxes are typically not

based on the purchase price of the home.

Before applying for a preapproved credit card, you have already

been granted credit.

Values are

beliefs

Social Security Disability Income Insurance

benefits form the federal government if their disability is total (meaning they cannot work at ANY job) and is expected to last one year (or until death if that is anticipated within a year).

The time period between billing dates on your credit cards is the

billing cycle

A rising inflation rate is good news for

borrowers

Lending by sales finance companies are most commonly associated with

borrowing to buy big-ticket items such as vehicles.

Banks that issue credit cards typically impose penalty APRs on certain borrowers to raise the APR for the entire debt repayment when

both a payment is more than 60 days late and a payment by check is returned for insufficient funds on accounts at that bank.

The purpose of a revolving savings fund is to

both accumulate funds for large, irregular expenses and meet occasional deficits

A borrower with an excellent credit history would be most likely to receive credit with

both higher credit limits and lower interest rates.

Implied warranties required by state law include a warranty of merchantability. fitness. repair. both merchantability and fitness.

both merchantability and fitness

Noninstallment credit includes

both single-payment loans and open-end credit.

In community property states, most of the money and property acquired during a marriage are legally considered the property of both spouses. the husband. the wife. the individual who bought it.

both spouses

In community property states, most of the money and property acquired during a marriage are legally considered the property of

both spouses.

From simply a financial perspective the best way to buy vehicles is to buy

buy one or two year-old used cars and drive them for five or more years.

The ____ outlines the specific vehicle to be purchased and all charges for the purchase.

buyer's order.

In communities with a multiple-listing service, a listed home

can be shown by all realtors in the community.

VA-guaranteed mortgages are very much like FHA-insured mortgages except they have higher required down payments. have higher interest rates. have shorter processing time for loan approval. can only be granted to military veterans.

can only be granted to military veterans.

The two most useful financial statements are ____ and ____. federal tax returns; income and expense statements cash-flow statements; balance sheets balance sheets; wills wills; federal tax returns

cash flow statements; balance sheets

A secured loan requires

either collateral or a cosigner

Recurring clause

clarifies the conditions under which a recurrence of an illness is considered a continuation of the first episode or a separate episode.

Using a budget design that keeps a declining balance helps one

code expenses

Installment purchase agreements are also called

collateral installment loans or chattel mortgage loans.

The Federal Deposit Insurance Corporation (FDIC) insures accounts in

commercial banks

Which form of compensation is not considered an employee benefit? Paid holidays Commissions Health insurance Retirement plan

commissions

Which form of compensation is not considered an employee benefit? retirement pay commissions paid holidays health insurance

commissions (pg 22)

The ________ balance sheets displays only percentages. a. comparative b. account form c. report form d. common-size

common-size

The process of comparing products or services to find what you think is the best buy is called

comparison shopping

The U.S. government measures inflation using the gross domestic product. the index of leading economic indicators. the consumer price index. consumer confidence index.

consumer price index

________ clauses specify that certain conditions must be satisfied before a home purchase contract is binding. Deed Contingency Title Home warranty

contingency

A land contract is also called a homeowners' manual. bill of sale. real estate contract. contract for deed.

contract for the deed

Dividing the price of a product by the number of times it will likely be used provides its ______ and provides a way to compare among competing purchase options.

cost-per-use

One cannot rely on worker's compensation to cover your health care needs because it

covers only job-related injuries and illnesses

The contract for a credit card account is called the

credit agreement.

A line of credit is structured much like a

credit card account.

The contract supporting a credit card account is called a(n)

credit card agreement.

A lender can legally discriminate in granting credit based on

credit history

Consumer Reports annual buying guide is published in

december

Interest assessed during each payment period (usually each month) based on the current outstanding balance of the installment loan is referred to as which method of calculating interest?

declining balance

Interest assessed during each payment period (usually each month) based on the current outstanding balance of the installment loan is referred to as which method of calculating interest? Declining-balance Add-on Discount Grace period

declining balance

Generally, consolidation loans may ____ monthly payments, ____ the interest rate on the debt or both.

decrease, decrease

Generally, consolidation loans may ____ monthly payments, ____ the interest rate on the debt or both.

decrease; decrease

Diversification ____ risk, and leverage ____ risk.

decreases ; increases

A worker covered by a health care plan might have to pay the first $1000 of any health expenses during a year. This requirement is called the

deductible (pg 24)

A borrower who has failed to make a payment of principal or interest when due or meet any other requirement of a credit agreement is said to be in

default

You may still owe money after repossession if there is a

deficiency balance

During a recession, people and business are likely to engage in ____________; meaning that their use of credit will decrease.

deleveraging (pg 8)

A checking account that does not pay interest is called a

demand-deposit account.

Both commercial bank and savings bank accounts are insured by the FDIC through a fund called the

deposit insurance fund

Having your pay sent directly to your bank rather than have a check given to you is a type of Shared accounting. Direct deposit. Check cancellation. NOW account.

direct deposit

Having your pay sent directly to your bank rather than receiving a written check is a type of

direct deposit.

A personal identification number is not needed for which of the following forms of electronic funds transfers?

direct diposite

The borrower will not receive the full amount of a loan when the ____ method is used to calculate interest.

discount

Tom and Mindy want to keep $420,000 in cash equivalents that are federally insured. They could accomplish this by

dividing it equally into two different joint accounts in two different federally insured savings banks.

A living benefit clause provides

dollar benefits to the insured prior to death if the insured is terminally ill

Four strategies of portfolio management for long-term investors are portfolio diversification, asset allocation, buy-and-hold, and

dollar-cost averaging

Occasionally, the economy will dip into a trough before it has reached a new peak after a previous trough. This phenomenon is called a

double dip recession (pg 9)

Letters from a creditor demanding immediate payment for a past due account are referred to as

dunning letters.

A ____ does not take effect until a specified event occurs, usually physical or mental incapacitation.

durable power of attorney

The strictest method of controlling budgets is

envelope system

Consumer credit can take the form of an installment loan that is repaid in ____ payments over a ____ period of time.

equal; set

You can take on more debt if your debt payments-to-disposable income ratio is in the range of

ess than 14 percent

The preferred phase of the economic cycle is

expansion (pg 8)

Checking account statements provide a source of information for the value of

expenditures

The measure of a fund's expenses expressed per dollar of the assets under management is its

expense ratio

Financial goals should be... (2 things)

explicitly stated and consistent with your values.

Service contracts are also called ____ warranties.

extended

Assets on the balance sheet are valued at their

fair market value

Assets on the balance sheet are valued at their fair market value. original purchase price. replacement cost. sentimental value.

fair market value

Ginnie Mae and Freddie Mac bonds are examples of ____ bonds.

federal agency

A financial planner who makes recommendations solely based on the best interest of the client regardless of the impact on the planner is said to adhere to a

fiduciary standard (pg 29)

The full additional cost of credit measured in dollars is called the

finance charge.

Financial success is defined as the achievement of

financial aspirations that are desired, planned, or attempted

A long-term goal is one that is projected to be achieved beyond how much time?

five years

Rent and vehicle insurance payments are examples of

fixed expences

Rent and vehicle insurance payments are examples of short-term liabilities. variable expenses. fixed expenses.

fixed expenses

A federal income tax reform proposal that would have a single rate applied to all taxpayers regardless of income level is called the flat tax. value-added tax. consumption tax. regressive tax.

flat tax

The process in which the lender sues the borrower to prove default and asks the court to order the sale of real estate property to pay the mortgage debt is called

foreclosure

Lenders use ____ ratios when setting limits on how much a home buyer can borrow

front-end and back-end

Which of the following is a court-sanctioned procedure by which a portion of your wages are set aside by your employer to pay a debt?

garnishment

Which of the following documents outlining all of the costs associated with closing on the sale of a home will the borrower receive within 3 days after applying for a mortgage?

good-faith estimate

If finance charges are not assessed on new credit card transactions during the period between the posting date and the due date, this period is called the ____ period.

grace

Which of the following items is least appropriate to purchase with a credit card unless you will pay the bill in full when the statement is received? microwave oven new suit smart phone groceries

groceries

Which of the following items is least appropriate to purchase with a credit card unless you will pay the bill in full when the statement is received? A new suit Groceries Microwave oven Smart phone

groceries

The statistic that measures the value of all goods and services produced in the United States is the

gross domestic product

The statistic that measures the value of all goods and services produced in the United States is the consumer price index. index of leading economic indicators. federal funds rate. gross domestic product.

gross domestic product

The statistic that measures the value of all goods and services produced in the United States is the

gross domestic product.

Projected gross income for an income-producing real estate investment is computed as

gross rental income less vacancies and unpaid rent.

A legal document in which individuals designate another person to make health care decisions on their behalf if they are incapable of making their wishes know is called a

health care proxy

The Affordable Care Act provides that individuals and families may take a tax credit called the ______ to help them purchase health insurance through a health insurance exchange. Health insurance tax deduction Modified Adjusted Gross Income (MAGI) Credit Health Insurance Premium Tax Credit American Opportunity Tax Credit

health insurance premium tax credit

Which of the following does not apply to monetary assets?

high return

A technique used by an auto dealer whereby an offer for a traded-in vehicle is much higher than its true value in order to get a buyer to accept a too high price for the vehicle being purchased is called

high-balling

Earnest money is the sum of money the home buyer pays to

hold the house while negotiating.

The dollar value of the home in excess of the outstanding mortgage debt is called

homeowner's equity.

Medicare Part B covers all of the following except

hospitilization

To set the stage for financial success, one must

identify financial values and goals

Child support received, Social Security benefits, and public assistance are all examples of

income

Child support received, Social Security benefits, and public assistance are all examples of expenses. assets. income. both assets and income.

income

Companies that consistently pay out higher than average cash dividends are classified as ____ stocks.

income

A cash-flow statement is also known as a(n) ____ statement.

income and expense

A cash-flow statement is also known as a(n) ____ statement.

income and expenses

Debt payments can be handled through either debt-repayment needs or ____ needs.

income-replacement

Paying expenses with pretax dollars increases taxable income. increases take-home pay. increases after-tax income. is only a good idea for high income earners.

increases after tax income

Paying expenses with pretax dollars

increases after-tax income

By investing in alternatives that are higher on the investment pyramid, one is exposed to ____ risk to his or her capital and ____ risk of loss.

increasing ; decreasing

The contract supporting a credit card account is called a(n) promissory note. credit card agreement. indenture. chattel note.

indenture

Most people should not make buying decisions for expensive purchases

inside a retail store or in a showroom.

A service contract is very much like

insurance

Disability income insurance

insurance covers and replaces a portion of the income lost when you cannot work because of sickness or injury.

Dental expense insurance

insurance that provides reimbursement for dental care expenses.

Skilled nursing care (p. 338)

intensive nurse care for people who need 24 hour supervision and help for daily activities.

Because certificates of deposit require that the deposited funds remain on deposit for a specified period of time they are subject to

interest rate risk

The ____ method of comparing the costs of life insurance policies assumes the policy will be cashed in at the end of a certain period of time rather than remaining in force until death.

interest-adjusted cost index

If Gus believes interest rates are going to fall in the near future and remain low for several years, Gus should now

invest in a long-term, fixed-rate certificate of deposit.

The true cost of a new automobile to the dealer is

invoice price less any dealer discounts (just invoice price is an incorrect answer)

The true cost of an automobile to the dealer is

invoice price less any dealer discounts..

Your average tax rate

is less than your marginal tax rate

Group health plan

is sold collectively to an entire group of people rather than to individuals

Medicare

is the federal government's health care program for the elderly.

Medicare Part B

is the supplementary health expense insurance portion for outpatient care, doctor office visits, or certain other services of the Medicare program; it requires payment of a monthly premium of usually $115.

Closed-end investment companies

issue a limited and fixed number of shares

Characteristics of a savings account include that

it permits the frequent deposit or withdrawal of funds.

Title insurance to protect the ____ is usually required. buyer lender seller buyer and lender

lender

Title insurance to protect the ____ is usually required. buyer and lender seller lender buyer

lender

The legal right to seize and dispose of property to obtain payment of an unpaid claim is called a(n)

lien

The speed and ease by which an asset can be converted into cash is referred to as its

liquidity

The person assigned to manage your loan application through the process is the

loan officer

The person assigned to manage your loan application through the process is the loan processor. mortgage server. real estate agent. loan officer.

loan officer

The amount borrowed under a mortgage loan divided by the initial purchase price is its value-to-loan ratio.. price-to-rent ratio. loan-to-value ratio. debt-to-equity ratio.

loan-to-value ratio

The amount borrowed under a mortgage loan divided by the initial purchase price is its

loan-to-value ratio.

In general, you will receive higher rates of interest on your certificate of deposit the ____ the maturity and the ____ the dollar amount invested.

longer; larger

Perhaps the greatest disadvantage of credit use is the

loss of financial flexibility in personal money management.

A technique used by an auto salesperson whereby an artificially low price is agreed upon verbally but the salesperson claims a higher price is needed when it comes time to finalize the sale on paper by claiming that he/she could not get approval for the original price is called

low-balling

When comparing buying versus renting comparable housing, renting requires a ____ annual cash flow while buying typically ____ one's tax liability. lower; decreases higher; decreases higher; increases lower; increases

lower; decreases

The ____ the APR, the ____ the true cost of the credit.

lower; lower

Companies that offer written express warranties must do so under the provisions of which federal act? Magnuson-Moss Warranty Act Taft-Hartley Act Marshall Act New Car Lemon Act

magnuson-moss warranty act

A POS terminal is an electronic computer terminal located at a store or other merchant location that allows the customer to

make purchases

A surplus on your cash-flow statement indicates that you are

managing your financial resources successfully

Stockbrokers loan money to clients who have ____ accounts.

margin

If Moody's downgrades a bond, which of the following would fall?

market price

Common stock investments are most vulnerable to ____ risk

market volatility

An investment that can be sold quickly but only by making price concessions suffers from ____ risk.

marketability

A dispute solution that is not legally binding on either party is

mediation

Checks you write and present for payment can clear your bank in as little as

minutes.

Numerous job-related expenses can potentially be deducted from federal income taxes as ____ expenses. tax interest charitable miscellaneous

miscellaneous

Which of the following would be included in the category of assets known as monetary assets? Money market accounts Stocks Bonds Real estate

money market accounts

The monetary asset management service provided by a mutual fund is a

money market mutual fund accounts.

A tax that requires a higher-income person to pay a higher percentage of his or her income in taxes is called a ____ tax.

progressive

______ insurance is generally required when a borrower makes a minimum down payment. Title Homeowner's Mortgage Liability

mortgage

The tax deductible expenses related to home ownership are

mortgage interest and property taxes.

what is classified as a tangible asset?

motorcycle

Noncancelable policies

must be continued in force without premium changes up to the age of 65 as long the participant pays the required premium. Recommended when buying disability income insurance.

Failure to pay the balance in full in a given month on a credit card with a grace period means that you

must pay interest on all new borrowings with the card since the last billing statement.

Determining the magnitude of possible losses from a premature death can be complicated. The best method is the

needs-based approach

In a zero-sum game, the overall return actually becomes ____ if transaction costs are included.

negative

Single-payment, open-end, and service credit are lumped together under the category of

noninstallment credit.

Vincent and Paula Farelli have decided to pay off their $875 MasterCard debt by taking $875 out of their money market savings account. This transaction will

not change their net worth on their balance sheet

The best use of credit is probably to

obtain an education

The best use of credit is probably to consume expensive products earlier. obtain discounts. consolidate debts. obtain an education.

obtain an education

The best use of credit is probably to

obtain an education.

Comparison shopping for a new vehicle includes

obtaining a loan preapproval

A point, as defined in the real estate market, is ____ percent of the loan amount. one-half of 1 1 and one-half 2

one half of 1

A short-term goal is one that is projected to be achieved within how much time?

one year or less

In an employer-sponsored retirement plan, interest, dividends, and capital gains earned from the funds invested in the plan are taxed only after funds are withdrawn from the plan, if at all. with each payment. annually. on a quarterly basis.

only after funds are withdrawn from the plan, if at all

A line of credit acts very much like

open-end/revolving credit.

Jim spent $300 on some new clothes rather than using this money to going to his college team's away game last weekend. The benefits of the trip are the ____ cost of buying the clothing.

opportunity

When the declining-balance method is used to calculate interest on an installment loan, the periodic interest rate is applied to the

outstanding balance each period.

Which of the following types of disability income insurance policies will only provide benefits if you can no longer perform the occupation you had at the time you became disabled?

own-occupation policy

People slip up in building and maintaining good credit when they

pay more than 14 percent of disposable income toward non-mortgage debt payments.

An individual checking or savings account can be set up to go automatically to another person when the depositor dies if it is set up as a(n) payable at death account. obituarial account. estate account. joint tenancy account.

payable at death account

Ownership investments generally

produce capital gains

"Gap" insurance

pays off the loan balance as well as being very profitable for the dealer.

"Gap" insurance pays off the loan balance of a "totaled" vehicle. is very profitable for the dealer. is a good deal for the buyer. pays off the loan balance as well as being very profitable for the dealer.

pays off the loan balance as well as being very profitable for the dealer.

Your bank will regularly (usually monthly) provide a compilation of your recent account activity, which is called a(n)

periodic statement.

The basis for financial planning is (are)

personal values

Managed care plans

plans that seek to control the conditions under which health care can be obtained.

The law requires that

points must be included when calculating the APR for the loan.

The time between when a homeowner is in default on a mortgage and when the lender has filed a formal notice of foreclosure is called the underwater period. the short sale window. the foreclosure auction period. preforeclosure.

preforclosure

The fairest method for calculating interest on an account used ____ method for determining the balance to which the interest rate is applied.

preloaded debit card

Which of the following might be used by an employer to pay an employee?

preloaded debit card

The rule of 78s is a commonly used method of calculating the

prepayment penalty.

The first consideration in any negotiation is

price

The key to success in negotiating a car purchase is to obtain the ____ before discussing any other aspects of the deal.

price for the car

The PITI acronym in mortgage lending stands for principal, insurance, taxes and interest. principal, interest, taxes and investment. principal, interest, taxes and insurance. principal, investment, taxes and interest.

principal, interest, taxes and insurance

The PITI acronym in mortgage lending stands for

principal, interest, taxes and insurance.

The outstanding balance owed on a debt is the

principal.

The PITI acronym in mortgage lending stands for principal, interest, taxes and insurance. principal, investment, taxes and interest. principal, interest, taxes and investment. principal, insurance, taxes and interest.

principle, interest, taxes and insurance

Lenders charge a loan origination fee to pay for the cost of processing the mortgage loan. investigating the borrower's credit rating. the title search. an appraisal of the property.

processing the mortgage loan

The primary purpose of setting long-term financial goals is to help

provide direction for overall financial planning

A group of physicians and hospitals who have banded together to offer a health insurance contract in areas where there is no available HMO is called a

provider-sponsored network

Health insurance

provides protection against direct medical expenses resulting from illness and injury.

Vision care insurance

provides reimbursement for eye examinations and purchase of glasses and contact lenses. Typically written on a group basis as an employee benefit.

Which is not a step in the planned buying process?

purchasing on credit

The direct labor variance can be divided into two variances a. rate variance and price variance. b. price variance and usage variance. c. rate variance and efficiency variance. d. price variance and efficiency variance.

rate variance and efficiency variance

A(n) ____ is a refund of part of the purchase price.

rebate

A(n) ____ is a refund of part of the purchase price. rebate MSRP sticker price dealer holdback

rebate

The process of recording the sources and amounts of dollars earned and spent is called

record keeping

The term used to describe righting a wrong is

redress

The term used to describe righting a wrong is negotiation. redress. complaint. warranty.

redress

Making a larger than required down payment on a given home will reduce the equity in the property. reduce the amount of the monthly payments. increase the amount of interest paid. increase the amount of the loan.

reduce the amount of the monthly payments.

Short term disability income insurance plan

replaces a portion of one's income for a short period of time; around 2 years.

Coinsurance clause

requires you to pay a proportion of any loss suffered.

With a(n) ____, a customer asks to have a purchase put on his or her account for repayment at a later date without using a credit card.

retail charge account

Credit cards issued by local and national merchants and other major non-bank companies are examples of

retail credit accounts.

The mortgage suited for someone who has his or her home completely paid for but needs cash to live on is the ____ mortgage.

reverse

The mortgage suited for someone who has his or her home completely paid for but needs cash to live on is the ____ mortgage. biweekly reverse rollover shared-appreciation

reverse

Which "rule" says to compare at least three alternatives before making a major purchase decision? Rule of comparison Rule of three Rule of negotiation Rule of data gathering

rule of three

A second mortgage amortized over 20 years or more but with a balloon payment due after 5 or 10 years that is paid to the previous owner of a home is an example of

seller financing.

The first step in the budgeting process is

setting financial goals

Of these four items, which is most aptly described as a need?

shelter

The purpose of a biweekly loan is to

shorten the repayment period of a loan.

Which of the following is an example of an unsecured debt?

signature loan

Which of the following is an example of an unsecured debt? auto loan second mortgage signature loan first mortgage

signature loan

Annual limits

specify the maximum payment for covered expenses occurring within one year.

Intentionally failing to pay mortgage payments in order to be foreclosed and out of the mortgage payment is called purposeful foreclosure. a short sale. nonrecourse default. strategic default.

strategic default

Lending designed specifically for borrowers with low credit scores is called

subprime lending

Lending designed specifically for borrowers with low credit scores is called

subprime lending.

A financial advisor who is also a broker-dealer is held to a

suitability standard

A financial adviser who is also a broker-dealer is held to a

suitability standard (pg 28)

Which of the following is a way to receive free money to deposit into a tax-sheltered retirement plan? Start early to boost your retirement. Take advantage of your employer's "match." Making early withdrawals from a tax-sheltered retirement plan. Opening an HSA.

take advantage of your employers match

Which of the following types of assets is primarily used for the maintenance of a lifestyle?

tangible

Management of ____ is not included in monetary asset management.

tangible assets

Seeking legal ways to reduce, eliminate or defer income taxes is called

tax planning

You pay personal taxes on your calculated ____ income.

taxable

The primary reason for giving a child an allowance is to

teach the child about how to manage money.

The primary reason for giving a child an allowance is to have a way to withhold a privilege in order to control the child's behavior. teach the child about how to manage money. pay the child for work around the house. encourage the child to get a job at an early age.

teach the child about how to manage money.

A person who is a joint owner of an ____ account should understand that his/her share of the assets in the account are distributed to the heirs of the deceased according to the terms of his/her will.

tenancy in common

A person who is a joint owner of an ____ account should understand that his/her share of the assets in the account are distributed to the heirs of the deceased according to the terms of his/her will. joint tenancy with right of survivorship tenancy in common tenancy by the entirety tenancy in common and tenancy by the entirety

tenancy in common

The tax credit(s) for qualifying higher education expenses is

the American Opportunity credit and lifetime learning credit.

When you have a consumer complaint, it is important to deal with ____ before moving to other channels.

the actual seller

An installment purchase agreement provides a measure of protection for

the borrower

The two statistics one should track to understand the future direction of the economy are

the consumer confidence index and the index of leading economic indicators (pg 10,11)*

The U.S. government measures inflation using

the consumer price index

A requirement of the federal Truth in Lending Act (TIL) requires that all installment loan lenders disclose to credit applicants

the interest rate (as an APR) and the finance charge (in dollars).

A requirement of the federal Truth in Lending Act (TIL) requires that all installment loan lenders disclose to credit applicants the interest rate expressed as an annual percentage rate (APR). the finance charge expressed in dollars. the interest rate (as an APR) and the finance charge (in dollars). neither the interest rate (as an APR) nor the finance charge (in dollars).

the interest rate (as an APR) and the finance charge (in dollars).

`Certificates of deposit (CDs) tend to pay higher rates of interest than money market accounts because

the investor agrees to leave his or her money in the CD for a specified period of time while he or she has free access to the funds in a money market account.

Mortgage insurance protects the lender. the borrower. All of these. the realtor.

the lender

Usury laws establish (3 things)

the maximum loan amounts, interest rates, and credit related fees for different types of loans from various sources.

With a balloon auto loan the last payment is equal to

the projected residual value of the vehicle at the end of the loan period.

Which of the following terms is not necessarily associated with a secured loan?

the rule of 78s

Net asset value increases when

the value of the underlying securities increases

An automobile buyer can call the National Highway Traffic Safety Administration website www.safercar.gov to get information on government safety test results, recalls, and

theft ratings

An automobile buyer can call the National Highway Traffic Safety Administration website www.safercar.gov to get information on government safety test results, recalls, and

theft ratings.

Which of the following sets NOW accounts apart from other checking accounts?

they pay interest

Long term disability income insurance plan

this covers periods of five or more years of income that is lost through sickness or injury.

The Consumer Leasing Act limits end-of-lease payments to a maximum dollar amount equivalent to ____ times the monthly payment.

three

When an account pays one rate of interest on a minimum amount on deposit and a higher rate of interest on additional deposits, this is called ____ interest.

tiered

Under the concept of ____, lenders may offer lower interest rates to applicants with the highest credit scores while charging steeper rates to more-risky applicants.

tiered pricing

A method by which one can compare cash flows across time, either as what a future cash flow is worth today (present value) or what an investment made today will be worth in the future (future value) is called

time-value of money

time-value of money (pg 17)

Which of the following is the least appropriate reason for using credit? To take advantage of free credit To consolidate debts To obtain an education To buy something you would likely buy soon but today it is on sale

to consolidate debts

Lenders in the sub-prime market offer loans

to higher-risk applicants.

Lenders in the sub-prime market offer loans to higher-risk applicants. to applicants that have been preapproved. with lower interest rates. to applicants with excellent credit ratings.

to higher-risk applicants.

Practically everything you receive in return for your work or services and any profit from the sale of assets is considered income, whether the compensation is paid in cash, property, or services. Listing these earnings will reveal your total income. taxable income. gross income. capital gain.

total income

The formula for calculating surplus (loss) is

total income minus total expenses

Using a base year as 100% and expressing other years as a percentage of the base year is an example of a. trend analysis. b. vertical analysis. c. horizontal analysis. d. benchmarking.

trend analysis.

Value funds specialize in securities of companies that are

underpriced

Jacob Wolf Company had a favorable direct labor flexible budget variance. It would not be possible for the direct labor rate and efficiency variances, respectively, to be: a. unfavorable; unfavorable b. favorable; favorable c. favorable; unfavorable d. unfavorable; favorable

unfavorable; unfavorable

Which of the following documents outlining all of the costs associated with closing on the sale of a home must the purchaser receive at least 1 business day prior to the closing? deed good-faith estimate uniform settlement statement abstract

uniform settlements and statement

Owing more on a vehicle loan than the vehicle is actually worth is called being upside down.. in default. strangled. depreciation.

upside down

Owing more on a vehicle loan than the vehicle is actually worth is called being

upside down.

The Truth in Savings Act requires depository institutions to

use the annual percentage yield (APY) in advertising

The practice in which any unspent dollars in a Flexible Spending Account (FSA) at the end of the year are forfeited and not returned to the employee is known as the

use-it-or-lose-it rule.

Food, clothing, and entertainment are examples of

variable expenses

Credit interest rates that go up and down according to interest rates in the economy as a whole are referred to as

variable rates.

A _______ _________ report lists prior ownership, odometer readings, accident reports, flood damage, total-loss information, and any title fraud on a used vehicle

vehicle history

Which of the following is a bankruptcy protection scheme that allows income earners to satisfy outstanding debts in whole or in part within a specific time frame?

wage earner plan

Any-occupation policy

will provide full benefits only if you cannot perform any occupation.

Under the Fair Credit Billing Act, you must make billing error complaints ____ to protect your legal rights.

within 60 days after the first bill containing the error was mailed to you

Who should set your debt limit?

you

What does it mean in auto leasing and auto financing when you are said to be upside down? You don't qualify for the lease or financing. You owe more on the car than it is worth. You wrecked the car and can't pay the debt. None of these.

you owe more on the car than it is worth

Most credit cards have a grace period only if

you paid the balance in full the previous month.

What is the maximum amount a lender would lend on a house valued at $160,000 if an 85 percent loan-to-value ratio were required? $128,000 $160,000 $136,000 $108,800

$136,000

Which of the following is most valuable to a taxpayer for the tax savings it provides? $200 charitable contribution $200 dependent care credit $200 unreimbursed medical expense $200 employee business expense

$200 employee business expense

The Federal Deposit Insurance Corporation (FDIC) currently insures against loss of up to ____ per person in an individual account at any one institution. $50,000 $100,000 $250,000 $500,000

$250,000

A person who is claimed as a dependent on someone else's tax return can claim ____ exemption(s) and at least a ____ standard deduction on his or her own tax return. 1; $6,200 0; $6,200 0; $0 1; $0

0; $6,200

Which of the following is primarily intended for those workers who select the high-deductible health plan (HDHP) offered by their employer? Flexible spending account (FSA) Cafeteria plan Health savings account (HSA) Tax-deferred plan

Health savings account (HSA)

____ has (have) historically been favored by Americans as the most preferable housing alternative. Manufactured housing Condominiums Single-family dwellings Cooperatives

Single-family dwellings

Which of the following is not a characteristic of a second mortgage loan? The property is collateral for both loans. Second mortgages can pay for major remodeling projects, finance college costs, medical bills, and so on. The claim of the second mortgage lender is primary. Second mortgages allow borrowers to access their home equity.

The claim of the second mortgage lender is primary.

A mortgage applicant who anticipated increasing interest rates would be most interested in a settlement statement. refinancing a mortgage. a mortgage lock-in. a due-on-sales clause.

a mortgage lock-in.

With ____, the agreement stays in effect unless either party gives proper notice. a periodic tenancy lease All of these. a tenancy for a specific time a security deposit

a periodic tenancy lease

A flexible spending account (FSA) is a vehicle that allows employee-paid expenses for medical or dependent care to be paid with pretax dollars. available through all employers. funded by an employer. taxable income received by the employee if not used by the end of the year.

a vehicle that allows employee-paid expenses for medical or dependent care to be paid with pretax dollars.

Disposable income is income before taxes. after all employer withholding including taxes. after all employer withholding except taxes. minus fixed expenditures.

after all employer withholding including taxes.

Charge accounts are referred to as open-ended credit because they allow repeated borrowing without having to reapply for the credit each time. don't have to be paid off completely each month. make use of a plastic card. can be used to purchase merchandise or to borrow cash.

allow repeated borrowing without having to reapply for the credit each time.

The sum of outstanding balances owed each day during the billing period divided by the number of days in the period is the periodic rate. average daily balance. APR. annual fee.

average daily balance.

The escrow account is used to accumulate funds for the down payment. homeowner's insurance premiums. real estate property taxes. both homeowner's insurance premiums and real estate property taxes.

both homeowner's insurance premiums and real estate property taxes.

Dividing the price of a product by the number of times it will likely be used provides its ______ and provides a way to compare among competing purchase options. item price cost-per-use bottom line unit-price.

cost-per-use

A(n) ____ is an IRS-approved retirement plan sponsored by an employer to which employees may make pretax contributions that lower their tax liability. tax-sheltered investment defined-contribution retirement plan pretax income opportunity cost

defined-contribution retirement plan

A balance sheet includes ____, ____, and ____. income; expenses; net worth assets; expenses; liabilities income; liabilities; net worth assets; liabilities; net worth

income; liabilities; net worth

The tax deductible expenses related to home ownership are homeowner's insurance and property taxes. homeowner's insurance and home improvements. home improvements and mortgage interest. mortgage interest and property taxes.

mortgage interest and property taxes.

A method not recommended for getting out of excessive credit card debt is to negotiate with your creditors to lower your payments and interest rates. consider transferring existing balances on high-interest rate accounts to an account with a lower interest rate. pay the minimum amount due on your high interest-rate cards, and pay as much as possible on the lowest interest-rate cards. not open new credit accounts or accept any new credit offers.

pay the minimum amount due on your high interest-rate cards, and pay as much as possible on the lowest interest-rate cards.

The law requires that the seller pays no more than 4 points. points be limited to 5 percent of the purchase price. the borrower pays no more than 4 points. points must be included when calculating the APR for the loan.

points must be included when calculating the APR for the loan.

The Truth in Savings Act requires depository institutions to offer life-line banking. use the annual percentage yield (APY) in advertising. provide federal deposit insurance on savings accounts. pay at least 3.5 percent interest on savings.

use the annual percentage yield (APY) in advertising.

Food, clothing, and entertainment are examples of short-term liabilities. variable expenses. fixed expenses. long-term liabilities.

variable expenses.

Under the Fair Credit Billing Act, you must make billing error complaints ____ to protect your legal rights. in person within 60 days after the first bill containing the error was mailed to you over the telephone both over the telephone and within 60 days after the first bill containing the error was mailed to you

within 60 days after the first bill containing the error was mailed to you

Lance, a volunteer baseball coach, was hit by a hard line drive. As a result of the injury, Lance was taken to the emergency room for treatment and admitted to the hospital. Lance's covered expenses totaled $4,000. How much of the $4,000 will Lance have to pay if these are his first medical expenses of the year and he has the following health insurance coverage? $500 deductible per year 80/20 coinsurance $1,000 per year out-of-pocket coinsurance cap

$1,200

Which of the following can provide increased disability income from your disability income policy whenever you do not qualify for Social Security disability benefits?

social security rider

COBRA rights

The Consolidated Omnibus Budget Reconciliation Act of 1985 allows a former employee to remain a member of a group health plan for as long as 18 months if the employee worked for an employer with more than 20 workers

The cost of a health maintenance organization is generally a(n)

monthly fee, a deductible, and copayments

Under the Affordable Care Act, all health care plans must include

ten specified essential health benefits

A positive aspect of defined-benefit plans is that

the plans include disability and survivor's benefits

If a long-term care policy is purchased prior to age___,the buyer faces a significant risk because inflation may render the daily benefit woefully inadequate when care is ultimately needed

Most companies will NOT write disability income policies for more than___percent of one's after-tax earnings.

60 to 80

In a dual-income household where both employers provide a health care plan, it is important to choose to be covered under the plan that provides__and is___.

more protection; less expensive

Coinsurance clause

A clause in a health care plan that requires the participant to pay a proportion of any loss suffered

Your health insurance requires that you pay $50 each time you visit the doctor's office and $15 for each prescription drug. This is an example of

A copayment

Medicaid

A government health care program for low-income people funded jointly by the federal and state governments

Health care proxy

A legal document in which individuals designate another person to make health care decisions on their behalf if they are rendered incapable of making their wishes known

Essential Health Benefits

A list of ten categories of benefits that all health care plans sold on the health insurance exchanges must providee

Which of the following best describes a preexisting condition?

A previously diagnosed medical condition

Co-payment

A variation of a deductible that requires you to pay a specific dollar amount each time you use your benefits for a specific covered expense item

The period of time each year when you can make changes in your selection of health care plans available from your employer is called a(n)

open-enrollment period

A person who wants to continue health insurance coverage through your COBRA rights must

pay the full premiums plus a 2 percent administrative fee

In what way(s) can health care costs potentially provide an income tax benefit?

All of these (itemizing deductions for health care expenditures, flexible spending arrangement through an employer, and writing off a portion of premium by self-employed people)

Living will

Allows you to document in advance your specific wishes concerning medical treatments in an emergency or during end-of-life health care

You can help yourself afford a longer benefit period under a long-term care insurance plan by selecting a longer

waiting period

A retirement plan that is self-directed means that the employee decides.

Both B and C - how much the employee will contribute to the plan, and how much the employer will contribute to the plan

A group of physicians and hospitals who have banded together to offer a health insurance contract in areas where there is no available HMO is called a

preferred-provider network

Deductibles

Clauses in health care plans that require the participant to pay an additional portion of health expenses annually before receiving reimbursement

Which of the following people would receive an asset should the beneficiary die before the owner of the asset?

Contingent beneficiary

Will is concerned that his monthly disability income benefit would be eroded by inflation in case of a long-term disability. Which policy provision would guard against this problem?

Cost-of-living adjustments

One cannot rely on worker's compensation to cover your health care needs because it

Covers only job-related injuries and illnesses

A longer waiting period on a disability income policy will

reduce the disability income insurance premium

Health savings account (HSA)

Tax-deductible savings account into which individuals or employers can deposit tax-sheltered funds to pay medical bills

The type of employer retirement plan in which the benefit is determined by a formula that generally includes the worker's average pay and the number of years worked for the company is called a ____ plan.

Defined-Benefit

Certificate of insurance

Document or booklet that outlines group health insurance benefits

Which of the following is NOT true of Medicare Part B?

Does not cover outpatient care

An employee stock-ownership plan allows the employees to regularly purchase shares of stock in the company at discounted prices.

False

If you put money into collectibles, limit your investment to no more than 20 percent of your portfolio

False

Residual clause

Feature of own-occupation policies that allows for some reduced level of disability income benefits when a partial-rather than full-disability strikes

Which of the following is true regarding futures trading?

Futures contracts are generally highly leveraged

Health care plan

Generic name for any program that pays or provides reimbursement for health care expenditures

Preferred provider organization (PPO)

Group of health care providers (doctors, hospitals, and other health care providers) who contract with a health insurance company to provide services at a discount

Health maintenance organizations (HMOs)

Health insurance plans that provide a broad range of health care services for a set monthly fee on a prepaid basis

_____provide(s) preventative care as well as other types of care for a set monthly fee which is considered to be advance payment for the care received

Health maintenance organization (HMO)

___is a long-term care provision that is especially important for a relatively young person purchasing this type of insurance.

Inflation protection

Activities of daily living (ADLs)

Insurance companies use the inability to perform a certain number of such activities as a criterion for deciding when the insured becomes eligible for long-term care benefits

Disability income insurance

Insurance that covers a portion of the income lost when you cannot work because of illness or injury

Eligibility for which of the following is based on household income and net worth?

Medicaid

Long-term custodial care is covered by

Medicaid

In which of the following is the retirement plan contribution for the employee dependent on the financial success of the employer?

Profit-Sharing

Social Security rider

Provides an extra dollar amount of protection if a person fails to qualify for Social Security disability benefits (70 percent of all applicants are rejected)

Health insurance

Provides protection against direct medical expenses resulting from illness and injury based on the concept of payment after an expense occurs

Long-term care insurance

Provides reimbursement for costs associated with custodial care in a nursing facility Or at home

The ____ is a computation of how much income the investor might pocket from rent each year before mortgage payments as a percentage of the purchase price.

Rental Yield

A(n) ____ is intended for taxpayers with self-employment income and owners of small businesses.

SEP-IRA

The salary-reduction pension plan specifically designed for employers with 100 or fewer employees is called a

SIMPLE IRA

Group health plan

Sold collectively to an entire group of people rather than to individuals, such as the group health care policies offered by employers

Health insurance exchange (HIX)

Stat-by-state mechanisms established by the ACA through which consumers can purchase a health care plan

Custodial care

Suitable for people who do not need skilled nursing care but who nevertheless require supervision (for example, help with eating or personal hygiene)

Patient Protection and Affordable Care Act (ACA)

The law passed by Congress in 2010 to provide affordable health insurance for all US citizens and reduce the growth in health care spending

Benefit period

The maximum period of time for which benefits will be paid under a disability income or other insurance

Premiums

The monthly or annual cost of a health care plan

Advance medical directives

Treatment preferences and the designation of a surrogate decision maker in the even that a person should become unable to make decisions on her or his own behalf

A beneficiary designation can, and should, be made on your retirement accounts, life insurance policies, bank and credit union accounts, and investment accounts.

True

When a worker retires, other members of his or her immediate family may also be eligible to receive Social Security retirement benefits.

True

When estimating your retirement savings goal in today's dollars, the amount saved must be higher to adjust for inflation

True

When estimating your retirement savings goal in today's dollars, the amount saved must be higher to adjust for inflation.

True

Workers who are not active participants in an employer-sponsored retirement plan can deduct contributions to their IRA accounts from their gross income, within specified limits, when filing their federal income taxes

True

You will earn money each year off your tax-deferred retirement accounts without having to pay taxes until the funds are withdrawn.

True

Social Security Disability Income Insurance

Under this government program, eligible workers can received some income if their disabilities are total, meaning that they cannot work at any job

The process by which employees obtain nonforfeitable rights to their retirement benefits that cannot be taken away in case of dismissal or resignation is called

Vesting

Which of the following pension plan features is (are) especially important to younger workers who anticipate changing jobs more frequently?

Vesting and Portability

Investors choose derivatives

both to reduce risk by hedging against losses and to take on additional risk by speculating.

Lyle's health care plan will pay 75 percent of all covered expenses over the first $500 per year. This policy contains

coinsurance and deductible

Traditional health insurance plans typically have___and____requirements that result in out-of-pocket costs for the insured

deductibles; coinsurance

A___ does not take effect until a specified event occurs, usually physical or mental incapacitation

durable power of attorney

A____ does not take effect until a specified event occurs, usually physical or mental incapacitation

durable power of attorney

An alternative name for traditional health insurance is a(n)?

fee-for-service plan

A legal document in which individuals designate another person to make health care decisions on their behalf if they are incapable of making their wishes known is called a

health care proxy

To make it possible for consumers to comply with the individual mandate to buy health insurance the Affordable Care Act established____ run by their states or the federal government

health insurance exchanges

__provide(s) preventative care as well as other types of care for a set monthly fee which is considered to be advance payment for the care received.

health maintenance organization (HMO)

Persons who have a high-deductible health plan can make tax-sheltered deposits into an investment account called a___ from which they can pay medical expenses

health savings account

Medicare Part A

is a hospitalization program for persons over 65 and requires no premiums

Your waiting period on disability income insurance can be__ if you have some savings set aside as an emergency fund

lengthened

Your waiting period on disability income insurance can be____ if you have some savings set aside as an emergency fund.

lengthened

Drawbacks of an HMO include

limited choice of physicians

Reimbursement for costs associated with intermediate and custodial care in a nursing facility or at home is provided by

long-term care insurance

Traditional health insurance provides protection against direct medical expenses and, thus, does not cover

lost income when you cannot work due to illness or injury

Under the Affordable Care Act, your level of income used to calculate the maximum tax penalty if you have a health care plan is your

modified adjusted gross income

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