Personal Finance 10, HDFS 3350 MASTER 13

The phrase _________________________________ involves investing the difference between the cost of premiums for a term life insurance policy and the cost of premiums for a cash-value policy.

"buy term and invest the rest"

If a person has auto insurance coverage of 100/250/50, how much per person bodily injury protection do they have?

$100,000

What are the 5 steps of the financial planning process. E De DEV Im Re

1. evaluate your financial condition 2. define your financial goals 3. Develop a plan of action 4. Develop and implement plans to monitor and progress towards goals 5. Review your goals and make appropriate changes

what to make for financial goals? 3 goals, dif length

1. long term goals- more than 5 years away 2. intermediate goals- 1-5 years 3. short-term goals- within the year

describe the important points for writing good goals.

1. make a very specific goal. Set dollar amount and specific date. 2. Make the goal realistic! 3. Have a plan. Think about how much you will need to save each month, who to talk to to what account you need to set up.

Nicholas purchased 150 shares of ABC Mutual Fund at $10.50 and sold them one year later at a price of $14.50. His total capital gain was

600

Invitation to Apply vs. a Prescreened solicitation vs. Pre-approved solicitation

?? SEARCH BOOK ??

tiered pricing? how are subprime borrowers affected?

?? SEARCH BOOK ??

credit application

A FORM and/or an interview that requests information that sheds light on your ability and willingness to repay debts, such as your income, assets, and debts.

Electronic Funds Transfer Act

A federal law that protects consumers engaged in the transfer of funds through electronic methods. This includes the use of debit cards, automated teller machines and automatic withdrawals from a bank account.

What is the difference between a need and a want?

A need is a basic requirement for survival and a want is something that is thought to be needed but is not actually

Professional advisory services provide detailed information on mutual funds. Which of the following is NOT a professional advisory service?

A- Dun and Moody's

Which of the following types of stock funds invests in stock issued by companies with a long history of paying dividends?

A- Equity income funds

Many mutual funds charge a commission when they are purchased by investors. These are called:

A- Load funds

In bankruptcy, what is taxed?

ALL debt, including forgiven debt

Define APR

APR - Annual Percentage Rate The annual rate that is charged for borrowing expressed as a percentage number that represents the actual yearly cost of funds over the term of a loan.

what are the different type of cards? list 3 what is the liability with these cards? after 2 days, after 3 days

ATM cards, debit cards, credit cards, prepaid cards, store valued cards, electronic benefit transfer cards. loss is limited to $50 if institution is notified within two business days -loss could be up to $500 if institution is notified within 3-59 days

What rights does COBRA provide for a person?

Allows a person to remain a member of a group health plan for a set period of time after work has terminated

What rights does COBRA provide for a person?

Allows a person to remain a member of a group health plan for a set period of time after work has terminated.

disposable income

Amount of income remaining after taxes and withholding for such purposes as insurance and union dues.

credit

An arrangement in which goods, services, or money is received in exchange for a promise to repay at a future date.

credit score

An indication of a person's creditworthiness or how likely the individual will be able to repay any credit extended in a timely manner.

Thomas wants to invest in a fund that invests in stock, bonds, and money market instruments. Which of the following will meet his needs?

Asset allocation funds

The average load charge for a mutual fund is

C- 3-5 percent

credit history

Continuing record of a person's credit usage and repayment of debts.

promissory note (note)

Contract that stipulates repayment terms for a loan.

The net asset value is calculated as

D- (current market value of portfolio - liabilities)/number of shares outstanding

A load fund is allowed to collect a sales fee as high as

D- 8.5 percent

describe how to legally repair a credit report.

Determine account balances and payments required focus budget on debt reduction contact your creditors Take on no new credit Refinance Avoid credit repair and debt settlement companies Find good help: credit counseling agencies CCA , debt management plans DMP

A no-load mutual fund

E- Can charge a 12b-1 fee of up to .25 percent of its assets

Owning and driving a car are examples of...

Exposures

An "A-fund" mutual fund may have a commission as high as 9.5 percent

FALSE

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

FLASE

Which of the following is false regarding gap insurance?

Gap insurance is not profitable for the dealer.

compare the good uses of credit and the downside of credit.

Good Uses For Convenience, Emergency, Make reservations, Own expensive products sooner, Advantage of free credit, Protection from fraud/ rip off, Obtain Education Downside of Credit. Credit reduces your financial stability and buying power. Interest itself is costly It is tempting to spend more money Over-indebtedness is a real possibility

describe a stop-payment order

Informs bank to not honor check when its presented for payment. A stop-payment order works only if the check has not yet cleared. If a verbal stop-payment order is not followed up with written instructions, the check can be cashed after 14 days.

Which of the following is the best description of the large-loss principle?

Insure the risks you cannot afford and assume the risks that you can reasonable afford.

What is the best description of the large loss principle?

Insure the risks you cannot afford and assume the risks that you can reasonably afford

Which of the following is true about mutual funds and taxes?

Investment companies are required to send each shareholder a year-end statement that specifies how much each received in dividends and capital gain distributions.

Which of the following is the correct statement for the Fair Credit Billing Act?

It helps people that wish to dispute billing errors on revolving credit accounts.

What's the main benefit of a health Savings Account?

It provides a tax deductible account for paying medical bills

What is false about cash value life insurance?

It's the least expensive form of life insurance

What is the way to handle risk if you installed heavy duty locks?

Loss control

What describes the potential magnitude of a loss or losses?

Loss severity

Which of the following is a good way to repair your credit report?

Make on time payments.

Which of the following organizations administers the insurance for federally chartered Credit Unions?

NCUA

Which of the following is false about mortgage insurance?

Once it is on a loan it can never be cancelled.

Which of the following is not included in the up-front costs of the closing costs? 

Principal and interest

What is the mortgage PITI?

Principal, Insurance, Taxes and Interest

Which of the following involves filing a deceased's person's will, paying debt, and distributing remaining assets?

Probate

What would be the recommended action for a loss that has low frequency and high severity?

Purchase insurance to cover the potentially large losses

Retirement Stool 3 Legs

Social Security Benefits Employer-Sponsored Plans Your Own Saving and Investing

A 'good' fund manager has the ability to increase the share value when the economy is good and retain that value when the economy is bad

TRUE

Who should set a debt limit?

The Borrower

Which of the following is false?

The best APY return is on accounts that compound interest annually.

credit utilization ratio.. desirable %..

The percentage of a consumer's available credit that he or she has used, which is a key component of one's credit score; a high credit utilization ratio can lower your score. max: 30%

Your marginal tax rate is

The tax rate applied to your last dollar of earnings.

Which of the following provisions is not required as part of a full warranty?

The warranty will cover the product for at least 3 years after purchase.

When using the dollar cost averaging approach to investing, which of the following is false?

When the price per share is up, you purchase more shares.

Which of the following was the first step to budgeting as listed in The Financial Checkup booklet?

Write down goals.

Indexing

Yearly adjustments to tax brackets that reduce inflation's effects on tax brackets.

Which of the following about prizes and sweepstakes is not true?

You must pay to win.

Which of the following is false about trading in a car?

You will get more for your car.

Wage earner plan (Chapter 13) (regular income plan) Steps..

a bankruptcy protection scheme that allows income earners to satisfy outstanding debts in whole or in part within a specific time frame. 1. file petition for bankruptcy 2. court issues automatic stay 3. hearing is scheduled 4. debtor follows strict budget while repaying obligations

garnishment

a court order directing money or property of 3rd party be seized to satisfy debt owed

automatic stay

a court order that temporarily prevents all creditors from recovering claims arising from before the start of the bankruptcy proceeding

A 401(k) retirement plan is

a defined contribution plan.

credit report

a detailed account of an individual's credit history prepared by a credit bureau and used by a lender to determine a loan applicant's creditworthiness.

collateral

a form of security to help guarantee that the creditor will be repaid

bankruptcy

a legal process in which some or all of the assets of a debtor are distributed among the creditors because the debtor is unable to pay his or her debts

grace period

a time period during which no finance charges will be added to your account

Deductible

an initial portion of any loss that must be paid before the insurance company will provide coverage.

Which of the following is the correct address to receive a free credit report?

annualcreditreport.com

state how to access a free credit report for yourself.

annualcreditreport.com

Hazard

any condition that increases the probability that a peril will occur.

Exposures

are items you own and the activities in which you engage that expose you to potential financial loss.

A balance sheet includes _______, _______, and _______.

assets; liabilities; net worth

Traditional IRAs

can reduce current year income.

If Mitchell leaves the money he put in a savings account in the account, plus the interest, he will be able to take advantage of

compound interest

Promissory Note

contract that stipulate repayment terms for loans.

What are the types of mortgages? C, AR, BI, Re

conventional mortgage( fixed rate, fixed term) adjustable rate mortgage( borrowers interest rate fluxiuates) biweekly mortgage( payment made every two weeks) reverse mortgage( older then 61 allowed to borrow against equity)

Speculative risk

exists in situations where there is potential for gain as well as for loss.

Which of the following is an example of a progressive tax? 

federal personal income tax

Which of the following makes a sales opportunity more like a pyramid scheme than a multi-level marketing plan?

focusing on recruiting distributors

Which two ratios do lenders use to estimate the maximum affordability of housing expenses?

front-end and back-end

credit lifestyle

how your credit affects your life

Peril

is any event that can cause a financial loss.

Which of the following describes the potential magnitude of a loss or losses?

loss severity

Which of the following is a good way to repair your credit report?

make on time payments

What is the rule of 78? !! what does it calculate?

most widely used method of calculating a prepayment penalty, calculate interest charges on a loan

A __________________ endorsement uses the phrase For Depost Only on the back of the check. blank

restrictive

The Financial Checkup booklet as the four important savings

revolving, emergency fund, future purchases, retirement

A(n) _________________________ IRA does not get any tax benefits upfront, but the withdrawals are taken out tax free.

roth

The _________________________ is a simple formula for figuring the number of years it takes to double the principal of an investment.

rule of 72

Which of the following is illegal?

tax evasion

Loss reduction

the action taken by the insured to lessen the severity of loss if a peril occurs (fire extinguishers).

Reverse Mortgages are for

the elderly

net income

the income you receive (take-home pay, allowance, gifts, and interest)

simple interest

the interest computed only on the principal, the amount that you borrow

Claims adjuster

the person designated by the insurance company to asses whether the loss is covered and to determine the dollar amount that the company will pay.

What is the role of a credit bureau?

to collect and keep records of borrowers' credit histories

Which of the following is one of the purposes of a revolving savings account?

to cover large nonmonthly expenses

Which of the following is one of the purposes of a revolving savings account?

to cover large nonmonthly expenses to cover yearly unexpected expenses

All of the following are examples of employee benefits

tuition reimbursement, child care, paid sick leave

Fortuitous losses

unexpected losses in terms of both their timing and magnitude.

Which of the following was not included in information that should be discussed during engagement? 

ways to reduce paying taxes

If a person has automobile insurance coverage of 100/250/50, how much per-person bodily injury protection do they have? 

$100,000

disadvantages of using credit

(1) it is tempting to spend more money (2) credit reduces one's future financial flexibility and purchasing power (3) future income is committed to previous credit contracts (4) slows progress to achieving financial goals (5) the risk of over indebtedness is real (6) interest is costly, perhaps as much as 18 percent or more per month (7) interest and fees substantially increase the cost of goods and services purchased (8) increases credit related solicitations via mail, e-mail, text, and telephone calls (9) reduced privacy when providers sell your personal information to others for solicitation (10) increases possibility of identity theft (11) it is much more difficult than you think to pay off old debts later and increase your FICO score (12) users worry and stress about their debts (13) may have negative impacts on relationships (14) may result in property loss via repossession (15) could result in one declaring personal bankruptcy (16) can negatively impact one's credit history and credit score (17) may result in damaged personal reputation.

17 advantages to using credit

(1) to enjoy the convenience (2) to enjoy goods and services now (3) to reduce the need to carry cash (4) to buy when funds are low (5) to shop on the Internet and by telephone (6) to show identification (7) to enjoy the grace period of 21 days on new credit card purchases (8) to pay for emergencies (9) to obtain an education (10) to make travel reservations (11) to obtain rebates, such as cash and travel miles (12) to pay off several purchases with one monthly payment (13) to easily return merchandise (14) to protect against seller rip-offs and frauds (15) to provide record keeping for business expenses (16) to help open a business (17) to buy expensive items sooner rather than later, like a home and vehicles.

Personal injury protection (PIP)

- medical payments coverage for the driver and any passengers for bodily injury losses as well as possibly lost wages and rehabilitation expenses common in no fault accident states.

What is gross domestic product? econ health What is consumer price index? change g s, ohio state

-the nation's broadest measure of economic health, it reports how much activity has occurred within the U.S. - a broad measure of changes in the prices and of all goods and services purchased by consumption by urban households.

Secured vs. Unsecured Loans

-unsecured loans (issued and supported only by the borrower's creditworthiness rather than collateral. Ex. Student Loan) -secured loans ( borrower has pledged some sort of asset as collateral to guarantee the loan. Ex. house loan)

What are the liabilities if your credit card is stolen?

-within two days, you aren't legally responsible for any fraudualent usage of this card. -after two days, you are responsible for $50

list four variables for the calculation of interest on deposits and provide a definition for the annual percentage yield (APY).

1 Amount of money on deposit 2 Method of determining this balance 3 Interest rate applied to the balance 4 Frequency of compounding (annually, semiannually, quarterly, or daily) Average Percentage Yield: Return on total interest received on a $100 deposit for 365 day period, given the institutions simple annual interest rate and compounding frequency The APY is a standardized rate of interest that is helpful for comparing accounts. The APY is the return on total interest received on a deposit. The Truth in Savings Act requires depository institutions to disclose the APY in advertising.

list the steps to budgeting.

1 GOAL write down goals before working on budget. 2 INCOME: how much you have via income/expense statement. 3 EXPENSES: Write down everything must pay to others (rent, loan, utilities) then what you need to live (food) Next what you need to do to accomplish your goals. Budget for entertainment/ recreation and plan for irregular expenses with revolving savings. 4 CONTROL figure out how to track budget via worksheet, computer, checkbook, or cash. 5 EVALUATE try it, evaluate , adjust and try again!

list the steps to correct an error on a credit report.

1 notify both the credit bureau and the original lender for confirmation of the debt. 2 Bureau and lender must re investigate the info within 45 days. If the bureau cannot complete its investigation within 45 days, it must drop the information from file 3if info is erroneous, it must be corrected. If a report was sent to a creditor investigating an application, a new report must be sent. 4 If the error was technically correct, can provide your version of the disputed info by adding a consumer statement to your file. 5 also obtain a report from the other 2 bureaus to ensure the error does not also appear in theirs. 6 trouble? contact the CFPB

What are the steps in career planning? clar, ident, rev, net, employ tren,fina

1. Clarify your values and interests 2. identify one or more desired career fields. 3. review your abilities, experience, and education. 4. take advantage of professional and social networking. 5. align yourself with tomorrow's employment trends. 6. finalize your career plan.

Positive use of credit

1. Convenience 2. Enjoy goods and services now 3. Reduce the need to carry cash 4. Buy when funds are low 5. Shop on the internet and by phone 6. To show ID 7. To enjoy the grace period 8. To pay for emergencies 9. To make travel reservations 10. To pay for education 11. To provide record keeping

List steps to take to minimize the risks of identity theft.

1. Credit freeze: prevents a credit bureau from releasing your credit report to merchants and financial institutions without your consent. 2. Don't carry your SS# 3. Shred documents containing personal information. 4. Do not attach or write a PIN # or SS# on anything your carry with you. 5. Use passwords

Criteria for obtaining debt

1. Establish both a checking and a savings account 2. Have a smartphone and utilities billed in your name. 3. Request, acquire, and use credit cards from retail sellers and businesses. 4. Apply for a bank credit card. 5. Stay current on student loans.

5 tips on how to build a good credit score

1. HAVE YOUR SMARTPHONE AND UTILITIES BILLED TO YOUR NAM. The fact that you can maintain a good payment pattern on your telephone and utility bills indicates that you can manage your money wisely and will do the same with your credit repayments. 2. ESTABLISH BOTH A SAVINGS AND CHECKING ACCOUNT. Lenders see people who can handle these accounts as being more likely to manage credit usage properly. 3. APPLY FOR A BANK CREDIT CARD. Your own bank is the best place to start your search for a credit card. If not successful there, you usually can find some bank that will issue you a card (search at www.bankrate.com). The credit limit may be low (perhaps $1,000) and the APR high (perhaps 24 percent), but at least the opportunity exists to establish a credit history. Later you can request an increase in the credit limit and a lower APR. 4. REQUEST, ACQUIRE, AND USE CREDIT CARDS FROM RETAIL SELLERS AND BUSINESSES. These cards are relatively easy to obtain. Use the credit sparingly, and pay the entire balance in full and on time each month. 5. STAY CURRENT ON YOUR STUDENTS LOANS. Making payments on time and paying off student loans quickly will show prospective lenders that you are a responsible borrower.

Credit Card Act

1. Limited interest rate hikes 2. limited universal default 3. The right to opt out if you dont agree with new terms. 4. Limited credit to young adults 5. Clearer due dates and times 6. HIgherst interest balance paid first 7. LImits on over limit fees 8. No more double cycle billing 9. Subprime card rules set 10. Minimum payment disclosures 11. Late fee restrictions

list the three tools of monetary asset management and how you would use them.

1. Low-cost, interest-earning checking accounts from which to pay ongoing, current living expenses. 2. Interest- earning savings accounts in local financial institutions in which you deposit funds for upcoming expenditures or to accumulate funds for future investments. 3. Money market accounts in local financial institutions or other financial services providers. These accounts pay higher interest rates than checking and savings accounts. They have limited check-writing privileges and, thus, are a cross between checking and a savings account.

11 Signs of Over indebtedness

1. Not knowing how much you owe 2. Running out of money 3. paying only the minimum amount due 4. exceeding debt limits and credit limits 5. requesting new credit cards and increases in credit limits 6. using cash advances to pay other credit cards 7. paying late or skipping credit payments 8. refinancing 9. using debt-consolidation loans 10. experiencing garnishment 11. Experiencing repossession (object taken by financial institution) or foreclosure (object taken through legal process)

Signs of overindebtedness

1. Not knowing what you owe. 2. Running out of money 3. Paying only minimum due 4. Refinancing 5. Requesting new cards or higher credit limits 6. Using cash advances to pay other cards

5 factors used to determine FICO scores

1. Payment history.: Late? Consistently pay your bills on time 2. Amounts owed: How much do you owe others? 3. Length of credit history: How long have you had account? 4. Taking on more debt: How many new accounts do you have? 5. Types of credit used: Do you have a good mix of credit usage? # of total accounts?

Negative uses of credit

1. Spending more 2. reduces your future financial flexibility 3. future income is committed to jprevious credit contracts. 4. risk of overindebtedness 5. interest is costly 6. slows progress in achieving financial goals. 7. identity theft 8. can effect credit score

2 things you have to do before your attorney requests a bankruptcy discharge

1. complete credit counseling w an agency 2. attend counseling about fundamentals of personal financial management

what are the steps in buying?

1.prioritizing wants 2. preshopping research 3. fitting your budget 4. comparison shopping 5.negotiating 6. making the decision 7. evaluating the decision

Using table A.3 in the appendix, calculate how much Kyle will have in 10 years if he saves $1,575 each year at 4% interest.

1575x12.0061=18,909.61

The investments in the Alamo Basics Contingency Fund have a current market value of $800 million. The fund also has liabilities that total $60 million. If this mutual fund has 20 million shares, what is the net asset value per share?

37

Which of the following is the most common defined contribution work retirement plan?

401 k

Using table A.1 in the appendix, calculate how much Rhonda will have in 6 years if she saves $4,500 at 5% interest.

4500x1.3401=6030.45

Which of the following has a maturity date?

A certificate of deposit

Bankruptcy

A constitutionally guaranteed right that permits people (and businesses) to ask a court to find them officially unable to meet their debts. 196

Which of the following is not true regarding credit cards?

A credit card offer would only show one APR in the information box.

Which of the following is not true?

A credit card offer would only show one APR in the information box. IS TRUE A credit card company could charge the borrower a penalty APR if he paid his bill late. Some fees are charged before a card is used, such as annual fee, account set-up fee, participation fee, etc. Even if a borrower carries over a low balance, she can be charged a minimum amount of interest.

Which of the following is not a true statement regarding grace periods?

A grace period is the due date for a credit card payment.

Which of the following is not a true statement?

A grace period is the due date for a credit card payment. IS TRUE A grace period is available only if the previous month's total balance was paid in full. Using the grace period on a credit card is like having an interest-free loan. A grace period is the time period between the posting date of a transaction and the due date.

Debt consolidation loan

A loan taken out to pay off several smaller debts.

Which of the following about an exemption is false?

A person can serve as an exemption on more than one tax return.

Which of the following is true about secured credit cards?

A secured credit card is backed by a savings account.

Which of the following is true?

A secured credit card is backed by a savings account.

Progressive Tax

A tax that progressively increases as a taxpayers taxable income increases. Example: Federal Personal Income Tax More income= more taxes. Higher the income implies a greater ability to pay.

The average upfront charge for a no-load mutual funds is

A- 0 percent

What percentage of all mutual funds are closed-end funds?

A- 7 percent

Which class of shares charges a commission when shares are purchased?

A- A

An example of a lifecycle fund is a fund that

A- Assists investors with planning for retirement by a specific date

Payments to investors related to the sale of securities in the fund's portfolio are

A- Capitol gain distributions

Which type of fund has the prices determined by factors of supply and demand like a stock?

A- Closed-end funds

Actual cash value formula

ACV=P-[CA x (P/LE)], ACV = purchase price of the property-[current age of the property in years x (purchase price of the property/Life expectancy of the property in years)]

explain the purpose of the FDIC and NCUSIF and state which institutions use them.

Accounts in federally chartered banks are insured against loss by the Bank Insurance Fund and Federal Deposit Insurance Corporation (FDIC) NCUSIF: National Credit Union Share Insurance Fund insures Federally chartered credit unions and administered by NCUA> State chartered credit unions are often insured by NCUSIF CREDIT UNIONS PAY HIGHER INTEREST RATES and charge lower fees than commercial banks, savings banks and MSB.

Which of the following is true regarding cash value coverage?

Actual cash value coverage represents the purchase price of the property less depreciation.

Adjustments

Adjustments: Allowable subtractions from gross income. -- subtractions from income such as school costs, job relocation expenses, contributes to IRA, health savings, alimony, Exemptions: Legally permitted amount deducted from Average Gross Income based on the number of people that the taxpayers income supports. Above-the-line deductinos

Which of the following about mutual funds is false?

All funds have the same investment objectives.

How is an ETF similar to a closed-end fund?

All of these are correct

Which of the following is false regarding lemon laws?

All states have used-vehicle lemon laws.

Which of the following is false?

All states have used-vehicle lemon laws. TRUE ABOUT LEMON LAW The buyer must go through the warranty process to enforce a lemon law. All states have new-vehicle lemon laws. A common definition of a lemon is a vehicle that was in the shop for repairs four times for the same problem in the first year after purchase.

Which of the following was not one of the concepts taught in the article about helping children learn about money?

Allowance can be used to help children learn how to use money to make wise decisions.

Tax Credits

American opportunity tax credit 2500$ per year to help defray college expenses for first four years Lifetime learning credit: nonrefundable credit that may be claimed every year for tuition and related expenses paid for all years of post secondary education undertaken to acquire or improve job skills. Earned income credit: refundable tax credit hat may be be claimed by workers with a qualifying child and in certain cases by childless workers. Child and dependent care credit: nonrefundable tax credit that may be claimed by workers who pay employment related expenses for care of child or others to work, seek work or attend school full time.

Which of the following is FALSE about adjustments? 

An adjustment is a deduction from the adjusted gross income based on the number of persons supported by the taxpayer's income

Which of the following is false about adjustments?

An adjustment is a deduction from the adjusted gross income based on the number of persons supported by the taxpayer's income.

What is net worth

Assets - Liabilities

What are assets? What are liabilities?

Assets are all the things you own, and liabilities are the debts you have

An example of a lifecycle fund is a fund that

Assists investors with planning for retirement by a specific date.

Identify ways to cover overdrafts on checking accounts.

Automatic Funds Transfer Agreement Automatic overdraft loan agreement Opt-in overdraft/bounce protection Cover overdrafts: Practice good account management 0$ Automatic funds transfer agreement 0-5 Overdraft line of credit 15+ 18%APR Automatic overdraft cash advance from a credit card 3-10$ + 18% APR Opt-in overdraft/bounce protection 20-30

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

B- 12b-1

Which class of shares charges a commission when withdrawals are made during the first five years?

B- B

Val wants to invest in a fund whose primary objective is to conserve principal, provide income, and provide long-term growth. Which of the following will best meet her needs?

B- Balanced funds

If you hold mutual fund shares in your Roth IRA, the taxes will be

B- Eliminated

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

B- Exchange-traded funds

Which of the following types of stock funds invests in stock issued by companies expecting higher than average revenue and earnings growth?

B- Growth funds

Cash paid to shareholders that is NOT related to the sale of securities in the fund's portfolio is called

B- Income dividend

Which of the following is unique for a closed-end fund?

B- Its value is determined by supply and demand

Which one of the following is not a positive aspect of credit?

Being able to spend more

A problem with mutual fund is

C- Being required to report reinvestment income dividends and capitol gain distributions on your federal tax return

Which class of shares does not charge a sales load or contingent deferred sales fee and charges a higher 12b-1 fee than the other classes?

C- C

When you sell your shares in a mutual fund, you may receive a profit called

C- Capitol Gain

Which of the following stock funds invests in the same companies included in the S&P 500?

C- Index funds

Which of the following is true about mutual funds and taxes?

C- Investment companies are required to send each share holder a year-end statement that specifies how much each received in dividends and capitol gain distribution

All of the following are advantages of a mutual fund EXCEPT

C- Loads of up to 8.5 percent

Sally wants to invest in a mutual fund. The mutual fund must provide a(n)_____ to her.

C- Prospectus

Which of the following is NOT a way one can access reliable information about mutual funds on the internet?

C- Review blogs from amateur investors about their favorite mutual funds

Time is an important factor when evaluating a mutual fund for which of the following?

C- the tenure of a fund manager

Which of the following contains a letter from the president of the investment company, detailed financial information, a schedule of investments, and a letter from the fund's independent auditors?

C-Mutual fund annual report

Which of the following has a maturity date?

CD

Explain the different components of a certificate of deposit.

CD: interest earning savings instrument purchased for a fixed period of time. Fixed time deposit, Amounts range from $100-$100,000 Time ranges from 7 days - 8 years The interest rate typically remains fixed for the entire term some offer Variable-rate/adjustable rates. Can lock in rate before account matures. Brokered CDs: often pay the highest yields and available through stock-brokerage firms. They are bought by firm in bulk and sold to brokerage customers. No sale commission. They are federally insured if purchased through an insured depository institution. The interest rate typically remains fixed for the entire term. Money withdrawn before the end of the time period is subject to interest penalties. less than a year 3 interests, more than a year 6 interests.

Capitol Gain/ Capital Loss

Capitol Gain: net income received from the sale of an asset above the costs of purchase/selling it. Capital Loss: profit or loss on the sale of an asset that has been held for more than a year.

Which of the following is true?

Closing credit card accounts can increase the ratio of what you owe to total available credit which can reduce your credit score.

What's true about the Patient Protection and Affordable Health Care Plan (Health Care Reform)?

Companies can no longer set a max lifetime payout

Which of the following is true about the Patient Protection and Affordable Health Care Plan (Health Care Reform)?

Companies can no longer set a maximum lifetime payout.

Which of the following is true regarding automobile insurance? 

Comprehensive automobile insurance protects against property damage losses caused by perils other than collision and rollover.

The U.S. Bureau of Labor Statistics measures inflation using the

Consumer Price Index

loan

Consumer credit that is repaid in equal amounts over a set period of time.

Which of the following was not part of the definition given about comsumerism?

Consumerism is usually passed down from one generation to another.

Which of the following was the first step a person should do if they think they might not be able to make a mortgage payment? 

Contact the lender and try to work out a plan with them

Which of the following was the first step a person should do if they think they might not be able to make a mortgage payment?

Contact the lender and try to work out a plan with them.

Which of the following was not one of the steps to "defend" against identity theft if you have become a victim? 

Contact your state insurance licensing department.

credit agreement

Contract that stipulates repayment terms for credit cards.

Which of the following is true about Roth IRAs?

Contributions are not tax deductible.

state the importance of and describe various credit components such as credit history, credit report, credit bureaus, and credit scores.

Credit Report: Compile info from merchants, utility companies, banks, court records, and creditors about your payment history. Credit Bureau: Firm that collects and keeps records of many borrowers credit history. Credit Score: statistical measure used to rate applicants based on various factors deemed relevant to creditworthiness.

A _____________________ is a not-for-profit organization.

Credit Union

Which of the following is false about credit scoring?

Credit scoring is what lenders do after watching if you have been paying your loan payments on the loan you have with them.

Which of the following is false?

Credit scoring is what lenders do after watching if you have been paying your loan payments on the loan you have with them.

discuss the concerns about closing a credit card account.

Credit utilization ratio should be below 30%

How do mutual funds provide returns to their shareholders?

D- All of the above

Sally wants to invest in a fund that only invests in stock. Which of the following will meet her needs?

D- Midcap funds

Which of the following provides a means of monitoring the value of your mutual fund investments, but not as much information as the other options listed to conduct a more complete evaluation?

D- Newspapers

Which of the following stock funds invests in stock issued by companies throughout the world outside of the US?

D- international funds

Which of the following is NOT correct about the 12b-1 fee?

D- it needs to be disclosed in the annual report but not in the prospectus

What is the portion that an insured person must pay annually before receiving any reimbursements?

Deductible

Tax Evasion

Deliberately and willfully hiding income from the IRS, falsely claiming deductions, or otherwise cheating the government out of taxes owed.

Ways to get out from under excess debt

Determine all your account balances and required Monthly payments Focus your budget on debt reduction Contact your creditors Don't take on new credit Refinance to lower interest rates Find good help and Avoid bad help (credit counselors that charge fee)

Which one of the following was not one of the tips for talking about money?

Do not disagree.

Tax Credit

Dollar-for-dollar decrease in tax liability; also known as credit. Tax credit reduce your tax liability dollar for dollar whereas tax deduction reduces the amount of your taxable income which is used to calculate tax liability. 1000$ tax credit would save 1000$ in taxes. 1000$ tax deductions when in 25% tax bracket saves 250$ in taxes.

Which of the following is NOT correct?

E- A managed fund will outperform an index fund only 60 percent of the time.

How is an ETF similar to a closed-end fund?

E- All of the above

Professional advisory services provide research on mutual funds in all of the following areas EXCEPT

E- All of the above are included by professional advisory services

All of the following are valid ways to purchase mutual funds except

E- All of the ways listed are valid

Whose shares are issued and redeemed by the investment company at the request of investors?

E- Open-end funds

Which of the following provides some information about mutual funds for free and more detailed information at a cost?

E- Professional advisory services

Which of the following stock funds invests in stock traded within one area of the world?

E- Regional funds

Melinda wants to withdraw some money from her mutual fund. Which of the following is NOT an option available?

E- Withdraw all principal and leave interest dividends and capitol gain distributions in the account

A contingent deferred sales load is known as all of the following EXCEPT

E- all of the above

An example of a refundable tax credit would be the

Earned Income Credit

Describe different types of endorsements on checks.

Endorsement: process of writing on the back of a chck to legally transfer it ownership, usually in return for cash amount indicated on the face of the check. BLANK ENDORSEMENT: Contains only payees signature on the back and immediately becomes a bearer instrument meaning that anyone who attempts to cash it will very likely be allowed to do so. SPECIAL ENDORSEMENT: Limits who can cash it and indicates Pay to the order of ____ RESTRICTIVE: For deposit only writen on the back along with the signature and can only be deposited.

What are amendments and additions to the basic insurance policy?

Endorsements

A capitol gain distribution is the profit that usually results when investors sell shares that have increase in value

FALSE

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

FALSE

A newspaper will provide more complete coverage of mutual funds compared to other sources

FALSE

A socially responsible fund invests in companies that produce tobacco, nuclear energy, and weapons in order to influence the board to change the companies' mission statements.

FALSE

An aggressive growth fund invests in companies with a long history of paying dividends

FALSE

An exchange-traded fund has portfolio managers who actively research and select stocks and other securities

FALSE

An investment company sponsoring a mutual fund must give potential investors an annual report

FALSE

Cynthia received an IRS Form 1099DIV. This form is sent at the end of each quarter to specify how much she received in dividends and capitol gain distributions

FALSE

For Individuals , stocks and bonds are safer choices than mutual funds because money is pooled from many investors for mutual funds.

FALSE

In 2008, investors in the US could choose from more than 25,000 mutual funds

FALSE

Most managed mutual funds outperform the Standard & Poor's 500 stock index

FALSE

Most mutual funds are closed-end funds

FALSE

Mutual funds provide amateur management

FALSE

Open-end mutual funds have managers and closed-end funds do not

FALSE

Stephanie wants to invest in a mutual fund that invests in companies within the same industry. She should put her money into a regional fund.

FALSE

The only way to get reliable information about mutual funds is to pay a fee for it.

FALSE

The return for an intermediate US government bond fund should be higher than for a junk bond fund

FALSE

Flexible Spending Accounts IRAs reduce Tax liability

FSA reductions are not included in the individuals taxable earnings reported on W-2 and the reimbursements from it are tax free. Use it lost it rule. IRA is considered an adjustment to income, which reduces your current year income tax liability. They grow tax free Considered an adjustment to income.

What is negligence?

Failure to exercise the standard care that a reasonable person would give under similar circumstances

what is the FDIC dep

Federal Deposit Insurance Corporation - Insure deposits up to $250,000

What provides protection for accident and theft losses to movable property regardless of where the loss occurs?

Floater policies

Which of the following is false?

Gap insurance is not profitable for the dealer.

describe various terms of credit such as garnishment, repossession, foreclosure, and deficiency balance.

Garnishment: Court-sanctioned procedure by which a portion of debtors wages are set aside by their employers to pay debts. Repossession/Foreclosure: Legal proceeding by which the lender seizes an asset. Deficiency balance: occurs when money raised by the sale of repossessed collateral doesn't cover the amount owed on the debt plus any repossession expenses

discuss various topics in connection with checking accounts.

Grace period: time in days during which deposits or withdrawals can be made and still earn interest from a given day of the interest period. Demand deposit accounts: pay no interest Tiered Interest: The combination of a base rate and a higher rate

Which of the following reports how much economic activity has occurred within the U.S. borders?

Gross Domestic Product

What provides a broad range of health care services for a set monthly fee on a prepaid basis that focuses on preventive care?

HMO

Which of the following provides a broad range of health care services for a set monthly fee on a prepaid basis that focuses on preventive care?

HMO

Patricia has $127,000 in a CD at her bank and $147,000 in a money market account at her credit union. They both are federally insured. Which of the following is correct?

Her funds are completely covered because they are at two different institutions.

Which of the following is true?

If you close credit card accounts, it is best to close newer accounts.

means test

In bankruptcy, a court determines whether an individual debtor's Chapter 7 filing can be presumed to be an abuse of the bankruptcy laws requiring dismissal or conversion of the case. Test to see if person can pay off debts

Which of the following describes level-premium term insurance?

It is a term policy with a long time period where the premiums remain constant.

Which one of the following is false concerning online buying?

It is best to use a debit card.

Which of the following is true about tax-sheltered income?

It is considered the second best type of income. It is exempt from income taxes in the current year but will be subject to taxation in a later tax year. It is also called tax-deferred income.

Which of the following is true about compounding of interest?

It is earning interest on interest. It depends on the frequency with which interest is compounded. It depends on the periodic interest rate that is applied.

Which of the following is not true for open-ended credit?

It is installment credit.

Which of the following is false about cash value life insurance?

It is the least expensive form of life insurance.

What is false about umbrella insurance?

It is very expensive

Which of the following was not mentioned as an aspect of affinity fraud? 

It is when someone gives a guarantee that an investment will have an excellent return.

What is true about comprehensive auto insurance?

It protects against property damage losses caused by perils other than collision and rollover

What is the main benefit of a Health Savings Account?

It provides a tax deductible account for paying medical bills.

Which of the following is true regarding a Chapter 7 bankruptcy?

It provides for an immediate liquidation of assets.

What is true about long-term care insurance?

It provides reimbursement for costs associated with custodial care

Which of the following about Long-Term Care Insurance is true? 

It provides reimbursement for costs associated with custodial care.

What is true about actual cash value?

It represents the purchase price of the property less depreciation

Which of the following is the correct statement for the Truth in Lending Act? 

It requires lenders to disclose to credit applicants both the interest rate expressed as an annual percentage rate and the finance charg

Which of the following is the correct statement for the Truth in Lending Act?

It requires lenders to disclose to credit applicants both the interest rate expressed as an annual percentage rate and the finance charge.

What's true about Disability Income Insurance?

It will replace income when there is a disability

Which of the following about Disability Income Insurance is true?

It will replace income when there is a disability.

What describes level-premium term insurance?

It's the term policy with a long time period where the premiums remain constant

What policy limits specifies the max reimbursement for a particular health care expense?

Item

11 suggestions to keep student debt under control

KNOW YOUR LOANS: keep track of the lender, balance, and repayment status for each of your student loans to determine your options for loan repayment and forgiveness. LIMIT STUDENT DEBT: don't borrow more than 50 percent of your first-year salary, 100 percent at the most. Rather than borrow, get a part-time job to cover living expenses. Choose a school that costs less than the big-name college or university. OPEN EVERY PIECE OF LENDER MAIL: Open and read every piece of mail, paper and electronic, you receive about your student loans. KEEP LENDERS UP TO DATE ON YOUR ADDRESS: Whenever you move or change your phone number or e-mail address, tell your lender right away. Otherwise, you might miss the next payment. PREPAY THE LOAN IF YOU CAN: If you can afford to pay more than your required monthly payment toward the "loan balance," you can lower the amount of interest you have to pay over the life of the loan. PAY OFF THE MOST EXPENSIVE LOAN FIRST: If you're considering paying off one of your loans ahead of schedule, experts say to start with the one that has the highest interest rate. Others say to first pay off the one with the smallest balance because you will do so more quickly, providing the gratification and momentum to pay off all your debts. PICK THE RIGHT REPAYMENT OPTION: When your federal loans come due, your loan payments will automatically be based on a standard 10-year repayment plan. If there are other options, you can change plans down the line if you want or need to. KNOW YOUR STUDENT LOAN GRACE PERIOD: A student loan grace period is the period of time a lender gives you to make your repayments without having to pay interest or late fees. FORGIVENESS MAY BE AVAILABLE: For those employed in government, nonprofit, and other public service jobs relief may be possible. The lender may offer some type of forbearance, often for a fee, or you may be able to make interest-only payments for some period of time. You also may get deferments, forbearance, and/or an income-based repayment schedule. Do Not Extend the Loan(s). Extending your repayment period beyond 10 years can lower your monthly payments, but you'll end up paying more interest. To Consolidate or Not: A consolidation loan is the combining of several unsecured debts into a single, new loan that is more favorable. It may result in a lower interest rate or a lower monthly payment, or both.

Which of the following is false about leasing?

Leasing payments are usually more than loan payments.

Exemptions

Legally permitted amount deducted from Average Gross Income based on the number of people that the taxpayers income supports. legally deducted from adjusted gross income. Value of the exemption is phased out for those with higher incomes. It is based on the number of people supported by the tax payers income.

According to The Financial Checkup booklet, which of the following is the most important part of auto insurance?

Liability

What is the most important part of auto insurance coverage because it covers the area with the greatest potential for loss?

Liability

Difference between Marginal tax rate Average tax rate.

Marginal tax rate: one of seven income-range segments at which income is taxed at increasing rates. Applies to last dollar of earnings. Average tax rate: The proportion of your total income that you pay in income taxes Therefore, your average percentage of your income will always be less than the marginal tax rate. 10000 pay 1000 in taxes, average tax rate is 10%. Marginal is always higher but every segment taxes it at different amounts.

differentiate between money market deposit accounts and money market mutual funds.

Money Market Deposit: Gov. insured money market account with minimum balance requirements and tiered interest rate. Money Market Mutual Fund:

Which of the following was one of the findings from the study by the authors of The Millionaire Next Door?

Most millionaires become wealthy as a result of hard work and self-discipline.

Credit Unions can have their accounts federally insured through which of the following organizations?

NCUSIF

What considers all the factors that might potentially affect the level of need for life insurance?

Needs based

Non Refundable tax credit

Non-Refundable: Tax credit that can reduce one's tax liability only to zero; however, if the credit is more than the tax liability, the excess is not refunded.

list the signs of overindebtedness.

Not knowing how much you owe running out of money paying only the minimum amount due exceeding debt limits and credit limits requesting new credit cards and increases in credit limits Using cash advances to pay other credit cards Pyaing late or skipping credit payments Taking add-on loans Using debt-consolidation loans Experiencing Garnishment Experiencing repossession or foreclosure

Which of the following is false about mortgage insurance? 

Once it is on a loan it can never be cancelled.

Fair Credit Reporting ACT (FCRA)

One part of the law requires that credit reports contain only accurate relevant information and allows consumers to CHALLENGE errors or omissions of information in their reports. bureau has 45 days to check

Which of the following statements is false concerning online banking?

Online banks do not need to be federally insured because everything is encrypted.

Which of the following statements is false concerning online banking?

Online banks do not need to be federally insured because everything is encrypted. TRUE You should check yourself to see if the online banking institution is federally insured and not rely on what the website says. Passwords should be changed frequently. An important part of safe online banking is keeping your own computer's virus protection up to date.

Debt limit

Overall maximum you believe you should owe based on your ability to meet repayment obligations expressed as a percentage of disposable income. 10% or less - little debt 11-14% = safe debt 15-18% = Precariously overindebted 19-28% = Seriously overindebted 29+% = Excessively overindebted

debt limit

Overall maximum you believe you should owe based on your ability to meet repayment obligations.

What would pay benefits if an individual could not perform the occupation they had when they became disabled?

Own-occupation disability insurance

What's a correct fact about reassessing your life insurance needs?

Parents with grown children have a decreased need for life insurance

Which of the following is a correct fact about reassessing your life insurance needs?

Parents with grown children have a decreased need for life insurance.

Which of the following was not mentioned as a prerequisite to investing?

Pay off all your debt.

Which of the following statements is false regarding payday loans?

Payday loans are a good way to get out of debt.

Which of the following statements is false?

Payday loans are a good way to get out of debt.

Which of the following is false about payday loans?

Payday loans are a low-cost, alternative form of credit.

Which of the following is false?

Payday loans are a low-cost, alternative form of credit.

describe concerns of using alternative lenders for credit such as payday lenders, rent-to-own programs, and pawn shops.

Payday loans are illegal in some states. In a rent-to-own program, the renter does not own the item until the final payment is made. Pawnshops usually loan one-third or less of the value of the item pawned.

state how payday loans work and questions to ask if considering a payday loan

Payday loans are illegal in some states. In a rent-to-own program, the renter does not own the item until the final payment is made. Pawnshops usually loan one-third or less of the value of the item pawned.

subprime borrowers

People with poor credit histories who are required to pay lenders more than others for credit.

Disposable income method

Percentage of disposable personal income available for regular debt repayments aside from set obligations. focuses on the amount of monthly debt repayments-- not one's total debt 87 / 185

debt repayment at 15-18% of disposable personal income: Current Debt Situation, Borrower's Feelings, and "Should you take on additional Debt?"

Precariously over indebted Borrower feels seriously stressed about debts and hopes no emergency event arises Absolutely should not take on more debt and should consider contacting a nonprofit credit counseling agency

____________________ is a court supervised process that files individuals' wills, pays their debts, and distributes their property.

Probate

During expansion, which of the following is high?

Production

Which of the following would be the recommended action for a loss that has low frequency and high severity?

Purchase insurance to cover the potentially large losses.

Which of the following business cycle phases is a recurring period of decline in total output, income, employment, and trade? 

Recession

Which one of the following was not one of the three important points for goals mentioned in The Financial Checkup booklet?

Report the goal to someone.

The Truth in Lending Act

Requires lenders to state the finance charge both in dollars and as an annual percentage rate (APR)

A __________________ endorsement uses the phrase For Depost Only on the back of the check.

Restrictive

What is not one of the 4 areas from the reading that people need to protect?

Retirement

Mutual Savings Bank

Similar to savings bank in that it accepts deposits and makes housing and consumer loans. These banks are legally permitted in 17 states. They are mutual because depositors own the institution and share the earnings. It is backed by the FDIC and BIF

Which of the following was not one of the steps to budgeting listed in The Financial Checkup booklet?

Slash all unnecessary expenses.

what are SMART goals?

Specific, Measurable, Attainable, Realistic, Timely

Deductions

Standard Deduction: fixed amount that all taxpayers subtract from their adjusted gross income if they don't itemize deductions. The standard depends upon filing status or marital status. Itemized deductions: Tax-deductible expenses. 1000$ tax deductions when in 25% tax bracket saves 250$ in taxes. 1000$ tax credit would save 1000$ in taxes.

Which of the following is false about bonds? 

Stocks and bonds tend to move in the same direction.

list tips for safe internet banking.

Study statements , avoid banking via computer/ mobile on unsecured networks be cautious about social networking and job search sites. Never provide account info if you get an email from your bank. Its likely a scam Always log off when done banking. avoid others computers for managing account. change passwords regularly and keep financial paper aways from guests/friends buy a shredder and save copies of electronic transactions.

A higer turnover ratio for a mutual fund can result in higher tax bills

TRUE

Brenda wants to invest in a fund that will outperform most others. On average, she would be better off to invest in an index fund instead of a managed closed-end fund

TRUE

If Ryan wants to invest in an S&P 500 index fund, he should not expect his fund to behave differently than the underlying index

TRUE

Many people invest in mutual funds through their retirement accounts

TRUE

Many people own mutual funds as part of a 401(k) plan

TRUE

Mutual funds may carry a risk that they will substantially decrease in value

TRUE

The difference between a global stock fund and an international fund is that the global stock fund invests in companies throughout the world, including the US and the international fund invests outside the US

TRUE

Which of the following is illegal?

Tax Evasion

what is the difference between tax avoidance and tax evasion?

Tax avoidance is reducing tax liability through legal techniques Tax evasion is deliberately and willfully hiding income, falsely claiming deductions

Refundable Tax Credit

Tax credit that can reduce one's income tax liability to below zero with the excess being refunded to the taxpayer. Refundable are often subject to income limits. Earned Income Tax Credit is a refundable tax credit. Refundable tax credits can reduce your taxes to below zero.

Regressive Tax

Tax imposed in such a manner that the tax rate stays the same for all income with the result that lower-income people pay proportionately more in taxes. Example: Buying Food when earning 30,000 for 6,000 on food taxed 7% is 1.4% on food. 80,000 for 10,000 on food is .87% on food. (7%* 6000= 420/30000= 1.4) (7%* 10000 -700/80000= .87%)

Which of the following is false about a reverse mortgage?

The borrower must start paying back the loan right after closing.

Which of the following is false about a reverse mortgage? 

The borrower must start paying back the loan right after closing. TRUE ABOUT REVERSE MORTAGE It is also known as a home-equity conversion loan. The borrower must be older than age 61. The borrower trades the equity in his or her home for a fixed monthly income or line of credit.

What person would receive the benefits if the beneficiary dies before the insured?

The contingent beneficiary

What best describes Medicare?

The federal government's health care program for person's aged 65 and older

Which of the following best describes Medicare?

The federal government's health care program for persons aged 65 and older.

identity theft

The fraudulent acquisition and use of a person's private identifying information, usually for financial gain.

Which of the following is true about flexible spending accounts?

The funds may be used to pay for dependent care for dependents younger than age 13. The funds may be used to pay for eyeglasses, contacts, and copayments. The funds are forfeited if not used within the time limit, unless the policy allows a carryover or grace period.

What is false about social security survivor's benefits?

The level of benefit depends on the age of retirement

Which of the following is false about Social Security survivor's benefits?

The level of benefit depends on the age of retirement.

What's false about long-term care insurance?

The longer the waiting period the higher the premium

Which of the following about Long-Term Care Insurance is false?

The longer the waiting period the higher the premium.

FICO Score

The most widely known credit scoring system used by 90+% of companies when making lending decisions. Fair Isaac Corporation

describe a debt limit.

The overall maximum you believe you should owe based on your ability to meet repayment obligations. It should be lower then what lenders offer. 4 method to determine debt limit: Debt to income method Debt payment to disposable income Compare Debt-to-equity Continuous Debt

What person controls all rights granted by a life insurance policy?

The policy holder

Which of the following is correct for a closed-end fund?

The price of its shares is determined by supply and demand, by the value of stocks in the portfolio, and by investor expectations.

What was not part of the info for "buy term and invest the rest"?

The principle consists of finding the difference between the value of the life insurance portion of a cash value policy and the value of the investment portion of the cash-value policy

Which of the following was not part of the information for "buy term and invest the rest?"

The principle consists of finding the difference between the value of the life insurance portion of a cash value policy and the value of the investment portion of the cash-value policy.

credit-monitoring service

These companies allow one to access his/her credit report as often as daily and obtain a personal FICO credit score. A waste of money

Which of the following is true about stocks?

They are a form of ownership.

Which of the following is true about cover letters?

They are designed to express your interest in obtaining an interview. They should sell you to the prospective employer. They should expand on a couple of details from your resume.

Which of the following is true about Health Savings Accounts?

They are for people with high-deductible health care plans. Contributions to the savings account are tax-deductible.. Withdrawals from the savings account are made to pay for medical expenses.

Earthquake insurance

This is an insurance coverage that can be purchased only from a private insurance company either as a separate policy or as an endorsement to an existing homeowners or renters insurance policy, it covers california.....

What is the purpose of power pay?

To determine how to more quickly pay off debts

What is the purpose of the Schumer's box?

To help consumers easily understand and compare rates and fees associated with credit card offers across the board.

What is the purpose of a title search?

To protect the buyer's title to the property.

What is the purpose of a title search? 

To protect the buyer's title to the property.

finance charge

Total dollar amount paid to use credit including interest and any other required charges such as a loan application fee 182 (READ)

Variety of Checks

Travelers Checks : purchasers pay fee 1% or 1 of every 100$. Money order: US Postal Service and many retailers and financial institutions sell money orders. Usually for smaller amount fees range from .50 to 8$ Certified checks: bank/institution prints Certified on check ensuring that the check has sufficient funds. Cashiers checks: back by institutions finances and when used it draws from the institutions finances.

Fair Credit Reporting Act

U.S. Federal Government legislation enacted to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies.

Which of the following is not true about Certificate of Deposits?

Usually interest rates on shorter-term CDs are higher than rates on longer-term instruments.

What is the purpose of a usury law?

Usury laws are regulations governing the amount of interest that can be charged on a loan. Usury laws specifically target the practice of charging excessively high rates on loans by setting caps on the maximum amount of interest that can be levied. These laws are designed to protect consumers.

Which of the following is not true?

When a written request is given for a stop-payment, the check can never be cashed.

When does Homeowner's Liability Insurance cover losses?

When you are legally liable for another person's losses other than losses from vehicle use

When does Homeowner's Liability Insurance cover losses?

When you are legally liable for another person's losses other than losses from vehicle use.

Which of the following was not one of the steps to budgeting listed in The Financial Checkup booklet?

Which of the following was not one of the steps to budgeting listed in The Financial Checkup booklet?

Melinda wants to withdraw some money from her mutual fund. She has a minimum required asset value of $10,000. Which of the following is not an option available for her to systematically withdraw some money?

Withdraw all principal and leave interest dividends and capital gain distributions in the account

Which of the following statements about traditional IRAs is false?

Withdrawals are tax-free.

Which of the following statements about refundable tax credits is false?

You cannot get a refund if you have more tax credit than your tax liability.

Which of the following is false about trading in a car?

You will get more for your car. TRUE about trading in car It is quicker. The dealer does the reconditioning work. The dealer does the paper work.

Which of the following is not a correct credit card rule as of February 2010?

Your credit card company must send you a notice 90 days before they can increase your interest rate.

Debt to income method.. Desirable...

Your monthly debt repayments (including your prospective mortgage, and any other loan or alimony payments you must make) are divided by your gross monthly income and multiplied by 100 Desirable: 36% or less and should decrease with age 87 / 185

Umbrella liability insurance

a catastrophic liability policy that cover liability losses in excess of those covered by any underlying homeowner's automobile or professional liability policy. Work great to cover the rest of the costs that are not covered with other target specific insurance.

What is bankruptcy?

a constituionally guaranteed right that permits people to ask a court to find them officially unable to meet their debts

what is a lease? con what are your protections as a leasor? rep, wate

a contract specifying the legal responsibilities of both the tenant and the landlord. -making repairs, retaliatory actions, habitability

Which of the following operate on a not-for-profit basis?

a credit union

Straight bankruptcy (Chapter 7) (immediate liquidations plan) steps..

a debtor's assets are sold, creditors receive payment, and the debtor is freed from most if not all of his/her debts. Last option. Permitted when repayment is nearly impossible. AKA Straight bankruptcy 1. pass a means test 2. assets are distributed to creditors Cannot file Ch. 7 for min. 6 years

National Flood Insurance Program

a federal government program that makes flood insurance available in countries where flood is common.

Fair Credit Billing Act

a federal law that aims to protect consumers from prejudicial or unfair billing practices. The Fair Credit Billing Act provides mechanisms to quell address billing errors in "open end" credit accounts, such as charge card accounts and credit cards.

what is a depository institution? leg c s

a financial institution in the US that is legally allowed to offer checking and savings accounts to individuals and businesses as well as provide loans. Ex commercial banks, credit unions

Insurance claim

a formal request to the insurance company for reimbursement for a covered loss.

what are debit limits and debit methods? max,

a limit is the overall maximum you believe you should owe based on your ability to meet payment obligations -the methods are continuous debt method, debt payment to disposable income, debt to income method

Which of the following is not included on a credit card statement?

a list of disputed purchases

credit rating

a measure of a person's ability and willingness to make credit payments on time

Insurance

a mechanism for transferring and reducing pure risk through which a large number of individuals share in the financial losses suffered by members of the group as a whole.

Coinsurance

a method by which the insured and the insurer share proportionately in the payment for a loss.

Condominium form (HO 6)

a named perils policy protecting condominium owners from the three principle losses they face: loss to contents and personal property, losses due to the additional living expended that may arise if one of the covered perils occurs, and liability losses.

Broad form (HO 2)

a named perils policy that covers 10 property damaged perils and provides protection from three liability related exposures.

Basic form (HO 1)

a named perils policy that covers 11 property damaging causing perils and provides three areas of liability related protection: personal liability, property damage liability, and medical payments.

Renters contents broad form (HO 4)

a named perils policy that protects the insured from losses to the contents of a dwelling rather than the dwelling itself.

Physical hazard

a particular characteristic of the insured person or property that increases the chance of loss

Goals should be based on

a person's values

Goals should be based on

a persons values

What is an umbrella policy? layer

a policy that extends the basic liability coverage provided in different types of policies.

what is marginal tax rate? last dol

a rate at which your last dollar of income is taxed. The highest tax bracket that your taxable income puts you in

Largeloss principle

a risk management rule that states that you should pay for small losses out of your own pocket and purchase as much insurance as necessary to over large, catastrophic losses that will ruin you financially.

credit scores and FICO scores

a score that is an indication of a person's credit worthiness/how likely they are to pay to credit back in a timely manner -the most widely known credit scoring system developed by Fair Isaac Corporation and used by over 90 percent of companies when making lending decisions

Which of the following is backed by collateral?

a secured loan

Risk reduction

a way to handle risk is to reduce it to acceptable levels insurance is used by policyholders when they arrange for all or a portion of their risk to be covered by an insurance company, thereby reducing the level of risk

Risk retention

a way to handle risk is to retain or accept it.

Risk transfer

a way to handle risk where an insurance company agrees to reimburse you for a financial loss

Which of the following states that after a specific number of missed payments the loan is considered in default and all remaining payments are due and payable upon demand of the creditor?

acceleration clause

Which of the following states that after a specific number of missed payments the loan is considered in default and all remaining payments are due and payable upon demand of the creditor?  chargeback

acceleration clause

The type of mortgage where the interest rate can fluctuate up and down according to an index of interest rates is the _______ mortgage.

adjustable-rate

The type of mortgage where the interest rate can fluctuate up and down according to an index of interest rates is the _______ mortgage. 

adjustable-rate

cosigning

agreeing to be responsible for another person's loan payments if that person fails to make them

How do mutual funds provide returns to their shareholders?

all of these

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

Personal property inventory

all the contents of your home are time consuming but important tasks.

Subrogation rights

allow an insurer to take action against negligent third party (and that party's insurance company) to obtain reimbursement for payments made to an insured.

Which of the following shows the portion of the monthly mortgage payment that will go toward interest and principal and the debt remaining after each payment?

amortization schedule

What is open-end credit?

an account under which you are allowed to make repeated purchases or obtain loans and you may pay the balance in full or you may pay in installments

Hazard reduction

an action taken by the insured to reduced the probability of a loss occurring.

What is revolving credit?

an arrangement between financial institution and customer that establishes a maximum credit limit that the lender will permit the person to borrow

credit

an arrangement to receive cash, goods, or services now and pay for them in the future

Debt management plan

an arrangement where the consumer provides one monthly payment that is distributed to all creditors.

creditor

an entity, such as a financial institution, merchant, or individual, that lends money

Content replacement cost protection

an option sometimes available in homeowner's insurance policies that pays the FULL replacement cost of any personal property.

What is risk? types of risk? (Spec, PUre)

an uncertainty about the outcome of a situation or event. The types of these are speculative risk and pure risk. Speculative risk is where there is potential gain and a potential loss Pure risk is no potential for gain, only possibility for a loss

How often should a financial checkup be completed?

annually

A(n) ___________________________ is a contract with an insurance company to provide guaranteed retirement income.

annuity

Financial loss

any decline in the value of income or assets in the present or future.

Homeowners general liability protection

applies when you are legally liable for the loses of another person (a guests son gets burned by the stove).

Law of large numbers

as the number of members in a group increases, predictions about the groups behavior become increasingly more accurate (statistics) larger group, better prediction of what will occur by averaging their loss events.

What is the law of large numbers?

as the number of members increase, predictions about the groups behavior become easier to predict

Thomas wants to invest in a fund that invests in stock, bonds, and money market instruments. Which of the following will meet his needs?

asset allocation funds

A balance sheet includes _______, _______, and _______. 

assets; liabilities; net worth

Of the following ways to protect yourself from overdraft fees, which one takes the amount necessary to cover an overdraft from your savings account?

automatic funds transfer agreement

Which of the following is the proportion of your total income that you pay in income taxes?

average tax rate

Which of the following is the proportion of your total taxable income that is paid in taxes

average tax rate

explain the new rules for debit and ATM cards.

bank must inform you on your rights and responsibilities in a written disclosure statement. Must be given a receipt from a POS terminal or ATM.

Exemptions are

based on the number of people supported by the tax payer's income.

Which of the following shows the number of months a person could continue to meet expenses using only his or her monetary assets if all income ceased? 

basic liquidity ratio

Legally liable

being held responsible for losses suffered by others

Tuition reimbursement, paid vacations, child care, and financial planning services can all be examples of employee _______________________.

benefits

Which of the following documents should not be kept in a person's active file?

birth certificates

Which of the following is the least safe way of endorsing a check?

blank endorsement

Which of the following benefit programs lets an employee choose which benefit(s) he or she would prefer from a list of available options? 

cafeteria plans

Which of the following benefit programs lets employees choose the benefits they want to design their own benefits package?

cafeteria plans

Deductible and coinsurance reimbursement formula

can be used to determine the amount of loss that will be reimbursed when the policy includes a deductible and a coinsurance clause. R = (1-CP)(L-D), reimbursement= (1- coinsurance percentage required of the insured)(loss-deductible)

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

capital gain

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

capital gain distribution

Monetary asset (cash)

cash and low-risk near-cash items that can quickly be converted to cash.

When changing jobs, the textbook talks about an unwise option of what to do with employer-sponsored retirement plans. That unwise option is to

cash it out

Which of the following is the most unwise option for taking care of money in an employer-sponsored retirement plan when changing jobs?

cash it out

An income and expense statement is also known as a(n) _______ statement.

cash-flow

identify the different types of resumes (chron, skills, func)

chronological order (provides information in reverse order, most recent first) skills format( emphasizes your qualities) functional format( emphasizes career related experiences)

Which type of fund has the prices determined by factors of supply and demand like the prices of a stock?

closed end fund

Installment credit is also called

closed-end credit

Automobile insurance

combines the liability and property insurance coverages needed by automobile owners and drivers into a single-package policy.

Homeowners insurance

combines the liability and property insurance coverages needed by homeowners and renters into a single-package policy.

debt-consolidation

combining several unsecured debts into a single, new loan that is more favorable

Premium

comparatively small, predictable fee which individuals share in the financial losses suffered by the members of the group as a whole.

what is a financial statement?

compilations of personal finance data that describe an individual financial condition. they present a summary of assets and liabilites along with income and spending. Two most useful statements are balance sheet and cash-flow statement

The U.S. Bureau of Labor Statistics measures inflation using the

consumer price index

What are the advantages/disadvantages to credit cards?

convenience, reduce carrying cash, emergencies, -tempting to spend more money then you have, interest is costly, possible identify theft, old debts

Commercial Banks

corporations chartered under federal and state regulations that offer numerous

All risk policies

cover losses caused by all perils other than those specifically Excluded by the policy!

Named perils policies

cover only those losses caused by peril that are specifically mentioned in the policy.

Automobile medical payments insurance

covers bodily injury losses suffered by the driver of the insured vehicle and any passengers regardless of who is at fault.

open-end credit

credit as a loan with a certain limit on the amount of money you can borrow for a variety of goods and services

closed-end credit

credit as a one-time loan that you will pay back over a specified period of time in payments of equal amounts

Which of the following shows a view of a person's total debt burden?

debt service-to-income ratio

Which of the following ratios should be 36% or less and decline as one grows older?

debt-to-income ratio

Which of the following ratios should be 36% or less and decline as one grows older?

debt-to-income-ratio

Which of the following is the portion that an insured person must pay annually before receiving any reimbursement?

deductible

Which of the following occurs when the sum of money raised by the sale of the repossessed collateral fails to cover the amount owed?

deficiency balance

A(n) ________________________ work retirement plan guarantees a specific amount in retirement and the responsibility for funding falls on the employer.

defined benefit

Which of the following is a broad, sustained decline in prices of goods and services?

deflation

Loss severity

describes the potential magnitude of the loss(es)

Which of the following is the amount of income remaining after taxes and withholdings?

disposable income

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

diversification and professional management

debt payments-to-disposable income method

divide your nonmortgage debt payment by your disposable (take-home) income considered over indebted if ratio is more than 15% 185 / 6.2b

Unexcused debts for bankruptcy

education loans that have come due within the previous seven years fines alimony child support income taxes for the most recent three years and debts for causing injury while driving under the influence of alcohol or drugs.

If you hold mutual fund shares in your Roth individual retirement account, the taxes on reinvested income will be

eliminated

What is risk avoidance? risk reduction?

elimination of hazards, any sort of risk -reduce the overall uncertainty about the magnitude of a loss

Which of the following is a great way to overcome the stumbling block of large unexpected expenses?

emergency fund

Which of the following are amendments and additions to the basic insurance policy?

endorsements

Which of the following types of stock funds invests in stock issued by companies with a long history of paying dividends?

equity income funds

Which of the following was not mentioned in the reading as a step to take before looking for a home to purchase?

evaluate your furniture needs

Which of the following was not mentioned in the reading as a step to take before looking for a home to purchase? 

evaluate your furniture needs

Morale Hazard

exists when a person is indifferent to a peril. (keeping doors unlocked just because he/she knows that they are insured)

Moral Hazard

exists when an insured person wants a peril to occur so that he or she can collect on an insurance policy

Pure risk

exists when there is no potential for gain, only the possibility of loss. (fires, accidents, theft)

Owning and driving a car are examples of

exposures

The ________________________ is the dollar value of protection provided by life insurance.

face amount

Assets on the balance sheet are valued at their

fair market value

Assets on the balance sheet are valued at their 

fair market value

Truth in Lending Act

federal law designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed.

Which of the following states that a financial adviser must always act in the best interest of the client?

fiduciary standard

Release

final step in the claims settlement process is to sign an insurance document affirming that the dollar amount of the loss settlement is accepted as full and complete reimbursement and that the insured will make no additional claims for the loss against the insurance company.

Which of the following rates usually comes with installment credit?

fixed rates

hich of the following rates usually comes with installment credit?

fixed rates

Which of the following may be used to pay for the care of a dependent younger than age 13 or for qualified, unreimbursed out-of-pocket expenses?

flexible spending account

Which of the following provides protection for accident and theft losses to movable property regardless of where the loss occurs?

floater policies

Savings Bank

focus primarily on accepting savings and providing mortgage and consumer loans. They offer checking through interesting earning now accounts

Which of the following was not mentioned in The Financial Checkup booklet as one of the four important savings? 

for a down payment on a home

Which two ratios do lenders use to estimate the maximum affordability of housing expenses? 

front-end and back-end

Which of the following reports how much economic activity has occurred within the U.S. borders?

gross domestic product

A _____________________ is a legal document in which individuals designate another person to make health care decisions on their behalf.

health care proxy

Which of the following uses tax-deductible contributions to pay for eligible expenses for individuals with high-deductible health care plans?

health savings account

Credit counseling agency

help the consumer avoid bankruptcy, to provide basic education on financial management and to negotiate with unsecured creditors on behalf of the borrower to reduce interest rates and late fees.

Which of the following money personalities likes to save money and budget?

hoarder

Which of the following has a specific amount of money borrowed for a fixed time period with fixed monthly payments?

home-equity installment loan

Which of the following has a specific amount of money borrowed for a fixed time period with fixed monthly payments? 

home-equity installment loan

Which of the following are lenders allowed to discriminate against?

income

Independent insurance agents

independent business people who act as third party links between insurers and insureds. Usually get commission from the companies he/she may advise people to go to, is it meets their best needs.

Which of the following types of stock funds invests in the same companies included in the Standard & Poor's 500 stock index?

index funds

Which of the following suggests the future direction of the U.S. economy?

index of leading economic indicators

Direct sellers

insurance companies that market their policies through salaried employees, mail-order promotions, newspapers, and internet.

Comprehensive personal liability insurance policy

insurance for a personal accident that may have occurred outside of the home and car.

Replacement cost requirement

insurance policies usually contain this policy that stipulates that a home MUST be insured for 80 percent of its replacement value.

What is indemnity? (insurance)

insurance will pay no more than the actual financial loss suffered

interest earning checking account (negotiable order of withdrawal NOW account )

interest paying account with no or little fees are available

Which of the following provides up-to-date information that can help investors made decisions quickly without having to make a trip to the library?

internet

Which of the following is a temporarily low initial interest rate to entice borrowers to apply for a credit card?

intoductory rate

Which of the following is a temporarily low initial interest rate to entice borrowers to apply for a credit card?

introductory rate

Which one of the following was not one of the three rules for successful investing?

invest large amounts of money

The Fair and Accurate Credit Transactions Act

is a federal consumer-rights law that amended the Fair Credit Reporting Act of 1970 (FCRA). Its primary purpose is to reduce the risk of identity theft by regulating how consumer account information (such as Social Security numbers) is handled.

Tax Sheltered Income

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

Risk management

is the process of identifying and evaluating situations involving risk to determine and implement the appropriate means for its management. The goal is to minimize any risk or potential risk through advance planning.

Risk

is uncertainty about the outcome of the situation or event

What happens to purchasing power when inflation rises?

it declines

Which of the following is false about umbrella insurance?

it is very expensive

Which of the following policy limits specifies the maximum reimbursement for a particular health care expense?

item

According to The Financial Checkup booklet, which of the following is the most important part of auto insurance?

liability

Which of the following is the most important part of auto insurance coverage because it covers the area with the greatest potential for loss?

liability

Stock brokerage firms

licensed financial institutions that specialize in selling and buying stocks, bonds, and other investments and provide advice and assistance to investors and earn commissions based on the buy and sell orders that they process for their clients. They offer money market mutual fund accounts

refinancing

loaning an even larger amount than current loan to pay it off and using remainder of money for other purposes when you refinance or rewrite a loan for an even larger amount before it has been completely repaid. debt-con

Which of the following ways to handle risk would it be if you installed heavy-duty locks?

loss control

Personal losses

losses that can be directly suffered by specific individuals or organizations rather than society as a while.

Susan spent $100 on a new edition of the personal finance textbook rather than $75 for a used copy. The additional cost for the new copy is called the ________ cost.

marginal

Sally wants to invest in a fund that invests only in stock. Which of the following will meet her needs?

midcap fund

Which of the following must be made to cover interest and a portion of the amount owed to avoid default?

minimum payment

Which of the following types of assets is primarily used for emergencies, maintenance of living expenses, savings, and payment of bills?

monetary

Which of the following types of assets is primarily used for emergencies, maintenance of living expenses, savings, and payment of bills? 

monetary

Which of the following money personalities has a hard time paying bills promptly, avoids making a budget, and doesn't know how much money they have?

money avoider

____________________ are not federally insured but are still considered extremely safe?

money market mutal funds

_______________________ are not federally insured but are still considered extremely safe?

money market mutal funds

Which of the following are not federally insured but are still considered extremely safe?

money market mutual funds

Which of the following money personalities "feels that 'money is the root of all evil' and would immediately distribute any windfall coming his or her way?"

money monk

Examples of adjustments would be

moving expenses to a new job, student loan interest, and contributions to a qualified personal retirement account.

Which of the following contains a letter from the president of the investment company, detailed financial information, a schedule of investments, and a letter from the fund's independent auditors?

mutual fund annual report

Which of the following considers all the factors that might potentially affect the level of need for life insurance?

needs based

Which of the following considers all the factors that might potentially affect the level of need for life insurance? 

needs based

what is the difference between uninsured and under assured?

not having any insurance having various degrees of being insured for some risks but not all

Automobile bodily injury liability

occurs when a driver or car owner is held legally responsible for bodily injury losses suffered by other people, including pedestrians.

Automobile property damage liability

occurs when a driver or car owner is held legally responsible for damage to the property of others (another vehicle, a building, signs, or poles).

deficiency balance

occurs when the sum of money raised by the sale of the repossessed or foreclosed collateral FAILS TO COVER THE AMOUNT owed on the debt plus any repossession expenses (collection, attorney, and court costs) paid by the creditor.

Whose shares are issued and redeemed by the investment company at the request of investors?

open end fund

Kurt spent $80 on a new sweater rather than using this money to buy his personal finance textbook. The cost of doing without the textbook is called the _____ cost.

opportunity

To have your bank's standard overdraft practices apply to your debit transactions, you must first

opt in

depository institutions

organizations licensed to take deposits and make loans.

Which of the following would pay benefits if an individual could not perform the occupation they had when they became disabled?

own-occupation disability insurance

The _____________ controls all rights granted by a life insurance policy

owner

Who pays more, renters or owners?

owners pay more in the beginning while renters pay more at the end.

After hiring an employee, the law requires employers to do all of the following

pay Social Security taxes to the federal government, provide unemployment insurance, provide workers' compensation benefits if the employee is injured on the job

Which of the following has the greatest impact on your credit score?

payment history

What makes up a FICO score?

payment history, amounts owed, length of credit history, taking on new debt, and type of credit used

How is Social Security funded?

payroll tax

Towing coverage

pays the cost of having a disabled vehicle transported for repairs.

Adverse selection

policies that don't included certain coverage because you are excluded from the people who are most likely to suffer such losses that they are and those that are least likely to know that, too.

Single liability limit

policy where all property and bodily injury liability losses resulting from an accident would be paid until the limit is reached.

Which of the ways for couples to handle money involves having both paychecks deposited into a joint account and used for both household and personal expenses?

pooler

credit freeze (or credit report freeze)

prevents a credit bureau from releasing your credit report to merchants and financial institutions without your consent. Intended for a consumer who is worried about an identity thief who may open a fraudulent account in the consumer's name

Which of the following is not included in the up-front costs of the closing costs?

principle and interest

What does PITI stand for?

principle, interest, taxes, and insurance

What does PITI stand for? 

principle, interest, taxes, insurance

During expansion, which of the following is high?

production

What type of tax system does the US have?

progressive tax system

Fair Debt Collections Practice Act

prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.

Which two monthly payments are usually included as part of an escrow account? 

property taxes and homeowner's insurance

Inflation guard protection

protection to have your insurance company increase your coverage automatically each year.

Comprehensive automobile insurance

protects against property damage losses caused by perils other than collision. (fire theft vandalism hail wind)

Professional Liability insurance (malpractice insurance)

protects individuals and organizations that provide professional services when they are held liable for the losses of their clients.

Underinsured motorist insurance

protects the insured and his/her passengers from bodily injury losses when the at fault driver has insurance but the coverage is insufficient to reimburse the losses.

Uninsured motorist insurance

protects the insured and the insured passengers from bodily injury losses resulting from an automobile accident caused by an uninsured motorist.

Property insurance

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

Liability insurance

protects you from financial losses suffered by others for which you are legally liable

Floater policies

provide all risk protection for an accident and theft losses to movable property (cameras sporting equipment MP3 players) regardless of where the loss occurs.

After hiring an employee, the law requires employers to

provide unemployment insurance

Rental reimbursement coverage

provides a rental car when the insured's vehicle is being repaired after an accident or has been stolen.

Special form (HO 3)

provides open perils protection for four types of property losses; losses to the dwelling, losses to other structures, landscaping losses, and losses gathering additional living expenses.

Automobile physical damage insurance

provides protection against loses caused by damage to your car from collision, theft, and other perils.

Actual cash value

purchase price of the property less depreciation.

What is a certificate of deposit? put money

put lump sum of money in wait such as 6 months, 1, 2, or 5 years. then take it out with interest

Which of the following business cycle phases is a recurring period of decline in total output, income, employment, and trade?

recession

The term used to describe "righting a wrong" is

redress

Tax Avoidance

reducing tax liability through legal techniques.

Loss frequency

refers to the likely number of times that a loss might occur over a period of time.

Which of the following types of stock funds invest in stock traded within one specific region of the world?

regional funds

Which of the following is a tax that demands a decreasing proportion of a person's income as income rises?

regressive tax

Which of the following is a tax that stays the same for all income which results in lower-income people paying proportionately more in taxes?

regressive tax

Collision insurance

reimburses an insured for losses resulting from collision with another car or object or from a rollover.

Insurance agents

represent one or more insurance companies that have the power to enter into, change, and cancel insurance policies on behalf of these companies.

Exclusive insurance agents

represent only one insurance company for a specific type of insurance.

Which of the following is a sign of over-indebtedness?

requesting new credit cards and increases in credit limits

Which of the following is a sign of overindebtedness?

requesting new credit cards and increases in credit limits

The Fair Credit Reporting Act

requires that credit reports contain accurate, relevant, and recent information.

explain the purpose of the Fair Credit Reporting Act.

requires that credit reports contain accurate, relevant, and recent information.

Deductible clause

requires that the policyholder pays an initial portion of any loss.

Which of the following leasing terms is "the projected value of the leased asset at the end of the lease time period?" 

residual value

Which of the following is not one of the four areas from the reading that people need to protect?

retirement

Which of the following accounts was one of the three tools of monetary asset management that is used for depositing funds for upcoming expenditures or to accumulate funds for future investments?

savings accounts

Which of the following accounts was one of the three tools of monetary asset management that is used for depositing funds for upcoming expenditures or to accumulate funds for future investments?

savings accounts mutual funds

What is risk transfer? What is risk retention?

shifting risk from one party to another. -accepting some risks simply arise in the course of one's life and retaining that risk

Which of the following takes place when lenders try to sell property on their own or through a real estate agent and are willing to take less than the full mortgage amount?

short sale

Which of the following takes place when lenders try to sell property on their own or through a real estate agent and are willing to take less than the full mortgage amount? 

short sale

what is the difference between short term and long term capital gain? time, the difference of

short term capital gain is you have received income from the sale of an asset above the costs incurred to purchase and sell it and have bought it within a year. Long-term is you have had the asset for more than a year.

The textbook recommends that anyone looking for a job take advantage of professional and __________________ networking.

social

The Debt-to-Asset Ratio measures which of the following?

solvency

Policy limits

specify the maximum dollar amounts that will be paid under the policy.

What are lemon laws? !!

state laws that provide guidelines used by arbirtrators to order a dealors buyback of a "lemon". (Ex. a vehicle that was in the repair shop four times for the same problem after the first year of purchase)

Principle of indemnity

states that insurance will pay no more than the actual financial loss suffered.

what are cash flow statements?

summarizes the total amounts that have been received and spent over a period of time

Which two monthly payments are usually included as part of an escrow account?

taxes and insuance

what makes up a mortgage payment? 3 different things

the amount borrowed, the interest rate and length of loan

Which of the following is not one of the primary variables for calculating interest on deposits?

the amount of federal insurance

Annual Percentage Rate (APR)

the annual rate that is charged for borrowing expressed as a percentage number that represents the actual yearly cost of funds over the term of a loan

Who should set a debt limit?

the borrower

Which of the following is the person that would receive the benefits if the beneficiary dies before the insured? 

the contingent beneficiary

Insurance policy

the contract between the person buying insurance and the insurance company.

annual percentage rate (APR)

the cost of credit on a yearly basis, expressed as a percentage

Which of the following budgeting methods has the strongest control and works especially well with small, variable expenses?

the envelope method

Which of the following budgeting methods works especially well with small, variable expenses?

the envelope method

Loss control

the handling risk method that is designed to reduce loss frequency and loss severity

What are opportunity costs? -What are marginal costs? add cost of one incremental item ex. building a factory in order to produce more goods

the loss of potential gain from other alternatives when one alternative is chosen. -the additional cost of one more incremental unit of some item

line of credit

the maximum amount of money a creditor will allow a credit user to borrow

Which of the following is the person who controls all rights granted by a life insurance policy?

the policyholder

Older home form (HO 8)

the replacement value of an older home may be much higher than its market or actual cash value. It is a named perils policy that provides actual cash value protection on the dwelling. It provides it to be rebuilt to a serviceable level.

Risk avoidance

the simplest way to handle a risk is to avoid it, you refrain from owning items or engaging in activities that expose you to possible financial loss

minimum monthly payment

the smallest amount you can pay and remain a borrower in good standing

Your marginal tax rate is

the tax rate applied to your last dollar of earnings.

finance charge

the total dollar amount you pay to use credit

What is future value? ASSET

the value of an asset projected at a particular time period in the future

Family auto policy (FAP)

the vehicle owner, relatives living in the vehicle owners household, and people who have the owner's permission to drive the vehicle.

what are liability limits? Hint- accident, three different numbers

three numbers referring to the most your insurer will pay for an accident you caused. 100/300/50 100,000 for injuries per person, 300,000 for injuries total, and 50,000 for property damage. Single liability limit just states the number(250,000 for insurance)

What is the purpose of power pay?

to determine how to more quickly pay off debts

If allowed in their state, employers may look at an employee's credit report

to determine if the employee will be able to manage important tasks.

Which of the following is the purpose of the Step-Down Principle?

to reduce expenses

Which of the following is the purpose of the Step-Down Principle? 

to reduce expenses

A(n) __________________________ IRA may get a tax benefit upfront but taxes must be paid on withdrawals.

traditional

consumer credit

use of credit for personal needs

Split liability limits

usually three numbers such as 100/300/50, with each number representing a multiple of $1000. The first number gives maximum pay, second number is the total of everyone's payments, third number is the maximum coverage you will receive.

Discretionary income is used to pay for things like

vacations

In which of the following areas does a person usually have the most control?

variable expense

In which of the following areas does a person usually have the most control?

variable expenses

What is the term for when an employer's contribution becomes the employees to keep?

vesting

A tax-payer would want to itemize their deductions if their tax-deductible expenses

were greater than the standard deduction.

What is the business cycle? wavelike

where the economy grows and contracts over time (wavelike pattern)

Which of the following includes a savings element?

whole life insurance

College Graduates

will get approximately 15% return investment on a bachelor's degree.

Homeowner's no fault medical payments protection

will pay for bodily injury losses suffered by visitors regardless of who was at fault.

Homeowners no fault property damage protection

will pay for property losses suffered by visitors to your home (a chewed leather coat by your dog to a visitor)

Which of the following is the 4th leg of a retirement stool that sometimes must be added?

work

Which of the following was the first step to budgeting listed in The Financial Checkup booklet?

write down goals

Which of the following is not included on a credit card statement?

year to date transactions

difference between financing and leasing

you may rent a product while ownership title remains with the owner, while the other is actually buying the other is actually buying the product

Continuous-debt method

you should be able to get completely out of debt every 4 years (other than mortgage)

Lenders only care about...

your ability to make debt repayments They do not want to be bothered about whether or not you are achieving your financial goals

According to The Financial Checkup booklet, which of the following is the third leg of the retirement stool that people usually need?

your own saving and investing