Personal Finance chapters 5, 6, and 7
All of the following are typical fees associated with the use of a debit card except: A. Out-of-network ATM fee. B. Lost card fee. C. Direct deposit credit fee. D. Monthly maintenance fee.
C.
Today, the majority of Americans make payments using: A. checks. B. debit cards. C. Automated Clearing House payments. D. prepaid cards.
B.
Which of the following bank products are insured by FDIC? I.Savings account. II.Certificate of deposit. III.Dedicated savings account. A. I only. B. II only. C. I and II only. D. I, II, and III.
D
Irene has a debit card but rarely uses it. Last night, she determined that her card was lost and had been for sometime. What is Irene's potential maximum liability if someone uses the card without her permission? A. $480. B. $96. C. $0. D. Unlimited up to the amount in her account.
D.
Which of the following is not a common financial emergency? A. Job loss. B. Major car repairs. C. Major medical expenses. D. Vacation travel.
D.
A Ponzi scheme represents: A. Business risk. B. Inflation risk. C. Fraud risk. D. Identity risk.
C.
An effective way to manage temptation and impulse spending involves: A. being as flexible as possible with the way you save money. B. going on a diet. C. always looking for an opportunity to spend savings on something else. D. managing your environment.
D
Unlike renters, homeowners are required to pay for what common expenses? A. Replacing appliances. B. Fixing broken windows. C. Painting every few years. D. All of the choices are correct.
D
What is not found in a good faith estimate? A. Loan amount. B. Title insurance premium. C. Loan type. D. Yard maintenance fees.
D
Jorge opened a no-cost checking account at a local bank last month. He was surprised when he was charged several service fees. Under federal law, which of the following service fees is allowed in a no-cost checking account? A. Service charge for excessive transactions. B. Money transfer fee. C. Inactive account fee. D. Withdrawal fee.
Not B
Rahim purchased a car 6 months ago. When he applied for an auto loan, the lender required that Rahim allow the bank to automatically debit his checking account on the 15th day of each month until the car is paid for in full. This transfer is an example of what type of electronic payment method? A. Automated Clearing House transfer. B. Check transfer. C. Debit transfer. D. Credit transfer.
Not C
Which of the following attributes is associated with renting? A. Tax-deductible monthly expenses. B. Application fee. C. Unlimited privilege to use property far into the future. D. Down payment.
Not C
An effective way to motivate yourself to save involves: A. visualizing where you want to be in the future. B. feeling angry whenever you spend money. C. using CDs exclusively for emergency fund savings. D. generalizing your dreams and financial goals.
A.
As a general rule, how much money should be kept in an emergency fund? A. Between 3 and 6 months of expenses. B. No less than 9 months' worth of expenses. C. $12,500. D. $9,700.
A.
Bart has been a successful financial advisor for more than 10 years. During that time, he has generated returns that have never been less than 5% annually. He does not advertise but that has not stopped investors from opening new accounts with his firm. It turns out that Bart has been taking the deposits of new investors, keeping a portion for himself, and sending the rest to earlier investors. Bart is running a(n): A.ponzi scheme. B. pyramid scheme. C. telemarketing scheme. D. identity theft fraud.
A.
How much should you expect to pay to use a debit card that is linked to your checking account? A. Nothing B. $20 per month C. $5 per transaction D. $240 per year
A.
If you become a victim of identity theft, you should report the crime to: A. Your local police or sheriff department. B. The FBI. C. The FDIC. D. The chairperson of the local city commission.
A.
All the following are features of renting, except that: A. provides flexibility over the short-term. B. provides an environment where you do not need to worry about major repairs. C. requires a security deposit. D. requires a down payment.
D.
If you discover that someone has used your debit card fraudulently, you should first: A. Email your bank, credit union, or card issuer. B. Call your insurance company immediately and file a claim. C. Send a letter to your bank, credit union, or card issuer. D. Call your bank, credit union, or card issuer.
D.
Kaylee received a check from her grandmother. She wants to make sure that the check gets deposited into her account, so she endorses the check as follows: For Deposit Only, Account 7864389876, Kaylee Jones. This is an example of what type of endorsement? A. Special endorsement. B. Certified endorsement C. Blank endorsement. D. Restricted endorsement.
D.
Nedra uses her debit card on a daily basis. The last time she used it was the evening before at a restaurant. This morning, she noticed that the card was missing. How long does she have to report the card as lost to have 100% protection against fraudulent use? A. She has 2 days from the date she determined the card was lost. B. She has 2 days from the date of the last authorized use. C. She has 30 days from the date of the last authorized use. D. She must report the card immediately before any unauthorized withdrawals are made.
D.
Some individuals facing financial emergencies will attempt to skip certain payments to make other payments. This strategy is generally not helpful because: A. The individual's credit report and credit score will be adversely affected. B. If income does not increase or expenses do not decrease, then nothing will change in the long run. C. This will likely lead to higher borrowing costs in the future. D. All of the choices are correct.
D.
The reason automobiles should not be considered an investment is because they A. provide an essential service in providing household income. B. help save time and effort. C. appreciate in value over time. D. depreciate in value over time.
D.
When Ann was traveling outside the United States, she found the perfect souvenir. Unfortunately, when she went to make the purchase with her debit card, the transaction was denied. This happened because Ann had only $200 in her account, and the souvenir cost $300. Ann was disappointed and regretted having to pass on her purchase. What could Ann have done before her trip to ensure that she could spend more than what was in her account? A. Traded her debit card for a prepaid card. B. Added fraud protection to her account. C. Asked her bank to allow a direct debit for international purchases. D. Added overdraft protection transfers from her savings account to her checking account.
D.
When searching for a rental property, what is the most important factor to consider? A. Access to neighborhood amenities. B. Appearance of neighborhood. C. Access to work. D. Safety.
D.
When searching for a vehicle to purchase, which of the following variables is an important factor in the purchase decision-making process? A. Reliability. B. Safety. C. Cost efficiency. D. All of the choices are correct.
D.
Which of the following are indicators that a landlord is taking adequate care of property? A. The property's parking lot has been repaved recently. B. The property is well lit. C. The property has high ratings posted online from tenants. D. All of these answer choices are correct.
D.
Which of the following is a threat associated with keeping cash at home? A. Theft. B. Lost interest. C. No protection against impulse purchases. D. Loss of interest, theft, and no protection against impulse purchases.
D.
Which of the following is an appropriate investment vehicle or source from which to draw emergency funds? A. A baseball card collection valued at $5,000. B. A savings account held at the local bank. C. An online checking account. D. A savings account held at the local bank or an online checking account.
D.
Which of the following is not a wise use of emergency fund money? A. Avoiding foreclosure or eviction. B. Replacing an air conditioning unit for your home. C. Going to the hospital if you unexpectedly become ill. D. Buying Christmas gifts.
D.
Which of the following lenders will likely provide the lowest interest rate to qualified borrowers? A. Credit-card company. B. Title loan lender. C. Retail/store credit card. D. Banks and credit unions.
D.
A pure risk is one that results: A. in an outcome that has both gains and losses at the same time. B. in a gamble that has equal odds of winning or losing. C. in an outcome that can include a gain or loss. D. only in a financial loss.
D.
All of the following factors combine to help determine whether a vehicle is a value except: A. Low price. B. High quality. C. Level of style and fun. D. Both low price and high quality.
D.
At a minimum, to obtain a prepaid card you need: A. a bank account. B. cash. C. a debit card(s). D. a checking account.
B.
A bank check issued by a financial institution can be purchased by paying the amount of the check plus a service fee is called a(n): A. Cashier's check. B. Travelers check. C. Money order. D. Certified check.
A.
A digital code on a check that helps facilitate check processing is known as a(n): A. Bank Routing Number. B. FDIC Tracking Account. C. Check Number. D. Check Register.
A.
A payment method that has had money loaded onto a card in advance is known as a: A. Prepaid card. B. Debit card. C. Secured credit card. D. Direct debit card.
A.
All the following help determine the amount of the loan that you can qualify for when auto shopping except: A. The safety features of the car. B. The maximum payment you can fit into your budget. C. Both the maximum payment you can fit into your budget and the interest rate of the loan. D. The interest rate of the loan.
A.
If you withdraw money from a CD prior to maturity, what can happen? A. You can be penalized through the lost interest earned. B. You can lose a portion of your original investment. C. You can rollover the money penalty free into a money market saving account. D. You can lose access to other banking products, including low interest loans and advanced savings products.
A.
Joe has cash in a savings account totaling $7,500, and his monthly expenses are $2,500. What is his emergency fund ratio? A. 3. B. 0.25. C. 5. D. 2.
A.
One method to verify a debit-card transaction is through the use of a: A. personal identification number. B. public identification number. C. public interest number. D. personal interest number.
A.
One way to become more motivated to save for emergencies is to: A. consider how the people you love would be affected if you could not pay for an emergency. B. consider that your emergency fund savings balance exceeds the FDIC insurance limits. C. withdraw and aggressively invest your current savings so that you will increase your emergency fund savings. D. rely on others to pay for your emergencies.
A.
Tony has $3,000 saved in a money market account. He just received a birthday gift and is deciding what to do with the money. He has narrowed down his options to either increasing his savings or purchasing a subscription to an online video streaming service. If he chooses the video streaming service, the savings alternative is: A. the opportunity cost. B. an irresistible temptation. C. a form of regret. D. the impulse cost.
A.
Tony struggles to save money. He knows it is important, but his immediate needs and wants make it difficult for him not to spend the money he has set aside. Which of the following options would be most effective for him to start building savings? A. Automatically having money deposited into a restricted account each month. B. "Hiding" cash in his apartment. C. Giving $20 to his friend Maria each week and ask her to save the money for him. D. Accepting the fact that he probably will not be able to save money.
A.
What occurs when you are deceived into believing that you will receive something that does not actually exist? A. Fraud. B. Theft. C. Pyramid scheme. D. Ponzi scheme.
A.
When shopping for a checking account, it is important to compare banks and credit unions based on fees charged. All of the following are reasonable fees except: A. $3-per-transaction fee for in-network ATMs. B. $0 fee for use of a debit card. C. $5 fee when account balance drops below $100 in a given month. D. $5 monthly account fee for a nonstudent account holder.
A.
Which of the following is not required for a check to be valid? A. Address of payee. B. Name of payee. C. Signature of the account holder. D. Account number.
A.
Xavier is purchasing a new car. The car dealership needs a $3,000 down payment before it will process a loan for the remaining balance. Xavier does not have a checking account, but he does have $3,000 in a savings account. He does not want to risk having the money stolen or lost from the bank to the car dealership. What option could Xavier use to make the down payment that is both acceptable to the dealership while providing protection for Xavier? A. He could purchase a cashier's check made payable to "Cash." B. Unfortunately, he does not have many choices other than to use cash. C. Both he could use a certified check from this bank and he could purchase a cashier's check made payable to "Cash" are acceptable. D. He could use a certified check from this bank.
A.
Bernie Madoff ran the world's largest: A. Identity theft ring. B. Ponzi scheme. C. Pyramid scheme. D. Telemarketing fraud.
B.
Liquidity can be described as: A. small amounts of money in a savings account. B. having access to your money whenever you need it. C. being prepared for unforeseen events. D. having access to affordable credit.
B.
Which of the following will increase wear and tear and decrease your chances of getting 100% of your security deposit back? A. Hosting parties on a regular basis. B. Vacuuming twice per year. C. Letting things stay in the refrigerator for months at a time. D. All of the choices are correct.
D
Money paid in advance to cover the cost of excess damage you might cause while renting is called a(n): A. application deposit. B. security deposit. C. renters' insurance. D. reletting fee.
B
PITI stands for A. Payments, Insurance, Tax, and Indemnity. B. Principal, Interest, Tax, and Insurance. C. Principal Mortgage Insurance. D. Payments, Income, Tax, and Insurance.
B
Which of the following loans requires a lower down payment? A. Conventional 30-year mortgage. B. FHA 30-year mortgage. C. Conventional 15-year mortgage. D. None of the choices are correct.
B
A fraud that entails recruiting new members to sell products or services and to also recruit additional new members is called a(n): A. identity theft. B. pyramid scheme. C. ponzi scheme. D. telemarketing fraud.
B.
Marc is just starting out in the world of personal finance. Help him determine the most appropriate way to avoid being a victim of debit card fraud. Which of the following should Marc do on a regular basis to protect himself? A. Share his PIN with his girlfriend, best friend, or work colleague as a safety precaution. B. Cut up or shred his old card(s). C. Carry all his debit and prepaid cards in his wallet to ensure that if his apartment gets robbed the thieves will not get the cards. D. Keep a mental checklist of recent purchases rather than writedown the details so that a potential thief cannot obtain detailed shopping information.
B.
The difference between a bank and a credit union is as follows: A. A bank shares profits with all depositors whereas a credit union shares earnings with shareholders. B. A credit union depositor is known as a member but a bank depositor is simply a customer. C. A credit union offers more products and services than a bank. D. A bank depositor is known as a member whereas a credit union depositor is a shareholder.
B.
Which of the following would be an appropriate tool, if necessary, for someone who has not yet accumulated any savings and is just starting to build an emergency fund? A. A savings account. B. Credit cards. C. Collectible coins. D. A savings account and / or credit card.
B.
Why do consumer advocates advise against using alternative financial services? A. Because the amount that can be borrowed is too little to get through an emergency. B. Because of the high-cost associated with the loans and other services. C. Because of the poor customer service provided by alternative financial service providers. D. Because they have a conflict of interest and invest in bank stock.
B.
When someone says that they purchased something, but they could have bought something else, they are referring to: A. the temptation to spend on impulse. B. the management of their environment. C. the opportunity cost of their purchase. D. their intention to save.
C
All the following are mainstream financial service providers except: A. store credit card. B. credit union. C. title Loan lender. D. Ford Motor Finance Company.
C.
All the following are outlined in a lease except that: A. whether you may or may not have a roommate. B. what you need to do when you move out. C. when you can turn on your water heater. D. what happens if you make a late monthly rental payment.
C.
Banks close about five million checking accounts every year. It can be difficult for someone with a closed account to reestablish an account at a later time. All of the following factors are likely to prompt a bank or credit union to close a checking account except A. being unable to pay an overdraft fee. B. consistently mismanaging the account. C. making several deposits and withdrawals every month. D. writing bad checks.
C.
Physical checks require a number of elements to allow someone to cash a check issued by one bank at another bank. Which of the following is not part of the payment trail for transferred funds? A. Bank routing number. B. Account number. C. Date of check. D. Both account number and date of check are correct.
C.
Place the following Automated Clearing House or hybrid process steps in order: I.Sign check .II.Record check information with device. III.Deduct payment after bank receives information. IV.Merchant system sends check data to ACH operator. A. I, II, III, IV. B. III, II, IV, I. C. I, II, IV, III. D. II, I, III, IV.
C.
Tommy lost his prepaid "City Buck" card 3 weeks ago. Someone found the card and made $365 worth of purchases, which was enough to deplete the card's value. In accordance with the terms of "City Buck" card, the Bank does not reimburse any amount in case of the fraudulent purchases. How much fraud protection can Tommy count on? A. $365. B. $65. C. $0. D. $650.
C.
When shopping for a new car, which of the following should be the first step in the buying process? A. Obtain an estimate for auto insurance. B. Calculate how much you can afford. C. Determine your transportation need. D. Shop for a loan.
C.
Which of the following protects a lender in case another person, at a later date, makes a claim on a piece of real estate? A. Title insurance. B. PITI insurance. C. Property insurance. D. Mortgage insurance
C.
Which of the following provides the least expensive alternative to meet an unforeseen financial expense? A. A credit card. B. A short-term loan until the next pay day. C. Money in a savings account. D. A short-term car loan.
C.
Which of the following purchase strategies will generally generate the lowest cost for someone purchasing a vehicle? A. Liquidating high-return stock and mutual fund investment to fund the entire purchase. B. Using a small amount of savings for a down payment and borrowing the remainder. C. Using money from savings to fund the entire purchase. D. Borrowing 100% of the purchase price.
C.
Which of the following sources of emergency funds will have the least negative impact on your lifetime financial situation if the source is used to meet emergency expenses? A. Selling investment assets. B. Being unprepared for major car repairs, major medical expenses, and major home repairs. C. Taking money from your savings account. D. Borrowing money using a credit card.
C.
Which of the following bank products provides high liquidity with a limited ability to make penalty free withdrawals? A. Dedicated savings account. B. Certificate of deposit. C. Savings account. D. Money market savings account.
D
Which of the following factors helps determine whether a car is affordable? A. The monthly loan payment. B. The monthly insurance cost. C. The monthly gas and maintenance cost. D. All of these answer choices are correct.
D
Which of the following reasons might require you to get a guarantor for a lease agreement? A. You have a low credit score. B. You do not have a credit report. C. You have never rented before. D. All of the choices are correct.
D
A payment made directly from a cardholder's checking account using the cardholder's signature to verify the transaction is called a(n): A. Automated Clearing Housing transaction. B. check transaction. C. check-to-electronic conversion. D. debit card with signature.
D.