Final Review

Which of the following is NOT a provision of the Equal Credit Opportunity Act? a. depending on state law, creditors cannot deny you credit based simply on your age b. prevents creditors from looking into your creditworthiness c. creditors must give anyone denied credit a written explanation for the denial d. married women now have a legal right to establish credit in their own name

B

Which of the following lists the steps in the consumer complaint process in the correct order? a. contact the company headquarters; involve a consumer agency; take legal action b. contact the place of purchase; contact the company headquarters; involve a consumer agency; take legal action c. threaten legal action; contact the place of purchase; involve a consumer agency; take legal action d. involve a consumer agency; contact the place of purchase; contact the company headquarters; take legal action

B

Which of the following provides a market for agricultural products? a. NASDAQ b. Chicago Board of Trade c. New York Stock Exchange d. all of the above

B

Which of the following publications would probably be your BEST source for information about how to invest your money? a. Parents b. Kiplinger's Personal Finance Magazine c. Good Housekeeping d. Consumer Reports

B

Which of the following types of life insurance does NOT have a cash value? a. ordinary life b. term life c. limited life d. all life insurance policies have a cash value

B

With ____, the bank deducts payments from your account and transfers them to the appropriate companies. a. direct deposit b. automatic bill payment c. credit cards d. automatic teller machines

B

You use a ____ card for ATM transactions. a. stored-value b. debit c. credit d. smart

B

Which of the following shows the correct order of the decision-making process for buying a product or service? a. evaluate alternatives; know the choices available; identify needs and wants; determine desired satisfaction; make the decision b. know the choices available; identify needs and wants; evaluate alternatives; determine desired satisfaction; make the decision c. identify needs and wants; know the choices available; determine desired satisfaction; evaluate alternatives; make the decision d. determine desired satisfaction; identify needs and wants; know the choices available; evaluate alternatives; make the decision

C

Which of the following would not be considered personal property? a. furniture b. electronic equipment c. an outdoor patio d. clothing

C

Which of the following would probably be a short-term financial goal? a. going on a three-week cruise b. going to college c. purchasing a new CD d. buying a new luxury automobile

C

A written promise to repay based on a debtor's excellent credit history is a(n) a. promissory note. b. IOU. c. receipt. d. invoice.

A

Anyone who buys on credit is called a(n) a. debtor. b. payee. c. entrepreneur. d. creditor.

A

Because of an error in the pricing bar code, everyone who bought a pair of jeans at a nationwide clothing store last month was overcharged by three dollars. The legal action that would be most appropriate in this case would be a. class action lawsuit. b. arbitration. c. negotiation. d. mediation.

A

Common stockholders a. are paid dividends only after preferred stockholders are paid their dividends. b. have no voting rights within the corporation, as do preferred stockholders. c. have no right to share in a corporation's profits. d. receive dividends limited to a set rate.

A

Janine needs someone to estimate the value of some property for her. She should probably hire a(n) a. appraiser. b. home inspector. c. real estate attorney. d. real estate agent.

A

One of the first things you should do as part of the financial planning process is to a. develop financial goals. b. create a balance sheet and cash flow statement. c. purchase life insurance. d. begin searching for a better-paying job

A

Simple interest = a. P x R x T b. S x R x T c. P x R d. P x T

A

The difference between the price at which you could currently sell your house and the amount owed on the mortgage is called a. equity. b. the assessed value. c. appreciation. d. liquidity.

A

The dollar limit for cases heard in small claims courts ranges from less than ____ in some states to ____ in others. a. $1,000; $10,000 b. $10,000; $100,000 c. $500; $5,000 d. $100; $1,000

A

The money you receive for letting others use your money is called a. interest. b. security. c. collateral. d. premiums.

A

The most important factor that influences homeowners insurance premiums is a. the estimated danger of loss based on the insurance company's past experiences. b. the value of the insured property. c. the distance to the nearest fire department. d. the insured's credit rating.

A

The most important feature of universal life insurance is that a. the investment portion earns a variable rate of return. b. the death benefit always exceeds the cash value. c. the premiums are fixed and regular. d. the payment period is for the life of the insured.

A

The most important responsibility consumers have is to be a. honest. b. waited on promptly. c. alert. d. informed.

A

The special form of homeowners insurance is sometimes referred to as a(n) a. all-risk policy. b. exceptions policy. c. comprehensive policy. d. replacement policy.

A

This month Anthony's take-home pay was $1,500. He also earned $20 interest on a savings account. He spent $250 for rent, $100 for groceries, and $300 for other expenses. Anthony's total cash inflows this month totaled a. $870. b. $1,500. c. $850. d. $1,520.

A

This non-deposit financial institution specializes in making loans for long-lasting or durable goods, such as cars and refrigerators, and for financial emergencies. a. consumer finance company b. credit union c. investment company d. pawnshop

A

This type of health insurance provides protection against the high costs of serious illnesses or injuries. a. major medical insurance b. hospital insurance c. regular medical insurance d. surgical insurance

A

This type of managed health care plan involves several health care providers who contract with an insurance company to provide services to members. a. preferred provider organization b. health maintenance organization c. holistic health organization d. hospice organization

A

When you use a debit card in a store or restaurant, a. the amount of the purchase is deducted from your bank account. b. you are borrowing money. c. the amount of the purchase is deducted from the stored value on the card. d. you pay a surcharge.

A

Which of the following is a variable expense? a. groceries b. insurance premium c. rent d. mortgage payment

A

Zack has endorsed a check by writing "For deposit only" above his signature. This is a a. restrictive endorsement. b. blank endorsement. c. full endorsement. d. special endorsement.

A

Comparison shoppers usually evaluate which of the following? a. services b. quality c. price d. all of the above

D

Federal tax return mistakes can be avoided by a. filing online or mailing your return before the deadline. b. signing the completed return. c. using the proper tax forms, tax tables, and correct filing status. d. all of the above

D

If an unreceived or returned item is billed to your credit card, how long do you have to dispute it? a. 60 days b. 120 days c. 90 days d. 30 days

D

Insurance that protects a car owner against financial loss resulting from a wreck or rollover is called a. comprehensive coverage. b. underinsured motorist coverage. c. deductible coverage. d. collision coverage.

D

Monthly payments under disability insurance are usually about ____ percent of the insured's normal income. a. 25-40 b. 75-85 c. 90-95 d. 40-60

D

Rebekka's ten-year-old couch was destroyed in a fire. Her insurance company paid her the cost of buying a brand-new couch. This indicates that Rebekka had purchased a. basic homeowners insurance. b. depreciation insurance. c. liability insurance. d. replacement insurance.

D

Tasha's main investment concern is that the money she has invested will be returned to her. She is MOST concerned with a. liquidity. b. return. c. taxes. d. safety.

D

The Truth-in-Lending Law limits your liability to ____ for unauthorized credit card purchases made prior to notifying the card issuer. a. $250 b. $100 c. $500 d. $50

D

The medical insurance portion of Medicare is often called a. long-term care insurance. b. Medicaid. c. disability medical insurance. d. supplementary medical insurance.

D

This debt security involves short-term borrowing with maturities from 91 days to one year. a. T-fund b. T-note c. T-bond d. T-bill

D

This is a tax-sheltered retirement plan in which people can annually invest earnings up to a certain amount; the funds are taxed when they are withdrawn after age 59 1/2. a. Social Security b. pension c. annuity d. individual retirement account

D

Which of the following is NOT a business source of consumer information? a. customer service departments b. advertising c. product labels d. the Environmental Protection Agency

D

Which of the following is NOT one of the "three Cs of credit"? a. capacity b. capital c. character d. creativity

D

Which of the following would be a personal asset? a. your car payment b. your college loan c. your home mortgage d. your personal computer

D

With an assigned-risk plan, a. low-risk drivers are assigned high-risk drivers to tutor in good driving practices. b. insurance companies can refuse to sell insurance to all high-risk drivers. c. the insured pay much lower premiums than in other types of plans. d. even high-risk drivers are able to obtain at least some automobile insurance.

D

Your birth certificate and Social Security card would likely be contained in which category of your financial records filing system? a. money management records b. housing records c. tax records d. personal records

D

Your net worth is a. what you have left over in your paycheck each week after deductions are taken out. b. the total value of your personal assets. c. the total amount of all of your investments. d. the difference between your personal assets and your liabilities.

D

Which of the following investments are listed in order from lowest risk to highest risk? a. municipal bond, U.S. savings bond, growth stock, commodities b. U.S. savings bond, municipal bond, growth stock, commodities c. commodities, growth stock, U.S. savings bond, municipal bond d. growth stock, U.S. savings bond, commodities, municipal bond

B

. A small food retailer that stocks popular items at higher prices and emphasizes an accessible location and long operating hours is called a a. vending machine. b. convenience store. c. supermarket. d. specialty store

B

A guarantee a. is usually in writing. b. must apply to the entire item, not just to some parts of it. c. covers damages caused by misuse. d. all of the above

B

A personal check for which a bank has guaranteed payment is called a a. banker's check. b. cashier's check. c. traveler's check. d. certified check.

B

All of the following types of businesses are among the main sources of consumer complaints EXCEPT a. motor vehicle repairs. b. restaurants. c. Internet auctions. d. credit cards.

B

All the following are examples of tax deductions EXCEPT a. interest paid on a home mortgage or home equity loan. b. rent expense. c. contributions to charitable organizations. d. certain medical expenses.

B

Almost ____ percent of U.S. banks are FDIC members. a. 90 b. 99 c. 75 d. 50

B

An interest-earning checking account a. generally pays very high interest rates. b. is a good choice if you are depositing a large amount of money. c. usually requires a lower monthly balance than regular checking accounts. d. usually earns interest only if the account stays above the required amount.

B

If actual spending is greater than planned spending, it is referred to as a a. surfeit. b. deficit. c. liability. d. surplus.

B

If you cannot pay your bills, you should never a. contact a credit counselor. b. respond to an advertisement claiming to "erase bad credit—100% guaranteed." c. try to work out a debt repayment plan. d. contact the creditor to explain the situation.

B

Money market accounts a. generally require long-term deposits. b. pay interest based on various government and corporate securities. c. usually pay much less than a regular savings account, but are far more secure. d. rarely have a large minimum balance requirement.

B

Mutual savings banks are organized mainly for a. check cashing. b. savings and home loans. c. automobile loans. d. business loans.

B

Take-home pay is a. the amount you will receive when you cash your paycheck. b. the money you have available to spend as a result of working plus any other income, such as a gift or stock dividend. c. the amount of a paycheck before taxes and other payroll deductions. d. cash inflows minus cash outflows.

B

The current price quoted for precious metals in the world markets is called the a. discount rate. b. spot price. c. face value. d. yield.

B

The person to whom a check is written is the a. drawee. b. payee. c. drawer. d. endorser.

B

This regulation requires credit bureaus to delete any information dealing with a personal bankruptcy that is more than ten years old. a. Fair Credit Reporting Act b. Fair Debt Collection Practices Act c. Consumer Credit Reporting Reform Act d. Bankruptcy Act of 2002

B

Typical e-banking services allow customers to do all of the following EXCEPT a. pay bills online. b. print new checks. c. obtain cash. d. transfer funds from savings to checking.

B

Wages, salary, commission, fees, tips, and bonuses are a. tax-deferred income. b. earned income. c. interest income. d. tax-exempt income.

B

Which of the following does NOT need to be recorded on an inventory of personal property? a. the date and place of the purchase b. an estimate of how often you use each item c. the purchase price d. the brand name and description of each item

B

Which of the following correctly shows the budgeting process? a. set financial goals; plan budget categories; maintain financial records; evaluate your budget b. maintain financial records; plan budget categories; evaluate your budget; set financial goals c. set financial goals; maintain financial records; plan budget categories; evaluate your budget d. plan budget categories; set financial goals; maintain financial records; evaluate your budget

C

Which of the following is NOT a type of permanent life insurance? a. whole life insurance b. universal life insurance c. term life insurance d. variable life insurance

C

A Series EE savings bond a. pays interest twice a year. b. pays an interest rate that increases with inflation. c. is bought at half its face value. d. is not discounted.

C

A dependent is a. someone who is employed by another person. b. the person who receives money when the insured dies. c. a person who must rely on another for financial support. d. the person who buys a life insurance policy.

C

A maximum amount you are allowed to owe at one time on your credit account is called the a. charge limit. b. installment. c. credit limit. d. finance charge.

C

A(n) ____ is a name given to a product or service to distinguish it from other similar and competitive items. a. copyright b. logo c. brand d. patent

C

Alexi is looking for a new bank. He is most concerned with finding a bank that offers 24-hour banking services. He is mostly concerned with a. restrictions. b. safety. c. convenience. d. fees.

C

All of the following are improper check-writing procedures EXCEPT a. overdraw your account whenever possible. b. write your checks in pencil. c. avoid making checks payable to "Cash." d. postdate all of your checks.

C

Bonds issued by local and state governments are called a. U.S. government savings bonds. b. mutual bonds. c. municipal bonds. d. corporate bonds.

C

Except for some retirement accounts, the FDIC insures all accounts in the same name at each bank up to an amount of a. $2,500. b. $25,000. c. $250,000. d. $2,500,000.

C

Financial planning experts encourage people to deposit ____ of their income into a savings account or other investment each month. a. 25 percent b. 1 percent c. 10 percent d. 5 percent

C

If you have a budget, you should a. never buy anything on credit. b. learn how to plan for financial emergencies. c. be able to buy anything you want. d. all of the above

C

Interest is paid to a bondholder based on the bond's a. maturity date and maturity value. b. stated interest rate. c. maturity value and stated interest rate. d. annual percentage yield and maturity date.

C

The Dow Jones Industrial Average is a commonly reported a. net asset value. b. rate of return. c. stock index. d. stated interest rate.

C

The relationship between a stock's selling price and its earnings per share is called the a. current ratio. b. stock index. c. price-earnings ratio. d. dividend yield.

C

This government agency makes certain that medicines and cosmetic products are not harmful to consumers. a. Better Business Bureau b. Consumer Product Safety Commission c. Food and Drug Administration d. U.S. Department of Agriculture

C

This part of Social Security provides death benefits to dependents of workers who die. a. retirement insurance b. unemployment insurance c. survivors insurance d. disability insurance

C

This type of charge account requires the buyer to make full payment within a stated period. a. sales charge account b. revolving charge account c. regular charge account d. budget charge account

C

This type of mutual fund invests in both stocks and bonds. a. sector fund b. aggressive-growth fund c. balanced fund d. income fund

C

This warranty is imposed by law and is understood to apply even though it has not been stated. a. guaranteed warranty b. statutory warranty c. implied warranty d. express warranty

C

To make the computation of interest easier, a year is often considered as a. 364 days. b. 400 days. c. 360 days. d. 365 days.

C

When you make a loan payment, your a. net worth is unaffected. b. cash outflows decrease. c. liabilities decrease. d. net income increases.

C

When you put money into your checking account, you will fill out a a. check register. b. signature card. c. deposit slip. d. check stub.

C

Which of the following require disclosure of the APR? a. sales credit agreements b. loan credit agreements c. both a and b d. neither a nor b

C

. This type of money order is typically issued by travel agencies, supermarkets, pharmacies, and convenience stores. a. telegraphic money order b. bank money order c. postal money order d. express money order

D

. Which of the following is NOT a deposit institution? a. mutual savings bank b. commercial bank c. savings and loan association d. check-cashing outlet

D

A business organization that accommodates the buying and selling of securities is called a(n) a. credit bureau. b. credit union. c. mutual savings bank. d. stock exchange.

D

A company that gathers information about credit users and sells it to businesses that offer credit is called a a. investment company. b. consumer finance company. c. clearing house. d. credit bureau.

D

A statement will report all of the following information EXCEPT a. the amounts credited to your account for returned items. b. the amounts charged during the month. c. the balance that was due when the last statement was mailed. d. whether the item was purchased on sale.

D

A tax on gasoline is known as a(n) a. estate tax. b. gift tax. c. income tax. d. excise tax.

D

Allie has automobile insurance with 100/300 bodily liability coverage. How much would her insurance company pay for injuries to one person? a. $30,000 b. $1,000 c. $100,000 d. $300

D

Assuming the same amount of coverage and deductibles, which of the following drivers is likely to pay the LEAST for auto insurance? a. Ricky, a single 32-year-old who drives a brand-new luxury sports car. b. Monica, a married 40-year-old who drives a seven-year-old van about 4,000 miles every year for neighborhood errands c. Isaac, a single 18-year-old who is now on his third vehicle—for which he paid $750—because he's already been involved in two wrecks d. Janu, a single 25-year-old who drives her two-year-old car about 50,000 miles every year on business

D

Bonita writes many checks each month. Which type of checking account is probably the best choice for her? a. interest-earning checking account b. activity checking account c. special checking account d. regular checking account

D