practice quizzez

what is the approximate annual finance charge for each $100 owed on a credit card with a 16% annual percentage rate (APR)

$16.00

if a person receives a 3% salary raise and inflation is 5%, the real raise was

-2%

who benefits from trading securities in the secondary market

Investors; investors benefit from trading stocks in the secondary market. most stocks and bonds are bought are bought and sold by investors on the secondary market

the grace period refers to the time

Permitted for paying a credit card bill to avoid a late fee

what is the face value of a bond

The amount the bondholder receives when the bond matures.

which of the following is the safest investment

U.S. Treasury bills (T-bills); U.S. Government has never defaulted on its debt obligations to its bondholders. Therefore, investors in a treasury bill are highly confident that the principal and interest will be paid if held until the treasury bill matures

a person bought a new cell phone using her credit card. her purchase created

a debt

which of the following is an advantage of a prepaid card

a person can use the card for online purchases

which of the following is an advantage of a prepaid cash card

a person can use the card for online purchases

which of the following statements is true about a traditional individual retirement account (traditional IRA)

a person has to pay income taxes on the money taken out of the account.

checking account overdraft protection at a bank is an optional service that is

a short-term loan with a high rate of interest

whole life insurance is more expensive than term life insurance because in addition to a death benefit whole life insurance policies

accumulate cash value

mortgage insurance is often required by a lender in order to protect the lender

against the market value of the property decreasing

a persons health insurance policy requires her to pay the first $500 of medical costs each year before the insurance company will start to pay any of her medical bills. This $500 requirement is called the

annual deductible

when stocks have high price/earning ratios (P/E), it usually means that investors are

anticipating higher growth in the future

a person has a checking account balance of $150 and deposits $400 check. the check deposited is from a local bank. when can she withdraw $200 in cash without having to pay fee?

as soon as the deposited clears

if a person has a choice of getting a loan from a bank or a consumer finance company, the person should generally choose the

bank, because it charges lower interest rates on loans than consumer finance companies

the main reason for buying life insurance is to provide money to the

beneficiaries of the insured person in case of his death

the ''time value of money is defined as the"

benefit of receiving money today rather than in the future

bodily injury liability

bodily injury liability covers expenses related to the physical injuries suffered by others that were caused by person who holds the insurance. most states require that policies include liability coverage

how does a corporate bond differ from a corporate stock

bonds earn interest and stocks do not

when buying a cell phone insurance, the person should consider the cost of the annual insurance premium and compare it to the cost of

buying a new phone

a person is shopping for home insurance. he learns that all of the policies he looked at limit the coverage on jewelry and electronic equipment to $500. how can he get coverage to replace lost or stolen jewelry and electronic equipment on his homeowners policy?

by buying a separate rider on his homeowner's policy to cover the replacement value of personal property; a policyholder can fully insure these types of items by purchasing a separate personal property rider. a rider is an add-on provision to a basic insurance policy that provides additional benefits to the policyholder at an additional cost

a stockholder receives a notice about the corporations annual meeting. the stockholder is unable to attend the meeting. therefore, the stockholder

can sign a proxy to transfer voting rights

a person bought stock for $4,000 and one year later he sold it for $5,000. the sale resulted in a

capital gain for the investor

a person who wants money to be FDIC insured, will probably deposit the money in a

certificate of deposit (CD) at bank

the type of credit card issued by a department store is generally a

charge card

when interest is earned daily on the balance of a savings account, it is known as

compound interest

a strategy to reduce future payments on a federal loan is to

consider getting a job in a career that qualifies for loan reduction

a savings account earns the greatest amount of money when the interest on the account is compounded

daily; the most interest is earned on an account is when there is daily compounding which means interest is earned every single day rather than, for example, once a year or four times a year.

a factor that is likely to affect the market price of a stock is the

decline in profits; a decline in the market price of a stock can be due to the decline in the company's profits. current events (for example, a war or major oil spill), the economic and interest levels can also affect the financial markets and have a strong influence on the price of stocks and corporate bonds

an oil company tanker hit another ship causing a major oil spill that will destroy the environment in the areas for years and will cost billions the cleanup. the price of that companys stock is most likely to

decrease

securities prices are not affected by

diversification

all of the following activities should be recorded in the checkbook register to ensure that the checking account balance on the checkbook register is accurate except for

dividends earned from securities

most pay day loans are

extremely expensive

if a person loses a debit or ATM card, and the card is used by someone else who

finds the card may withdraw money from the account

before investing stocks, a person should

have a sufficient amount of money in an emergency fund

a person should consider changing his budget when

he has a newborn child

before making an investment in stocks, a person should know

his risk tolerance

which statement accurately describes a characteristic of the cash value of a whole life insurance policy

if the policy is cancelled, the owner is entitled to the accumulated cash value

when a person is looking to decrease the cost of his car insurance premium, he might choose to

increase the deductible

over time, the purchasing power of money may decrease due to

inflation ; it causes the purchasing power of the dollar to go down resulting in higher prices for consumer goods. Thus, consumers are paying more for the same goods

insurance is frequently described as a method of sharing risk because the

insured shares the cost of a loss with all other policyholders

If a public corporation wants to raise capital but NOT create debt, it can...

issue common stock; a public corporation raises capital money when it issues stock, a share in the ownership of the company

a cashiers check is a check that is

issued to the payee and guaranteed by the bank; a bank guarantees payment on a cashier's check that a customer can buy from them.

how does having a savings account help a persons financial wellbeing

it enables a person to save for major purchases

what action can the federal reserve system (Fed) take to stimulate the economy during a recession

lower short-term interest rates

Based on Credit CARD Act of 2009, credit card companies CANNOT

mail credit card offers to someone under the age of 21

An umbrella insurance policy covers

major personal liability losses; an umbrella policy a great deal of additional coverage to protect against a lawsuit that could be brought over injuries and/or property damage that the policyholder caused that exceeds the liability limits on his car insurance, home insurance, boat insurance.

credit issuers are required to disclose terms such as due dates, year to date totals on interest and fees charged clearly, so that the credit cardholder will know the result of

making only minimum payments

when a person needs health care, she goes to her doctor. she is charged a co-pay. what type of health insurance does she have

managed care hmo health insurance

the securities and exchange commission (SEC) and financial industry regulatory authority (FINRA) are both involved with

monitoring the buying and selling of stocks

parents of a new baby want to save their childs college education. they want an investment that is diversified and has the potential to increase in value. they should buy

mutual funds

parents of a new baby want to save for their child's education. they want an investment that is diversified and has the potential to increase in value they should buy

mutual funds; mutual funds are diversified financial product that have the potential to grow in value. an advantage of mutual funds is that they are managed by professionals

after required deductions have been taken out of a persons pay the amount of money the employee receives to take home is known as

net pay

to remember her atm/debit card personal identification number (PIN), a person should write the pin and keep it

on her desk at home; you should never write any pin on something that might be stolen or something that can be easily seen by someone else

a person wants to get trading information about IBM stock. Where can she find out about what happened to the price of IBM stock yesterday

on the internet

to improve an unfavorable credit rating, a person should

pay bills on time

a person buying a home with a mortgage loan that has a variable rate will generally

pay more for the loan if interest rates go up

a good practice when using credit cards is to

pay the complete balance each month

current events covered in the news and media may have an impact on the

price of securities; current events (for example, a war or a major oil spill) can affect the business outlook for a company and the price of its stock. good news (a new product being launched, for example) generally causes an uptick in prices and negative news (like an oil spill) generally results in prices going down

what does the credit card act of 2009 do

protect consumers against misleading and unfair practices

one reason most states pass laws that mandate all car owners to have car insurance is that states want to

protect drivers from financial loss

Garaging a car and installing a security alarm system are strategies that will

reduce the cost of car insurance; if a person parks her car in a locked garage and/or has a an alarm system installed, he should make the insurance company aware of this because these strategies will help reduce the premium

a certificate of deposit (CD) from a bank is a

restricted savings account that requires the money remain in the bank for a fixed period of time; a certificate of deposit is savings instrument that requires a minimum deposit for a specified period of time (term) during which the saver cannot withdraw money without having to pay a penalty. usually a CD pays more interest than a savings account

one major disadvantage of making a credit card purchase is the

risk of spending more money than a person earns

a person wants to open a checking account and wonders if checking accounts are free

some are free

collateral is defined as

something of value that secures a loan to protect the lender

when interest rates are low, it is a good time to

take out a fixed car loan; when interest rates are low it is generally a good idea to borrow for large purchases like a car, or a home. The price for using other peoples money is low which also means that the cost of buying these large items is less. if a person waits until the interest rates get higher, the real cost for these same large items will be higher

a credit card company is allowed to raise non-promotional interest rates on new transactions after

the card is in effect by one year

a credit card company is allowed to raise non-promotional invest rates on new transactions

the card is in effect for one year

a person lost a debit card and did not report it missing for three months. if an unauthorized person used her debit card, the maximum the card owner may be responsible for is

the entire amount of debit transactions ; unfortunately, if reported after 60 days or, it it is not reported, the consumer be liable for the entire amount of unauthorized purchases

most often the source used for a college student loan is

the federal government

how does the degree of risk that the insurance company has to take influence the cost of the insurance policy ?

the higher the risk the higher the cost of the insurance premium

what does the consumer need to consider when applying for a variable interest rate mortgage

the possibility of interest rates increasing in the future

the net worth of an individual

to calculate ones total net worth subtract what is owed from what is owned

a consumer is protected from credit card fraud or abuse through the

u.s department of the treasury

a good reason to get a credit card from a credit union is that their credit cards

usually have lower interest rates on unpaid balances

a person who owns shares and cannot attend the annual stockholder meeting can

vote by mail or online through a proxy

it is usually less expensive for a policyholder to pay an insurance premium

yearly