Personal Finance
The three drawbacks of home ownership are:
Financial uncertainty, higher living costs, limited mobility
True or false: The rate of return you earn on your savings account should be compared with the inflation rate.
True
True or false: Two important sources of used car prices are Edmund's Used Car Prices and the Kelley Blue Book.
True
Tax refund loans are a(n) ______ way to borrow money in case of a cash shortfall.
expensive
Factors such as the material quality and condition of the building, the condition of the foundation, roof and gutters, and the type of chimney are part of the ______.
exterior construction
If you have funds available on your credit card, you can obtain a cash advance from ______.
a bank or credit union an ATM
A regular savings account usually offers:
a low or no minimum balance requirement.
The ______ is the percentage rate expressing the total amount of interest that would be received based upon time and compounding.
annual percentage yield
How often should you review your credit report?
annually
Which of the following obligations are not discharged in a Chapter 7 bankruptcy?
certain taxes fines child support alimony
One of the 5 Cs of credit is _____. This is a valuable asset that can be taken to satisfy a loan obligation.
collateral
The simplest type of IRS audit is the _____ audit. This is a one-word answer.
correspondence
In a straight bankruptcy, many but not all are forgiven.
debts
The drawback to interest-only mortgages is that the loan balance does not _____ and therefore the only equity buildup occurs if the home value _____.
decrease, increases
True or false: Financial services can change due to such factors as changing interest rates and rising consumer prices.
True
The Truth in Savings law requires the following items to be disclosed:
other terms and conditions of the savings plan the annual percentage yield (APY) fees on deposit accounts the interest rate
An implied warranty of ______ indicates that the seller has a right to sell the product.
title
When closing on a home, the seller usually pays ______.
title insurance
True or false: The rule of 78s is a mathematical formula to determine how much interest has been paid at any point in a loan.
True
True or false: To properly document automobile travel expenses for the purposes of tax deductions, it is wise to maintain a notebook to record such operating expenses as gasoline, oil, parking, and tolls.
True
A _____ ticket or slip is used to add funds to a checking account. This is a one-word answer.
deposit
What are responsible purchases with a home equity loan?
educational expenses home improvements
A ______ fund is an account used for savings offered by investment companies.
money market
The savings alternative that offers more liquidity is:
money market accounts.
Brand names are usually:
more expensive, and sometimes the private-label products are manufactured by the same companies that produce the brand-name products
Brand name products are usually Blank______ expensive than nonbrand items, but offer Blank______ quality.
more; higher
Family members may only charge interest they would have earned on the money if they had deposited it in a ______ account.
passbook
When you are applying for a bank loan, the bank will:
use the five Cs when determining your creditworthiness.
Credit cards are different from debit cards because:
you are borrowing additional money.
A credit counseling organization usually provides credit management classes and helps you devise a credit management _____. (Enter only one word per blank.)
plan
Financial services include:
savings. investments. financial planning. insurance. payment services. borrowing.
Which of the following do not offer for-profit tax services?
universities
When evaluating the 5 Cs of credit, ______ is determined by a borrower's assets or net worth.
capital
When impostors take your name, Social Security number, credit card number, or some other piece of your personal information for their use, they are:
committing a crime.
Which of the following would be considered wise buying techniques?
comparing brands to determine which is best for your purpose reading and evaluating label information using coupons to try new products
Criteria for selection of a savings plan include:
safety. interest rate. liquidity. convenience.
Life insurance has other uses, including:
savings alternatives. investment options. providing financial security for dependents.
When a stock is sold at a higher price than that for which it was purchased, it is called a:
capital gain
If you apply for a charge account, the creditor will check your ______.
credit score
If you cannot make a payment on a debt when due, contact the _____ at once to work out a modified payment plan. This is a one-word answer.
creditor
By comparing financial institutions, a customer can:
minimize ATM fees. lower bank fees.
A card that is usually prepaid and tracks the balance available for you to spend is a ______.
stored value card
True or false: The Fair Debt Collection Practices Act prohibits certain practices by agencies that collect debts for creditors.
True
True or false: A person could choose not to participate in a class-action suit and instead file an individual lawsuit.
True
True or false: A reliable way to see if you can afford a loan is to determine what you will give up to make the monthly loan payment.
True
True or false: Other than price, the product attributes to be considered when evaluating brand alternatives are performance, design, and warranty.
True
True or false: Tenants are often subjected to restrictions regarding pets, decorating, and remodeling.
True
A _____ bank is a financial institution that offers a full range of services. This is a one-word answer.
commercial
When obtaining a mortgage, it is important to investigate ______ and ______ of mortgages.
rates; conditions
A _____ check is a check drawn on a financial institution.
cashiers
In a straight bankruptcy, many but not all _____ are forgiven.
debts
In a straight bankruptcy, many but not all are _____ forgiven.
debts
The interest rate on cash advances is often _____ than the rate on purchases. This is a one-word answer.
higher
For callable CDs, banks may "call" these instruments if:
interest rates drop.
An account with two or more owners is called a ______.
joint account
Writing a check when you do not have funds to cover it:
may cause a large fee to be charged.
Default on an auto title loan can mean that the auto will be:
repossessed.
Renters have fewer ______ than homeowners since they usually do not have to be concerned with maintenance and repairs.
responsibilities
The costs of Chapter 13 bankruptcy include court costs, lawyer fees, and _____ fees.
trustee
The person who distributes the money to creditors is the
trustee
The costs to Chapter 13 bankruptcy include ______.
trustees' fees and costs attorneys' fees court costs
A joint account means:
two or more owners.
The trustee's role in a Chapter 13 bankruptcy involves distributing _____ to creditors.
money
Institutions typically offering online banking include ______.
savings and loans "brick-and-mortar" banks Internet-only banks
Which of the following are common sources of home mortgages?
credit unions banks mortgage companies savings and loans
What types of financial institutions have federal deposit insurance through FDIC?
savings and loans commercial banks
A special endorsement is comprised of:
"pay to the order of," the name of the payee and your signature.
How much money have savers with deposits covered by federal insurance lost in recent years?
$0
The typical dollar limit per person per financial institution for FDIC insurance is ______.
$250,000
The three types of credit insurance are:
-credit accident and health -credit life -credit property
Place, in the order of occurrence, the following steps of a mortgage loan application process. Place the first step at the top.
1. Complete the mortgage application 2. Meet with leader, present evidence of job and income 3. Lender gets credit report, confirms financial aspects 4. Mortgage is approved or denied
Place the steps for wise online buying in the proper order.
1. Conduct online research 2. Compare stores. 3. Make purchase. 4. Plan for future purchases.
Private mortgage insurance (PMI) is required when the down payment is less than _____%. This is found in the discussion of determining the amount of your down payment.
20
The maximum debt payment-to-income ratio that is acceptable is around _____%. This is found in the discussion of debt payments-to-income ratio.
20
Private mortgage insurance (PMI) is required when the down payment is less than:
20%
A $500 savings account that earned $25 after a year would have a rate of return, or yield, of ______%.
5
What is one method of determining your home equity line of credit maximum?
75% of home value less the amount of your first mortgage equals the possible home equity line of credit.
Which of the following statements is not true?
Bankruptcy courts treat gift cards as secured debt.
Which of the following items are timing strategies for purchases that could save you money?
Buying holiday decorations in late December and early January Buying winter clothes in late winter Buying summer clothes in late summer
What three actions should you not take if you are a victim of identity theft?
Call your friends and neighbors. Leave the area until the problem is resolved. Locate the person who stole your identity.
Which of the following tax activities should be completed in February?
Check to make sure you received all forms to complete your tax return.
How is collateral used in evaluating loans?
Collateral is used when you apply and sign for a loan, pledging some kind of property to secure the loan.
In which step of the wise online buying activities would the consumer compare brands and features?
Conduct online research.
An example of a travel and entertainment card is ______.
Diners Club
Select the bonds that are a type of federal savings bond.
EE I
True or false: Most credit cards allow a grace period on cash advances.
False
What are the advantages of owning a condominium?
Fewer maintenance responsibilities when compared to a house Tax benefits
Which of the following automobile driving costs are categorized as variable operating costs?
Gas Oil Repairs Parking costs and tolls
What are the effects of credit card fraud?
Higher prices for consumers, higher interest rates for consumers
______ bonds are not a type of federal savings bond.
Municipal
Which of the following are advantages of owning a previously owned home?
Pride of ownership Tax benefits
What are techniques for managing your credit history?
Review monthly bank and credit card statements. Check your credit report annually. Look for errors and report them immediately.
________ 15 is the due date for the third installment for estimated tax.
September
Which of the following is not a reliable source of information for economic trends?
The blogspot website
How can a consumer get a credit card if they have bad credit?
The consumer may be able to get a secured credit card from a savings institution.
What is a credit bureau?
a reporting agency that collects information on how promptly people and businesses pay their bills
In a Chapter 13 bankruptcy, the debtor normally keeps ______ of the property.
all or most
When you rent a house, you will usually need to pay for:
all utilities
A deposit ticket is used to add funds to ______.
an account
Benefits of money market accounts include:
deposit insurance. a favorable interest rate.
Well-maintained and certain high-quality vehicles _____ at slower rates.
depreciate
The loss of a vehicle's value due to time and use and the largest fixed cost of a new car is called _____.
depreciation
When creditworthiness is being determined, creditors look for which of the following?
employment history net income total debt
Payments for Blank______ taxes are due by April 15, June 15, September 15, and January 15 of the following year
estimated
When selecting a lawyer _____, the questions to ask focus on the lawyer's with similar cases, how charges will be set, and when _____ is due.
experience, payment
Personal preferences are the foundation of a housing decisions, but ______ factors will modify the final choice.
financial
The three-step process to follow in cases of identity theft is to contact the _____ departments of the three credit reporting agencies, contact creditors for account activity, and, finally, file a _____ _____.
fraud, police, report
Which of the following are personal factors that could affect your daily buying habits?
gender occupation age education
Commercial banks offer services to ______.
government agencies businesses individuals
What type of financial institution typically does not have federal deposit insurance?
investment companies
Your _____, needs, desires, and attitudes are reflected in your choice of a home.
lifestyle
The Fair Credit Billing Act provides that you may withhold payment on damaged or defective goods or poor services you have purchased with a credit card as long as you have:
made a sincere attempt to resolve the problem with the merchant.
Which of the following are disadvantages associated with renting an apartment?
no tax benefits limitations on remodeling restrictions on pets (no pets) and certain activities
Convenience users:
pay off the credit balance each month in full.
Renting is a fairly _____ practice in the United States with about 35% of households living in rental units.
prevalent
One strategy that will help you avoid deceptive business practices is to always do business with reputable companies that have a track _____ of satisfying customers.
record
Lemon laws require a _____ for the vehicle after the owner has made repeated unsuccessful attempts to get the car fixed by the dealer.
refund
Which items below affect the cost of an automobile lease?
residual value—the projected value at the end of the lease money factor—the interest rate paid on the capitalized cost capitalized cost the monthly payments and the number of months
One of the reasons why renting offers fewer financial benefits than home ownership is that rent is not _____ deductible, while the interest on mortgage payments is.
tax
Which of the following captures the main factor to consider when refinancing a loan at a lower rate?
the cost of refinancing versus the benefits (savings) of lower monthly payments
Which of the following best describes the rights of residents of cooperative housing?
the right to occupy the unit for as long as stock is owned
The interest rates charged by pawnshops are regulated by ______.
the state
One advantage of a T&E card is that:
they help with replacing lost passports.
A reason why people tend to choose long-term financing is:
they want to make smaller monthly payments.
You are not responsible for charges on your debit card account if they are:
unauthorized.
Just before closing on a house, you often do a ______ before accepting the property.
walk-through
Which of the following should you consider when determining whether you can afford a loan?
your monthly expenses your monthly pay funds remaining for other expenses
Real estate taxes and ______ are tax deductible by the homeowner.
mortgage interest
Which of the following is not true about filing your income tax return online?
"Free file fillable forms" option is available for taxpayers whose income is below the income limitations for free file.
Achieving your financial goals and carrying out your daily activities require many ______ services.
financial
The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 requires credit card companies to tell consumers:
how long it will take to pay off the balance if only the minimum payment is made. when they plan to increase rates or other fees.
A(n) _____ warranty of merchantability covers a product's intended use or other basic understandings that are not in writing.
implied
The opportunity costs and common trade-offs of a housing decision include which of the following?
interest lost on money used for down payment the loss of tax advantages cost to commute to work when you live in area that offers less expensive housing
What are the disadvantages of owning a condominium?
Assessment fees Less privacy Uncertain demand affecting property value
What would happen if a Credit Bureau verifies inaccurate information?
If the Credit Bureau is wrong about information, the consumer can sue for damages.
Which of the following automobile driving costs are categorized as fixed ownership costs?
Insurance Registration fees Interest on car loans Depreciation
True or false: The ECOA protects individuals from discrimination in credit transactions on the basis of factors including race, color, age, sex, and marital status.
True
True or false: The driving costs of an automobile are influenced by the number of miles you drive and the size of the car.
True
How is identity theft detected?
You get a bill for a credit card account you never opened. You see charges on your bill you didn't authorize. Your credit report includes debts you do not know about.
Trusts are commonly managed by ______.
a bank
If a 10 pound bag of dog food sells for $6.99, what is the per unit cost of the dog food?
about $0.70 cents per pound
When interest rates are falling, you should not:
choose short-term savings options.
Savings account loans are offered by ______.
commercial banks
Use a credit card to:
delay the payment for a purchase. build credit history. buy online for large purchases.
The main purpose of life insurance is to provide financial security for _____.
dependents
Cash advances require that you pay a transaction _____.
fee
Most credit cards carry a special _____, based on the percentage of the amount borrowed, that is applied when a cash advance is taken out. This is a one-word answer.
fee
Which of the following are advantages of renting a house?
minimal financial commitment easy to move (mobility)
Check-cashing outlets offer the following services:
money orders electronic tax filing utility bill payments
Credit life insurance is generally ______ expensive compared to equivalent term life insurance.
more
EE bonds have a minimum holding period of ______.
one year
Another very expensive way to borrow is a(n) _____ refund loan, which is possibly more expensive than a cash advance on a credit card. This is a one word answer.
tax
You can save money selling your own home, but it requires an investment in _____ and effort.
time
True or false: The reason why people choose long-term financing is because it is cheaper in the long run.
False
True or false: The three names of the major credit reporting agencies are Trans Union, Equifax, and Experiment.
False
A common trade-off (opportunity cost) for financial services includes having to keep money in accounts longer to obtain higher interest rates. This leads to reduced ______.
liquidity
Schools, shopping, and recreation are some of the important ______ aspects of selecting an apartment.
location
The step in the mortgage application process that involves completing the mortgage application is ______.
prequalification
The tenant is protected by rental increases during the lease term unless the lease contains a _____ allowing for increases.
provision
Many states require that your security deposit be returned within a _____ time.
reasonable
Approximately 35 percent of U.S. households live in ______.
rental units
Place the steps to writing a check in rank order from first to last.
1. Record the date 2. Write the name of the person receiving the funds 3. Record the amount in numbers 4. Write the amount of the check in words 5. Sign the check 6. Note the reason for the payment
A $200 savings account that earned $8 after a year would have a rate of return, or yield, of ______%.
4
When asked how much you can afford each month for a car, be sure to ask:
how many months.
One of the best sources of information about the product you are considering buying is:
independent testing organizations.
Each 1% increase in the _____ rate means a decrease of approximately 1% in the quantity of goods and services you can purchase with a given amount of money.
inflation
The two parts of interest on an I bond are a(n):
inflation rate that changes semiannually. fixed rate of interest for the life of the bond.
Common choices for making payments include all of the following except:
installment loans.
An express warranty is usually in writing, is created by the _____ or manufacturer, and has two forms: _____ warranty and limited warranty.
seller, full
The factors that influence the asking price for a home include recent _____ prices of comparable homes in the area, demand for homes in the housing market, and available financing.
selling
Overdraft protection is an automatic loan made to checking account customers to cover checks written in excess of:
their balance.
Installment loans are a cheaper alternative to credit cards because:
their interest rates are often lower than credit card rates. they are cheaper over many months or years when an extended payment period is needed.
The advantage of certified, preowned vehicles is that ______.
there is a rigorous inspection and the original manufacturer's guarantee of quality
One reason some people use payday loans is that:
they are convenient.
True or false: At the end of a car lease, if the market value of the car is less than the residual value, you may be able to sell the car for a profit.
False
When someone steals your personal or sensitive information, this is called _____ _____.
identity, theft
An adjustable-rate mortgage usually has a rate cap and a _____ cap.
payment
The new Credit CARD Act requires creditors to include a warning on the monthly statement about making only the minimum _____.
payment
What is the difference between convenience users and borrowers?
payment of the full balance versus carrying over a balance
Opting out is:
requesting removal of your name from mail and phone lists that solicit for credit offers.
The rate of _____ is the percentage increase in the value of savings as a result of interest earned.
return
A simple interest declining balance loan has the following terms: 8% annual interest rate, $2,000 loan, two payments: one at the end of the first half year and the last payment at the end of the second half year. What would be the amount of these two payments?
$1,080 and $1,040
A simple interest declining balance loan has the following terms: 8% annual interest rate, $3,000 loan, two payments: one at the end of the first half year and the last payment at the end of the second half year. What would be the amount of these two payments?
$1,620 and $1,560
Using compounding, how much interest will be earned in the second year of a savings account that has an original balance of $200 and earns 6% interest per year?
$12.72
As of 2021, the IRA contribution limit was ______.
$6,000
Clara's home is worth $200,000. She owes $83,000 on her mortgage. The lender will allow her to borrow up to 85% of the value of her home. How much can she borrow on a home equity loan?
$87,000
You should review your credit file at a specific credit reporting agency at least _____ time(s) per year.
1
Fraud charges on a debit card should be reported within ______ days of receiving your statement to protect your right not to be charged for the transaction.
60
Which of the following best explains why credit cards are more dangerous than installment loans?
A credit card is easier to use than taking out an installment loan.
Which of the following are usually covered by a new-car warranty?
Basic parts covered against defects Engine, transmission, and drive train Corrosion coverage for holes due to rust
_____ banks are organized as corporations, with individual investors contributing the capital for operations.
Commercial
The law that protects consumers by setting standards for correcting billing mistakes and allowing customers to avoid paying for defective merchandise is called the ______.
Fair Credit Billing Act
What is the process you should follow when your identity is stolen?
File a police report. Contact creditors of all accounts for unauthorized access. Contact the fraud departments of each credit bureau.
_____ checking accounts usually have a monthly service charge that you can avoid by keeping a minimum balance in the account.
Regular
What are ways to protect against credit card fraud?
Shred anything with your account number on it. Reviewing your billing statements. Don't give your card number over the phone unless you initiate the call.
What type of applications does the ECOA cover?
The ECOA covers applications for mortgages and home improvement loans.
How does the Secret Service fight identity theft?
The Secret Service typically focuses on financial fraud cases with large amounts of money involved.
What does the Consumer Credit Reporting Act state?
The burden of proof for accurate credit information is placed on credit reporting agencies.
Identify the correct statement about a loan with add-on interest.
The interest is calculated on the full amount of the original principal, no matter how frequently the payments are made.
Why is paying only the minimum payment detrimental?
The longer it takes for you to pay off a balance, the more finance charges you pay on an item.
A stop payment order is designed to:
avoid payment of a specific check
A(n) _____ is your signature on the back of the check.
endorsement
When you sign the back of the check, this is a(n):
endorsement
A money market fund is a ______.
savings instrument
What is the main function of a finance company?
to make loans to consumers and small businesses
True or false: Credit alternatives are only for people of limited resources.
False
Financial services include all of the following except:
debt counseling.
Which of the following tax activities should be completed in January?
- Make your final estimated quarterly tax payment for the previous year by the 15th. - If you expect a refund, file your return for the previous year.
Which of the following tax activities should be completed in December?
Decide if you can defer income to the following year Determine if you should make estimated payments for the next year
Which of the following might trigger alternative minimum tax?
high tax deductions for state taxes significant amount of second mortgage interest high tax deductions for local taxes
Interest income from _____ bonds, which are issued by state and local governments, is not subject to federal income taxes.
municipal
The ability to transfer money to others is:
necessary for daily business activities.
Many taxpayers have found filing:
online to be easier and less expensive than paper filing.
Common mistakes made when managing current cash needs include:
overspending using savings for current expenses lacking sufficient funds
The condition of upside-down or negative equity can result with automobile financing when a long payment period is chosen. When this happens, the market _____ of the car is less than the outstanding loan amount.
value
The key pieces of information that credit card issuers must provide are ______.
variable rate information annual fees APRs grace period
Which type of financial institution typically charges higher rates?
check-cashing outlets
Factors such as the size and arrangement of rooms, layout of kitchen, and the location of bedrooms, closets, and storage space should be considered when inspecting the interior _____ of a home.
design
The financial uncertainties associated with home ownership include obtaining money for a _____ payment, the difficulty of obtaining mortgage financing due to personal and current economic problems, and fluctuating property values.
down
Conditions, one of the five Cs of credit, refers to the general _____ conditions that can affect your _____ to repay a loan.
economic, ability
True or false: The creditor in a Chapter 13 bankruptcy proposes a plan to pay off debts from future earnings over a period of time.
False
True or false: The monthly payment is the best indicator of the true cost of a car loan.
False
Examples of protecting against fraud are:
be sure your credit card is returned to you after a purchase not giving your card number over the phone unless you have initiated the call
True or false: Loans from finance companies and appliance stores tend to be the highest cost loans.
True
You should obtain information about _____ available when selling your own home to help potential buyers determine whether a deal is possible.
financing
Selecting a location, considering a real estate agent, and conducting a home inspection are steps you take when you are:
finding and evaluating a home purchase.
Examples of individuals who are legally able to look at your credit report are:
in association with some legitimate business need. insurance underwriters. financial services, if applying for a loan.
Some things to consider when selecting your financial institution include:
online banking. convenience. fees and charges. services offered.
In a(n) _____-action suit, all affected parties are notified as to whether or not they want to participate or file an individual lawsuit.
class
Factors such as the material quality and condition of the building, the condition of the foundation, roof and gutters, and the type of chimney are part of the exterior _____.
condition
Common trade-offs (opportunity costs) for financial services include ______.
convenience no-fee services liquidity
Consumer finance companies do not offer:
credit card loans.
Which of the following loans are available to consumers through commercial banks?
credit cards passbook loans second mortgages
Which of the following are sources of automobile loans?
credit unions banks consumer finance companies
Which of the following best describes the purpose of the alternative minimum tax? This is found in the discussion of calculating taxes owed.
It is to assure that people who receive tax breaks pay a fair share of taxes.
True or false: It is important to evaluate the reason for taking a home equity loan.
True
True or false: Loans from finance companies and appliance stores tend to be the highest cost loans. True false question.
True
Which of the following is not a drawback of leasing an automobile?
small cash outflow
Which of the following are given in the textbook as good sources for fair pricing on used cars?
Edmund's Used Car Prices Kelley Blue Book
A $3,000 loan that uses add-on interest has the following terms: 6%, one year, two payments: one in 6 months and one in 12 months. What is the amount of each of these payments?
$1,590
Joe Smith earns $72,000 per year. His bank uses a rule that PITI must be equal to or less than one third of gross monthly income. If his home owner's insurance is $100 per month, roughly how much of a monthly payment can Joe afford including taxes over and above the $100 for insurance?
$1,900
Using compounding, how much interest will be earned in the second year of a savings account that has an original balance of $100 and earns 5% interest per year?
$5.25
A $1,000 loan that uses add-on interest has the following terms: 8%, one year, two payments: one in 6 months and one in 12 months. What is the amount of each of these payments?
$540
What would be the interest cost (simple interest) for a $2,000 loan with a 6% rate for a half of a year?
$60
Check-cashing outlets usually charge fees of:
1% to 20% of the face value of the check.
Which of the following are the common terms (years) of home mortgages?
10 20 30 15
In which of the following situations is unit pricing most helpful?
10 pounds of dog food vs. 20 pounds of dog food
If you want to amend (change) a previous return, you would need to file a ______ form.
1040X
The Homeowner Protection Act requires that a PMI policy be terminated when the equity reaches _____% of the property value at the time the mortgage was executed.
22
The Homeowner Protection Act requires that a PMI policy be terminated when the equity reaches ______ of the property value at the time the mortgage was executed.
22%
Home equity loan interest is only tax deductible as long as the proceeds are spent on education with the risk being that a default on the equity loan could mean foreclosure.
False
One of the factors that influences the price of buying a used car is capitalized cost.
False
True or false: A condominium is a type of building structure and not a legal form of ownership.
False
True or false: A home equity loan is never set up as a revolving line of credit where borrowings are allowed up to a specified limit and for a stated time period.
False
True or false: A lease trap will usually not happen if you ignore the total cost of the lease agreement and focus only on the monthly payment.
False
True or false: Although the five Cs are important, capacity is the only one that really matters.
False
True or false: An individual should get intimidated by emails that warn of dire consequences for not following the sender's instructions.
False
True or false: Bouncing a check can be very inexpensive.
False
True or false: Family loans are simple arrangements and can benefit both parties and no documentation is recommended.
False
True or false: For tax-deductible automobile travel, the IRS does not require detailed records consisting of dates, mileage, locations, and purposes of trips.
False
True or false: If you find a problem in your bill, you should notify the credit bureau in writing within 60 days.
False
True or false: In the credit application process, the lender can deny a person based on gender.
False
True or false: Most credit card companies do not charge a fee when a cash advance is made.
False
True or false: Only about one million Americans belong to credit unions.
False
True or false: Social factors that affect your buying habits include peer pressure, culture, and inflation.
False
True or false: Taking part in public assistance guarantees you will be denied credit.
False
True or false: The Fair Credit Reporting Act was enacted in 1960.
False
True or false: The two types of credit are closed-end and free credit.
False
True or false: Typically, each person is insured up to $100,000 deposited into each financial institution.
False
True or false: When a used car is sold "as is," the seller assumes responsibility for any necessary repairs in the first 30 days.
False
True or false: When suing a creditor, you can sue for actual damages and $15,000 in punitive damages.
False
True or false: When suing a creditor, you can sue for actual damages and $15,000 in punitive damages. True false question.
False
Which of the following are questions you should ask yourself when you are considering a major purchase?
How should I pay for it? Which brands should I consider? Can I delay the purchase?
A savings bond that has an interest rate based on two components is a(n) ______.
I bond
Which of the following are advantages of home ownership?
Income tax savings because of mortgage interest. The ability to borrow against the equity in the home. Stability of residence and a personalized living location.
How could the tax benefit and risk of a home equity loan best be described?
Interest is tax deductible, but default could mean you lose the home.
Which statement best describes how taxpayers pay their taxes to the IRS?
It is a pay-as-you-go system utilizing withholding of tax from paychecks and estimated quarterly payments.
When it comes to mobile homes, which of the following statements are true?
It may be difficult to sell in the future. Financing may be difficult to obtain.
What does the Fair Credit Billing Act (FCBA) do?
It protects consumers with billing mistakes and provides assistance in avoiding payment for defective merchandise.
Making needed repairs, painting the interior and exterior of the home and cleaning all rooms are strategies that can lead to a fast and financially favorable sale.
True
Monthly car lease payments are often less than monthly car financing payments.
True
Redeemed EE bonds may be exempt from federal income tax if the funds are used to pay tuition and fees at a college or qualified technical school for yourself or for a dependent and if they were purchased by an individual who is at least 24 years old.
True
The unit price of chocolates in a box is found by dividing the price of the box of chocolates by the number of chocolates in the box. Assume all the chocolates have the same price per unit.
True
True or false: A credit bureau is a reporting agency that collects credit and other information about consumers.
True
True or false: A lease trap can happen when you negotiate the monthly payment on a lease and ignore the capitalized cost of the vehicle.
True
True or false: A security deposit covers the cost of damages that may be done to a rental unit.
True
True or false: After you vacate a rental unit, your security deposit should be refunded within a reasonable time.
True
True or false: Asset management accounts are a collection of financial services offered for a single fee.
True
True or false: Banks, savings and loans, credit unions, and mortgage companies are common sources of mortgage loans.
True
True or false: Credit cards are convenient, but not always better, to use than installment debt because of the latter's application process and procedures; but that ease of use can lead to overuse. True false question.
True
True or false: Creditors can look at a credit report to help determine if a potential borrower is trustworthy and stable.
True
True or false: In most cases, it is less expensive to borrow money using your certificate of deposit as collateral for a loan than if you use your used car.
True
True or false: Most automobile financing agreements allow the lender to repossess your vehicle when you are in default on your payments.
True
True or false: Most businesses are concerned for their reputation and therefore correct legitimate complaints.
True
True or false: Negotiating the purchase price for a home may involve an offer and several counteroffers.
True
True or false: One criterion for choosing a saving plan is the interest rate.
True
True or false: One drawback of an adjustable-rate mortgage (ARM) is that the monthly payment may increase in future years if interest rates increase.
True
True or false: People who have a strong willingness and ability to repay debts generally have the highest credit ratings.
True
True or false: Some of the factors to consider when determining a price for a home include the owner's need to sell, the time the home has been on the market, and the features and condition of the home.
True
True or false: The ECOA covers your mortgage application and bans discrimination based on race, color, age, sex, marital status, national origin, and several other factors. True false question.
True
True or false: The EIC is a credit that low-income working families can claim to lower their taxes or receive a check from the IRS. True false question.
True
True or false: The IRS reviews all returns for completeness and accuracy.
True
True or false: The base computation for a home equity loan is the current market value of the home less the amount you still owe on your mortgage.
True
True or false: The drawbacks of leasing an automobile include no ownership interest in the vehicle and costs for extra mileage, for certain repairs, and for turning the car in early.
True
True or false: The importance of preparing your home for sale is that it can make for a fast and financially favorable sale.
True
True or false: The lender can sue and collect the total amount from the cosigner of the loan.
True
True or false: The lender can sue and collect the total amount from the cosigner of the loan. True false question.
True
True or false: The main variables of a car warranty include time, mileage, and parts they cover.
True
True or false: The purpose of the Truth in Lending law of 1969 was to give consumers the information needed to compare credit costs on various loans.
True
True or false: The services that a real estate agent can provide include suggesting an asking price, making potential buyers and other agents aware of your home, and screening potential buyers to determine whether they will qualify for a mortgage.
True
True or false: Time deposits include money in savings accounts and certificates of deposits.
True
True or false: To opt out from prescreened solicitations, you may notify the credit reporting agencies via mail.
True
True or false: Two external (market) factors that affect the price of a home are the current demand for housing and the financing options (i.e., interest rates) available.
True
True or false: Underpayment penalties are usually avoided if you make sure you pay in, through withholding and estimated payments, an amount that is equal to or more than last year's tax liability or pay in at least 90% of the current year's tax liability.
True
True or false: Well-maintained and certain high-quality vehicles depreciate at slower rates than vehicles not receiving the same level of care or not consisting of the same high quality.
True
True or false: When attempting to trade in a current car for a new car, it is best not to mention a trade-in vehicle until the cost of the new car has been settled.
True
True or false: You should avoid credit when you don't need the purchase and when you can afford to pay cash to acquire the item.
True
Which of the following is a negative equity situation with a car loan?
Upon selling your car you still owe the bank money on the car loan (over and above your selling price). The loan amount owed is more than the value of the car.
If you make an offer on a home, a counteroffer indicates:
a willingness to negotiate a price settlement.
Capacity is the borrower's financial _____ to meet the credit obligations.
ability
With the ______-on interest method, interest is calculated on the full amount of the original principal, no matter how frequently you make payments.
add
The interest rate on cash _____ is often higher than the rate on purchases.
advances
Many mortgage companies and banks will prequalify you for a mortgage loan by determining how much you can _____ for a home mortgage payment. This is a one-word answer.
afford
What are the factors that a creditor cannot use to deny a person credit?
age race marital status color
The Credit Reporting Agency can disclose history of more than 10 years when:
an individual is being investigated for more than $75,000. an individual is purchasing life insurance for $150,000 or more.
The pros and cons of T&E credit cards, such as American Express, include:
annual fees are typically high. full payment is due each month. no finance charge is incurred as full payment of the balance owed is due each month.
Electronic banking allows a customer to:
apply and receive approvals for loan. payments for online purchases. transfer funds for online payments of mortgage payments or rent. direct deposit checks.
When purchasing a home, the buyer can expect to pay closing costs such as ______.
appraisal fee recording fees
In , _____ a third party tries to settle a grievance and the process is binding.
arbitration
In _____, a third party tries to settle a grievance and the process is binding.
arbitration
Typically, qualified cosigners:
are able to pay loan payments
Share draft accounts at a credit union:
are interest bearing
When cosigners sign their loans, they:
are stating that they are able to pay for the loan if required.
Payday loans are typically used by people who:
are trapped by debts. are driven into debt by misfortune. run up debt by free spending.
The first thing a debtor must do in a Chapter 7 bankruptcy is to draw up a petition listing _____ and liabilities or debts for submission to the court.
assets
Common sources of down payment funds to purchase a home include:
assistance from relatives. the sale of investments. personal savings.
The common areas of condominiums are not owned by the condo owner but by the condominium _____.
association
Dealing with the person who has the _____ to give you a lower price is a vital factor of negotiations.
authority
A signature card is the document that helps the bank determine who are the ______ on the account.
authorized persons
Which of the following are examples of groups of people that might qualify for a class-action suit?
auto owners charged for unneeded replacement parts for their vehicles people injured by a defective product customers overcharged for a service
Use a debit card to:
avoid possible interest charges. avoid an annual fee. avoid bills to be paid in the future.
In a regular checking account, it is beneficial to:
avoid the monthly service charge.
Tax _____ means using legitimate strategies to reduce taxes, while tax _____ involves using illegal means to lower tax liability.
avoidance, evasion
Trusts are typically created by a ______.
bank lawyer
The legal process by which a person, business, or government entity unable to meet financial obligations is relieved of those debts by a court is called _____.
bankruptcy
What is the legal process by which a person, business, or government entity unable to meet financial obligations is relieved of those debts by a court?
bankruptcy
When comparing savings accounts rates of return, you should choose one that:
beats the rate of inflation.
Why are investors willing to pay a higher rate on loans when increased inflation is expected?
because they expect inflation to enable them to repay the loan with cheaper dollars
A premature withdrawal from an IRA may be subject to a tax penalty. What is the age considered "premature"?
before age 59 1/2
The two key tax planning activities of December are deciding whether to make payments that would be to your _____ for this year while deferring _____ into the next tax year.
benefit, income
A home equity loan can be seen as:
borrowing money against the value of your house.
A used-car dealer must place a guide sticker in the window of cars for sale.
buyer
A borrower's assets in excess of liabilities is called ______.
capital
Credit alternatives include:
cash loans, home mortgages, credit cards
Even though the ECOA dictates that people on public assistance may not be denied credit for that reason, they are often denied because:
certain information related to this income could impact creditworthiness.
A savings plan that requires a certain amount of money to be left for a specified amount of time, subject to penalty for early withdrawal, is called a ______.
certificate of deposit
It is said that the least expensive way to borrow is when you borrow on the value of a financial asset. Which of the following loans would meet that test?
certificate of deposit loan life insurance cash surrender value loan
The savings alternative that offers less liquidity is:
certificates of deposit.
A _____ check is a personal check with guaranteed payment. This is a one-word answer.
certified
If you get a large tax refund, it is wise to:
change your withholding amount. save it for retirement. pay off credit cards.
Time deposits do not include:
checking accounts.
When you _____ on a home purchase, you arrange for a date to sign papers, obtain funds and the necessary documents, and request clarification on any unclear issues. This is a one-word answer.
close
The two major categories or types of credit are _____-end and open-end credit.
closed
Even if you win in small claims court, you will still need to:
collect the funds.
Payments of anywhere from 10 to 30 years are ______ for mortgages.
common
The factors that influence the price of a used car include ______.
condition number of miles demand for the model features and options
The common sources of information regarding products during the preshopping phase include personal _____, media, and independent testing agencies such as Consumer Reports.
contacts
The APR is the best indicator of the true of credit.
cost
Overdraft protection is designed to:
cover underfunded checks
Cash advances are obtained through your _____ card at a bank or through an ATM machine. This is a one-word answer and found in the discussion of cash advances.
credit
One of the intangible costs of bankruptcy is the difficulty obtaining _____ in the future.
credit
Credit card fraud affects:
credit card holders
High-cost financial services typically do not include:
credit unions. mutual savings banks.
Which of the following factors are social factors that could affect your daily buying habits?
culture peer group hobbies
Renting increases mobility by:
decreasing financial investment in a home. decreasing the amount of time one is required to be financially liable for housing. making it easier for people to get up and move.
Which of the following is generally considered to be expensive sources of loans?
department stores finance companies appliance companies bank credit cards
A regular savings account usually does not have:
difficulty in withdrawal. a high rate of interest. a high balance requirement.
The typical _____-related fraud works by soliciting charitable donations for phony efforts.
disaster
Residents of cooperative housing ______ the units.
do not own
The Fair Debt Collection Practices Act ______ to creditors that collect debts themselves.
does not apply
The Truth in Lending law of 1969 requires lenders to state the cost of borrowing as a specific _____ amount so that consumers know exactly what the credit charges are. This is a one-word answer.
dollar
The most common sources for a(n) _____ payment for a home purchase include personal savings, pension plan funds, sale of investments, and assistance from relatives. This is a one-word answer.
down
The most common sources for a(n) _____ payment for a home purchase include personal savings, pension plan funds, sale of investments, and assistance from relatives. This is a one-word answer.
down
Activity accounts charge a fee for each check written and sometimes for:
each deposit transaction.
Most financial institutions impose a penalty for ______.
early withdrawals of CD funds
After Chapter 13 bankruptcy, people may find obtaining credit ______.
easier
Renting makes job transfers ______.
easier
Parents who set aside funds for their children will often intend for the money to be used for ______.
education
Like many financial decisions, when making a housing decision, you should consider what you give up in time, _____, and money as a result of the decision.
effort
Who is most likely to benefit from a reverse mortgage?
elderly home owners who can take the funds in the form of a tax-free loan to live on and pay back the loan when the home is sold
Which of the following items of income and value are protected under a Chapter 7 bankruptcy?
equity in home trade tools SS payments and unemployment compensation household appliances equity in cars
Product label on appliances includes information on operating _____, to assist you in selecting the most energy-efficient models.
expense
Payday loans are (inexpensive or expensive) _____ although readily available via check cashers, finance companies, and other sources.
expensive
An individual would benefit from comparison shopping when wanting to purchase which of the following types of products and/or in which of the following situations?
expensive or complex products products where quality differs greatly among sellers products that are sold by many different sellers at various prices
The information on the label of some food products includes _____ dating that helps the consumer determine freshness. This is a one-word answer.
expiration
Factors such as the appearance of the neighborhood, the quality of landscaping, the condition of the driveway, and outdoor lighting are part of the _____ facilities.
exterior
Factors such as the appearance of the neighborhood, the quality of landscaping, the condition of the driveway, and the outdoor lighting are part of the ______.
exterior facilities
Two possible tax planning activities for April _____ are filing the tax return by April , and, if necessary, filing for an automatic six-month _____.
fifteenth, extension
If you find that you have income or deductions that you did not report on your tax return, you should:
file a 1040X to amend the return.
Achieving your financial goals and carrying out your daily activities require many _____ services.
financial
When selecting an apartment, rent, length of lease, security deposit, and utilities are some of the ______ people should consider.
financial aspects
The Truth in Savings law requires ______ to disclose certain charges and fees on savings account plans.
financial institutions
From which of the following sources can money orders be purchased?
financial institutions post offices stores
When selling your own home, you should find out about the availability of ______.
financing
You should not indicate borrowing plans until the price is set on a new car because you should separate the _____ of the car from the negotiations over price.
financing
Depreciation is the largest ______ cost of a new vehicle.
fixed
The main benefit of a conventional 30-year mortgage is (found in discussion of types of mortgage loans):
fixed payments
When selecting a lawyer, questions about legal costs should focus on the way charges will be calculated, such as _____ fee, _____ rate, or contingency basis.
flat, hourly
The advantages of owning a manufactured home (mobile home) include which of the following?
flexibility in the selection of features and appliances less expensive than other options
An adjustable-rate mortgage is also referred to as a ______ mortgage.
flexible-rate
Which of the following are signs of possible debt problems?
getting a credit card revoked having little in savings using up savings borrowing money to pay old debts
Potential home owners without children should evaluate school systems of the municipalities where they might live because:
good schools translate to rising property values.
A strategy that will help you avoid deceptive business practices is to recall the old adage: "Be cautious about offerings that seem too _____ to be _____."—because they often are.
good, true
Credit cards can be a cheaper alternative to an installment loan if the need is short term (less than a month). This is because of the _____ period that is often allowed by credit card companies.
grace
A money order:
guarantees payment.
If a customer "rolls over" her or his payday loan, it is easy to:
have fees that exceed the amount borrowed.
A married couple that does not talk about money could be:
having debt problems.
What are some of the living expenses (other than the rent payment) that you would incur if you were to rent a unit?
heat water bill electricity
The two main activities of the CCCS are:
helping families with debt problems by helping them manage debts teaching families how to avoid heavy debt burdens in the future
Which of the following are main services offered by a real estate agent?
helping you negotiate a price for a home recommending other advisers to help you with the process of buying or selling a home
Drawbacks of money market accounts include:
higher minimum balance required. some institutions charging for low balances.
The one drawback of a conventional 15-year or 20-year mortgage when compared to a 30-year mortgage is:
higher monthly payments.
Generally speaking, the ______ the credit score the ______ the mortgage rate.
higher; lower
Financial services will usually not be affected by:
historically lowest consumer prices.
Which of the following is not one of the benefits of home ownership?
income tax deductibility of home repairs
All of the following are deposit-type institutions that serve as financial intermediaries except:
insurance companies.
Cash advances on credit cards usually accrue _____ from the moment you accept the cash.
interest
Compounding is the process that calculates earnings based on previously earned _____.
interest
Long-term financing is more costly than short-term financing because of higher _____ costs.
interest
A blank endorsement is comprised of ______.
just a signature
A possible advantage of _____ an automobile is the smaller upfront cash outlay.
leasing
Owners of new cars are protected by the _____ laws when repeated attempts have been made to have the car fixed without success. This is a one-word answer.
lemon
The ______ law protects car owners after four attempts to get the same problem corrected or when the vehicle is out of service for more than 30 days within _____ months of purchase or within the first 12,000 miles.
lemon, 12
The rule of 78s formula favors ______.
lenders
When reviewing applications for credit:
lenders use the five Cs as a way of determining who is worthy of the credit
Credit offered by car dealers is generally ______ expensive than most other car loans.
less
Tenants are usually ______ in the types of activities they can pursue in their home.
limited
What are some of the disadvantages of new home ownership?
limited mobility when compared to renting higher living expenses than renting significant financial commitment
The benefits of a FHA/VA fixed-rate mortgage include:
low down payment. fully assumable. no prepayment penalties.
The benefit of an interest-only mortgage is that the monthly payments are _____ than a conventional mortgage and therefore easier to _____.
lower, afford
You are responsible for charges on your account if they are ______.
made online authorized for broken products
The expenses covered by a condominium monthly fee include:
maintenance and repairs. improvements. insurance for common areas.
One way to reduce your tax liability is to:
maximize contributions to tax-deferred retirement programs.
In a(n) _____ process, a third party tries to settle a grievance, but the process is nonbinding.
mediation
Which of the following are the advantages associated with renting an apartment?
minimal financial commitment less maintenance than owning easy to move (mobility)
Pawnshops charge _____ fees than other financial institutions.
more
Which of the following exists primarily to provide loans to purchase homes?
mortgage companies
Certified, preowned vehicles are:
nearly new cars that come with the original manufacturer's guarantee of quality.
Two situations when you should avoid credit are: when you don't _____ or really want the purchase, and when you could pay cash but choose to finance the needed item. (Enter one word per blank.)
need
When you need repairs not covered by warranty, you should investigate, evaluate, and ______ a variety of servicing options.
negotiate
The difference between the sticker price and the dealer's cost is usually the range available for ______.
negotiation
When contracting to have repairs made to a car, it is wise to follow a process similar to when making the original purchase. Such a process of investigation, evaluation, and ______ can help minimize the ownership costs of a car. (Enter only one word per blank.)
negotiation
When contracting to have repairs made to a car, it is wise to follow a process similar to when making the original purchase. Such a process of investigation, evaluation, and can help minimize the ownership costs of a car. (Enter only one word per blank.)
negotiation
An old adage that the three most important factors to consider when buying a home are location, location, and location means that the ______ plays an important part in determining market value.
neighborhood
Which of the following home improvements are not among the three that would have the most favorable impact on asking price?
new hot tub
Which of the following are disadvantages of renting a house or an apartment?
no tax benefits limitation regarding remodeling
What type of credit is a home equity loan?
open-end credit
A savings plan that requires a certain amount of money to be left for a specified amount of time is not a:
passbook savings account. money market account. stock option.
High-cost financial services typically include ______.
pawn shops payday loans rent-to-own centers check-cashing outlets
If an unauthorized person(s) accesses your credit report, they could:
pay a fine. receive jail time.
Check-cashing outlets do not offer which of the following services?
payday loans
Credit card issuers must provide certain information to consumers, including:
penalty APR and when it applies. how to avoid paying interest. APR for purchases, balance transfers, and cash advances. minimum interest charge, setup and maintenance fees.
Annual _____ rate is the yearly interest rate quoted by a financial institution on a loan.
percentage
A credit file contains your detailed _____ information.
personal
There are several reasons that you should borrow from a credit union, including their patience in dealing with borrowers who have good reasons for missed payments, and they provide _____ service.
personal
Which of the following types of loans are offered by consumer finance companies?
personal installment loans second mortgages
Which of the following are advantages of borrowing from a credit union?
personalized service patient with borrowers
In Chapter 7 bankruptcy, a debtor is required to draw up a ______ listing his or her assets and liabilities.
petition
The five Cs refer to:
policies that help determine who will receive credit.
The one drawback of a FHA/VA fixed-rate mortgage is ______.
possibility of additional processing time
Many lenders will ______ you for a certain loan amount.
preapprove
To determine how much you can afford to spend on a home, have a loan officer at a mortgage company or other financial institution to _____ you.
prequalify
Single-family homes can be ______ or ______.
previously owned; new
Products such as real estate or automobiles may be purchased using _____ negotiation.
price
The advantages of owning a newly built home include ______.
pride of ownership no previous owner, so you know the history of the home tax benefits
Comparison shopping can be beneficial when:
product quality or prices vary greatly.
Which of the following are important considerations when choosing a store at which to shop?
product selection and services location and prices
Which of the following are the most important three considerations when evaluating a local school system?
program variety school funding achievement level of students
In addition to showing your home and marketing it to potential buyers, real estate agents can screen potential home buyers to see if they _____ for mortgage financiing.
qualify
The benefits of adjustable-rate mortgages (ARM) include a lower initial mortgage _____.
rate
Once you have determined what you can afford for a down payment, you should investigate mortgage _____ and apply for a loan.
rates
A number of factors can impact the amount you can spend on a home including current mortgage _____, the size of the down _____ you can make, and your income.
rates, payment
The main services of a ______ are to present your offer to the seller, negotiate a settlement price, assist in obtaining financing, and attend the closing.
real estate agent
The Fair Credit Reporting Act of 1971:
regulates the use of credit reports, requires deletion of obsolete information, and allows access of their files to consumers.
Bankruptcy is the legal process by which a person, business, or government entity unable to meet financial obligations is:
relieved of those debts by a court.
If bankruptcy is filed by the consumer, this:
remains in the credit report for up to 10 years
Which of the following home improvements are the three most desirable (i.e., they will have the greatest positive impact on the asking price)?
remodeled kitchen new energy-efficient features remodeled bathroom
While most mortgage payments are fixed, _____ can be subject to increases over which the tenant has no control.
rent
The tenant is protected from ______ during the lease term unless the lease contains a certain provision.
rent increases
The ______ process is defined as a store that leases products to consumers who will eventually keep the items after completing a certain amount of payments.
rent-to-own
A full warranty states that a defective product can be fixed or _____ during a reasonable amount of time.
replaced
When reporting suspicious emails or calls from third parties (found in the discussion of what's phishing?):
report this to the Federal Trade Commission.
The purpose of the W-2 is to:
report, document annual earnings and amounts paid in taxes.
Most automobile financing agreements permit your creditor to _____ your car anytime you are in default on your payments.
repossess
The Credit Card Accountability, Responsibility, and Disclosure Act of 2009:
requires disclosure of how long it takes to pay off balance making the minimum payment. requires a 45-day notice when the company plans to increase your rate.
A CD that may increase the interest rate at regular intervals is called a ______.
rising-rate CD
Most consumer complaints are resolved at the original _____ location.
sales
Which of the following are deposit-type institutions that serve as financial intermediaries?
savings and loans associations commercial banks credit unions
A _____ deposit provides the landlord with funds to cover the cost of any damages done to the rental unit during the lease period.
security
When you are finding and evaluating a property to purchase, you should:
select a location. conduct a home inspection. consider using a real estate agent.
If the dealer is not willing to pay enough for your used car as a trade-in, you should:
sell the old car to an outside party.
A _____ draft account is an interest-bearing checking account at a credit union. This is a one-word answer.
share
A limited warranty covers only certain aspects of the product and requires the buyer to pay part of the costs for:
shipping or repairs.
A _____ card is the document that records the authorized persons on the account.
signature
The most popular form of housing is:
single-family dwelling
Financial institutions consider checks that are older than ______ to be "stale dated."
six months
The two factors that influence driving costs are the:
size of the car and the number of miles you drive.
Mobile Web banking with Internet access of the financial institution's website is one of the three methods to access financial service activities through a(n) _____ or _____. (Enter only one word per blank.)
smartphone, tablet
Lifestyle, interests, hobbies, and peer group are all _____ factors that affect your buying decisions.
social
Default on an auto title loan can mean that the auto will _____ be upon default. This is a one-word answer.
sold
Default on an auto title loan can mean that the auto will be _____ upon default. This is a one-word answer.
sold
Your budgeted financial obligations help dictate the appropriate amount to _____ on housing.
spend
A(n) ______ can be helpful in maintaining and updating income and expense data.
spreadsheet program
The major provisions of the Credit Card Accountability, Responsibility, and Disclosure Act of 2009:
state that a teaser rate must be good for at least six months limits the issuer's ability to increase the interest rate in the first year set a consistent due date for each month
Buying decisions make a(n) _____ about your lifestyle.
statement
The range of negotiation is determined with a new car by knowing the _____ price and the _____ cost.
sticker, invoice
A stop payment order is not designed to:
stop any withdrawals from the account. stop paying on any check written. stop payment of all future checks.
From a tax standpoint, which of the following is most beneficial?
tax-exempt investments
Renters have fewer responsibilities than home owners because:
tenants are not responsible for maintenance or repairs.
When evaluating a home equity loan, which of following should be examined?
terms and condition changes whether payments are applied to interest only hidden fees
If you have a complaint about a business while dealing with identity theft issues, you can file a complaint with:
the Federal Trade Commission.
Credit offered by car dealers, such as financing through ______, may be less expensive than banks, but the downside is that the car dealer may be less willing to discount the price.
the General Motors Acceptance Corporation or Ford Motor Credit Corporation
The Act that prohibits creditors from giving inaccurate information or denying consumers the right to cancel credit accounts is:
the Truth in Lending Act.
Despite the fact that conventional mortgages offer fixed payments, some borrowers will select an adjustable rate mortgage over a conventional mortgage because:
the adjustable rate mortgage has lower initial payments.
Which of the following can affect mortgage affordability?
the amount of income you earn the length of the loan your down payment
When referring to credit, character means:
the borrower's attitude toward credit obligations
When referring to credit, capacity refers to:
the borrower's financial ability to meet the credit obligation.
What do conditions mean in reference to credit?
the general economic conditions that can affect a borrower's ability to repay a loan
The bank will not loan as much money when:
the individual is a risk to the bank.
If the primary borrower misses a payment:
the lender has the right to collect the entire debt immediately from the cosigner if a payment is missed.
You are considering a car with no down payment and monthly payments of $550 for 48 months and an estimated value at the end of the loan term of $8,000. A comparable model can be leased for $550 a month for 36 months with end-of-lease costs of $1,800. Which arrangement should you choose?
the loan and purchase because its cost is lower
The difference between a smart card and a regular credit card is:
the metallic chip embedded on the front of the smart card.
A car with a total purchase price of $12,000 is available, while a comparable model can be leased for $350 a month for 36 months with end-of-lease costs of $800. Which arrangement should you choose?
the outright purchase because its cost is lower
The rate of return is:
the percentage increase in the value of an account.
What are capital gains?
the positive difference between the purchase price of a stock and its sale price
Because of the ECOA, creditors may not use any appraisal of the value of your property that considers:
the race of the people in your neighborhood.
Simple interest (I) is calculated as follows: Principal × Rate of Interest × ______. This is a one-word answer.
time
The most important thing you can do to improve your credit score is to pay your bills on _____. This is a one-word answer.
time
What is the purpose of liquidity?
to allow you to withdraw money on short notice
What is the main purpose of life insurance?
to provide financial security for dependents
What is the main function of a mortgage company?
to provide loans to purchase homes
What are the services that finance companies typically do not offer?
to provide savings accounts with high interest rates To provide checking accounts with unlimited withdrawals to provide frequent access to cash machines
To calculate the debt payments to income ratio:
total monthly debt payments (excluding home mortgage) are divided by net monthly income
A variety of scams surface after ______ and ______.
tragedies; natural disasters
A _____ is a legal agreement that provides for the management and control of assets by one party for the benefit of another. This is a one-word answer.
trust
The _____ in Lending Act prohibits creditors from giving inaccurate information or denying consumers the right to cancel credit accounts.
truth
An important security measure to take when selling your own home is to show the home when _____ or more adults are at home.
two
Security features currently being added to credit cards to deter counterfeiting include:
ultraviolet ink on the company logo. a holograph that changes color and image.
To improve your credit score, it is important to:
understand the computation of outstanding debt. avoid applying for new credit cards. pay your bills on time.
Banks, credit , _____ and consumer finance companies are all businesses that are sources of car loans.
unions
When consumers take the price of an item and divide by the common units, such as ounces, the result is called:
unit pricing.
When making online purchases, you should:
use a secure browser, keep a record of the purchase, and review your statement.
Certified checks, cashier's checks, and money orders allow you to make a payment that the recipient knows is ______.
valid
When interest rates are falling, you should:
wait to refinance a home loan. use short-term loans. choose long-term savings options.
What is typically in a credit file?
whether you rent or own your home whether checks have been returned for insufficient funds former address employer information
Which of the following is part of the billing dispute process?
writing a letter to the creditor
Annual percentage rate is the _____ interest rate quoted by a financial institution on a loan.
yearly
Debit cards are different from credit cards because:
you are spending your own money when you use a debit card.
Long-term financing is more costly than short-term financing because:
you will pay more in interest charges.
If you are denied credit by a bank or credit union, you should question:
your ability to afford the higher rate charged by a loan company.
Which of the following factors have an impact on the amount you can spend to acquire a home of your own?
your income (salary, wages, investment income, etc.) the amount of the down payment you can make your current living expenses
_____ deposits include checking accounts and other payment methods. This is a one-word answer.
Demand
True or false: The ability to transfer money is not a necessary part of daily business activities.
False
True or false: The advantage of a Coverdell Education Savings Account is that the contribution of $2,000 per year is tax deductible.
False
What are tax-free savings accounts into which people with high-deductible health insurance plans can place funds each year called?
HSAs
The due dates for quarterly estimated payments are April 15, June 15, and September 15 of the current year and Blank______ 15 of the following year.
January
You did some independent contracting in 2018 that resulted in a tax liability of $1,000. You did not make estimated tax payments. Your withholding for 2018 was $2,500 and your total tax liability is $3,200. Your tax liability for 2017 was $2,100. Will you incur penalties as a result of your underpayment in 2018?
No, because your withholding is more than your tax liability for the previous year.
True or false: Many taxpayers view an annual tax refund as a "windfall," extra money they can count on each year.
True
The positive difference between the purchase price of a stock and its sale price is called _____ _____.
capital, gains
A trust is a legal agreement that provides for:
control of assets. management of assets. creation of a beneficiary.
Using savings for _____ living expenses is one of the mistakes people make when managing current cash needs. This is a one-word answer.
current
Health _____ accounts are designed to promote personal saving out of which workers can pay routine health care expenses while working and can pay for Medicare copayments and deductibles later, during retirement.
savings
CPAs and enrolled agents both offer tax services including return preparation, while a(n) ______ will represent you in the case of an IRS lawsuit.
tax attorney
A premature withdrawal from a traditional IRA will result in taxable income and a penalty of ______% of the withdrawn amount.
10
Which of the following is a tax consequence of self-employment?
Business owners must pay self-employment tax.
You filed a Form 4868 and received a six-month extension on your taxes for 2018. Which of the following is true?
The filing will not postpone your payment liability, so you must pay your estimated payment liability by April 15, 2019.
People who claim large or unusual deductions increase their chances of ______.
an audit
Factors to consider when evaluating tax services include experience and training of the provider, the fee, and if the provider will represent you with the IRS in the case of an _____.
audit
On filing Form 4868, you can ______ a six-month extension on filing an income tax return by filing the proper forms with the IRS before the April 15 filing deadline.
automatically receive
Asset management accounts are commonly offered by ______.
investment companies
The actions the IRS will take if you make an error could include recalculating your tax, sending you a(n) _____ or refund, or, in a worst-case scenario, notifying you of a tax _____. These are one-word answers.
invoice, audit
Two of the tax advantages of being self-employed are that you can deduct the cost of both health (medical) and ______ insurance as a business expense.
life
Two tax planning activities for the month of January include ______.
making your final estimate quarterly payment for the previous year for income not covered by withholding record-keeping
Which of the following tax activities must be completed by June 15?
Pay the second installment of estimated taxes.
True or false: While municipal bonds pay a lower rate of interest than other types of bonds, the after-tax income may be higher than other types of bonds.
True
Which of the following is an indicator of a good tax preparation service?
Tax preparation is the main business activity.
Lemon laws protect car owners after four attempts to get the same problem corrected or when the vehicle is out of service for more than _____ days within 12 months of purchase or the first 12,000 miles.
30
You are in the 25% tax bracket. So, the yield on the savings account is 8%, and the after-tax savings rate of return is ______.
6%
In order to qualify for a reverse mortgage, you must be at least age ______.
62
You are in the 25% tax bracket, the before-tax savings rate of return is 12%, the after-tax yield on the savings account is:
9%
Which of the following is a tax avoidance strategy?
Delay the receipt of income because you want to delay the payment of taxes until next year. Accelerate deductions to save taxes this year.
Annual percentage yield is also commonly expressed as ______.
APY
Which of the following is not true regarding ATMs?
All financial institutions charge the same ATM fees.
_____ is a process that calculates interest based on previously earned interest.
Compounding
Which of the following are possible disadvantages of owning a previously owned home?
Limited mobility Possibility of significant repairs Significant financial commitment
_____ is the attribute of savings accounts that allows you to withdraw money on short notice without a loss of principal or fees.
Liquidity
Which of the following best describes why the home can be a tax shelter?
Mortgage interest and real estate taxes are tax deductible, which helps lower the cost of home ownership.
Sharon has been taking out student loans to finance her college education. She has amassed a great deal of debt, but plans to declare Chapter 7 bankruptcy to have the debt forgiven. Will her strategy work?
No, student loans are not forgiven in Chapter 7 bankruptcy.
Can a credit company legally deny a person credit even if they are credit worthy—good credit history and credit score?
No. This action would be illegal.
What is the best strategy if you can't make a payment on a debt?
Notify the creditor as soon as possible in an attempt to work out a modified payment plan.
_____ protection is less costly than paying a fee for an unfunded check.
Overdraft
Which of the following tax activities must be completed by September 15?
Pay the third installment of estimated taxes.
What actions should you take if you are a victim of identity theft?
Place a fraud alert on your credit report. File a police report. Contact the Social Security administration.
A Coverdell Education Savings Account is most similar to a:
Roth IRA.
Which of the following loans are offered by credit unions to consumers?
Share draft loans Credit card loans Installment loans
Online payments do not include ______.
Smart cards
What is the procedure under consumer credit laws when denial of credit is discriminatory?
Sue the creditor. Make the creditor aware of your understanding of the law. File a complaint with the government.
If you purchase a new but defective item that the business will not accept as a return, what does the FCBA require?
The credit card company will allow you to withhold payment on such an item because it is defective.
Which of the following attributes is not important when selecting a financial institution?
There is a state or national charter for the institution.
Which of the following sentences are true in relation to depositors with federal deposit insurance?
They have not lost money in recent years. They have more security than non-insured accounts.
Which of the following are the names of credit bureaus?
TransUnion Experian Equifax
As a general rule, it may be wise to refinance when the interest rates on mortgages drop at least 1 percentage point below your current mortgage rate.
True
Being aware of zoning laws and restrictions on how a property in an area can be used can be useful in making your real estate buying decision.
True
Even if you do not use a real estate agent to sell your home, you should use an attorney or title company to close the transaction.
True
Factors that impact the asking price for a home include recent asking prices of comparable homes in your area.
True
Lowballing and highballing sales techniques should be avoided when purchasing a vehicle.
True
Which of the following best explains the flaw in the strategy of borrowing from a finance company?
When you are denied credit from traditional sources, you probably have less ability to afford the higher rate a finance company charges.
Which of the following is not true concerning small claims court?
You can generally sue for as much as $100,000 in small claims court.
How is identity theft often detected?
You receive a bill for a credit card account you never opened.
What are reasons to maintain good credit history?
You will have a good FICO score. You are less likely to be denied credit.
Another name for an automated teller machine (ATM) is ______.
a cash machine
The benefits of a conventional 15-year or 20-year mortgage usually include:
a faster equity buildup than a 30-year mortgage. a lower rate than a 30-year mortgage. a quicker payoff of the loan than a 30-year amortization.
Certificates of deposit require that a certain amount be on deposit for a stated time period in exchange for:
a higher interest rate.
The rent-to-own process is:
a lease and buy option.
Activity accounts charge a fee for each check written and each deposit, as well as:
a monthly service charge.
Disadvantages of travel and entertainment cards include:
a requirement for the balance to be paid in full.
Which of the following is a tax-deferred investment?
a retirement plan
An arrangement whereby borrowings are permitted up to a specified limit and for a stated period is known as:
a revolving line of credit.
A retirement plan designed for self-employed people is a ______.
Keogh plan
Select all the accurate observations below about different types of audits.
The simplest audit is a correspondence audit. With an office audit, you must visit the IRS office to answer questions about your return. A field audit involves an IRS agent visit to your home or office and is the most complex type of audit.
Saving funds for future use is necessary for financial ______.
safety
Demand deposits are not ______.
savings accounts
A tax planning activity for February would be to check to see if you have received all of your W-2 forms (salary and wages) and all of your _____ forms (interest and dividends) so you can begin to organize and prepare your income tax return.
1099
Which of the following statements are true about software and taxes?
A spreadsheet program such as MS Excel can help you with your tax planning. A spreadsheet program can help you keep track of income and expenses as the year plays out. Software packages such as H&R Block At Home and TurboTax help users prepare and file returns.
True or false: A tax-exempt investment generates income to be taxed in later years, while a tax-deferred investment produces tax-free income.
False
Which of the following tax activities must be completed by April 15?
File your federal tax return or file for an extension.
Which of the following is a difference between a traditional IRA and a Roth IRA?
The initial contribution to a Roth IRA is not tax deductible.
True or false: A Keogh plan is a tax-deferred retirement plan designed for self-employed people.
True
True or false: A tax credit is an amount subtracted directly from taxes owed.
True
True or false: Achieving your financial goals and carrying out your daily activities require various financial services.
True
True or false: The contribution limit for an IRA (as of 2021) is $6,000 for workers under the age of 50.
True
You received your W-2 and it had the following information: Wages, tips, other compensation: $35,000, Federal income tax withheld: $4,500. You do your 1040 and find that your taxes owed are $3,500. Which of the following is true?
You will receive a refund of $1,000.
The biggest difference between a(n) _____ IRA and a Roth IRA is that the Roth IRA contribution is not tax deductible, but after five years, its earnings are tax free.
deductible
People who claim a large or unusually high amount of ______ increase their odds of getting audited.
deductions
Very low-income workers can benefit from the ______.
earned income credit
Insurance is a(n) ______.
financial service
Taxpayers pay income taxes through:
payroll withholding and through estimated tax payments.
Head of household is a filing status for a(n) Blank______ individual or a(n) Blank______ spouse who maintains a household for a child or dependent relative.
single; surviving
Additional financial services that may be needed for successful financial management include:
tax assistance. insurance. investments. financial planning. trust services.
Which of the following are tax-deferred investments?
tax-deferred annuities IRA Section 529 savings plans Keogh
Taking advantage of tax credits, deferring capital gains and accelerating capital losses, and considering tax-exempt investments are all strategies to lower income _____.
taxes
