Personal Finance

Dumpster Diving

. go through the trash and take personal information that contains identifying numbers

Negative credit information stays on the record for ____ years.

7

Which of the following is not a term that a financial institution specifies for certificates of​ deposit? ​(Select the best answer​ below.) A. The liquidity rate B. The maturity date C. The minimum amount to be invested D. An annualized interest rate

A. The liquidity rate

A​ risk-free rate​ is: ​(Select the best answer​ below.) A. an interest rate guaranteed on an investment for a specified period. B. an interest rate that is not guaranteed on an investment for an unspecified period. C. an interest rate that is not guaranteed on an investment for a specified period. D. an interest rate guaranteed on an investment for a unspecified period.

A. an interest rate guaranteed on an investment for a specified period.

Credit​ unions: ​(Select the best answer​ below.) A. are nonprofit organizations that accept deposits and provide personal and mortgage loans only to their members. B. focus on making loans to institutions. C. accept deposits in checking and savings accounts and make loans to both personal and commercial clients. D. accept deposits but focus on providing mortgage and personal loans to individuals rather than commercial clients.

A. are nonprofit organizations that accept deposits and provide personal and mortgage loans only to their members

The personal cash flow statement determines the amount​ of: ​(Select the best answer​ below.) A. excess or deficient funds a person will have at the end of a period. B. excess or deficient funds a person will have at any point in the future. C. debt you have. D. money you can borrow.

A. excess or deficient funds a person will have at the end of a period.

Securities​ companies: ​(Select the best answer​ below.) A. facilitate the purchase or sale of securities by firms or individuals and also provide brokerage​ services, helping to make a market for stocks and bonds by matching buyers and sellers. B. sell insurance to protect individuals and companies against perils​ (adverse events), and include life insurance​ companies, property and casualty insurance​ companies, and health insurance companies. C. provide personal loans to individuals. These loans are usually at higher rates to individuals at a higher risk of defaulting on the loan. D. provide a means by which investors with only a small amount of money can invest in a portfolio of securities.

A. facilitate the purchase or sale of securities by firms or individuals and also provide brokerage​ services, helping to make a market for stocks and bonds by matching buyers and sellers.

Charging large amounts on your credit cards can affect your overall financial planning​ by: ​(Select the best answer​ below.) A. lowering your liquidity level and restricting you from getting other financing. B. increasing your liquidity level and enabling you to get other financing. C. reducing your available funds to lend. D. requiring you to rollover your balances.

A. lowering your liquidity level and restricting you from getting other financing.

NOW stands​ for: ​(Select the best answer​ below.) A. negotiable order of withdrawal. B. negotiable order waiting. C. negotiable offered withdrawal. D. new order waiting.

A. negotiable order of withdrawal.

As current interest rates rise​, borrowers can expect​ to: ​(Select the best answer​ below.) A. pay a higher interest rate. B. be paid a higher interest rate. C. be paid a lower interest rate. D. pay a lower interest rate.

A. pay a higher interest rate.

There is no risk because a​ risk-free investment: ​(Select the best answer​ below.) A. pays an interest rate guaranteed on an investment for a specified period. B. could default. C. would pay investors only if the financial institution went into bankruptcy. D. pays an interest rate guaranteed on an investment for an unspecified period.

A. pays an interest rate guaranteed on an investment for a specified period.

Finance​ companies: ​(Select the best answer​ below.) A. provide personal loans to individuals. These loans are usually at higher rates to individuals at a higher risk of defaulting on the loan. B. sell insurance to protect individuals and companies against perils​ (adverse events), and include life insurance​ companies, property and casualty insurance​ companies, and health insurance companies. C. provide a means by which investors with only a small amount of money can invest in a portfolio of securities. D. facilitate the purchase or sale of securities by firms or individuals and also provide brokerage​ services, helping to make a market for stocks and bonds by matching buyers and sellers.

A. provide personal loans to individuals. These loans are usually at higher rates to individuals at a higher risk of defaulting on the loan

A grace period​ is: ​(Select the best answer​ below.) A. the time between your statement closing and the due date on the bill. B. a week or two after the due date on the bill. C. a billing​ cycle, approximately 30 days. D. the time between when you exceed your credit limit and when you can use the card again.

A. the time between your statement closing and the due date on the bill.

One advantage of using a credit card is​ that: ​(Select the best answer​ below.) A. they provide free financing until the statement arrives. B. there are usually not annual fees. C. they can allow you to spend beyond your means. D. the interest rates are high if you do not pay off the balance when due.

A. they provide free financing until the statement arrives.

Interest​ rates: ​(Select the best answer​ below.) A. will be higher for loans that are exposed to higher default risk. B. will be lower for loans that are a higher amount. C. will be higher for loans that are made to depositors. D. are the same for all loans.

A. will be higher for loans that are exposed to higher default risk.

The three major credit bureaus​ are: ​(Select the best answer​ below.) A. ​Equifax, Experian, and Trans Union. B. Accountifax, Experian, and Union Credit. C. Equifax, Experian, and Union Credit. D. Equifax, LendCheck, and Trans Union.

A. ​Equifax, Experian, and Trans Union.

Factors Steve should consider​ are: ​(Select all that​ apply.) A.the availability of web minus based access the availability of web−based access B. the interest rates charged for mortgages C.the size of the staff the size of the staff D.the convenience of making deposits and withdrawals the convenience of making deposits and withdrawals Your answer is correct. E. the number of people waiting in line on payday F.ATM locations

A.the availability of web minus based access the availability of web−based access

Which of the following is not a step you can take to safeguard your personal​ information? ​ (Select the best answer​ below.) A. Remove your name and address from directories, including the local phone directory. B. Do not carry a cell phone. C. Use a P. O. box or a locked mailbox for your mail. D. Do not carry your Social Security number with you.

B. Do not carry a cell phone.

Savings​ institutions: ​(Select the best answer​ below.) A. focus on making loans to institutions. B. accept deposits but focus on providing mortgage and personal loans to individuals rather than commercial clients. C. accept deposits in checking and savings accounts and make loans to both personal and commercial clients. D. are nonprofit organizations that accept deposits and provide personal and mortgage loans only to their members.

B. accept deposits but focus on providing mortgage and personal loans to individuals rather than commercial clients. Your answer is correct.

Financial institutions obtain funds for loans​ by: ​(Select the best answer​ below.) A. accepting donations from the community. B. accepting deposits from individuals. C. borrowing from large corporations. D. borrowing from other banks.

B. accepting deposits from individuals.

Some common credit card fees​ are: ​ (Select the best answer​ below.) A. monthly​ fee, late​ fee, balance transfer​ fee, and cash advance fee. B. annual​ fee, late​ fee, balance transfer​ fee, and cash advance fee. C. annual​ fee, late​ fee, balance carryover​ fee, and cash advance fee. D. annual​ fee, early payment​ fee, balance transfer​ fee, and cash advance fee.

B. annual​ fee, late​ fee, balance transfer​ fee, and cash advance fee.

A weak credit report can affect you​ because: ​(Select the best answer​ below.) A. assets are reviewed to evaluate the amount of credit currently serviced and the timeliness of the past payments. B. credit history is reviewed to evaluate the amount of credit currently serviced and the timeliness of the past payments. C. assets are reviewed to evaluate the trustworthiness of the borrower. D. credit history is reviewed to determine if personal information is accurate.

B. credit history is reviewed to evaluate the amount of credit currently serviced and the timeliness of the past payments.

Credit cards are a convenience and you should not use them unless​ you: ​(Select the best answer​ below.) A. have an APR under​ 15%. B. have the cash to cover the payment. C. have investment profits greater than your credit card interest rate. D. have enough home equity to cover the debts

B. have the cash to cover the payment.

Money market funds​ (MMFs): ​ (Select the best answer​ below.) A. are considered risky because they invest in investments that have a high risk of default. B. offer some liquidity. C. are considered risky because they invest in speculative investments. D. offer little liquidity.

B. offer some liquidity

Mutual​ funds: ​(Select the best answer​ below.) A. sell insurance to protect individuals and companies against perils​ (adverse events), and include life insurance​ companies, property and casualty insurance​ companies, and health insurance companies. B. provide a means by which investors with only a small amount of money can invest in a portfolio of securities. C. facilitate the purchase or sale of securities by firms or individuals and also provide brokerage​ services, helping to make a market for stocks and bonds by matching buyers and sellers. D. provide personal loans to individuals. These loans are usually at higher rates to individuals at a higher risk of defaulting on the loan.

B. provide a means by which investors with only a small amount of money can invest in a portfolio of securities.

NOW​ accounts: ​(Select the best answer​ below.) A. are the same as a savings account. B. require a minimum balance. C. do not require a minimum balance. D. are less liquid than a regular savings account.

B. require a minimum balance.

The organization that controls monetary policy in the United States​ is: ​(Select the best answer​ below.) A. Congress. B. the Federal Reserve. C. the Federal Bureau of Investigation. D. the Internal Revenue Service.

B. the Federal Reserve.

A cash advance​ is: ​(Select the best answer​ below.) A. a reduction in the APR. B. when the cardholder receives cash rather than goods or services. C. an automatic increase in the length of the grace period. D. obtained when goods or services are returned to the merchant.

B. when the cardholder receives cash rather than goods or services.

What steps should you take to determine the best allocation of your money market​ investments? ​(Select the best answer​ below.) A. Anticipate upcoming​ bills, estimate money needs in the near​ future, then determine the best place to borrow funds. B. Estimate money needs in the near​ future, evaluate​ debt, then determine the best place to borrow funds. C. Anticipate upcoming​ bills, estimate money needs in the near​ future, then invest remaining funds according to your risk tolerance. D. Evaluate​ debt, estimate money needs in the near​ future, then determine the best place to borrow funds.

C. Anticipate upcoming​ bills, estimate money needs in the near​ future, then invest remaining funds according to your risk tolerance.

What factors should you consider in determining your​ allocation? ​(Select the best answer​ below.) A. Debt​ levels, timing of cash​ needs, and ability to borrow B. Cash​ flows, timing of cash​ needs, and ability to borrow C. Cash​ flows, timing of cash​ needs, and risk tolerance D. Debt​ levels, timing of cash​ needs, and risk tolerance

C. Cash​ flows, timing of cash​ needs, and risk tolerance

A step you should not take if you become a victim of identity theft​ is: ​(Select the best answer​ below.) A. Request that a fraud alert be placed into your credit file. B. Contact the local police department. C. Open new accounts with an alias. D. Notify the major credit reporting companies.

C. Open new accounts with an alias.

Why is paying your credit card balance in full so​ important? ​(Select the best answer​ below.) A. Your ability to borrow will improve. B. Your assets will not be seized. C. You can avoid interest charges. D. Your monthly minimum payment will not change.

C. You can avoid interest charges.

What information is not important when applying for​ credit? ​(Select the best answer​ below.) A. Your income. B. Your assets. C. Your health insurance. D. Your expenses.

C. Your health insurance.

One way to reduce an excessive credit card balance is​ to: ​(Select the best answer​ below.) A. file for bankruptcy. B. ask the credit card company to eliminate the interest charges on your account. C. borrow from a family member to pay off credit. D. devote a certain amount of your income to pay off the interest.

C. borrow from a family member to pay off credit.

Money management relates to the cash flow statement because​ it: ​(Select the best answer​ below.) A. is most efficient when done by professionals. B. determines​ long-term borrowing needs. C. determines how to use excess funds or how and where to obtain funds when they are needed. D. determines what you own and what you owe.

C. determines how to use excess funds or how and where to obtain funds when they are needed.

Insurance​ companies: ​(Select the best answer​ below.) A. facilitate the purchase or sale of securities by firms or individuals and also provide brokerage​ services, helping to make a market for stocks and bonds by matching buyers and sellers. B. provide a means by which investors with only a small amount of money can invest in a portfolio of securities. C. sell insurance to protect individuals and companies against perils​ (adverse events), and include life insurance​ companies, property and casualty insurance​ companies, and health insurance companies. D. provide personal loans to individuals. These loans are usually at higher rates to individuals at a higher risk of defaulting on the loan.

C. sell insurance to protect individuals and companies against perils​ (adverse events), and include life insurance​ companies, property and casualty insurance​ companies, and health insurance companies.

The interest rate for loans is determined by​ adding: ​(Select the best answer​ below.) A. varying percentage points to the default rate. B. varying percentage points to the inflation rate. C. varying percentage points to the rate paid on deposits. D. the rate paid on deposits to the inflation rate.

C. varying percentage points to the rate paid on deposits.

A finance charge is applied to credit​ purchases: ​(Select the best answer​ below.) A. ​quarterly, based on purchase amounts. B. in the second month when the bill is not paid in full before the due date. C. when a bill is not paid in full before the due date. D. when a bill is paid before the billing cycle ends.

C. when a bill is not paid in full before the due date.

Liquidity represents your ability to cover​ any: ​(Select the best answer​ below.) A. ​long-term cash deficiencies. B. ​long-term debt. C. ​short-term cash deficiencies. D. ​short-term debt.

C. ​short-term cash deficiencies.

Which of the following is not one of the six major areas of information that may be included on your credit​ report? ​(Select the best answer​ below.) A.Potentially negative information from public records B.All open and closed accounts C.Average annual income D.Unpaid accounts turned over to a collection agency

C.Average annual income

The Equal Credit Opportunity Act prohibits that credit be denied due to all of the following reasons ​except: ​(Select the best answer​ below.) A. gender. B. age. C. race. D. education.

D education

In addition to financial​ losses, victims of identity​ theft: ​(Select the best answer​ below.) A. have been refused loans for which they would normally have qualified. B. have been hounded for bad taxes on income they did not earn. C. have been turned down for employment. D. All of the above.

D. All of the above.

You can improve your credit score​ by: ​(Select the best answer​ below.) A. making at least the minimum payments. B. becoming current with payments. C. reducing the debt load. D. All of the above.

D. All of the above.

One of the factors is used to determine your credit score and how it is weighted by FICO​ is: ​(Select the best answer​ below.) A. Payment history is weighted at 35 percent. B. Length of creditor relationship and number of inquiries is weighted at 35 percent. C. Payment history is weighted at 50 percent. D. Amount of monthly credit used is weighted at 35 percent.

D. Amount of monthly credit used is weighted at 35 percent.

What is a disadvantage of using​ credit? ​(Select the best answer​ below.) A. It helps build a good credit score. B. The use of credit enables borrowers to buy more financial products. C. The use of credit may ultimately result in long-term liquidity. D. The use of credit may ultimately result in bankruptcy.

D. The use of credit may ultimately result in bankruptcy.

Commericial​ banks: ​(Select the best answer​ below.) A. are nonprofit organizations that accept deposits and provide personal and mortgage loans only to their members. B. accept deposits but focus on providing mortgage and personal loans to individuals rather than commercial clients. C. focus on making loans to institutions. D. accept deposits in checking and savings accounts and make loans to both personal and commercial clients.

D. accept deposits in checking and savings accounts and make loans to both personal and commercial clients.

Your consideration of whether or not to purchase a CD would acknowledge that CD rates​ are: ​(Select the best answer​ below.) A. about the same as a savings​ account, but you give up access to your funds. B. higher than a savings​ account, but you gain liquidity. C. about the same as a savings​ account, but you gain liquidity. D. higher than a savings​ account, but you give up access to your funds.

D. higher than a savings​ account, but you give up access to your funds.

Money​ management: ​(Select the best answer​ below.) A. is most efficient when done by professionals. B. focuses on long-term investments to achieve liquidity and adequate return. C. involves​ long-term investment. D. is a series of decisions you make over a short-term period regarding cash inflows and outflows.

D. is a series of decisions you make over a short-term period regarding cash inflows and outflows.

Non-installment ​credit: ​(Select the best answer​ below.) A. requires that borrowers only pay interest in the short​ term, and the principal at some time in the future. B. is issued to consumers for very short periods of time to make specific purchases. C. grants varying amounts of credit to consumers based on debt level and credit payment history. D. is issued for specific purchases but gives the borrower a longer time to repay the loan.

D. is issued for specific purchases but gives the borrower a longer time to repay the loan.

Since assets that are liquid​ may: ​(Select the best answer​ below.) A. not have a high​ return, it is best to avoid these types of assets. B. not have a high​ return, it is best to consult a financial manager. C. have a high​ return, it is best to invest in these types of assets. D. not have a high​ return, it is best to invest in multiple money market investments with varying​ returns, liquidity, and maturities.

D. not have a high​ return, it is best to invest in multiple money market investments with varying​ returns, liquidity, and maturities.

Monetary policy​ is: ​(Select the best answer​ below.) A. the act of controlling the number of loans a bank may give. B. the act of controlling bank regulations. C. the act of controlling the money demand. D. the act of controlling the money supply.

D. the act of controlling the money supply.

Two of factors that affect the return on​ short-term investments​ are: ​(Select the best answer​ below.) A. the​ investor's debt level and the length of matuirty of the investment. B. the​ investor's wealth and the length of maturity of the investment. C. the prevailing market rate and the​ investor's wealth. D. the prevailing​ risk-free rate and the​ investor's risk tolerance.

D. the prevailing​ risk-free rate and the​ investor's risk tolerance.

Shoulder Surfing

D. stand over the shoulder of the victim and read the credit card number.

Identity theft occurs when any​ individual: A. seeks your personal identifying information without your permission. B. uses your name as their own. C. impersonates you. D. uses your personal identifying information for personal gain without your permission.

D. uses your personal identifying information for personal gain without your permission.

Which of the following does depict a special service that banks​ provide? Part 2 A. Automatic teller machines that offer convenient access to cash. B. Cashier's checks that are useful when the payee is concerned that a personal check may bounce. C. Money orders are a safe way to send money. D. Safety deposit boxes, which are used to store important documents or jewelry. E. All of the above.

E. All of the above

Phishing

a type of pretexting

Some of the banking services offered by financial institutions​ are: ​(Select all that​ apply.) a. preparing tax returns b. depository (savings) account c. personal loans d. electronic checking

b. depository (savings) account c. personal loans d. electronic checking

Skimming

copy the information contained in the magnetic stripe on the credit or debit card and use it to create fake cards

Pretexting

obtain personal information under false pretenses by posing as a survey taker

You should review your credit report from each of the three major credit bureaus at least

twice a year