FINA 3370

Investments, insurance, and tax assistance are tools for financial planning and are also known as:

Financial services.

The average upfront sales charge for the purchase of a no-load mutual fund is:

$0; there is no upfront charge.

Jim wants to make an offer to buy an older house. At this point, he should:

Set up a home inspection.

When planning for retirement, inflation:

Should be considered since income received earlier in retirement will buy more than the same amount received later in retirement due to the rising prices of goods and services.

A loan that must be repaid in total on a specified day, usually within 30 to 90 days, is:

Single lump-sum credit.

Which of the following is a fund that invests in the stocks or securities contained in a specific stock or securities index?

An exchange-traded fund

Which of the following statements is correct?

An immediate annuity allows an individual to receive income payments from an annuity beginning at once.

A direct loan for personal purposes, home improvements, or vacation expenses is called:

An installment cash credit.

Preston never opened his bank statements, so he was surprised to see that he had incurred a service charge because his balance went below a required minimum balance. In addition, he did not earn interest for this month. What kind of account does Preston have?

An interest-earning checking account

The shares of which fund are issued and redeemed by the investment company at the request of investors?

An open-end fund

Dividend yield equals:

Annual dividend amount/Current price per share.

Homeowner's insurance typically covers all of the following except:

Automobiles.

Generally, interest on corporate bonds is normally paid every:

Six months.

Which of the following is a deduction to determine take-home pay?

Social Security taxes

The amount printed on a label with the suggested retail price that is posted on a vehicle is called the:

Sticker price.

When an employer's contribution is used to buy stock in the company for its employees, it has a:

Stock bonus plan.

The opportunity to have another person take over rent payments and live in the rental unit is called (a):

Subletting.

The tax based on the total tax due divided by taxable income is called the:

Average tax rate.

Which of the following are two personal financial statements that you create yourself?

Balance sheet and cash flow statement

Another name for a statement of financial position is a:

Balance sheet.

The potential return on any investment should:

Be directly related to the risk the investor assumes.

A person who is named to receive the proceeds from a life insurance policy is a(n):

Beneficiary.

Joseph needs to complete his income taxes for the year. He has already calculated his adjusted gross income. What does he need to do next?

Subtract his itemized deductions.

A fancy way of saying you need to diversify your investments is:

Don't put all of your eggs in one basket.

A $1,000 bond issued by ABC Corporation pays a 6 percent rate of interest, which resulted in an annual amount of interest of $600.

FALSE

A benefit of an employer pension plan is that taxes are eliminated.

FALSE

A family of funds is a grouping of funds that all invest in bonds or all invest in stocks.

FALSE

A landlord is responsible for paying renter's insurance.

FALSE

An advantage of renting is pride of ownership.

FALSE

An exchange-traded fund is actively managed by professional fund managers, and shares are traded on the floors of stock exchanges.

FALSE

Annabelle works at Acme Cleaning Company. When she retires, her employer's health insurance plan and Medicare should cover all of her medical expenses.

FALSE

Asset allocation is the process of spreading your assets among several different types of investments to increase risk.

FALSE

Closed-end credit consists of loans made on a continuous basis with periodic bills for at least partial payment.

FALSE

Experts suggest that you spend more than 20 percent of your net (after-tax) income on consumer credit payments.

FALSE

For individuals, stocks and bonds are better investment choices than mutual funds because money is pooled from many investors for stocks and bonds.

FALSE

Fred wants to invest in a "no-load" fund. This means that the fund has no 12b-1 fees.

FALSE

Glen bought XYZ stock on November 8, 2018, at a price of $39.20 and then sold it on March 19, 2020, at $11.20. Glen can be classified as a speculator.

FALSE

Home equity is the current market value less the assessed value

FALSE

Homeowner's insurance coverage typically excludes detached structures on your property.

FALSE

In the event of bankruptcy, stockholders have a claim to assets of the corporation before bondholders.

FALSE

Interest paid on a credit card is tax-deductible.

FALSE

Making transactions using a credit card will immediately reduce your bank balance.

FALSE

Mortgage points are paid to the lender at the end of the mortgage.

FALSE

Municipal bonds generally are only tax-exempt at the federal level.

FALSE

Private mortgage insurance is usually required if the down payment for a home is less than 30%.

FALSE

The higher your FICO score, the more risk you pose to creditors.

FALSE

When Brett's apartment lease ends, he should receive his entire security deposit back even though the carpet has been damaged while he was living there.

FALSE

When Don retires, his transportation expenses will likely increase.

FALSE

According to the suicide clause, the beneficiaries of someone who dies by suicide will never be eligible to receive any benefits from his or her life insurance policy.

False

Adjusted gross income is increased by the itemized or standard deduction.

False

An example of an excise tax is Social Security.

False

Annuities are more attractive for people who expect to live only a short time.

False

Another name for a straight term policy is a renewable return-of-premium term policy.

False

As borrowing by consumers and businesses increases, interest rates are likely to decrease.

False

Life expectancy for men is longer than that for women.

False

The "nonworking" spouse method of estimating life insurance includes factors such as Social Security and liquid assets.

False

Francisco and Maria have three children and want to complete a detailed worksheet to determine the amount of life insurance they need to purchase. They will consider factors such as Social Security and liquid assets. Which method are they using to determine their life insurance needs?

Family need method

Claudette's grandchildren are 7 and 9 years old. When Claudette passed away, her grandchildren inherited her money. However, the will stipulated that they should not get control of the money until age 25. Which of the following should be set up to provide for the management and control of the funds?

A trust

The main purpose of a personal financial statements is to:

Achieve all of the choices.

Gross income less adjustments to income equals:

Adjusted gross income.

When calculating federal income taxes, what increases "gross income"?

Alimony received

Which of the following is a liquid asset?

All of these are liquid assets.

A school ID that includes prepaid amounts for school lunches is called a debit card.

FALSE

If you rent a big-screen television from a rent-to-own center for a week, you will be certain to own it at the end of the first week.

FALSE

Form 4868 allows a taxpayer to obtain a six-month automatic extension on filing and paying federal taxes without penalty

False

The amount levied on the value of property bequeathed by a deceased person is:

Inheritance tax.

The inability to pay debts when they are due because liabilities far exceed the value of assets is called:

Insolvency.

A personal balance sheet reports:

Items owned, amounts owed, and net worth.

The amount you would have left if all assets were sold and all debts were paid in full is called your:

Net worth.

A worker's primary goal should be to:

Pay his or her fair share of taxes while taking advantage of appropriate tax benefits.

A balance sheet reports what an individual or family owns and owes.

True

A cash flow statement uses this equation: Total cash received during the time period − Cash outflows during the time period = Cash surplus (or deficit).

True

A tax credit has a full dollar effect in lowering taxes.

True

Current liabilities are the debts you must pay within a short time, usually less than a year.

True

Every taxpayer receives at least the standard deduction, a set amount on which no taxes are paid.

True

Personal financial planning is the process of managing your money to achieve personal economic satisfaction.

True

Personal opportunity costs refer to resources, such as time, health, and energy that are given up when a choice is made.

True

Purchasing a car is an example of a durable-product goal.

True

Social Security is an example of a tax on earnings.

True

Which of the following is correct about inflation?

In order to increase buying power, you need to earn a rate higher than the rate of inflation.

When prices are increasing at a rate of 4 percent, the cost of products will double in about 18 years.

True

When Imogene brought a necklace to a _______, she received a loan based on its proportional value.

pawnshop

When creating a budget, it is important to:

"Pay yourself first" by setting aside savings before other expenses are budgeted.

If a $10,000 investment earns a 7 percent annual return, what should its value be after 6 years?

$15,007

Using the following table, calculate the taxes for an individual with taxable income of $20,800.

$2,298.50

The insurance coverage provided by the FDIC for a savings account is ________ per depositor per insured financial institution.

$250,000

Rebecca Wilson budgeted $395 for a new wardrobe in June. She actually spent $425. What is her budget variance?

$30 deficit

A family with $100,000 in assets and $60,000 of liabilities would have a net worth of:

$40,000.

A demand deposit is also known as:

A checking account.

Cathy needs a full range of financial services, including checking, savings, and lending. To which of the following should she go?

A commercial bank

Which of the following short-term goals is stated most clearly using the SMART approach?

A. Within the next 6 months, buy a car for less than $15,000.

The tax designed to ensure that those who receive tax breaks also pay their fair share of taxes is called the:

AMT.

Which of the following usually offers money market mutual funds

An investment company

Items that you own that have a monetary value are referred to as:

Assets.

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

Budget variance.

Adjustments to income include all of the following except:

Charity contributions.

Tanya is a single low-income working parent, and Fred is a single high-income working parent. Because of her status, Tanya, but not Fred, may be eligible for the:

Earned-income credit.

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

Financial plan.

This tax is a major financial planning factor for most people because it is sometimes imposed at the federal, state, and local levels.

Income tax

A credit card is a type of:

Loan/borrowing.

Increased consumer saving and investing is likely to be accompanied by:

Lower interest rates.

When creating a personal balance sheet, which of the following is a current liability?

Medical bill

A budget system that involves envelopes, folders, or containers to hold money or slips of paper is called a(n):

Physical budget.

Which of the following would increase the interest rate for a loan?

Poor credit rating

Which of the following goals contains elements for implementation and measurement?

Save $100 a month to create a $2,400 emergency fund in 2 years.

The Rule of 72 is:

Used to estimate how fast prices will double using a given annual inflation rate.

All of the following are fixed expenses except:

Utilities.

Which of the following appears as a cash outflow on a cash flow statement?

Variable expenses

Opportunity cost refers to:

What you give up by making a choice.

The problem of bankruptcy is associated with overuse and misuse of credit in the ______________ component of financial planning.

borrowing

Future value computations are often referred to as:

compounding.

Changes in the cost of money is referred to as ____________ risk.

interest rate

If I can invest a dollar today and earn interest on it, then it should be worth _________ in the future.

more

The average used car costs about _______ less than the average new car.

$10,000

Acme Home Lending offers home equity loans up to 80 percent of the home value for its customers. If Sally Johnson has a home valued at $200,000 and a current mortgage of $50,000, how much can she borrow in a home equity loan from Acme?

$110,000

Cheyenne has a home insured for $300,000. It would cost $320,000 to rebuild her home. If she has home insurance that provides personal property coverage at 70 percent of the home's value, how much of her household belongings would be covered?

$210,000

The net asset value is calculated as:

(Current market value of portfolio − Liabilities)/Number of shares outstanding.

Hannah has liabilities totaling $30,000 (excluding her mortgage of $100,000). Her net worth is $45,000. What is her debt-to-equity ratio?

0.67

If you have probably reached the upper limit of debt obligations, your debt-to-equity ratio is about:

1.

A fee charged to defray the costs of advertising and marketing a mutual fund is called a ____ fee.

12b-1

Timothy Carter has net monthly income of $3,800. He has a monthly auto loan payment of $350, a student loan payment of $150, a mortgage payment of $1,200, and a credit card minimum payment of $45. What is his debt payments-to-income ratio?

14.3%

When Nancy buys her house, the mortgage company will usually conduct:

An appraisal.

FICO scores generally range from:

300 to 850.

Which of the following is a form of housing in which the owners pay a monthly fee for maintenance of the common areas?

A condominium

A credit card holder who pays off his balances in full each month is known as:

A convenience user.

Which of the following is an example of open-end credit?

A department store credit card

If you invest $4,000 per year over the next 40 years for retirement, which of the following is correct?

A high rate of return will give you the highest total dollar return.

If you are selling your house by owner, you should still enlist the assistance of:

A lawyer or title company to assist with the contract, closing, and other legal matters.

Which of the following is an example of closed-end credit?

A mortgage loan

Insurance that covers valuable items, such as an expensive musical instrument, is called:

A personal property floater.

An individual who purchases an insurance policy is called:

A policyholder.

A prearranged loan for a specified amount that a consumer can use by writing a special check is known as:

A revolving check credit.

Which of the following allows an individual to receive an amount of income that will change based on the income received from stocks or other investments over a certain period of time, or over his or her life?

A variable annuity

Patrick is interested in opening a different account that will allow him to write a few checks each month for a fee per check, but he is unable to maintain a minimum balance. He should open a(n):

Activity checking account.

Molly is thinking about buying a type of whole life insurance policy, but she is not sure about how much she will need in the next few years. She may need to change her coverage as her needs change. Which of the following policies would meet her needs?

Adjustable life

Which of the following can result from a failure to repay a loan?

All of the above may result from the failure to repay a loan.

When conducting a financial analysis for retirement planning, you should review:

All of these are correct.

Which of the following is not a major source of retirement income?

All of these are major sources of retirement income.

While evaluating alternatives, all of the following are appropriate questions you could ask before making a major purchase except:

All of these are questions that should be asked.

Which of the following is a valid reason for using credit?

All of these are valid reasons for borrowing.

If you start a new job and are offered the opportunity to participate in the company's 401(k) or 403(b) retirement plan, which of the following decisions can affect your financial future?

All of these decisions can affect your financial future.

What should a home buyer consider when evaluating a house?

All of these should be evaluated.

When misused, credit can result in:

All the choices are correct

A call feature:

Allows the corporation to buy outstanding bonds from current bondholders before the maturity date.

Donald wanted to buy a house in the country, so he sought advice from his cousin Evan. Evan explained the advantages and disadvantages of home ownership; however, he had some information incorrect. Which of the following is incorrect?

An advantage is that the down payment required is typically less than the security deposit for a rental.

A no-load mutual fund:

Can charge a 12b-1 fee of up to 0.25 percent of its assets.

The question "What are your assets and net worth?" relates to:

Capital

Payments to a fund's shareholders that result from the sale of securities in the fund's portfolio are:

Capital gain distributions.

When you sell your shares in a mutual fund, you may receive a profit that results from an increase in value called a(n):

Capital gain.

Logan paid a bill with a special form. He received this form at his financial institution and had to pay the amount of the check plus a fee. He used a:

Cashier's check.

Molly purchased a $1,500 dishwasher from Best Appliances. She will make 12 equal payments over the next year to pay for it. She is using:

Closed-end credit.

When you retire versus now, you will probably spend less money on:

Clothing.

Nancy is studying the health insurance plan options offered by her employer. She wants a policy that will have the insurance pay a percentage of her medical expenses after she meets her deductible. She should review the:

Coinsurance.

Amanda wants to be part of the most basic form of ownership for a corporation. She should invest in:

Common stock.

The insurance that helps pay hospital, surgical, medical, and other bills with a low deductible is known as a(n):

Comprehensive major medical policy.

Henry was driving at dusk and hit a deer running across the road. His damage would be covered under his:

Comprehensive physical damage coverage.

Timothy Calibe purchased common stock in XYZWidgets.com. To be a successful investor, he should:

Continue to evaluate his investment in XYZWidgets.com after the purchase.

Which of the following is a form of housing in which the units are owned by a nonprofit organization?

Cooperative housing

A young employee is buying individual life insurance and is worried about the impact inflation will have on his life insurance coverage. Which of the following riders should he consider?

Cost-of-living protection

Which of the following is NOT a type of permanent life insurance?

Decreasing term

Jenny wants health insurance that sets the amount that she must pay toward medical expenses before the insurance starts paying benefits. She is concerned about a:

Deductible.

All of the following are examples of defined contribution plans except:

Defined-benefit plan.

Which of the following are major reasons that investors purchase mutual funds?

Diversification and professional management

Pam just started working at XYZ Widget Company and finally wants to get insurance coverage through her employer. She does not want to take a medical exam to get coverage, because she has some underlying health conditions and is concerned that she might not qualify for a policy. Which of the following life insurance policies should she apply for?

Group life

The type of health insurance coverage that pays for some or all of the daily costs of room and board during a hospital stay is:

Hospital expense.

According to the text, which of the following will probably be your most valuable asset at retirement?

House

If you miss payments on a home equity loan, you can lose your:

House.

Which of the following is the best way to state a problem?

I need transportation.

Fred bought life insurance five years ago. He forgot to tell them that he had a heart condition, and, as a result of that condition, he recently died. Which of the following provisions prevents the life insurance company from refusing to pay his beneficiaries because of his original fraudulent misrepresentation?

Incontestability clause

Cindy was contacted by her home insurance agent to discuss ways to decrease her premium. Which of the following should NOT reduce her premium?

Increasing the amount of coverage

Jeff and Erica have two children. They plan to purchase life insurance using this formula: (18 minus Youngest child's age) × $20,000. Which method are they using to determine their life insurance needs?

Nonworking spouse method

Which of the following statements is false?

Individual investors who purchase U.S. government securities must hold the investments until maturity.

Which of the following risks reduces your purchasing power?

Inflation risk

If you do not pay back any of the loan amount for a portion of the loan period but are not defaulting in the loan, you have a(n):

Interest-only mortgage.

The dealer's cost is also known as the:

Invoice price.

Which of the following is correct about the lemon law?

It applies to vehicles that have been serviced four times to correct the same problem or have been out of service for more than 30 days within 12 months of purchase or the first 12,000 miles.

Of the following, which one is the most positive feature of whole life insurance for a person who wants a more structured way to save?

It builds cash value.

A legal document that includes information about the due date of monthly rent is called a:

Lease.

The settlement option that pays the life insurance proceeds to the beneficiary for as long as she or he lives is called:

Life income option.

If your main focus is to be able to buy or sell an investment quickly without substantially affecting the investment's value, you are most concerned with:

Liquidity.

Many mutual funds charge a commission every time shares are purchased by investors. These are called:

Load funds.

Home equity loans should be used for:

Major expenses, such as home improvements or education.

Fred bought life insurance when he was 47, although he told the insurance company that he was 42. He has since died. Which of the following provisions will affect the amount of money his beneficiaries will receive?

Misstatement of age provision

Kylie went to a post office to obtain a:

Money order.

Which of the following is an advantage of a car lease?

Monthly lease payments are usually lower than monthly financing payments.

When calculating the debt-to-equity ratio, which of the following is NOT included?

Mortgage balance

This term life insurance policy will guarantee that you will pay the same premium for the duration of your policy.

Multiyear level term

A debt security issued by a state or local government is known as a:

Municipal bond.

Private mortgage insurance:

Must be terminated automatically when the homeowner's equity reaches 22% of the property value at the time the mortgage was executed.

Wendy has had a life insurance policy for five years with her spouse listed as the person who receives the benefit if she dies. She was recently divorced. Which of the following provisions should she take action on?

Naming a beneficiary

Which of the following is often considered to offer the least expensive loans (i.e., loans with low interest)

Parents or family members

Personal property insurance covers:

Personal property items up to 55-75 percent of the insured value of the home.

The type of health insurance coverage that may cover routine doctor visits, X-rays, and lab tests is:

Physician expense.

Madeline had a severe allergy attack and crashed her car into a telephone pole while sneezing. The damage to the telephone pole would be covered under Madeline's:

Property damage liability coverage.

Which of the following expenses is NOT usually incurred by a tenant?

Property taxes

The expected value of a vehicle at the end of a lease is called the:

Residual value.

Julian's annual contributions to his retirement are not tax-deductible, but his earnings accumulate tax-free. He is investing in a:

Roth IRA.

A brick home will usually cost less to insure than a similar structure made of wood.

TRUE

A deductible is a set amount you must pay toward medical expenses before the insurance company pays benefits.

TRUE

A good goal is to plan for one's net worth to increase each year as one moves closer to retirement.

TRUE

A homeowner's insurance policy typically provides coverage for additional living expenses so you can stay somewhere else if a fire damages your home.

TRUE

An example of an investment that is very safe with low risk is a government bond

TRUE

Bond ratings range from AAA (the highest) to D (the lowest) for Standard & Poor's Corporation.

TRUE

Corporate earnings are reported in the firm's annual report, or are obtained from a professional advisory service or accessing a website such as Yahoo! Finance.

TRUE

Every state in the United States has a law requiring people to carry motor vehicle insurance.

TRUE

FICO scores are used by creditors to predict how likely it is that you will repay a loan.

TRUE

If you purchase something with a credit card, the finance charges you pay on an item could end up being more than its worth.

TRUE

If you sold 100 shares of ABCD stock for $40 a share that you originally purchased for $33 a share, then your capital gain would be $700.

TRUE

In the five Cs of credit, character refers to the borrower's trustworthiness and stability.

TRUE

Installment sales credit is a loan that allows a consumer to purchase high-priced items, such as large appliances or furniture.

TRUE

Insurance is protection against possible financial loss.

TRUE

Many people can invest in mutual funds through their retirement accounts.

TRUE

Motor vehicle insurance falls into two categories: protection for bodily injury and protection for property damage.

TRUE

Renter's insurance protects the tenant by covering damage or theft to clothing, furniture, and stereo equipment.

TRUE

Shelby purchased 100 shares of ABCD Growth fund and had income dividends of $15, capital gain distributions of $35, and a capital gain of $120 in the year she sold her shares, which resulted in a total dollar return of $170.

TRUE

Surgical expense insurance pays all or part of the surgeon's fees for an operation in a doctor's office.

TRUE

The potential return on any investment should be directly related to the risk that the investor assumes.

TRUE

The renter is responsible for paying renter's insurance.

TRUE

Your lifestyle affects your housing decision.

TRUE

Which of the following is a disadvantage of renting?

Tenants cannot take tax deductions for mortgage interest and property taxes.

Another name for temporary life insurance is:

Term life insurance.

When analyzing a price-earnings ratio:

The higher the price-earnings ratio, the more investors are paying for earnings.

Liability is defined as:

The legal responsibility for the financial cost of another person's losses or injuries.

What is the fee that a policyholder pays when an insurance company agrees to take on the risk?

The premium

Kelly selected a home and submitted an offer to the seller. Which of the following is correct?

The seller may reject the offer and choose to provide a counteroffer.

When thinking about retirement, which of the following is correct?

The sooner you start saving, the better.

Perhaps the greatest disadvantage of using credit is:

The temptation to overspend.

Which of the following is not correct regarding preferred stock?

The yield on preferred stocks is often lower than the yield on corporate bonds.

What is the primary purpose of medical expense insurance?

To pay actual medical costs for illness or injury.

Elaine purchased her living unit in a building with five other separate units. She purchased a:

Townhouse.

Anders went to Norway and went shopping. He had to sign his name once when he purchased this document and a second time at the store. Anders used a:

Traveler's check.

A U.S. government security issued in minimum units of $100 with 4-, 8-, 13-, 26-, or 52-week maturities is called a:

Treasury bill.

Which of the following is not a U.S. Treasury security?

Treasury stock

Life insurance benefits may be used to pay off a home mortgage or other debts at the time of death.

True

The most widely used settlement option for a life insurance program is the lump-sum payment.

True

The sooner a person is likely to die, the higher his or her premiums will be.

True

The financially independent firm or individual that acts as the bondholders' representative is the:

Trustee.

As a result of being an armed services veteran, Dan should be eligible for a(n):

VA loan.

Bill is worried about being able to pay his premium if he is totally and permanently disabled before age 60. Which of the following riders should he consider?

Waiver of premium disability benefit

Which of the following is NOT correct?

When showing the home, Caryn's suggestion to open drapes but keep lights turned off to conserve energy will give her property a positive image.

Another name for permanent life insurance is:

Whole life.

If you have a multiyear level term policy, then:

Your premium will be the same for the duration of your policy.

Madeline wants to purchase a larger house. However, she has not yet sold her current home. She may want to include a(n) ________ in her offer.

contingency clause

A bond that can be exchanged, at the owner's option, for a specified number of shares of the corporation's stock is called a(n) ____________ bond.

convertible

A bond that is backed only by the reputation of the issuing corporation is called a(n) ____________ bond.

debenture

Comparison of product features is part of the ____ phase of the research-based buying process.

evaluating alternatives

A bond backed by the full faith, credit, and unlimited taxing power of the government that issued it is called a ____________ bond.

general obligation

Problem identification is part of the ____ phase of the research-based buying process.

pre-shopping activities

All of the following can reduce your taxes today except investing in:

A Roth IRA

All of the following are deposit institutions except:

A finance company.

Which of the following primarily provides loans for home purchases?

A mortgage company

Which of the following will likely provide the most expensive loans?

A payday loan company

When you select a financial services provider, you should ask all of the following questions except:

All of these questions should be asked.

An all-in-one account that provides a complete financial services program for a single fee is known as:

An asset management account.

A tax imposed on the value of a person's property at the time of death is called a(n):

Estate tax.

All of the following are ways that households can increase their net worth except:

Increase their debt ratio.

An advantage of effective personal financial planning is:

Increased control of financial affairs.

Which of the following best describes the concept of the time value of money?

Increases in amounts of money as a result of interest earned

A certificate of deposit that has earnings based on the stock market is called a(n):

Indexed CD.

The text discusses several types of bonds. Which bond pays interest for 30 years that is exempt from state and local taxes?

Series EE

A loan from a pawnshop will typically be more expensive than one from a bank.

TRUE

I bonds earn interest based on a fixed rate plus an inflation rate.

TRUE

If you think that rates will fall in the future, you should buy a long-term CD to lock in your rate now.

TRUE

If Brenda wants to pay her fair share of taxes, no more and no less, she should practice:

Tax avoidance.

Income that is taxed at a later date is:

Tax-deferred income.

Disposable income equals:

The amount a person or household has to spend.

The consumer price index measures:

The average change in prices of a fixed basket of goods and services of urban consumers in the United States.

Quentin wants his retail purchases to be deducted directly from his checking account. Which of the following tools should he use?

A debit card

When Angela wanted to provide financial security for her dependents, she considered purchasing a product that would provide income replacement in the event of her untimely death and also provide a savings/investment component while she is alive. Which company would she most likely do business with?

A life insurance company

Zach wants to open an account, but he doesn't know which kind is appropriate. He is interested in earning a higher interest rate and knows that he might not be able to write many checks from his account. In addition, he plans to keep at least $1,000 in his account so he can avoid paying a fee. He definitely wants to have federal deposit insurance. What kind of account should he open?

A money market account

Amber wants to open an account, but she doesn't know which kind is appropriate. She is interested in earning a higher interest rate and plans to keep at least $1,000 in her account so she can avoid paying a fee. Amber wants to open her account at an investment company and understands that her account will not be covered by federal deposit insurance. What kind of account should she open?

A money market fund

A drawback of a regular savings account is:

A relatively low rate of return.

A time deposit is also known as:

A savings account.

Susan Smith has a goal of saving $25 per month for a TV. Considering the SMART approach, Susan's goal lacks:

A time frame.

If a household has $195,000 of assets and $75,000 of liabilities, then net worth would be $125,000.

False

Inflation is most harmful to people with incomes that are expected to increase.

False

Intermediate goals are usually achieved within the next year or so.

False

Liquid assets can be easily converted to cash and include money in checking accounts and all personal possessions.

False

Tax rate schedules list average tax rates.

False

The financial activities for a young, single person will probably be the same as those for an older couple with no dependent children at home.

False

When creating a budget, it is important to save the amount you have left at the end of the month.

False

Which of the following is an example of a financial opportunity cost?

Forgoing wages to attend school