Personal Finance
Mason corporation borrows funds for the expansion of its business. The loan is secured with the office building. Therefore, the office building serves as _________ for the loan.
a collateral
If the interest rates and monthly mortgage payments do not change over the life of your mortgage, you have ______
a fixed-rate mortgage
which is an example of real property?
a garage
The monthly interest on your adjustable-rate mortgage was $690. You paid $650 as your monthly payment on the loan leading to an increase in the principal balance. This is an example of:
a negative amortization
The three parts of an individual's balance sheet are their:
assets, liabilities, and net worth
The price of the car you are leasing is called the:
capitalized cost
A _____ account is called a demand deposit account.
checking
Henry must make set premium payments on his insurance policy until he dies, and if he cancels the policy, he will receive the cash value. His plan is a ______ policy
continuous whole life
Loans should be recorded as a liability on the balance sheet at their:
current standing balance
The process of finding present value is called ________
discounting
Tax _________ is an illegal practice
evasion
The primary purpose of life insurance is to provide:
financial security for dependents in the event of death
Employees often provide ______ life insurance as a fringe benefit for their employees.
group
When your liabilities exceed your assets, you are______
insolvent
A(n) _______ loan is a loan that is repaid in a series of fixed, scheduled payments rather than in a lump sum.
installment
The majority of each monthly payment at the beginning of the loan goes to pay the:
interest
The insurance designed to help with nursing home or in-home care due to chronic illness is called:
long-term care
The settlement option chosen by most policyholders is:
lump sum
The financing rate on a lease similar to the interest rate on a loan is called the ______
money factor
Fees charged by lenders as a condition of a mortgage loan that raises the effective rate of interest are called:
mortgage points
The _______ method is the most accurate method of determining the amount of life insurance coverage needed for an individual
needs analysis
A progressive tax system is one in which:
people at higher-income levels pay tax at a higher rate than people at lower-income levels.
The basic purpose of insurance is to ___________
protect yourself from economic losses
An escrow account is used to collect _____ from one's monthly mortgage payment.
real estate taxes
A(n) ______ is a common provision in many term policies
renewable clause
Earnest money is the sum of money the home buyer pledges with the ______
seller to indicate the intent of purchase
A capital gain is the result of:
selling an asset for more than its purchase price
If you do not wish to itemize deductions, the other deduction you can take is the:
standard deduction
Tax credits reduce your:
tax liability
With a bank credit card, one can often avoid interest charges if:
the account balance is paid in full every month
The more frequently a bank compounds interest, ______ for a given nominal rate will be.
the higher the effective rate
From the standpoint of a person buying insurance, the central purpose of insurance will be:
to transfer the risk of serious losses
Mary Scott died with a $1,000,000 life insurance policy. Her husband, Fred, is the primary beneficiary, and their children, Lisa (age 24) and Andrew (age 29), are the contingent beneficiaries. All three survive Marilyn. How will the policy proceeds be distribute?
$1,000,000 to Fred
If your lender charges 1.5 mortgage points on a house selling for $100,000, on which there is a $90,000 loan, the points will cost you _________
$1,350
Molly and Justin are considering contributing $5,000 to a tax-deductible charity. This contribution will bring deductions to $20,000. Assuming they are in the 28% marginal tax bracket, how much will they save in taxes by contributing the $5,000 to charity?
$1,400
John Anderson deposited $10,000 in a certificate of deposit (CD) for 3 years at 5%. At maturity, it will be worth:
$11,580
Michael and Sandy purchased a home for $100,000 five years ago. If its value appreciated at 6% annually, what is it worth today? (Round the answer to the nearest unit place).
$133,823
Alice lost her ATM card and reported it missing the next day. She found that $800 had been withdrawn from her savings account. Alice's loss is equal to:
$50
In 2018, the total social security tax rate was:
15.3 percent
A grace period permits a policyholder to retain full death protection even though the premium has not been paid for:
31 days
A lender will usually require a loan-to-value ratio of _____ or less for a borrower to avoid having to pay private mortgage insurance (PMI)
80%
_____ is a situation where homeowners owe more to the lenders than what their properties are worth
A negative equity
which of the following is true of budgets?
Budgets are forward looking.
Funds in commercial banks are protected by the:
Federal Insurance Corporation (FDIC)
A tax audit is a(n):
Internal Revenue Service (IRS) attempt to verify the accuracy of a return
Which of the following statements is true of the tax levied under the Federal Insurance Contributions Act (FICA)
It is paid equally by employer and employee.
Which is true of an individual's net worth?
It is the difference between an individual's total assets and his or her total liabilities.
______value is the value today of an amount to be received in the future.
Present
Which of the following types of insurance policies provides temporary coverage for a set period?
Term life insurance policy
Which is true of the health reimbursement account CHRAS?
The amount of unused money in the health reimbursement account can be rolled over annually.