finance final

The method of determining life insurance requirements that does not ignore such important factors as social security and your liquid assets is called the:

"family need" method

Barker Creek Clothing has after-tax income of $12.8 million. It also has 32 million shares of stock outstanding. What is the firm's earnings per share?

$0.40 a share

XYZ Corporation wants to retire a $60 million bond issue before the maturity date. In order to call the bonds in this issue, the corporation must pay the bondholders the face value plus a premium. What is the typical premium for bonds that have been called?

$10-$25

Patsy Banz owns 220 shares of General Mills Corporation. For the last calendar quarter, General Mills Corporation paid a dividend of $0.47 a share. What is the total amount she received in her dividend check for this quarter?

$103.40

If you borrow $100 at 10 percent simple annual interest and repay it in one lump sum at the end of one year, you will have to pay:

$110.

Patricia McDonald has determined that the value of her liquid assets is $4,500, the value of her real estate is $128,000, the value of her personal possessions is $62,000 and the value of her investment assets is $73,000. She has also determined the value of her current liabilities is $7,500 and the value of her long term liabilities is $98,000. What is Jamie's net worth?

$162,000

A family with $45,000 in assets and $22,000 of liabilities would have a net worth of:

$23,000.

Renee Warning has a life insurance policy where the payments to beneficiaries get smaller as time passes. What type of life insurance does Renee likely have?

Decreasing term insurance

Which of the following is an advantage of buying?

Deductibility of mortgage interest

Sophie Bennett must pay $500 in doctor's visits before her insurance company will make any payments for doctors visits. This is called:

Deductible

Preparing a list of current asset and debt balances and amounts will help with which step of of The Financial Planning Process?

Determining your current financial position.

Which type of insurance provides regular cash income lost by employees as a result of an accident, illness, etc.?

Disability income

Because you feel young and healthy now, you may overlook the very real need for:

Disability income insurance.

The rate that the Federal Reserve charges banks for loans is the:

Discount rate

A family spends $40,000 on living expenses. With an annual inflation rate of 3 percent, they can expect to pay approximately _______ in 15 years.

$62,320

Spike goes to a payday loan company to borrow $100. He gives them a check for $115. 14 days later he returns & redeems the check for $115 cash. What APR is he paying?

391%

According to the "Rule of 72", if the interest rate your earn is 16% your money will double in value in:

4.5 years

Which of the following is a retirement plan sponsored by an employer? Roth IRA

401(k) Plan

Be certain you don't let your ____________ birthday roll by without a comprehensive retirement plan.

45th

The credit bureau cannot charge you a disclosure fee if you ask for a copy of your credit report within ______ days of being notified of a denial based on a credit report.

60

Most of the information in your credit file may be reported for ______ years.

7

There are about _____ exchange-traded funds.

775

With an inflation rate of 9 percent, prices would double in about ___________ years.

8

The commission charge for purchasing shares of a load fund may be as high as ___ percent.

8 1/2

An investment account that increases from $3,000 to $3,271 in one year is earning about ___ percent.

9

Approximately ____________ percent of all mutual funds are open-end funds.

92

Margaret Wilson has a piece of paper that she can mail in to the manufacturer of the product she just purchased that allows her to get part of her purchase price back. What is she most likely using?

A rebate

The most popular type of home ownership is:

A single family dwelling

Which statement is correct regarding stock life insurance companies?

A stock company generally sells nonparticipating (nonpar) policies.

Jerry Lewis is thinking about purchasing some life insurance. He goes to a company that is owned by shareholders. What type of life insurance company has he gone to?

A stock life insurance company

Carol Fisher wants to sell the stock of Hathaway International at the next available price after the prices reaches $50 per share. What type of transaction is Carol making?

A stop order

What has become one of the most important social issues of our time?

Affordable health care

Possible sources of income for many retirees include:

All are possible sources of income.

Which of the following is correct about a lost or stolen debit card?

All of the above.

Estate planning involves:

All of the choices are correct.

Which of the following is another name for permanent insurance?

All of the choices are names for permanent insurance

Which one of the following is a true statement about retirement planning?

All of the choices are true statements.

Typical examples of uses of life insurance proceeds are:

All of the choices are typical examples.

Investors purchase corporate bonds for:

All of the choices.

By evaluating your credit options, you can:

All of these choices are correct.

Financial institutions, the sources of credit:

All of these choices are correct.

Why is financial planning for retirement critical?

All of these factors are vitally important.

Gerald Wilkins owns a home worth $250,000, a car worth $15,000, various investments worth $600,000 and other personal assets worth $25,000. What are these things to Gerald?

An estate

Which of the following situations is a person who could be insolvent?

Assets $40,000; liabilities $45,000

Another name for a mutual fund that charges a contingent deferred sales load is a(n) ____________ fund.

B

According to the Investment Pyramid, which of the following investments would rank the highest with regard to safety?

CD's (Certificates of Deposit)

Joan Wilder receives a phone call from a salesman who tries to sell her an insurance policy by scaring her about her high risk of death from this disease. She knows that this type of insurance policy has a notoriously poor value so she politely declines. What type of insurance policy did this salesman likely try to sell her?

Cancer Insurance Policy

Which 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

Paul Carter is applying for a loan from a bank. The bank is concerned because Paul is an airline pilot for United Airlines. The bank thinks that Paul may be laid off in the near future. Which of the 5Cs of credit is the bank concerned with?

Conditions

Kevin Bacon is thinking about buying an investment. The investment option that he is thinking about buying is a written pledge by a corporation to repay a specified amount of money. It also pays interest payments every 6 months until it matures. What investment is Kevin thinking about purchasing?

Corporate Bond

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

The lowest bond rating issued by Standard & Poor's is:

D.

Terry Hamilton has just received $30,000 from an uncle who died and is trying to decide how to invest it. She has done some research has decided that about 30% of the money should go into large cap stocks, 20% into medium cap stocks, 15% into small cap stocks, 10% into bonds, 10% into foreign stocks and 15% into cash. She thinks that even if one area does not do that well, the rest will so that her overall return will be pretty good. What aspect of investing is Terry most concerned about?

Diversification

James Green just bought the stock of a company. He knows that he will receive a cash payment from the company once a quarter, although the company is not obligated to make this payment. What will he receive?

Dividends

An authoritative rating guide to the financial stability of the nation's insurers is published by all of the following except:

Dow Jones & Company

Which type of health insurance is simply a bad buy?

Dread disease and cancer policy

In the budgeting process, which of the following is budgeted first?

Emergency fund & savings

Which federal consumer credit law prohibits credit discrimination based on sex and marital status?

Equal Credit Opportunity Act

Which of the following is correct about the "Rule of 78s?"

It favors lenders and dictates that you pay more interest at the beginning of a loan.

Which is correct with respect to life expectancy?

It is greater for a woman than a man.

Which of the following statements is true?

It is possible to obtain financial information about a corporation that issues stock by using the Internet.

Brenda Johnson has used a preprinted form that she got from the internet to create her will. However, she was unhappy with one section of the will and crossed out the parts she didn't like and hand wrote the changes she wanted. What may be true about this will?

It may be invalid

If a gold bullion bar does not remain in the possession of the dealer or bank that sells it, what must happen before it can be resold?

It must be reassayed

Which of the following would not be a benefit of establishing a trust?

It removes all income tax liability.

_____________ are expenses that a taxpayer is allowed to deduct from adjusted gross income.

Itemized deductions

What are the two most popular personal retirement plans?

Keogh accounts and individual retirement accounts

Which is a correct statement about life insurance?

Life insurance is still more often sold than bought

Some savings and investment choices have the potential for higher earnings. However, these may also be difficult to convert to cash or sell when you need the funds. This problem refers to:

Liquidity risk

____________ is considered a variable operating expense of an automobile.

Maintenance

Which one of the following statements is true about estate planning?

Many people give little or no thought to setting their personal & financial affairs in order.

Which health care plan is administered by each state within certain broad federal requirements and guidelines?

Medicaid

Which one of the following is a federal health insurance program?

Medicare

Hospital insurance (Part A) and medical insurance (Part B) are parts of:

Medicare.

Which of the following statements is false?

Most individual investors that purchase treasury bills, notes, and bonds bid competitively once they have visited the Treasury Direct website.

Which of the following is not a business and general periodical?

New York Stock Exchange Report

Andrea Mitchell has joined a real estate syndicate. The syndicate she belongs to was formed by one individual who sold participation units to Andrea and several others. The individual who sold the participation units has unlimited liability and provides professional management. Andrea and the others can only lose their initial investment. What type of real estate syndicate has Andrea joined?

One organized as a limited partnership.

When you make a choice in financial decision making you always give something up. You generally sacrifice something to obtain something else more desirable. These trade offs are known as ___________.

Opportunity costs

What is likely to be an individual's single biggest asset?

Owned home

Brett Johnson owns a home in Yukon, Oklahoma. A babysitter he hires breaks her leg when she trips over the dog. What part of his homeowner's insurance would cover this loss?

Personal liability

Julie Cumbie is playing softball and gets hurt sliding into second base. She gets an x-ray at her doctor's office to make sure her ankle isn't broken. Which part of her basic insurance coverage should help pay for this x-ray?

Physician Expense Insurance

Hector Ramirez has purchased a new Honda Accord with power windows, locks and anti-lock brakes. He is reading his owner's manual to know when he needs to take it in for its regular servicing at the dealer. He wants to make sure this car lasts a while. What step in the purchasing process is Hector carrying out?

Postpurchase activities

Which of the following is a true statement?

Professional management is an especially important factor for investors purchasing a mutual fund.

Which of the following is a problem with direct investment in real estate?

Responsibility for maintaining the rental property.

Brenda Lee has received a $10,000 gift from her mother and is trying to decide how to invest it. She thinks she would like to invest it in stocks because she knows that stocks have been earning about a 10% rate of return over the last several years. What aspect of investing is Brenda most concerned about?

Return

Kevin Brown rides his bicycle to work so that he doesn't have to worry about getting in a car accident. How is Kevin managing his risk?

Risk Avoidance

Sarah Logan's employer makes nontaxable contributions to a plan in her name and reduces her taxable income by the same amount. What type of retirement plan does Sara have?

Salary reduction plan or 401k

Which of the following statements is true?

Selling short is selling stock that has been borrowed a from brokerage firm.

Which of the following is true with respect to closed-end funds?

Shares are traded on the floors of securities exchanges or in the over-the-counter market during the day like individual corporate stocks.

Hospital insurance (Part A) of Medicare is financed from part of the ____________ taxes.

Social Security

Sophie Bennett has met the deductible for her doctor's visits. She has also paid out 20% of all expenses above this deductible amount. She has paid a total of $5000 in doctor's visits. At this point there is a clause in her insurance contract that make her insurance company pay for 100% of all expenses. What clause is this likely to be?

Stop-Loss provision

___________________________ play an important role in setting prices:

Supply and demand

Joe Johnson needs surgery for appendicitis. Which part of his basic insurance coverage should help pay for this surgery?

Surgical Expense Insurance

Mr. and Mrs. Dowright want to give their son Dudley a total of $24,000. They each write him a check for $12,000 so they won't have to pay any gift tax. This is an example of

Tax avoidance.

The law that requires financial institutions to disclose fees on deposit accounts, the interest rate, the annual percentage yield and other terms and conditions of the savings plan is called:

The Truth in Savings Law

What has made it much easier to find and trade in collectibles?

The advent of the World Wide Web

Which federal credit law protects you against an unauthorized use of your credit card to $50?

Truth in Lending Act

Which federal law limits a cardholder's liability for unauthorized use of a card to $50?

Truth in Lending Act

Which federal law, passed in 1969, requires creditors to state the cost of borrowing in common language?

Truth in Lending Act

Which country has the highest per capita medical expenditures of any industrialized country in the world?

U.S.A.

Question 10 1 / 1 pts Which organization has the purpose of testing products for electrical and fire safety?

Underwriters Laboratories

Which type of life insurance policy combines term insurance and short-term investment elements?

Universal Life

Which of the following statements is false?

With an exchange-traded fund, there is more need for a portfolio manager to make decisions.

Which type of audit is the least complicated for taxpayers?

a correspondence audit

Which of the following is an example of a conventional mortgage?

a fixed rate mortgage

For which of the following types of credit plans is the interest tax deductible?

a home equity loan

You have a two-year-old daughter named Chloe. You want to have enough money so you can pay for her college education when she starts college in sixteen years. What type of goal is this?

a long-term financial goal

Georgette Valentine has expensive photography equipment for use in her hobby. Which one of the following types of coverage would pay for damage or theft of this equipment?

a personal property floater

When a lender uses the borrower's house as collateral to buy an annuity for the borrower from a life insurance company, it is called:

a reverse annuity mortgage.

Brad Opper has a goal of "saving $50 a month for vacation." Brad's goal lacks:

a time frame.

The ____________ method to settle claims is based on the current replacement cost of a damaged or lost item less depreciation.

actual cash value

What are the most common settlement options in a life insurance program?

all are common options

What are some possible reasons for high and rising costs of health?

all are possible reasons for high health care costs

When selecting a financial institution, you should consider:

all of the above.

Excessive indebtedness can result in:

all of the choices are possible results.

What is (are) the danger signal(s) of potential debt problems?

all of the choices are the danger signals of potential debt problems

A call feature:

allows the corporation to buy outstanding bonds from current bondholders before the maturity date.

Which type of tax expert would be of most value when you have a difference of opinion with the IRS?

an attorney

A method of evaluating the cost of life insurance by taking into account the time value of money is called:

an interest-adjusted index

Your first step in retirement planning is to:

analyze your current assets and liabilities.

The amount of interest is determined by multiplying the amount in savings by the:

annual interest rate and the time period.

An individual can reduce the amount of risk associated with an investment program by using:

asset allocation.

An all-in-one account that provides several services is a(n):

asset management account.

Cash & items that you own with a monetary worth are referred to as:

assets.

For most mutual funds, the net asset value is calculated:

at the close of trading each day.

A short-term mortgage with a very large final payment is called a ____________ mortgage.

balloon

Most people who are in debt over their heads are:

basically honest people.

The type of bond that is not registered in the investor's name is a ___________ bond.

bearer

When an investor purchases shares in a load fund, the average sales charge is usually ____________ percent.

between 3 and 5

Today, most bond ownership records are maintained using a process called:

book entry.

The difference between the amount budgeted and the actual amount received or spent is called a:

budget variance.

Estate planning has two parts. The first part consists of:

building your estate through savings, investments, and insurance.

Unsuccessful products or bad management may result in investors experiencing ____________ risk.

business failure

A term that refers to the borrower's assets or net worth is called:

capital.

A personal check with guaranteed payment is called a:

certified check.

The borrower's attitude toward his or her credit obligations is called:

character.

Recently, Jim Dahl was on a bus tour in a mountain area. The bus broke down forcing the group to stay overnight. Group members had to pay for their own hotel bills. Jim believes that the hotel cost for the group should be paid by the tour company. Which legal action would be most appropriate?

class action suit

Mortgage loans, automobile loans, and installment loans for purchasing furniture or appliances are examples of:

closed-end credit.

Which document explains, adds, or deletes provisions in your existing will?

codicil

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

collectibles such as rare coins

Traditionally, the greatest variety of financial services have been offered by a(n):

commercial bank.

Which of the following investments often offers the greatest opportunity for growth?

common stock

Who financially supports a Consumer Credit Counseling Service?

community-minded organizations and individuals

Future value calculations involve:

compounding.

Warranties are commonly associated with ____________ purchases.

consumer

In recent years, membership in credit unions has:

continued to increase.

The purpose of a service contract is to:

cover the repair costs of a product.

A tax ____________ is an amount subtracted directly from the amount of taxes owed.

credit

Which of the following financing methods provides a float period?

credit card

The most commonly purchased type of credit insurance is:

credit life insurance

A cash flow statement reports a person's or a family's:

current income and payments.

Savings compounded ____________ would have the highest effective yield.

daily

The purpose of the invoice price is to inform customers of the:

dealer's cost.

A bond that is backed only by the reputation of the issuing corporation is called a(n) ____________ bond.

debenture

In a bankruptcy, a person filing for relief is called a:

debtor.

Easing of international tensions or disinflation causes gold price to:

decline

When the board of directors approves a two for one stock split, the price for each share of stock most likely:

decreases in value.

Which document is used to transfer ownership of property from one party to another?

deed

A stock that remains stable during declines in the economy is called a(n) ____________ stock.

defensive

Which employer retirement plan specifies the benefits promised to the employee at the normal retirement age?

defined-benefit plan

Which employer pension plan has an individual account for each employee?

defined-contribution plan

Stock bonus plans, profit-sharing plans, and 401(k) pension plans are examples of a(n):

defined-contribution plan.

In what type of real estate investment does the investor hold legal title to the property?

direct investment

A plan which allows stockholders to purchase stock directly from a corporation without having to use a brokerage firm is called:

direct investment plan.

Real estate investments are classified as:

direct or indirect.

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

disclose the annual percentage yield (APY).

Federal law requires REITs to:

distribute at least 90 percent of their taxable annual earnings to shareholders.

A long-term technique used by investors who purchase an equal dollar amount of the same stock at equal intervals in time is called:

dollar cost averaging.

Money received by an individual for personal effort is ____________ income.

earned

The Roth IRA differs from the regular IRA in that:

earnings on the account are tax free after five years.

An investment theory based on the assumption that stock price movements are purely random is called the ____________ theory.

efficient market

A federal tax levied on the right of a deceased person to transmit his or her property and life insurance at death is called a(n) ____________ tax.

estate

Which type of tax is imposed on specific goods and services at the time of purchase?

excise

Which of the following would result in a reduction of taxable income?

exclusions

A person who will follow your instructions specified in your will is called a(n):

executor or executrix.

Which of the following types of warranties is usually written and created by the seller or manufacturer?

express

When one investment company manages a group of mutual funds, it is called a(n):

family of funds.

The total dollar amount you pay to use credit is called the:

finance charge.

Of the following, which is generally the most expensive lender?

finance companies.

A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends a direction for your financial activities is a(n):

financial plan.

If you have a problem with your creditor, the best solution is to:

first try to deal directly with the creditor.

Payments that do not vary from month to month are ____________ expenses.

fixed

In general, the price of gold:

fluctuates daily.

Open dating provides information on:

freshness or shelf life.

The principle purpose of taxes is to:

fund government programs.

An investment theory based on the assumption that a stock's intrinsic or real value is determined by the future earnings of the company is called the ____________ theory.

fundamental

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

A prime reason for buying an annuity is to:

give you retirement income for the rest of your life

Most people pay federal income tax by:

having amounts withheld from income.

A handwritten will is called a(n):

holographic will.

Who has the greatest need for life insurance?

households with small children

A stock that pays higher than average dividends is called a(n) ____________ stock.

income

A financial benefit of home ownership is:

increased property value.

The time value of money refers to:

increases in an amount of money as a result of interest.

An example of ____________ risk occurs when an investment does not keep up with prices that are increasing in the overall economy.

inflation

Investors buy precious metals as a hedge against:

inflation.

An example of a tax-exempt investment is:

interest income on municipal bonds.

A mutual fund that invests in foreign stocks sold in securities markets throughout the world is a(n) ____________ fund.

international

An individual retirement account is an example of a(n) ____________ asset.

investment

Money received in the form of dividends or interest is ____________ income.

investment

Standard & Poor's and Mergent's are companies that would be examples of:

investors' services.

If you establish a(n) ____________ trust, you cannot change its terms or end it.

irrevocable

A beneficiary is a person who:

is designated to receive life insurance proceeds

A home file should be used to:

keep financial records for current needs & documents with limited value.

The basic unit of gold bullion is one:

kilogram

The legal document involved in renting an apartment is called a(n):

lease.

Which of the following legal techniques best serves low-income consumers?

legal aid societies

Possible losses due to negligence resulting in bodily injury or property damage to others are called ____________ risks.

liability

A request that a stock be bought or sold at a specified price is called a ____________ order.

limit

One of the advantages of being a limited partner in a real estate investment venture is that you have ____________ liability.

limited financial

The ability to buy or sell an investment quickly without substantially affecting the investment's value is called the:

liquidity factor.

A(n) ____________ trust is a property management arrangement that you establish while you are alive.

living

A mutual fund in which investors pay a commission every time they purchase shares is called a(n) ____________ fund.

load

The most commonly considered factor when selecting a home is the:

location of the home.

Which one of the following is a possible disadvantage of real estate investments?

long period of depreciation

As Jean Tyler plans to set aside funds for her young children's college education, she is setting a(n) ____________ goal.

long-term

Brenda Williams plans to rent instead of buy her housing. What advantage of renting will Brenda encounter?

lower initial costs

The main financial benefit of renting is:

lower initial costs.

Homeowners without children benefit from strong schools because the educational advantages of a community help:

maintain property values

The purpose of a debit card is to:

make purchases and have them deducted from from your checking or other bank account.

Medigap is sold by:

many (private) companies.

A request that a stock be bought or sold at the current market price is called a ____________ order.

market

The process of resolving consumer complaints with the use of a third party who suggests a solution through discussion and negotiation is:

mediation.

The people who are in the best position to save are:

middle-aged.

A VA-guaranteed loan program provides assistance to:

military veterans.

A corporate bond that is secured by various assets of the issuing firm is called a(n) ____________ bond.

mortgage

A financial institution organized for the main purpose of providing loans to purchase homes is a:

mortgage company.

A type of investment that combines and invests the funds of many investors and manages it with a professional manager is called a(n):

mutual fund.

Investment companies are also called:

mutual funds.

The highest consistency of quality is associated with ____________ brand items.

national

If a homeowner leaves toys on stairs that results in injury to a delivery person, this may be ruled as:

negligence.

The current market value of the securities in the mutual fund's portfolio minus the mutual fund's liabilities divided by the number of shares outstanding is called the:

net asset value.

If you default on your automobile loan:

no advance notice is required before repossession.

Which of the following would increase the speed of equity growth for a homebuyer?

obtaining a 15-year mortgage instead of a 30-year mortgage

For an investor who wants to speculate, which of the following investments would be appropriate?

options

Which is often the source of the least expensive loan?

parents or family members

The purpose of a security deposit is to:

pay for potential damages.

An umbrella policy is designed to cover:

personal injury, bodily injury and property damage.

Renter's insurance would include coverage for:

personal property.

Which type of health insurance pays for physician's care that does not involve surgery?

physician's expense

What is prepaid interest charged by a mortgage company?

points

A documentary agreement between spouses before marriage in which one or both parties often waive a right to receive property under the other's will or under state law is called a:

prenuptial agreement.

Which type of housing is preferred by most persons who are approaching retirement?

present home

A market in which an investor purchases financial securities (via an investment bank or other representative) from the issuer of those securities is called the ____________ market.

primary

The 25 in 50/100/25 refers to ____________ coverage.

property damage liability

A cost associated with home buying would be:

property taxes.

A financial risk of home ownership is that:

property values may decrease.

Most people buy life insurance to:

protect someone who depends on them from financial losses caused by their death

The purpose of financial responsibility laws is to:

protect the public from physical harm and property damage losses caused by drivers.

The purpose of an assigned risk pool is to:

provide insurance for poor drivers.

A taxpayer whose spouse recently died is most likely to use the ____________ filing status.

qualifying widow or widower

The ______________ property tax is based on the value of land and buildings at some point in time.

real estate

Wearing a seat belt in an automobile to protect yourself against injury is an example of ____________ risk.

reducing

A bond that is registered in the owner's name by the issuing company is called a ____________ bond.

registered

Pam McNally is planning to use the services of the Better Business Bureau. A major purpose of the BBB is to:

resolve complaints against local merchants.

A _______________ endorsement is especially useful when you are depositing checks.

restrictive

Most consumer complaints are resolved by:

returning to the place of purchase.

A bond that is repaid from the income generated by the project it is designed to finance is called a(n):

revenue bond.

The financial planning process concludes with efforts to:

review and revise the financial plan.

If you establish a(n) ____________ trust, you retain the right to end the trust or change its terms.

revocable

After the death of her husband, Gina Baker, 35, received a check for $350,000 from a life insurance company. Gina has two small children and wants to make sure that both she and the children are taken care of in the future. Based on this information, which of the investment factors listed below would be the most important to Gina in her investment program?

safety

Which of the following is an example of opportunity cost?

saving money instead of taking a vacation

Which of the following investments offers the greatest liquidity?

savings accounts

Time deposits consist of:

savings accounts.

A market for existing financial securities that are currently traded between investors is called the ____________ market.

secondary

A mutual fund that invests in companies in the same industry is called a(n) ____________ fund.

sector

An investor concerned with a predictable source of income provided by an investment would choose:

securities issued by the U.S. government.

A cooperative is designed to:

sell products or services to members at reduced prices.

Earnest money has the purpose of:

serving as evidence of good faith indicating a serious purchase offer.

The purpose of small claims court is to:

settle legal differences involving amounts below a set limit.

A savings account at a credit union is called a ____________ account.

share

An example of a direct real estate investment is a:

single-family dwelling.

Starting a small business that may or may not succeed is an example of ___________ risk.

speculative

An order to sell a particular stock at the next available opportunity after the market price of the stock reaches a specified price is called a ____________ order.

stop

A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders with respect to interest payments, repayment and assets is called a(n):

subordinated debenture.

You can determine your net worth by:

subtracting your liabilities from your assets.

Which type of health insurance pays part or all of the surgeon's fee for an operation?

surgical expense

Total earnings of a person minus the deductions for taxes and other items is called:

take-home or net pay.

Tax-deferred retirement plans are a type of:

tax shelter.

A traditional IRA, Keogh plan and 401(k) plan are examples of:

tax-deferred retirement plans.

An investment theory based on the assumption that a stock's market value is determined by the forces of supply and demand in the stock market as a whole is called the ____________ theory.

technical analysis

A trust established by your will that becomes effective upon your death is called a(n) ____________ trust.

testamentary

One of the following is not a source that provides data to credit bureaus:

the Internal Revenue Service

One of the disadvantages of borrowing on financial assets (collateral) is that:

the assets are tied up until you have repaid the loan.

Peril is defined as:

the cause of a possible loss.

Aside from a home, the real property investment most widely favored by the small investor is:

the duplex, four-plex, or small apartment building.

Howard Ramsell recently became aware of implied warranties that exist for consumer purchases. An implied warranty exists as a result of:

the intended use of a product.

A will is:

the legal declaration of a person's mind as to the disposition of his or her property after his or her death.

The 500 in 200/500/50 refers to:

the limit for bodily injury claims paid to all persons in an accident.

The 100 in 100/300/50 refers to:

the limit for bodily injury claims that can be paid to one person.

Which of the following items is a set amount on which no taxes are paid?

the standard deduction

If you die without a valid will:

the state's law of descent and distribution becomes your will.

The sticker price of a car refers to:

the suggested retail price of a new car.

Financial leverage refers to:

the use of borrowed funds for investment purposes.

Estate planning has two parts. The second part of estate planning consists of:

transferring your estate in the manner you have specified.

A government security issued in minimum units of $100 with maturities that are one year or less is called a:

treasury bill.

A government security issued in minimum units of $100 with a 30-year maturity is called a:

treasury bond.

A government security issued in $100 units with maturities of more than one year but not more than ten years is called a:

treasury note.

A person or institution that holds or generally manages property for the benefit of someone else under a trust agreement is called a(n):

trustee

The financially independent firm or individual that acts as the bondholders' representative is the:

trustee.

Good disability plans pay when you are:

unable to work at your regular job.

Henry Edwards was injured in an accident caused by another driver who did not have insurance. Henry's medical expenses would be covered by:

uninsured motorists protection.

Which type of housing is designed to allow people to stay in their homes as they grow older?

universal design

Subject to certain minimums, which life insurance is designed to let you pay premiums at any time in virtually any amount?

universal life

Impulse buying refers to:

unplanned buying.

One aspect of borrowing from parents or family members is that such loans are:

usually the least expensive

The cash values of a ____________ life insurance policy fluctuate according to the yields earned by a separate fund, which can be a stock fund, a money market fund, or a bond fund.

variable

An investor can make money on a common stock investment by:

waiting for the stock's value to increase and then selling it.

Opportunity cost refers to:

what a person gives up by making a choice.

When did installment credit explode on the American scene?

with the advent of the automobile in the early 1900s

The rate of return on a savings account is also referred to as:

yield.

Illiquidity in real estate means that:

you cannot quickly sell the property.

What can be included in your credit bureau file?

your spouse's name & social security number

John Peterson purchased a bond at a price far below its face value, makes no interest payments and will be redeemed at its face value at maturity. In all likelihood, he purchased a(n) ____________ bond.

zero-coupon

Which of the following is an advantage to renting?

Fewer responsibilities

The Capitalist Mutual Fund's portfolio is valued at $45 million. The fund has liabilities of $3 million, and the investment company sponsoring the fund has issued 1,600,000 shares. What is the fund's net asset value?

$26.25

Your home insurance provides for replacement value for personal property losses. A microwave is stolen. It cost $300 two years ago and has an expected life of six years. A comparable microwave costs $400 today. What amount will the insurance company pay?

$400

The annual mutual fund management fee typically ranges between ____________ percent of the fund's asset value.

0.25 to 1.5

The average management fee for all mutual funds is:

0.50 to 1 percent.

Many financial planners recommend that investors pick a mutual fund with an expense ratio that is:

1 percent or less

After you buy new life insurance you have a "free look" period of ______ days.

10

A fee that some investment companies charge to defray the costs of distribution and marketing a mutual fund is called a:

12b-1 fee.

Approximately ____________ percent of all mutual funds are closed-end funds.

2

A good rule of thumb is to limit consumer credit payments to ____________ percent of your net monthly income.

20

Experts suggest that you spend no more than ____________ percent of your net income on credit purchases.

20

At a 3 percent rate of inflation approximately how many years will it take prices to double?

24 years

The grace period allows ____________ days to elapse, during which time the premium may be paid on an insurance policy.

28 to 31

Which is NOT an example of open-end credit?

A 36-month car loan.

Jeremiah Brown has been making contributions into an individual retirement account for his retirement. His contributions are not tax deductible but earnings accumulate tax free. What type of individual retirement account does he have?

A Roth IRA

Ben Carmichael has been making contributions into an individual retirement account for his retirement. His contributions are tax deductible. What type of individual retirement account does he have?

A Traditional IRA

George Wade has been selected to receive the assets of his brother Kyle in the event of Kyle's death. What is George?

A beneficiary

Which of the following presents a summary of income and outflows for a period of time?

A cash flow statement

Liquidity allows you to withdraw your money on short notice without a loss of principal or fees. Which account would be considered the most liquid?

A checking account.

Which of the following would be considered a long-term liability?

A mortgage

Which of the following is issued by state and local governments?

A municipal bond

Lori Simpson is thinking about purchasing some life insurance. She goes to a company where the policyholders are essentially the owners of the company. What type of life insurance company has she gone to?

A mutual life insurance company

Which of the following institutions makes loans based on the value of tangible possessions?

A pawnshop

Nick Rodr owns a home in Edmond, Oklahoma and pays $665 per year in insurance on the home. The $665 is an example of:

A premium

To determine a person's solvency, which financial document should be consulted?

Balance sheet

Which of the following are considered to be personal financial statements?

Balance sheet and cash flow statement

Why have a growing number of students been without health insurance?

Because an older student population is not covered by family policies

____________ provides coverage for the risk of financial loss due to legal expenses, medical expenses, lost wages, and other expenses associated with injuries caused by an automobile accident for which you were responsible.

Bodily injury liability

All except which one of the following are good ways to acquire money for starting an investment program?

Borrow money specifically for investment purposes.

David Wynn gets a personal loan from his credit union for $1000. David will make monthly payments $85.15 over the next year to repay the loan. What type of financial service is David using?

Borrowing service

Hector Ramirez has decided he needs he needs a new car. After doing some research, he has settled on a mid-sized four-door sedan. He likes the Honda Accord and is exploring what features needs and wants on this car. He is also trying to decide whether he would be better off purchasing a new car, a used car or leasing a car. He knows that if he purchases it new it would likely last him for many, many years. On the other hand a used car would be a lot cheaper. He is not sure a lease is for him because of the mileage requirements. What step in the purchasing process is Hector carrying out?

Evaluating alternatives

Which of the following is a credit bureau?

Experian

Which federal law allows consumers to withhold payment for faulty or defective goods or services (within certain limitations) when purchased with a credit card?

Fair Credit Billing Act

Mohammad Ishaque has checked his credit report with Experian and believes there is an error in it. Which consumer protection law specifies that he has the right to have errors in his credit report investigated?

Fair Credit Reporting Act

Which federal law gives consumers access to their credit files and the right to have erroneous data corrected?

Fair Credit Reporting Act

Sean Carter needs to store monthly statements from his bank, his credit card company and from his savings and loan. Where is the most appropriate place for Sean to store this information?

His home file cabinet and/or personal computer

Which of the following statements is true?

In bond quotations, prices are given as a percentage of the bond's face value.

____________ risk refers to the changes in buying power.

Inflation

One aspect of financial planning is to buy stocks, bonds, mutual funds and other investments with the potential for long-term growth. Which component of personal financial planning does this deal with?

Investing

Brian Wilson has a baseball card collection passed down to him from his grandfather. He is particularly proud of the signed Hank Aaron baseball card that he has. What type of investment does he hold?

Investment in collectibles.

Lynn Roy owns three two carat diamonds that she received from her grandmother who did not believe in banks or stocks and bonds. What type of investment does she hold?

Investment in gems

Jeremy Fischer has just purchased 20 American eagle gold coins from a broker. What type of investment does he hold?

Investment in precious metals

Which of the following statements is false?

Investors who purchase mutual funds are guaranteed a higher rate of return than a comparable investment in stocks or bonds.

Which of the following statements is true?

The common stockholders elect the Board of Directors and must approve major changes to corporate policies.

Dave Harris buys a bond. He knows that he will receive $1000 on March 1, 2026. What is this date?

The maturity date of the bond.

Which of the following is a disadvantage of using credit?

The use of credit is the temptation to overspend

The assessed value of your home is:

The value of your home used to calculate property taxes