Personal Finance 4 and 5

Phil and Christina are recently married and are unsure of where they will be relocated after Christina finishes her residency in 9 months. Based on this information, which of the following housing recommendations would be most appropriate for them? Select one: a. Rent a home b. Lease a car c. Buy a single-family dwelling d. Buy a cooperative apartment e. Buy a condominium

a. Rent a home

The majority of each monthly payment at the beginning of the loan goes to pay Select one: a. interest. b. homeowner's insurance. c. principal. d. private mortgage insurance. e. real estate taxes

a. interest.

Reasons why auto leasing is so popular include all of the following except: Select one: a. lower total cost b. rising new car prices c. getting more expensive car for the same monthly payment d. lower monthly payments e. lower down payment

a. lower total cost

Homeowners may be allowed to deduct the following on their taxes Select one: a. homeowners insurance b. mortgage interest c. home improvements d. mortgage principal

b. mortgage interest

Credit unions are Select one: a. mortgage lenders. b. mutual associations. c. available to the general public. d. special commercial lenders. e. not providers of insured deposits.

b. mutual associations.

The seller of the house typically pays the Select one: a. points. b. real estate agent's commission. c. title search and insurance. d. appraisal fee. e. loan application fee.

b. real estate agent's commission.

The first choice in housing in the United States is Select one: a. condominium. b. rental apartment. c. single-family home. d. manufactured home. e. cooperative apartment.

c. single-family home

Generally, renting would be preferred to buying when Select one: a. you have just gone through a divorce. b. none of these. c. you know your job will be temporary. d. all of these. e. you have no money to make a down payment.

d. all of these.

Money Market Deposit Accounts Select one: a. allow unlimited check writing. b. have stated maturity dates. c. all of these. d. are typically federally insured. e. are offered only by credit unions.

d. are typically federally insured.

A ____ is an interest-bearing checking account. Select one: a. regular checking account Incorrect b. Treasury bill c. certificate of deposit d. Series EE US savings bond e. NOW account

e. NOW account

At the end of your car lease period, you intend to turn in the car, and you will not pay extra at that time based on the residual value of the car. You have ____ lease. Select one: a. an open-end b. a residual c. a purchase option d. none of these e. a closed-end

e. a closed-end

The loss of value in a car over time is called Select one: a. loan payments. b. commissions. c. sales payments. d. maintenance. e. depreciation.

e. depreciation.

The Annual Percentage Yield is the same as the Select one: a. compound rate. b. real rate. c. nominal rate. d. simple rate. e. effective rate.

e. effective rate.

If interest on a savings account is compounded semiannually, the effective rate of interest will be Select one: a. lower than the simple rate. b. lower than the nominal rate. c. the same as the simple rate. d. equal to the nominal rate. e. higher than the nominal rate.

e. higher than the nominal rate.

The least expensive method for banks to interact with their customers is Select one: a. on the phone b. ATM machine c. self service kiosks d. in person e. on-line

e. on-line

A fee charged by lenders as a condition of a mortgage loan that effectively raises the interest rate is called Select one: a. an add-on charge. b. a down payment. c. a commission. d. loan fee. e. mortgage points.

e. mortgage points.

Alice lost her ATM card at the lake and reported it missing the next day. She found that $800 had been withdrawn from her savings account. The most Alice will be legally liable for is Select one: a. $ 25. b. $800. c. $ 50. d. $ 0. e. $500.

c. $ 50

When an S & L is a mutual association, it means that it is owned by the Select one: a. borrowers. b. local government. c. depositors. d. management. e. creditors

c. depositors.

Which of the following is not a strategy to building your nest egg: Select one: a. set up a retirement plan b. make savings a priority c. splurge once in a while d. all the above are strategies. e. reinvest interest and dividends

c. splurge once in a while

Leasing accounts for about ____ percent of all vehicles sold today. Select one: a. 23 b. 14 c. 37 d. 19 e. 10

d. 19

Commercial banks are insured by the Select one: a. Financial Deposit Insurance Company. b. Federal Depositors Assurance Corporation c. Financial Deposit Insurance Association. d. Federal Deposit Insurance Corporation. e. Federal Demand Deposit Corporation.

d. Federal Deposit Insurance Corporation.

If the maximum loan-to-value ratio that a lender will accept on a $100,000 loan is 90 percent, then the borrower must make Select one: a. closing costs plus points of $10,000. b. a maximum down payment of $10,000. c. a minimum down payment including closing costs of $10,000. d. a minimum down payment of $10,000 plus closing costs. e. none of these.

d. a minimum down payment of $10,000 plus closing costs.

Share draft accounts are commonly offered by Select one: a. commercial banks. b. insurance companies. c. mutual savings banks. d. credit unions. e. savings and loan associations.

d. credit unions.

The interest rates and monthly mortgage payments will not change over the life of your mortgage; you have a(n) Select one: a. reverse-annuity mortgage. b. rollover mortgage. c. graduated-payment mortgage. d. fixed-rate mortgage. e. adjustable rate mortgage.

d. fixed-rate mortgage.

A financial advantage of renting compared to purchasing housing is Select one: a. the legal obligation. b. income tax treatment. c. required security deposit. d. no need for a down payment. e. stable monthly payments.

d. no need for a down payment.

A check you wrote to buy shoes last week has not yet been processed by the bank. It is said to be Select one: a. certified. b. subtracted. c. endorsed. d. outstanding. e. in transit.

d. outstanding.

You are going on an overseas trip and you want to have checks that are easily converted into local currency. You should purchase Select one: a. conditional checks b. certified checks c. cashier's checks. d. traveler's checks. e. guaranteed checks.

d. traveler's checks.

When you lease your apartment from the corporation that owns the building and your lease is an ownership share, your apartment is Select one: a. permanent. b. expensive. c. a duplex. d. a condominium. e. a cooperative.

e. a cooperative.

One can arrange auto loans through Select one: a. banks. b. consumer finance companies. c. credit unions. d. auto dealers. e. all of the above.

e. all of the above.

Money Market Mutual Funds Select one: a. have stated maturity dates. b. are typically federally insured. c. all of these. d. are offered by banks, S & Ls, and credit unions. e. allow check writing.

e. allow check writing.

When reporting errors or unauthorized transactions, it is best to notify your bank Select one: a. by telephone and follow up with a letter and keep a copy for your files b. by telephone c. none of the above d. by letter, keeping a copy for your files.

a. by telephone and follow up with a letter and keep a copy for your files

Vicki Vasquez owns a six-month treasury bill that is four months from maturity. She recently encountered medical problems and needs the money now. She Select one: a. can sell the T-bill in the open market. b. can call a toll-free number to request the money. c. can go to the bank and withdraw the funds needed. d. will have to wait until the maturity date to get your money. e. can request in writing for the treasury to pay her early.

a. can sell the T-bill in the open market.

In which of the following situations would you have to pay additional money when returning a vehicle using a closed-end lease? Select one: a. mileage limits were exceeded b. b and c c. residual value is less than expected d. residual value is more than expected e. a and c

a. mileage limits were exceeded

Which of the following are important safeguards when using on-line banking? Select one: a. 128-bit encryption b. all of the above c. FDIC insurance d. guarantees to protect you against losses e. firewall to protect data

b. all of the above

Christina works at a company that offers direct deposit of her paycheck. This service is called Select one: a. a FDIC service. b. an EFT service c. a money market service. d. an ATM service. e. an overdraft service.

b. an EFT service

The first step in the auto-buying process should be Select one: a. test drive several cars. b. analyze how much car you can afford. c. decide whether to trade in your used car or to sell if yourself. d. begin negotiations. e. consider alternative buying strategies.

b. analyze how much car you can afford.

Factors typically influencing the choice of where to maintain a checking account are: Select one: a. convenience and cost b. convenience, services, and cost c. d. convenience and services e. cost and services

b. convenience, services, and cost

Advantages of buying a used car rather than a new car include Select one: a. all of the above. b. less expensive. c. will depreciate more quickly. d. good mechanical condition. e. more choices available.

b. less expensive.

A check you issued last week has been stolen. You can prevent it from being withdrawn from your account by an unauthorized person by Select one: a. tearing up the check. b. requesting a stop payment. c. depositing the correct amount of money. d. writing a new check. e. properly endorsing the check.

b. requesting a stop payment.

Earnest money is the sum of money the home buyer deposits with the Select one: a. lender to guarantee the purchase. b. seller to indicate intent of purchase. c. realtor to view homes. d. lender to originate the loan. e. realtor for finding the desired home.

b. seller to indicate intent of purchase