Personal finance

This provides the tenant protection from rent increases.

lease

Louise got caught in a cash flow trap and desperately needed money quickly. Unfortunately, she didn't shop around and she went to a _____. As a result, her annual percentage rate was higher than 780%!

payday loan company

Abigail checked out brands and prices of blue jeans at several stores. She was comparison shopping.

true

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

true

For 2014, the seven-rate system for federal income tax ranges from 10% to 39.6%. T/F

true

In comparing used vehicles, a vehicle that looks rusty on the outside may hide a well-maintained engine. T/F

true

The current financial position of an individual or family is a common starting point for financial planning. T/F

true

Rental insurance isn't important since the landlord's insurance on the building includes coverage on all tenants' belongings. True/false

false,The landlord's insurance usually does not cover damage or theft of personal property belonging to the tenants. It is important for the tenant to obtain adequate renter's insurance.

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

a commercial bank

When Sam applied for a loan, he was assured that his rate would not change if he closed within 30 to 90 days. Sam had a(n) ______ on the interest rate.

lock

The goal of investing $50 per month for the next 12 years for your nephew's college fund is a(n) __________ goal.

long-term

Lenny the landlord has the right to take legal action against Tina the tenant for nonpayment of rent or destruction of property. T/F

true

When Ted needs more cash than he has available, his choices include liquidating savings and borrowing. T/F

true

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

true, use the rule of 72: (72/4=18)

Which of the following is the document that transfers ownership of property from one party to another?

deed

Lemon laws have been enacted in 48 of the 50 states for new vehicle purchases.

false all 50 states have lemon laws

Purchasing an appliance is an example of a consumable-product goal. T/F

false purchasing an appliance is a durable- product goal

There are only 3 possible courses of action when developing alternatives for decision making. T/F

false there are 4

Reconciling a checking account is not really necessary since the bank statement includes all activity from the bank's perspective.

false, Banks sometimes make errors, so a bank reconciliation should be done each month.

The best place to find a qualified lawyer who will meet your specific needs is a phone book.

false, Common sources of lawyers are referrals from friends, advertisements, and the local division of the American Bar Association.

In an organized system of financial records, credit card records belong in a safe deposit box. T/F

false, Credit card records belong in a home file, home computer, or online.

When Tom calculates his taxable income, he should subtract his tax credits from adjusted gross income.

false, He should subtract his tax deductions, not his tax credits. Tax credits are subtracted directly from the amount of taxes owed.

An example of a "preshopping activity" is negotiating the price of a product.

false, Negotiations are part of the selection and purchase phase of the buying process.

A condominium is a form of housing in which the units in a building are owned by a nonprofit organization.

false, The definition is for cooperative housing.

The only way that you can have long-term financial security is to not save all of your current income.

false, The only way to have long-term financial security is to not SPEND all of your current income.

A landlord has the right to sublet an apartment. T/F

false, The renter may have this right.

In comparing used vehicles, a vehicle that looks rusty on the outside will have major operational problems.

false,The appearance of a used car can be deceptive.

Financial experts recommend a debt/payments ratio of less than ____ of take-home pay.

20%

The maximum that an individual can contribute to a Roth IRA for the 2014 year is

$5,500

Given the following information, calculate the net worth: Assets = $8,000 Cash inflows = $6,000 Cash outflows = $4,500 Liabilities = $4,000

4,000

Will wants to open an account with $500 that will allow him easy access to his funds (by checks, ATMs, or debit card usage) from many locations. He also wants to earn at least a low interest rate and have federal deposit insurance. What kind of account should he open?

An interest-earning checking account

How long should you keep documents relating to investments?

As long as you own these items.

The equation to calculate net worth is

Assets - Liabilities = Net Worth

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

Borrowing

A bump-up CD allows an investor to increase the amount invested at various intervals. T/F

False, A bump-up CD has higher rates at various intervals.

Individuals are allowed to give money or items of any value to a person without being subject to estate taxes. T/F

False, Individuals are allowed to give money or items valued at $14,000 or less in a year to a person without being subject to estate taxes.

Liquidity and rate of return refer to the same thing. T/F

False, Liquidity and rates are trade-offs. Liquidity allows one to withdraw money on short notice without fees or a loss of value. Many people trade off liquidity for a higher return.

The FDIC insures a depositor's savings account up to $200,000 per insured financial institution. T/F

False, the limit is $250,000 per depositor per insured financial institution.

A debt ratio of 0.5 indicates

For every dollar of net worth, debt equals $0.50.

The owner/landlord is known as the

Lessor.

The 'borrowing' component in a financial plan relates to

Maintaining control over credit-buying habits

The rate used to calculate the tax due on the next dollar of income is referred to as the

Marginal tax rate.

Veronica has had a variable-rate mortgage for several years. Unfortunately, the monthly mortgage payments have not covered her interest owed. As a result, her home equity is decreasing because of

Negative amortization.

Income that is taxed at a later date is

Tax-deferred income.

The consumer price index measures:

The average change in prices of goods and services of urban consumers

An example of a personal opportunity cost would be

Time comparing several brands of personal computers.

Fees, tips, and bonuses are forms of

earned income

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

$10,000

Victor read the fine print for a checking account he was thinking about using. The fine print said, "A minimum balance of $500 is required. If your balance falls below this level, you will be assessed a monthly fee of $10." Since Victor was planning to keep only a $50 balance in his account, how much could he be charged each year?

$120

In 2014, taxable income was reduced by ______ for each exemption claimed.

$3,950

A vehicle lease has several costs. Which of the following is the price of the vehicle?

Capitalized cost.

Amanda and Jack are working on their taxes and need to determine which form to file. They had wages, interest, and dividends. In addition, they bought a house this past year and are thinking of itemizing their deductions. Which form should they use?

1040

Which of the following ratios shows the relationship between debt and net worth?

Debt ratio

Risks associated with many financial decisions are easy to identify and evaluate. T/F

False, these risks are difficult to identify and evaluate

Paul Davis wants to deposit money today for a vacation that he plans to take to Asia after he graduates from Graduate School. Which formula should he use to determine the amount of money he will have available for his vacation?

Future value of a single amount

The appearance of a used car can be deceptive. When purchasing a used vehicle, it is a good idea to...

Have a trained and trusted mechanic of your choice check out the vehicle.

After having established a spending plan, it is important to

Keep track of your actual income and expenses.

Wanda bought a certificate of deposit and automatically received a free bike. She purchased a...

Promotional CD.

With a downpayment of at least 5%, lenders use 33% of monthly gross income as a guideline for PITI (principal, interest, taxes, and insurance). T/F

True

At the end of the year, Xavier received a form from his employer that reported annual earnings and the amounts deducted for taxes. That form is called a

W-2