FINANCE EXAM 3
Prices on big ticket items such as vehicles, furniture, appliances and electronic equipment is usually the same from seller to seller T/F
False
The sticker price on a new car is typically the final sale price T/F
False
When considering insurance loss frequency is more important than loss severity T/F
False
The primary difference between a speculative risk and a pure risk is their is a chance for ____ in a speculative risk and a chance for ____ in a pure risk
Gain and loss (speculative), only loss (pure)
What is the first step in the risk management process
Identify the Risk
Buying without fully considering priorities and alternatives is called _________
Impulse buying
Fire theft Illness, and accidents are all examples of
Perils
The larger the down payment one can make on a purchase the easier the payments will fit into one's budget T/F
True
The security deposit is the amount paid in advance to a landlord for normal wear and tear on rental property T/F
True
When researching safety on a vehicle you should check on recalls T/F
True
Owing more on a vehicle loan than the vehicle is actually worth is called being
Upside Down
Implied warranties required by state laws include a warranty of _____
Verbal Warranty
A vehicle lease is essentially ______
a rental of a vehicle
With a closed end lease there is ____
no charge if the end-of-lease value of the vehicle is lower than the originally projected residual value.the possibility of some end-of-lease charges on excess wear.
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
A ______ is a refund of part of the purchase price
rebate
With _____ the agreement stays in effect unless either party give proper notice.
a periodic tenancy lease
Jillian wants to rent an apt that has monthly rent payment of $850 requires a $400 security deposit and a $500 damage deposit in order to move in how much will she be required to pay to move in
$1750
steps in the planned buying process
-Prioritizing wants -Pre-shopping research -Fitting your budget -Comparison shopping -Negotiating -Making the decision -Evaluating the decision
A point as defined in the Real Estate market is what % of a loan amount
1%
Have an ability standards for rental property would not include things such as
A Dishwasher
Monthly fees assessed to buyers of cooperatives include funds for ____ A)management fees. B)payment on the cooperative's debt. C) insurance covering the building(s) D) All of these
All of these
Pre shopping research for new cars should focus on ______ A. Price B. Trade-in value C. Financing D. All of these
All of these
Reduced risk gives one the freedom to A)Buy a car B)Buy a house C) D)All of these
All of these
When negotiating to purchase a vehicle besides the price what other variables should be considered
All of these
_____ should be completed before interacting with sellers
Answer on test: All of these
An increase in the value of a home is called ______
Appreciation
____ is when the home is financially and legally transferred to the new owner
Closed
A form of housing ownership where the owner holds legal title to a specific housing unit and a proportionate interest in a common ground in facility is.
Condominium
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
Owning a big screen TV is called a _____ while the potential theft of that tv is called an _______
Exposure; peril
A lease typically affects the landlord but not the renter
False
In most jurisdictions landlords are prohibited from harassing tenants who report violation of billing codes or other tenant rights T/F
False
Financial product used for transferring and reducing risk by having a large number of people share in the financial losses suffered by the members of the group is called
Insurance
The types of insurance you carry which covers losses suffered by others is called _____ insurance
Liability
The amount borrowed under a mortgage loan divided by the initial purchase price is known as what
Loan-to-Value (or LTV) Ratio
Buying an alarm system as an option on your new sports car is an example of
Loss control
Person who leaves his or her insured car running when he or she runs into the convenience store provides an example of a _____ hazard
Morale
___ insurance is generally required when a borrower makes a minimum down payment
Mortgage
A loan to purchase real estate in which the real estate itself serves as collateral is a _____ loan
Mortgage loan
In this kind of lease you must pay any difference between the projected residual value of the vehicle and the market value at the end of the lease period
Open End
The PITI acronym in mortgage lending stands for
Principal, Interest, Taxes, Insurance
Which is not an additional charge when leasing an automobile
Residual Value
Deciding not to drive a car is an example of handling risk through
Risk Avoidance
People who are uncomfortable with risk and who avoid it whenever they can are using the approach of
Risk Avoidance
The decision not to buy collision insurance on an old car is called
Risk retention
When purchasing Insurance you should
Shop around for the lowest cost coverage
Which of the following is not a peril A)Fire B)Wind C)Frozen water Pipes D)Smoking
Smoking
When a tenant that wants to move before leasing to another tenant
Subleasing
When a star football running back pays an insurance company to insure his legs this is an example of
Transferring Risk
A risk transfer is any arrangement where an insurance company agrees to reimburse you for a financial cost T/F
True
An ill advised credit purchase can have negative effects on your budget for years T/F
True
Buying a home represents the largest expenditure most people will ever make T/F
True
In administering a risk management program you should use the maximum possible loss as a guide for the dollar amount of coverage to buy T/F
True
It is wise to make a list of all damages and defects in an apartment before moving in and moving out T/F
True
One should assume risk that is affordable and insure against losses that would be unaffordable T/F
True
Property insurance protects you from financial losses resulting from damage to or destruction of your property or possession T/F
True
The escrow account is used to accumulate funds for
both homeowner's insurance premiums and real estate property taxes.
The true cost of an automobile to the dealer is
invoice price less any dealer discounts
When comparing buying versus renting comparable housing, renting requires a ____ annual cash flow while buying typically ____ one's tax liability.
lower; decreases