Family Economics Exam

Which of the following is the best example of a well-stated financial goal?

Buy a $3,000 computer in 18 months.

A lease typically protects the landlord but not the renter.

False.

Credit unions with federal charters have their accounts insured through FDIC.

False.

Earthquake insurance is covered under the standard homeowner's insurance policies.

False.

High-demand occupations tend to pay low salaries.

False.

In general, the shorter the maturity time on a certificate of deposit, the higher the rate of interest that will be paid.

False.

It is usually easy to reduce a fixed expense.

False.

Once a life insurance policy is issued, the insurance company cannot refuse to pay a death benefit.

False.

Posting your resume to monster.com is all you need to do to get a good job.

False.

Sellers are the only source of financing for big ticket items.

False.

Tax avoidance is illegal whereas tax evasion is legal.

False.

Term life insurance costs far more than cash-value life insurance.

False.

The additional dollar cost for using credit is referred to as the APR.

False.

The sticker price on a new car is typically the final sales price.

False.

The abbreviation PITI stands for principal, interest, taxes, investment.

False. Principle, interest, tax, insurance.

The time limit specified on a suicide clause is generally five years.

False. Two years.

A form of housing ownership where the owner holds legal title to a specific housing unit and a proportionate interest in the common grounds and facilities

a condominium

an increase in the value of a home is called

appreciation

The formula for calculating net worth is

assets - liabilities

the person who receives the proceeds of a life insurance policy at the death of the person whose life is insured is the

beneficiary

ratings of the financial strengths of insurance companies are available from:

both standard and poors and AM best company

Deductibles are requirements that the insured pay a n initial portion of any loss.

True.

Experian, Equifax, TransUnion are the three largest national groups of credit bureaus.

True.

Financial assets include cash and near-cash items hat can be readily converted to cash.

True.

Financial planning begins by examining one's values.

True.

Fixed-time deposits specify a period of time that the savings must be left on deposit.

True.

Independent agents sell insurance for more than one life insurance company.

True.

Keeping good records is important for effective financial planning.

True.

Life insurance is insurance that protects against financial losses resulting from death.

True.

Liquidity is the speed and ease with which an asset can be converted to cash.

True.

Medicaid pays for the costs of indigent nursing home care.

True.

Open-enrollment periods are common in group health care plans.

True.

Parents with minor children almost always need life insurance.

True.

Property insurance protects you from financial losses resulting from the damage to or destruction of your property or possessions.

True.

Specific financial goals drive to creation of budgets.

True.

State sales tax is an example of a regressive tax.

True.

The actual transfer of ownership of real estate occurs at the closing.

True.

The federal government administers the national flood insurance program.

True.

The internal revenue service is the agency that collects federal income taxes.

True.

The largest potential financial loss resulting from premature death is lost income.

True.

The major purpose of budgeting is to reach your financial goals.

True.

To be most successful in negotiating, one must be willing to walk away from the deal.

True.

When purchasing a term life policy, it is generally best to purchase a guarantee a renewable policy.

True.

When the purchase contract is signed, the seller keeps the earnest money as a deposit against the purchase price.

True.

When you use a debit card, funds are almost instantaneously removed or held from your account.

True.

You can estimate the trade-in value of your car on the websites for the National Automobile Dealer's Association, Edmunds, and Kelley Blue Book

True.

You cannot build financial security or wealth unless you spend less than you earn.

True.

The first step in the budgeting process is

setting financial goals

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

shelter

________ income is exempt from taxes in the current year but is subject to taxation in a later year.

tax-sheltered

Cal Purcell has found an apartment that has monthly rent payment of $950 and requires the equivalent of one month's rent as a security deposit and a$500 damage deposit. in order to move in, carl will probably be required to pay:

$2400

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

$7,500

establish household and personal goals recognize a problem or opportunity make the purchase decision evaluate the purchase decision purchase the good or service conduct a post purchase evaluation

...

set investment goals assess risk and return select the right investments manage your investments

...

Earned income is reported to the federal government on some version of a

1040 Form

72 rule

72/rate of return= #of years to double your money

A group health care plan is sold collectively to an entire group of persons rather than individuals.

True.

A housing unit that is detached from other units is called a single-family dwelling.

True.

A progressive tax is one that demands a higher percentage of a person's income as income increases.

True.

Buying a home represents the largest expenditure most people ever make

True.

By saving and investing, people are much more likely to have funds available for future consumption.

True.

Checks mailed to the bank for deposit should always be endorsed with a restrictive endorsement.

True.

Compound interest will produce larger investment values than simple interest.

True.

what are the three c's of credit?

capacity character collateral

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

cashier's check

The Federal Deposit Insurance Corporation (FDIC) insures accounts in

commercial banks

one cannot rely on workman's compensation to cover health care needs because it:

covers only job-related injuries and illness

a lender can legally discriminate in granting credit based on

credit history

your continuing record of credit usage is called your

credit history

_____ typically pays the highest rates of interest of savings

credit unions

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

pay yourself first

needs and wants should both be considered necessities.

false.

Which of the following tax is progressive

federal income taxes

which of the following types of insurance can be puchased only through a federal government program

flood insurance

the primary difference between a speculative risk and a pure risk is that there is a chance for ___ in a speculative risk but a chance for ___ in a pure risk

gain and loss/ only loss

group life insurance would be especially beneficial for persons who:

have health problems

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

longer; larger

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

lower, lower

the advantage of term insurance is

more coverage for premium dollar

Which of the following is classified as a tangible asset?

motorcycle

The best use of credit using the following examples is probably to:

obtain an education

the period of time each year when you can make changes in your selection of health care plans available from your employer is called an

open enrollment period

The U.S. Government measures inflation using:

the consumer price index

morgage insurance protects

the lender

life insurance should be bought primarily

to provide protection from financial losses

A student who has lost health care coverage under his parent's employer group plan is eligible for coverage through COBRA.

true.

Independent agents typically represent more than one insurance company

true.

a car's sticker price is the manufacturer's suggested retail price.

true.

uninsured motorist coverage provides protection for the driver and passengers in a car that is hit by an uninsured driver.

true.