Personal Finance: Credit and Insurance

To revise a monthly budget, changes in which categories need to be identified? Check all that apply

income amount budgeted expenses

A credit score is based in part on

income and total debt

What future opportunities will most likely be affected by Lesley's poor credit? Check all that apply

insurance jobs rentals

An entrepreneur keeps backup funds in a savings account so that if their business experiences a loss, they will be able to recuperate. What type of risk management is this an example of

reducing risk

Which of these would require a significant but temporary budget revision

replacing a broken dishwasher

Both mortgages and auto loans

require minimum payments

Insurance companies create a pool of funds to handle

risk

When revising a budget, it is important to make choices that allow you to continue _____ money

saving

If two people are invited to invest and become partners in a business, the business owners will then _____ the risk

share

What is the definition of premium

the amount paid for an insurance policy

What is a main disadvantage of leasing a vehicle compared to buying a vehicle

the up-front cost

Which best describes a way people can use personal loans

to pay for college

When planning a budget, the biggest consideration should be the

total recurring monthly expenses

Zachary's student loans are an example of what type of loan

unsecured loan

Tom finds a second personal loan option. This loan would also require him to repay the principal in one lump sum after three years Remember, A refers to the total amount owed. Calculate the total amount that Tom would repay

$11,337

If Claire does not make any payments, how much will she owe after ten years

$12,136.67

Tom needs money to pay for education expenses, and he finds a personal loan. The loan would require him to repay the principal in one lump sum after three years Remember, A refers to the interest accrued. Calculate the total interest Tom would pay, in addition to paying back his $9,000 in principal

$2,970

The simple interest on a loan of $200 at 10 percent interest per year is

$20 per year until the loan is paid off

What is the compound interest on a three-year, $100.00 loan at a 10 percent annual interest rate

$33.10

What best determines whether a borrower's investment on an adjustable rate loan goes up or down

A market's condition

Under which circumstance would someone need disability insurance

A person was in a car accident and cannot work for several months

For which buyer would a lender most likely approve a $200,000 mortgage

A person with a credit score of 760 with a small amount of debt who has had steady employment for many years

The safest way for someone to make an online purchase is to

Buy from a reputable website

What is the most acceptable and easy way to revise a budget to allow for the purchase of a new couch

Cook dinners at home instead of going out to eat

Bryan receives an e-mail from a group posing as a police officers association and asking for bank account information. This is an example of

Phishing

It is important for victims of identity theft to contact the authorities

Quickly to protect themselves from financial losses

Joann has decided to purchase a new car. What should she do next according to the decision-making process

Research available cars for sale

Daniel wants to buy a laptop computer, and he has $300 in savings. He can purchase a new computer for $279 or a refurbished [repaired or renovated] computer for $100. What should Daniel do next

Review the pros ad cons of the different available computers

Which describes the difference between secured and unsecured credit

Secured credit is backed by an asset equal to the value of a loan, while unsecured credit is not guaranteed by a material object

The Jones family would like to buy a home, but they have a large amount of debt that has led to a weak credit score. What step could the Jones family take to improve their credit

They could hire a financial adviser to figure out how to pay off their debt

Which person is a victim of identity theft

Thomas, whose credit card information was stolen and maxed out at a jewelry store

A good rule is to spend no more than 25-30% of your _____ income on housing

gross

Which expense category will most likely be changed to allow money for the purchase of a car

entertainment

A credit score between 500 and 600 means a consumer would most likely

find it hard to get a loan

When making a decision about housing, the first step should be

gathering information on available housing

What is a benefit of obtaining a personal loan

getting large amounts of money to use immediately

What effects are Mary and Todd likely to face if they declare bankruptcy? Check all that apply

-They will find it hard to get new loans -They will have to pay higher interest rates on any new credit cards they obtain -They will have poor credit reports

What steps can Booker take to improve his credit score? Check all that apply

-make all of his loan and credit card payments on time -check his credit history for accuracy -find a second job to improve his income in order to pay off his debt more quickly

Why is it important to check your credit history? Check all that apply

-to track my current debt -to ensure that the information is correct -to monitor my credit score

Which information is included on a person's credit report? Check all that apply

Credit cards and loans. Total amount of money owed. Whether bills are paid on time. How much money lenders will loan.

Which step in the decision-making process would most benefit Simon

Evaluating results

The chart shows a range of credit scores

Find it hard to get a loan

The best way a bank can protect a victim of identity theft is to ______ his or her account

Freeze

Which steps are involved in filing an insurance claim? Check all that apply

Get expenses covered. File a claim. Experience damages

A car dealership analyzing whether it will loan money to William to buy a new car finds that his credit score is in the "very good" range

He is a low-risk borrower who qualifies for lower interest rates

What is the first step in the decision-making process

Identify the decision

Checking a credit report is a good way to

Know whether credit is improving

If the loan company does approve Lesley's loan, what provision is likely to be part of the loan agreement

Lesley will have to pay a higher interest rate

Consumers who pay more than the minimum payment on credit cards

Pay less interest in the long run

People in financial trouble are advised to contact creditors to negotiate a _____ plan

Payment

Why does insurance often provide "peace of mind"

People are less worried when they know they have protection from risk

Which describes the difference between simple and compound interest

Simple interest is paid on the principal, while compound interest is paid on the principal and interest accrued

Which describes an example of using unsecured credit

Someone buys new gutters for a home with a credit card

Marlene has decided to save $3,500 so that she can attend the nearby community college. Which step in the decision process should Marlene take

Take action

What must happen in order for an insurance company to make a payout? Check all that apply

The insurance company must verify the claim. The insured party must file a claim. The insurance policy must be in place. The insured party must experience a covered loss

How can an insurance company make a profit by taking in premiums and making payouts

The value of the premiums the company takes in is higher than the value of the payouts it makes

Which statement best describes how lenders determine borrowing conditions for a customer

They access the customer's credit reports

What is an appropriate budgeting question

What are my recurring expenses?

Which questions about risk should someone ask before making a big purchase

What problems are most likely to happen? What could go wrong? What problems could be most damaging?

Which questions about risk should someone ask before making a big purchase? Check all that apply

What problems are most likely to happen? What could go wrong? What problems could be most damaging?

Which questions about risk should someone ask before making economic choices? Check all that apply

What problems are most likely to happen? What could go wrong? What problems could be most damaging?

When can a credit agency release someone's credit information in Florida

When a consumer authorizes it

The type of credit people are most likely to use for small purchases during their lifetime is

a credit card

When an insurance company needs to provide a payout, the money is removed from

a pool of funds

Which is the most important consideration when deciding to purchase or lease a vehicle

all current monthly expenditures

A similarity between mortgages and auto loans is that both

are less risky for lenders

Some major considerations when deciding on housing are needs and

budgeting

If Roland wants to invest money in his own business, how can he avoid risk

by deciding not to invest the money

Roland has purchased a new tablet. How he can avoid risk? Check all that apply

by using a screen protector by using an antivirus app by using a protective case

Buying a new car can create a financial challenge because

car payments must become part of the budget

What is the $25 fee Maria's mother paid when Maria visited the doctor

co-payment

Insurance is a financial service that allows a

consumer to share liability with a company

In determining whether to issue a loan, banks are not allowed to ask about an applicant's

country of origin

Filing for bankruptcy can make it hard for a consumer to reestablish and obtain

credit

The type of credit people are most likely to use during their lifetimes is a

credit card

Which type of insurance policy would someone get to protect others only

life insurance

What is an advantage of renting a place to live

lower up-front costs

What steps can an individual take to improve a credit score? Check all that apply

make all loan payments on time check credit reports for accuracy avoid opening credit accounts that are not needed keep balances low

Most people prefer to pay health insurance premiums rather than pay out-of-pocket for medical expenses because

medical costs can be extremely high, and insurance is more affordable than paying out-of-pocket for a hospital stay

An example of secured credit is a

mortgage

People who want to buy a house typically ask the bank for a _____ over a 10- to 30-year period

mortgage

Consumers who make higher payments on credit cards

pay less interest in the long run

How can Elizabeth most responsibly pay off her bill sooner

pay more than the minimum payment each month

A way to build good credit is

paying bills when they are due

A credit score is based in part on

payment history and total debt

Buying a new car can create a financial challenge because car

payments must become part of the budget

What is the $75 payment Nelson must make each month

premium

Which is always a cost when buying insurance

premium

Simple interest is paid only on the

principal borrowed