Personal Finance

Sarah Parker's husband goes out with the boys for a night on the town and gets home at 4 am waking everyone in the house. In response, Sarah goes out the next day and spend $500 in new clothes for herself putting it all on her credit card. Which one of the answers best explains Sarah's spending? a. misunderstanding or lack of communication b. the use of money to punish c. the expectation of instant comfort. d. keeping up with the Jonses. e. overindulgence of children

B. The use of money to punish

Sue Ann James is depressed and goes to the mall and buys herself three new outfits at Dillards to make herself feel better. Which of the reasons for over-indebtedness of families is this purchase most likely a result of? a. the use of money to punish a spouse. b. the overindulgence of children. c. emotional problems. d. keeping up with the Jonses. e. All of the above

C. Emotional problems

Emily is trying to decide whether to lease or buy a car. Which one of the following is not a factor necessary in making the comparison? a. down payment. b. monthly lease payments. c. gasoline costs. d. estimated value of vehicle at end of lease period. e. mileage overage charges.

C. Gasoline Costs.

What is the rate an individual will pay for borrowing to purchase a new home called? a. prime. b. discount. c. mortgage. d. treasury bond. e. corporate bond.

C. Mortgage

Which of the following institutions is organized primarily to provide loans to purchase homes? a. life insurance companies. b. finance company. c. mortgage company. d. pawnshop. e. investment company.

C. Mortgage Company

Which of the following is money deposited with the lending institution for the payment of property taxes and homeowner's insurance? a. title insurance. b. closing costs. c. warranty deed. d. escrow costs. e. points.

D. Escrow Costs

Sloane owes $2,600 on her car loan. According to Edmonds Used Car Prices, her car is valued at $1,950. The term used to refer to this situation is: a. residual value. b. pre approval. c. capitalized cost. d. negative equity. e. money factor.

D. Negative equity

Which is the following is not an advantage of a credit card? a. credit cards permit the purchase of goods and services even when funds are low. b. credit cards allow shopping convenience and the efficiency of paying for several things with one monthly bill. c. The use of credit cards can provide up to 50-day float on purchases. d. The interest rate of credit cards can be higher than other sources of credit.

D. the interest rate of credit cards can be higher than the other sources of credit.

Recently, Jim Dahl was on a bus tour in a mountainous 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? a. Small claims court. b. mediation. c. Legal aid society. d. Arbitration. e. class action suit.

E. Class action suit.

A bank that is looking at your past payment records on your loans by examining your credit report is more likely examining which aspect of the 5 C's of lending? a. Character b. Capacity c. Collateral d. Capital e. Conditions

a. Character

Edward Jones is buying a new home. The amount of the loan that he needs is $150,000 and he is trying to decide between two mortgage choices. He can have a 30-year mortgage at 8% with no points or her can have a 30 year mortgage at 7% with 2 points. How many months would he have to live in the house to make it worth his while to pay the points and get the lower interest rate? He has determined that his monthly payments on the first mortgage would be $1,100.65 and that his monthly payments not he second mortgage would be $1,005.26.

31.45 months

Is marjorie Wilcox borrow $200 for one year with an APR of 12% and an annual service free of $10, what is her total cost of credit?

34

What cannot be included in your credit report? Circle all that apply; a. race. b. nationality. c. sex. d. marital status. e. religion. f. gender.

A, B, C, E, F

You purchase $2,500 worth of furniture from Mathis Sisters Furniture. You decide to use their plan where you make 12 equal payments over the next year to pay for it. You sign a contract which specifies what your payments are and when they are due. This is an example of: a. Closed-ended credit. b. Open-ended credit. c. Revolving check credit. d. A line of credit. e. None of the above.

A. Closed ended credit

A(n) _____ is a financial institution that offers a full range of services to individuals, businesses and government agencies. a. commercial banks. b. savings and loan. c. credit union. d. investment company. e. None of the above.

A. Commercial Banks

Gary Smith is purchasing one living unit in a building. What type of house is Gary most likely going to live in? a. condominium. b. duplex. c. cooperative. d. prefabricated home. e. mobile home.

A. Condominium

______ are non-profit stores created by people in the neighborhood to serve their customers, who are also called members. Prices are this type of store are usually lower than at other retailers. a. cooperatives b. warehouse stores c. factory outlets d. catalog showrooms e. hypermarkets

A. Cooperatives

Which of the following is a disadvantage of home ownership? a. limited mobility. b. limited lifestyle. c. lower livings costs than when renting. d. no tax savings. e. all of the above.

A. limited mobility

What type of account would be considered the most liquid? a. certificate of deposit. b. checking account. c. money market account. d. brokerage account. e. share of stock.

B. Checking account

An example of an economic buying influence would be: a. family size. b. inflation. c. advertising. d. hobbies. e. place of residence.

B. Inflation

Which of the following expenses is paid from an escrow account? a. title insurance. b. property insurance. c. points. d. loan application fee. e. real estate agents commission

B. Property Insurance

A(n) ____ is a home loan with an interest rate that can change lending to a change in payments over the life of the loan. a. conventional mortgage. b. balloon mortgage. c. adjustable rate mortgage. d. graduated payment mortgage. e. none of the above.

C. Adjustable rate mortgage

A(n) _______ is an all-in-one account that includes savings, checking, borrowing, investing and other services for a single fee. a. Regular savings account. b. Regular checking account. c. Asset management account. d. Certificate of deposit. e. None of the above.

C. Asset management account

The borrower's attitude toward his or her credit obligations is called a. capacity. b. capital. c. character. d. collateral. e. conditions.

C. Character

What type of financial institution makes loans to consumers and small business? This type of financial institution has short and intermediate term loans with a higher interest rate than other types of financial institutions. It can be easier for able with no credit history or bad credit history to get a loan from this type of institution. a. Commercial banks. b. Credit Unions. c. Finance companies. d. Mortgage companies. e. None of the above.

C. Finance Companies

One of the advantages of owning your own home is: a. the easy ability to move. b. few or no responsibilities for maintenance. c. the growth in equity while you own the home. d. lower initial costs. e. all of the above.

C. The growth of equity while you own the home.

The purpose of title insurance is to: a. Transfer ownership of property. b. Reduce the chance of decease in property value. c. protect an owner from unknown claims on the property. d. Protect an owner from changes in mortgage interest rates. e. cover the closing costs of a real estate transaction.

C. protect an owner from unknown claims on the property

Explain and name the two choices available in declaring personal bankruptcy

Chapter 7 - you have very little to no income and cannot pay any of your bills. totally destroys credit score. Chapter 13 - You have limited income but are still able to pay off some of your bias.

Which of the Following is liquidity? a. It is the annual yield you earn on a savings plan. b. It is the fact that you may earn interest on interest. c. It is the fact that your purchasing power may change as price levels change. d. It is the fact that you can withdraw money on short notice without loss of principal. e/ None of he above is liquidity.

D. It is the fact that you can withdraw money on short notice without loss of principal.

Most consumer complains are resolved by: a. legal action b. assistance from a government agency c. contacting a company's headquarters d. returning to the place of purchase e. obtaining help from an action line

D. Returning to the place of purchase.

John Camey has a house that is worth $150,000. He has a mortgage on it worth 85,000. His bank allows him to borrow up to 90% of the value of the house. What size home equity loan can John get? a. $65,000. b. $50,000. c. $135,000. d. $85,000

b. $50,000

Miranda Sellars pays off the balance on her credit card every month. What type of credit card user is she known as? a. A borrower. b. A convenience user. b. A discriminating user. d. An economical user.

b. A convenience user

You have a balance in your savings account of $1,000. You keep your money in that account for half the year and earn $35 in interest. What is the annual percentage yield on this account? a. 2.80% b. 5.69% c. 1.39% d. 7.01% e. None of the above

d. 7.01%