BUS120 MIDTERM

Ownership of an individual housing unit in a building is commonly called:

condominium

Which one of the following agencies can produce for a subscribing member, almost instantaneously, a report about your past and present credit activity?

credit bureau

Which one of the following financing methods provides a float period?

credit card

Ben Chase needs to pay off some of his debts over the next few months. Which item on his balance sheet would help him decide what amounts are due in the near future?

current liabilities

Consumer credit:

dates back to colonial times

Which federal credit law sets the procedure for promptly correcting billing mistakes?

fair credit billing act

TRUE OR FALSE: Buying on credit is almost always cheaper than paying cash.

false

TRUE OR FALSE: Financial planning has specific techniques that will be effective for every individual and household.

false

TRUE OR FALSE: Gross Domestic Product (GPD_ measures the total value of goods and services produced within a country's boarders, excluding items produced with foreign resources.

false

TRUE OR FALSE: In the 5 Cs of credit, capacity refers to the borrower's attitude toward his or her credit obligations.

false

TRUE OR FALSE: Real estate advisors suggest a price-to-rent ratio of 25 or lower when you buy to possibly avoid lower home value after your purchase.

false

TRUE OR FALSE: Tax avoidance refers to illegal actions to reduce one's taxes.

false

TRUE OR FALSE: The smaller the debt-to-equity ratio, the riskier the situation is for lenders and borrowers.

false

Which one of the following is an advantage of using credit?

funding an emergency expense

Which one of the following is not an element of corporate culture?

government regulations

Renting would be most appropriate for people who:

have limited funds currently available

Which CD pays earnings based on the stock market?

indexed

Liquid assets refer to:

Cash and other items that are easily converted to cash

Which form of bankruptcy allows a debtor with a regular income to extinguish his or her debts from future earnings or other property over a period of time?

Chapter 13

What should you do if your identity is stolen?

Contact the fraud departments of each of the 3 major credit bureaus

Austin Guess has written his resume and had it checked by his career placement center for errors. He plans on sending it to three companies he has identified as having job openings. Which step in the career planning process is Austin completing?

Develop a resume and cover letter to apply for specific positions

Which one of these statements correctly applies to a Roth IRA?

Earnings on the account are tax-free after five years

The Federal Trade Commission enforces the:

Fair Debt Collection Practices Act

If a person deposited $50 a month for 6 years earning 8 percent, this would involve what type of computation?

Future value of a series of deposits

During the past month, Jennifer Ernet had income of $3,000. During the month, her net worth declined by $200. If no other financial activities occurred, this means Jennifer's payments for the month were

$3,200

Jennifer Ryan wants to gain some employment experience so when she is ready to start a career she has something to offer a company. She has decided to work 20 hours a week for a local accounting firm answering the phone and assisting the partners in completing tax returns. Which of the following employment experience strategies is she pursuing?

Part-time employment

Which one of these situations creates negative amortization?

Paying less than the monthly interest on a mortgage

TRUE OR FALSE: Insolvency is a result of having more liabilities than assets.

TRUE

TRUE OR FALSE: One way to gather information about a product is to use an independent testing organization like consumers Union.

TRUE

_________ is a benefit on which you pay no taxes.

Tax exempt benefit

TRUE OR FALSE: Certain careers increase and decrease in demand based on changes in interest rates.

True

Which type of audit is the least complicated for taxpayers?

a correspondence audit

Mike Jacobs is planning to lease an automobile. In an effort to minimize the price of the vehicle being leased, Mike should compare the ____________ at different leasing companies.

capitalized cost

Arbitration differs from mediation in that arbitration:

is legally binding

The Rule of 78s demonstrates that a borrower pays:

more interest at the begining of the loan period

Which of the following information is required on food labels?

open dating

What is the rate that commercial banks charge large corporations for loans called?

prime rate

The Truth-in-Savings law requires that financial institutions:

report annual percentage yield on savings

Which of the following financial documents would most likely be stored in a safe-deposit box?

savings certificates

A cooperative is designed to:

sell products or services to members at reduced prices

TRUE OR FALSE: A deed is the document that transfers ownership of the property from one person to another.

true

TRUE OR FALSE: A payment cap keeps the payments on an adjustable-rate mortgage at a given level or limits the amount to which those payments can rise.

true

TRUE OR FALSE: All-in-one accounts may be used by financial institutions to simplify the maze of financial services and to attract customers.

true

Brad Hayden has a piece of paper that guarantees the conditions, under which he can return, replace, or repair an item that he has purchased. What is it he most likely has?

warranty

Opportunity cost refers to:

what a persongives up by making a choice

If you have declared personal bankruptcy, that fact may be reported by credit bureaus for ____________ years.

10

Todd Foley is applying for a $100,000 mortgage. He can select either a $600 monthly payment with no points or a $520 payment with two points. How many months will it take Todd to cover the cost of the discount points if he takes the lower monthly payment?

25

A deduction from adjusted gross income for yourself, your spouse, and qualified dependents is:

an exemption

Thw firat step of the financial planning process is to:

analyze your current personal and financial situation

A ____________ endorsement would be used if a person is presenting a check in order to obtain cash.

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