Finance Flashcards

Credit 3 Personal Finance16

creditor A business that gives you a loan is:
Obtain a car loan Having a low credit score can make it more difficult to:
One credit report from each credit bureau How many free credit reports are you legally entitled to each year?
Paying off your credit card bill Which of the following actions would IMPROVE your credit score?
Payment History Which of the following MOST influences your credit score?
You inquire about a credit card charge. Which of the following actions has NO impact on your credit score?
You forgot to pay the cable bill. Which of the following actions can NEGATIVELY impact your credit score?
EquifaxTransUnionExperian One of the big three credit reporting agencies
It can impact your ability to be approved for bank loans. Having a good credit score is important because:
Credit scores reflect how likely individuals are to repay their debts. Which statement about credit scores is TRUE?
$50 Oh no! Someone stole your credit card and charged $2,500 worth of purchases before you even knew the card was missing. How much of the unauthorized charges can you be required to pay?
APR and fees You can best compare credit card offers by looking at these two features:
Add finance charges and late fees to your bill You forgot to pay last month’s credit card bill. Your creditor will probably:
The smallest payment that will keep a credit card holder in good standing with the lender Which of the following is the best definition of a minimum payment on a credit card?
Principle When you borrowed $50 from your rich cousin, and then had to pay her back $60, what is the original $50 called?
D. It will probably be high If you get your first credit card while you’re a full-time student, what can you expect about the card’s APR on outstanding balances?
Credit When goods, services, or money are received in exchange for a promise to pay back a definite sum of money at a future date.
5 Cs of credit worthiness Character, capital, capacity, collateral, and conditions.
Character A person’s honesty and reliability, determined by their history of paying bills.
creditworthiness A measure of your reliability to repay a loan.
capital A person’s net worth and how much a person has in savings or tied to major assets
Capacity Your Ability to Repay Debt…Can you make payments?
Advantages of credit Convenient, you don’t have to use your own money right away, you can stretch amount owed into payments, etc.
Disadvantages of credit Interest, credit card companies can try to trick you, minimum payments build up, you might end up paying more than you would if you just paid it in full up front, etc.
What are ways to establish good credit? Paying bills on time, paying loans on time, having a longer history of using credit, etc.
What are ways to establish bad credit? Not paying bills on time, choosing minimum payments, taking out loans for things that aren’t necessities, etc.
What is the past due amount? The required amount not paid before the due date.
Minimum payment. What is the amount that must be paid each month to avoid penalty fees?
Debit card No interest, linked to a bank account, money is immediately taken from bank.
Credit card Preapproved credit, charged now payed later, pay interest.
Interest Price of borrowing money to make a purchase and pay later. Rates vary.
Annual percentage rate (APR) for purchases Interest rate charged for amount borrowed per year.
Due Date The day by which the company requires a payment to be made.
Late payment fees Penalty fee for payments not made by the due date.
Fair Isaac Company (FICO) The most common credit scoring system
Finance Flashcards

Finance Test 2

Published once a year and provides stockholders with details about the company’s performance and financial condition? Annual Report
Explains the changes in a company’s retained earnings over the account year? Statement of retrained earnings.
Gives details about the firm’s sales, costs, and profits for the past accounting period? Income statement.
Provides a quantitative summary of a company’s assets, liabilities, and net worth at a specific point in time? Balance sheet.
Aggregates all cash inflows, which the company receives from its ongoing activities and investment sources, and all cash outflows? Statement of cash flows.
As long as the information reported follows the generally accepted accounting principles guidelines, accountants in a firm have the liberty to use personal judgement to report transactions in the firm’s financial statements? True
What is EBIT or Operating Income? Net Sales-Operating Costs
What is EPS or Earning Per Share? Net Income / Common Shares Outstanding
What is DPS or Dividends Per Share? Dividends / Common Shares Outstanding
What is BVPS or Book Value Per Share? Total Common Equity / Common Shares Outstanding
Finance Flashcards

Personal Finance final

A government security issued in minimum units of $1,000 with a 10 year to 30 year maturity is called a ___. D treasury bond
A stock that follows the business cycle of advances and declines in the economy is called a stock. B. cyclical
For most mutual funds, the net asset value is calculated C. at the close of each trading day
A mutual fund that invests in the common stocks of companies in the same industry is called a ____________ fund. C. sector
An emergency fund should be deposited in a A. savings account at the highest available interest rate
A request that a stock be bought or sold at the current market price is called a _________ order. A: market
A bond that can be exchanged, at the owner’s option, for a specified number of shares of the corporations stock is called a ____________ bond. D: convertible
Generally, interest on corporate bonds is paid every ________. 6 months
A mutual fund in which investors pay a commission every time they purchase shares is called a ________ fund. C. Load
When the board of directors approves a two for one stock split, the price for each share of stock… . A: decreases in value
The legal conditions for a corporate bond are described in the D: bond indenture
The management fee for most mutual funds ranges between _________ percent. A: 0.25 to 2
A 1-5 percent fee that investors pay when they withdraw their investment from a mutual fund is called a _________. Contingent deferred sales loan
A call feature… C: allows the corporation to buy outstanding bonds from current bondholders before the maturity date
When a bondholder loses money because interest rates in the economy increase it is an example of ________ risk. B: interest rate
Which of the following investments offers the greatest growth potential? B: common stock
A request that an order be executed at the next available opportunity after the market price of the stock reaches a specified process called a _________ order. C: stop
A request that a stock be bought or sold at a specified price is called a ________ order. B: limit
Which of the following statements is true… a. Most mutual funds are managed fundsb. The role of a fund manager is not important because the investment company is always changing managersc. If a fund has performed well under present manager over a 5-year, 10-year, or longer period it is time to sell the fund
If the board of directors approves a two for one stock split an investor who owns 150 shares before the split owns ______ shares after the split D: 300
A market for existing financial securities that are currently traded between investors is called the _________ market. D: secondary
An order to buy or sell a security that lets the broker decide when to execute the transaction and at what price is called a ________ order E: discretionary
A mutual fund that invest in common stocks and bonds with the primary objectives of conserving capital, providing income, and long term growth is called a __________ fund A: balanced
A mutual fund in which no sales charge is paid by the individual investor is called a __________ fund. D: no-load
A mutual fund that invests in common stocks of rapidly growing corporations with higher than average revenue and earnings growth is called a ______ fund. B: growth
A government security issued in $1000 units with maturities of more than one year by no more than ten years is called a _________. C: treasury note
When one investment company manages a group of mutual funds, it’s called a ________. A: family of funds
An example of ___________ risk occurs when an investment does not keep up with prices that are increasing the overall economy. inflation
If overall interest rates in the economy rise, a corporate bond with a fixed interest rates will generally … B: decrease in value
When an investor purchases shares in a load fund, the average sales charge is usually __________ percent. Between 3-5
A decrease in value of stocks, bonds or other investments may cause investors to experience ________ risk. Market.
The value of MF’s portfolio minus the mutual funds liabilities divided by the number of shares outstanding is called the _________ net asset value
When a bond is selling for less than its face value, it is said to be selling at a A: discount
A market in which an investor purchases financial securities (via an investment bank or other representative from the issuer of those securities) is called the _______ market. E: primary
An individual can reduce the amount of risk associated with an investment program by using… B: asset allocation
According to Ibbotson Associates, which of the following investments is projected to earn the largest return between now and the year 2025? Stocks
Index funds invest in… E securities contained in an index like the S&P 500
The federal government requires that a corporation selling a new issue of securities must disclose information about the company and its finances in an…. D: prospectus
A very safe investment that generally attracts conservative investors is called a ___________ stock. E: blue-chip
A fee that some investment companies charge for marketing and distributing a mutual fund is called a __________ B: 12b-1 fee
A government security issued in minimum units of $1000 with maturities that are one year or less is called a _______ B: treasury bill
Income dividends and capital gain distributions are: s subject to federal taxation.
A long-term technique used by investors who purchase an equal dollar amount of the same stock at equal intervals in time is called a _____. A: dollar cost averaging
A mutual fund in which shares are issued only when the fund is organized is called a ______ fund. B closed end
An investor concerned with a predictable source of income provided by an investment would choose ________ A: government bonds
If interest rates in the overall economy decrease, what will happen to the market value of a corporate bond, with a fixed interest rate? B: The value of the bond will increase
A bond that is repaid from the income generated by the project it is designed to finance is called a C: revenue bond
A stock issued by a corporation that has the potential of earning above-average profits when compared to other firms in the economy is called a _______ stock. D defensive
Which of the following investments offers the greatest liquidity? interest- bearing checking accounts
A bond that is backed only by the reputation of the issuing corporation is called a ________ bond A: debenture
All the different management fees and funds operating costs are often referred to as a _______ B: expense ratio
A mutual fund that invests in companies outside the US is called a ________ fund. C: international
A MF in which new shares are issued and redeemed by the investment company at the requests of investors is called a _______ fund open-end
A stock that pays higher than average dividends is called a ____ stock D: income
Bad products or poor financial management may result in investors experiencing _____ risk. C: business failure
A bond back by the full faith, credit, and unlimited taxing power of the government that issued it is called a ________ bond. B General Obligation
Which of the following investments would rank the highest with regard to safety? A: government stocks
Equity financing is a popular choice to provide long-term financing for a corporation because… B: it does not have to be repaid
A stock that is issued by a corporation that has a large amount of capitalization is called a __________ stock C: large-cap
A stock that remain stable during declines in the economy is called a ________ stock. A: defensive
A deduction from adjusted gross income for yourself, your spouse and qualified dependents is E: an exemption
For a dependent to qualify as an exemption, he or she must… D: receive more than one half of his or her support from the taxpayer
An example of a tax-exempt investment is… D: interest on municipal bonds
For which of the following types of credit plans is the interest tax deductible? A: a home equity loan
An expense that would be included in the itemized deductions of a taxpayer is… C: real estate property taxes
___________ are expenses that a taxpayer is allowed to deduct from adjusted gross income C: itemized deductions
Personal finance planning has the main goal of… C: putting money to work and living within your means
A family with $45,000 in assets and $22,000 of liabilities would have a net worth of… B: $23,000
Attempts to increase income are part of the _____ component of financial planning. B: obtaining
With an inflation rate of 9 percent, prices would double in about ____ years. 8
Money management refers to… B: day-to day financial activites
A personal budget sheet presents… D: items owned and amounts owed
A cash-flow statement reports a person or family’s B: current income and payments
A formalized report that summarized your current financial situation, analyzes your financial needs and recommends a direction for your financial activities is a B: financial plan
The main responsibility of The Fed is to B: approve spending by Congress
The first step of the financial planning process is to … C. analyze your current personal and financial situation
The study of how wealth is created and distributed is D: economics
Items with monetary worth are referred to as E: assets
If you put $1000 in a saving account and make no further deposits, what type of calculation would provide you with the value of the account in 20 years? A: future value of a single amount
To determine a person’s solvency, which financial document should be consulted? B: budget
Which type of audit is the least complicated for taxpayers? D: a correspondence audit
The time value of money refers to D: increases in an amount of money as a result of interest
What type of tax is imposed on the value of an individuals property at the time of his or her death? E: estate
________ risk refers to the danger of lost buying power during times of rising prices. D: inflation
The use of legitimate methods to reduce ones taxes is tax _____. B: avoidance
A tax credit of $50 for a person in a 28 percent tax bracket would reduce a persons taxes by D: $50
Current liabilities differ from long-term liabilities based on D: when the debt is due
Which of the following situation is a person who could be insolvent? D: Assets $40k and Liabilities $45k
Liabilites are amounts representing A: debts
Capital gains refer to C: profits from the sale of an investment asset
The ____ property tax is based on the value of land and buildings. B: real estate
A tax ____ is an amount subtracted directly from the amount of taxes owed. A: credit
Future value calculations are also referred to as C: compounding
The main purpose of taxes is to A: generate revenue for funding of government programs
Which of the following items is a set amount on which no taxes are paid? B: standard deduction
Which type of tax is imposed on specific goods and services at the time of purchase? C: excise
A decrease in net worth would be result of B: expenses greater than income for a month
The problem of bankruptcy is associated with poor decisions in the ____ component of financial planning. D: borrowing
As Jean Tyler plans to set aside funds for her young children’s college education , she is setting a _____ goal B: long-term
The current financial position of an individual or family is best present with the use of a C: balance sheet
The financial planning process concludes with efforts to E: review and revise your actions
Which of the following would result in reduction of taxable income? C: passive income
Payments that do not vary from month to month are ___ expenses. A: fixed
The difference between the amount budgeted and the actual amount is called a D: budget variance
A major activity in the planning component of financial planning is D: allocating current resources for spending
Opportunity costs refers to B: trade-off of a decision
Liquid assets refer to B: items that are easily converted to cash
The main economic influence that determines prices is E: supply and demand
If a family planned to spend $370 for food during march but only spent $348, the difference is referred to as an A: surplus
The ability to convert financial resources into usable cash with ease is referred to as B: liquidity
Information about a personal bankruptcy may be reported on your credit file for D: 10 years
Ursula wants to have an interest rate that can increase or decrease during the life of her loan. She would look for a A: ARM
The use of property or savings to secure a loan relates to D: collateral
Which of the following is a legal form of ownership in which the owners pay a monthly fee for maintenance of the common areas. A: condominiums
Rebecca paid extra money to reduce her mortgage interest rate. The extra money is called E: points
If you do not pay back any of the loan amount for a portion of the loan period you gave a E: interest-only mortgage
What should a home-buyer consider when evaluating a house? E: all- going laws, location of business and future construction sites, school system, property values of community
Frank and Diane want to buy a house. Which of the following do they need before they purchase a house? A: down payment
Which of the following is an account used to pay property taxes and home insurance? B: Escrow
Most products come with some guarantee of quality. This type of warranty covers the products intended use of other basic understandings that are not written. D: implied warranty
Experts suggest that the debt payment to income ratio be a maximum of B: 20%
Which of the following is an example of open-end credit? B: a department store credit card
Which of the following is a disadvantage of renting B: tenants cannot take tax deductions for mortgage interest and property taxes
If you have a mortgage that has fixed monthly payments and a very large final payment, you have a A: balloon mortgage
Most products come with some guarantee of quality. Which of the following is usually in written form created by the seller or manufacturer and has two forms? B: express warranty
Helga plans to purchase a pickup truck. She should begin her price negotiation at the A: invoice price
Pauline just submitted an offer on her dream home. To show that she is serious, she included D: earnest money
The amount printed on a label with the suggested retail price that is posted on a vehicle is called the B: sticker price
This gives the landlord the right to take legal action against a tenant for nonpayment of rent or destruction of property A: Lease
Diane purchased her house and had it assembled before it was moved to her lot. She purchased a C: Manufactured home
A process used to settle grievances in a nonbinding process is called a D: Mediation
When purchasing a used vehicle, it’s a good idea to C: have a trained and trusted mechanic of your choice check out the vehicle
Which of the following is often considered to offer the least expensive loans? D: parents or family members
A credit card holder who pays off his balances in full each month is known as B: a convenience user
The primary benefit of a home equity loan is B: the deductibility of the loan interest on federal taxes
FICO scores generally range from C: 350 to 850
Which of the following is an advantage of renting? B: renters have fewer responsibilities than home owners
The APR is the percentage cost of credit on a ____ basis. D: annual
The question “Will you repay the loan?” relates to A: Character
The question “What are your assets and net worth/” relates to C: Capital
Adolph has a low income and needs legal assistance. He should make use of a C: legal aid society
All of the following are fixed operating costs for a vehicle except E:Maintence and repairs
Which of the following is a valid reason for borrowing? E: -all are
Trenton wants to buy a house but can provide only a 10% down payment He probably will be required to have D: PMI
Which of the following is an example of closed-end credit? A: a mortgage loan
A loan officer examines whether or not he will offer you a loan today Specifically, she is examine your income and debts, Which of the five C’s is the loan officer reviewing? B: Capacity
A variable operating cost for a vehicle is E: maintenance and repairs
Under CH. 7 of the US bankruptcy code C: Certain assets receive some protection
The dealer’s cost is also known as the A: invoice price
A standard measurement used to compare packages of different sized is D: unit pricing
LIST AND GIVE THE PERCENTAGE OF THE 5 KEY AREAS THAT MAKE UP YOUR CREDIT: pay on time 35%. Debt credit limit ratio 30%. Credit history 15%. New credit 10%. Mix of credit 10%.
What type of loan will never be forgiven, even with bankruptcy? Student
_________ is the time between the statement end date and the due date of the bill. Grace Period
__________ is the best billing cycle for a credit card. Daily.
What is the lowest credit score you can have and still get the best interest rate available when you borrow money? 720- 850
Jack needs comprehensive medical coverage; however, his income is quite low. What plan should he investigate C: medicaid
Tom wanted to receive as many discounts on his home insurance as possible. Which if the following would NOT provide a discount? E:- all would
Jenny wants health insurance that limits the amount that she must pay before the insurance starts paying benefits. She is concerned about a A: deductible
After you have reached a certain limit that you must pay for the deductible and coinsurance, the insurance company covers 100% of any additional cost. This is called B: out of pocket limit
If you choose to avoid the risk of a traffic accident by not driving to work, you are using A: risk avoidance
If you choose to wear your seatbelt, you are using B: risk reduction
The best place to keep a household inventory is D: in a safe deposit box
A young employee is buying individual life insurance and is worried about the impact inflation will have on his life insurance coverage. Which if the following riders should he consider? D: cost of living protection
Miguel is concerned that the health insurance option he is considering plays upon unrealistic fears. He is most concerned about a E: dread disease policy
If you have loss due to a flood, B: You need to have purchased special coverage if you live in an area that has frequent floods in order to be covered
Medicaid covers E: -all- specifics- i.e. eyeglasses
Another name for permanent life insurance is A: whole life
Which if the following is not temporary insurance? A: Whole life
After you purchase a life insurance contract, you have a “free look period” that lasts C: 10 days
Barbra left a skateboard on her front steps. Her neighbor tripped on the sk8board and was injured. The fact that Barbra didn’t put away the skateboard is called B: negligence
Medical payments coverage applies to medical expenses of A : anyone in your vehicle, including you
A policy that supplements your basic personal liability coverage is called a E: umbrella policy
All of the following are sources of disability income except E: – all – work comp, empl, priv income, SS
A person who is named to receive benfits from an insurance policy is a B: beneficiary
Pam just started working XYZ widget company and finally wants to get insurance coverage. She does not want tot take a medical exam to get coverage because she has underlying health conditions and is concered that she might not qualify for a policy. Which life policy should she apply B: group life
Madeline had a severe allergy attack and crashed her car into a telephone pole while sneezing, the damage to the pole would be covered under madelines B: property damage liability policy
Sandy went to the doctor 3 times, and each apt cost $200. Her copayment was $25 per visit How much was Sandy required to pay in total for her three visits? B: $75
Which of the following households most likely has the greatest need to life insurance? D: household with children
Which of the following is not a type of permanent insurance? D: term life
Which of the following is a poor choice for the amount of protection offered for an individual? C: credit life
Georgia has a health insurance policy that includes a deductible of $600 and a coinsurance of 20%. Other total bill is $4,000 how much will she be required to pay? D: $1,280
Katrina was injured in an accident at work, the benefits she will receive to cover part of her income will come from E: workers compensation.
Henry was driving at dusk and hit a deer running across the road his damage would be covered under his C: collision policy
Nancy is studying the health insurance plan options offered by her employer, she wants a policy that will have the insurance pay a percentage of her med expenses after she meets her deductible B: coinsurance
Individuals over the age of 65 who are eligible for fed gov health paying coverage may also be interested in purchasing more coverages called D: medigap.
Andrew is applying for insurance for his new home. Which of the following is incorrect C: he should use the replacement value method for settling claims to receive the full cost of repairing or replacing his personal belongings
Most people receive health insurance from C: a plan offered by their employer
Which of the following should reduce your auto insurance premium C:good grades in college.
An insurance company will B: insure pure risk but not speculative risk
Which of the following is incorrect D: a bad disability policy pays you if you cannot work at your regular job.
Medicare part A covers D: inpatient hospital care.
Insurance that covers valuable items such as an expensive harp C: personal property loader
Most people buy life insurance to B: protect the people who depend on the insured from financial losses caused by his or her death
Fred bought life insurance 5 yrs ago he forgot to tell them that he had a heart condition and as a result of that condition he recently died, which of the following provisions prevents the life insurance company from refusing to pay his beneficiaries because of his original misinterpretation A:incontestiblitly clause.
Another name for temporary life insurance is… D: Term
Barbra left a skateboard on her front steps a windstorm swept it up through her window C: peril.
Homeowners insurance covers all of the following except D:auto insurance
Zach lived in a neighborhood that was known for gang activity, one day he noticed that his car had been vandalized, this damage would be covered under his D: comprehensive physical damage policy.
Barbra left a skateboard on her front steps. Her neighbor tripped on the skateboard and was injured. The skateboard was a A: Hazard
Mildred was diagnosed with terminal cancer and knows that she doesn’t have long to live which of the following writers would allow her to receive cash now E: accelerated benefits.
Fred bought life insurance when he was 47, although he told the insurance company he was 42, he has since died. Which will affect how much money his beneficiary will receive B: statement of age provision.
The set amount that you must pay toward medical expenses before the insurance company pays benefits is called C: deductible
Sally was driving her own car and collided with a pickup truck, sally sustained $100, 250 in injuries and her passengers sustained $10, 000 in injuries. If her coverage was 100/300/50 what are the total med expenses the insurance company would pay for this accident. C: $110,000.
Timothy is driving his friend to football practice, while driving he was hit by a driver who had a coverage of 100/300/50. Tim and Nick each suffered some physical injuries, based on this info which of the following info is correct. E: the policy would provide a max of $100,000 for each of the injured and no more than $300,000 for total injuries sustained in the accident.
Georgia was suppose to pay her premium by the 15th of the month, which of the following provisions allows her to keep her coverage if she is a couple weeks late with paying her premium E: grace period.
Finance Flashcards

Business Finance, chapters 1-4

1. treasurer the person generally directly responsible for overseeing the cash and credit functions, financial planning, and capital expenditure
2. capital structure the mixture of debt and equity used by a firm to finance its operations is called:
3. working capital management the management of a firm’s short-term assists and liabilities is called:
4. corporation a business created as a distinct legal entity composed of one or more individuals or entities is called a:
5. limited liability company a business entity operated and taxed like a partnership, but with limited liability for the owners, is called a:
6. maximize the current value per share of the existing stock the primary goal of financial management is to:
7. the agency problem a conflict of interest between the stockholders and management of a firm is called
8. protect investors form corporate abuses the sarbanes oxley act of 2002 is intended to:
9. deciding whether or not to open a new store which one of the following is a capital budgeting decision?
10. the owner of a sole proprietorship may be forced to sell his/her personal assists to pay company debts which one of the following statements concerning a sole proprietorship is correct?
11. has more management responsibility than a limited partner a general partner:
12. the largest firms are usually corporations which one of the following business types is best suited to raising large amounts of capital
13. corporation which one of the following business types is best suited to raising large amounts of capital
14. market value of the existing owners’ equity the decision made by financial managers should all be ones which increase the:
15. corporation which form of business structure faces the greatest agency problem?
16. capital markets and money markets financial markets are composed of:
17. market for new issues the primary market is defined as the:
18. secondary markets the NYSE and NASDAQ are both:
19. each limited partner’s liability is limited to the amount he put into the partnership in a limited partnership:
20. generally not the same since GAAP allows for revenue recognition separate from the receipt of cash flows accounting profits and cash flows are:
Finance Flashcards

Personal Finance Ch. 5-8

The convenience of using a financial institution with 24 hour banking requires a trade-off of personal service.
The purpose of a debit card is to transfer money electronically.
Time deposists consists of savings accounts.
The funds deposited into a checking account can be restricted for use by a holding period.
Another name for closed-end credit is installment credit.
Another name for open-end credit is revolving credit.
Revolving credit is a prearranged loand for a specified amount you can use by writing a special check.
In determining your credit capacity you 1st provide for basic necesitites (such as morgage or rent).
Most information in your credit file may be reported only for 7 years.
If you have a problem with your creditior, the best solution is to solve your problem with the creditor.
Parents or family members are a source of the least expensive loan.
If you are denied credit by a bank or credit union you should question your ability to afford the loan.
Most commonly purchased type of credit insurance is credit life insurance.
Federal Trade Commission enforces the fair debt collections practices act.
If you recieve a phone call from a debt collector they must send you a written notice with in 5 days.
Excesive in debtedness can result in heavy drinking, neglect of children, marital problems, and drug abuse.
Most reliable source of product information is likely to come from a food source ingredient label.
Items produced for retail stores are commonly sold under a store brand.
Express waranty is a specific agreement created by the seller or manufactuor.
Purpose of a service contract is to protect a product owner from expensive repairs.
Arbitration differs from madiation in that arbitration is legally binding.
If you desire some assurance of quality when buying a used car the best warrenty is usually offered from a new car dealer.
Most cars bought from private parties have no express waranty.
Sticker price on a car refers to the suggested retail price of a new car.
Storage of funds for future use is a purpose of savings services.
Checking accounts are frequently referred to as demand deposits.
To avoid high fees for loans a person should not borrow from a pawn shop.
In the bank reconsiliation process, service fees should be subtracted from the checkbook balance.
Morgage companys main purpose is providing lonad to purchase homes.
A good example of a closed-end credit is a morgage loan.
Line of credit is the maximum amount of credit you are alllowed by a creditor.
Debit card debits your account at the moment you buy goods/services.
If you co-sign for a loan you’ll have to pay up to the full amount of the debt if the borrower doesnt pay.
Marital status is included in your credit report.
If your credit application is denied you are entitled to know the specific reason.
Best way to obtain credit rating is to reppay your debts on time.
Most expensive loans are availabe from finance companies.
Toal $ amount you pay to use credit is called the finance charge.
Rule of 78 is used by creditios to determine how much interest you have payed at any point in the loan.
If you have trouble paying your bills try to solve the problem with your creditor.
Borrowing $ to pay old debt is one of the 16 danger signals of potential debt problems.
Impulse buying refers to unplanned spending.
Open-dating provides information on freshness.
Purpose of small claims court is to resolve minor consumer complaints.
Am implied warranty that comes with a used car is that the vehicle must be in operation condition.
Finance Flashcards

Personal Finance Test 1

It is especially important to use “key phrases” when preparing your résumé because (p. 53-59)Select one:a. computer software is typically used to scan résumés in order to select better qualified candidates b. you want to show that you are well educatedc. it saves time when writing your résuméd. many employers will be impressed with your vocabulary a. computer software is typically used to scan résumés in order to select better qualified candidates
Forms of remuneration provided by employers to employees that result in the employee not having to pay out-of-pocket for certain expenses are called (p. 49-52)Select one:a. employee benefits b. salariesc. 401(k) plansd. bonuses a. employee benefits
Which of the following reduce the additional income that might come from having a second income? (p. 49-52)Select one:a. additional spending on transportationb. additional spending on foodc. All of these d. the impact of your marginal tax rate c. All of these
A summary record of your education, training, experience and other qualifications is your (p. 53-59)Select one:a. cover letterb. lifestyle inventoryc. interest inventoryd. résumé d. résumé
The progression from entry level positions to higher levels of pay, skill, responsibility, or authority is referred to as a(n) (p. 40-44)Select one:a. ascendancy planb. career ladder c. career enhancementd. progression plan b. career ladder
______ are the principles, standards, or qualities considered worthwhile (p. 40-44)Select one:a. Goalsb. Values c. Aptitudesd. AbilitiesFeedback b. Values
You should avoid listing specific abilities, such as using Microsoft Excel, in your résumé. (p. 53-59)Select one:TrueFalse False
University-, community-, and employer-sponsored opportunities for job seekers to meet with many potential employers over one or more days is called a (p. 53-59)Select one:a. career fair b. mentoring fairc. career festivald. head hunt a. career fair
In preparation for a job interview, you should (p. 60-67)Select one:a. anticipate interview questions and prepare responsesb. create a list of negative responses to questions that you should then avoidc. compile some personal storiesd. compile some personal stories and anticipate interview questions and prepare responses d. compile some personal stories and anticipate interview questions and prepare responses
Which of the following is an employer not legally required to provide to employees? (p. 49-52)Select one:a. worker’s compensation insuranceb. a retirement plan c. unemployment insuranced. unpaid leave for personal and family medical problems b. a retirement plan
In monetary assert management, safety means the speed and ease with which an asset can be converted to cash. (Section 5.1)Select one:TrueFalse False
Which of the following is a federal government agency that administers funds to insure accounts at commercial banks and certain other depository institutions? (Section 5.1)Select one:a. NCUAb. SBFc. SECd. FDIC d. FDIC
Which of the following sets NOW accounts apart from other checking accounts? (Section 5.2)Select one:a. They can be accessed by a debit cardb. They pay interest c. They are time depositsd. They are safer b. They pay interest
The interest rate of most concern to a savings account depositor is the (Section 5.2)Select one:a. annual percentage yield (APY). b. annual percentage rate (APR).c. effective rate of interest (ERI).d. nominal rate of interest (NRI). a. annual percentage yield (APY).
An interest-bearing savings instrument that requires people to deposit money for a fixed amount of time is called a(n) (Section 5.2)Select one:a. secured balance account.b. certificate of deposit. c. money market account.d. time-deposit. b. certificate of deposit.
If you wanted to set up a checking or savings account with another person that granted each of you the right to make withdrawals without consulting the other, you would choose a(n) (Section 5.3)Select one:a. individual access account.b. joint tenancy account with right of survivorship. c. tenancy in common.d. trustee account. b. joint tenancy account with right of survivorship.
What is the maximum you can lose if you notify your bank of a lost debit card within two days? (Section 5.4)Select one:a. $500b. $5,000c. All of your moneyd. $50 d. $50
Ways to protect your privacy and reducing the risk of fraud include: (Section 5.4)Select one:a. All of these b. Always hit the “log off” button before closing your browser windowc. Watch for small charges, like a $1 charge, that you can’t identifyd. Regularly change your passwordse. Avoid banking via public computers or networks a. All of these
The primary reason for giving children an allowance is to (Section 5.5)Select one:a. teach them how to handle money. b. keep them from asking for money all the time.c. pay them for doing chores around the home.d. have something to withhold when there is a need for discipline. a. teach them how to handle money.
For couples, the specific money management tasks such as bill paying, overseeing spending, and handling banking can be divided in any way that works for the couple, but making ______ ______ should be a joint endeavor. (Section 5.5)Select one:a. shopping tripsb. savings depositsc. account reconciliationsd. financial decisions d. financial decisions
The tax rate applied to a taxpayer’s last dollar of income is called the _. (Section 4.1)Select one:a. marginal tax rate b. average tax ratec. composite tax rated. adjusted tax rate a. marginal tax rate
You pay federal taxes only on your _. (Introduction) Select one:a. taxable income b. employment incomec. investment incomed. gross income a. taxable income
____ taxes are characterized by higher tax rates on higher levels of income. (Section 4.1)Select one:a. Exciseb. Marginalc. Regressived. Progressive d. Progressive
Practically everything you receive in return for your work or services and any profit from the sale of assets is considered income, whether the compensation is paid in cash, property, or services. Listing these earnings will reveal your: (Section 4.2).Select one:a. Taxable incomeb. Total income c. Capital gainsd. Adjusted gross income b. Total income
You and your spouse have $9,000 in allowable itemized deductions in a year when the standard deduction is $12,600 for married taxpayers. How much in deductions are you allowed to take? (Section 4.2)Select one:a. $9000b. $15,300c. $21,600d. $12,600 d. $12,600
Which of the following is excluded from gross income? (Section 4.2)Select one:a. Scholarship income spent on room and boardb. Illegal incomec. Gifts and inheritances d. Capital Gains c. Gifts and inheritances
Salary reduction programs that set aside a portion of an employee’s pre-tax income for child-care expenses and unreimbursed medical and dental expenses are called _. (Section 4.3)Select one:a. tax creditsb. flexible spending accounts c. earned income spending accountsd. withholding accounts b. flexible spending accounts
Which of the following directly reduces your tax liability rather than your income subject to federal income taxes? (Section 4.2)Select one:a. tax deductionb. tax exemptionc. tax credit d. tax adjustment c. tax credit
How far back can the IRS go if you have understated your income? (Section 4.2)Select one:a. 1 yearb. 10 yearsc. 3 years d. 6 years d. 6 years
The penalty for tax evasion can include (Section 4.3)Select one:a. jail sentencesb. all of the above c. penaltiesd. interest charges b. all of the above
Which of the following financial statements provides a complete snapshot of one’s financial condition as of a particular point in time? (p. 79-85)Select one:a. bank statementb. balance sheet c. budgetd. cash-flow statement b. balance sheet
The amount of take-home pay remaining after all deductions are withheld for taxes, insurance, union dues, and other items is referred to as your __________ income. (p. 91-96)Select one:a. currentb. disposable c. reald. discretionary b. disposable
Which financial statement shows your net worth? (p. 79-85)Select one:a. Statement of pluses and minusesb. Income Statementc. Balance Sheet d. Budget c. Balance Sheet
The essential first step in budgeting occurs with (p. 91-96)Select one:a. saving moneyb. planningc. setting goals d. controlling spending c. setting goals
Secured lock boxes at banks that can be rented by customers for safe storage of documents and other items are called (p. 87-91)Select one:a. safe-deposit boxes b. safesc. vaultsd. safe houses a. safe-deposit boxes
Documents that evidence financial transactions, such as bills, receipts, credit card receipts and statements, bank records, tax returns, and other documents are called (p. 87-91)Select one:a. financial statementsb. assetsc. financial records d. financial résumés c. financial records
Specific long- and short-term objectives to be attained through financial planning and management efforts are one’s (p. 74-78)Select one:a. financial goals b. financial strategiesc. valuesd. net worth a. financial goals
When working on your monthly budget, which of the following is a useful tool to help balance out the variations in income and expenditures from month to month? (p. 91-96)Select one:a. subordinate budgetb. credit control sheetc. revolving savings fund d. goal worksheet c. revolving savings fund
Your debts – the amounts you owe to others – are called: (p. 79-85)Select one:a. Assetsb. Expensesc. Liabilities d. Income c. Liabilities
Which of the following would be a fixed expense? (P. 79-85)Select one:a. Foodb. Rent c. Entertainmentd. Utilities b. Rent
The amount remaining after all budget classification deficits are subtracted from those with surpluses is: (p. 100-105)Select one:a. cash-flowb. discretionary incomec. net surplus d. net income c. net surplus
Finance Flashcards

VB Personal Finance Getting a Credit Card (Reading Quiz)

QUESTION 1 of 10: You ran short of cash and borrowed $50 from your rich cousin. When you paid her back, she insisted that you owed $60. What is the extra $10 called? b) Interest
QUESTION 2 of 10: You forgot to pay last month’s credit card bill. Your creditor will probably: c) Add finance charges and late fees to your bill
QUESTION 3 of 10: You can best compare credit card offers by looking at these two features: a) APR and fees
QUESTION 4 of 10: Which of the following is the best definition of a minimum payment on a credit card? b) The smallest payment that will keep a credit card holder in good standing with the lender
QUESTION 5 of 10: A business that gives you a loan is: d) A creditor
QUESTION 6 of 10: Oh no! Someone stole your credit card and charged $2,500 worth of purchases before you even knew the card was missing. How much of the unauthorized charges can you be required to pay? b) $50
QUESTION 7 of 10: Chandra likes her new credit card. She uses it whenever she can, but she’s careful to stay below her credit limit. After two months she notices her credit card bill includes huge finance charges. She chose her card because it featured 0% APR, so she doesn’t think she should have any finance charges at all. What is the most likely explanation for the finance charges on Chandra’s bill? c) The introductory rate on the card is no longer in effect
QUESTION 8 of 10: If you get your first credit card while you’re a full-time student, what can you expect about the card’s APR on outstanding balances? c) It will probably be high
QUESTION 9 of 10: When you borrowed $50 from your rich cousin, and then had to pay her back $60, what is the original $50 called? c) Principal
QUESTION 10 of 10: Matt has $471.60 in his checking account and feels he’s doing pretty well financially.Then his car stops running. His mechanic is able to fix it in a day, but with the towing charges, parts, and mechanic’s labor, he now needs to pay the service center $624.11 so he can drive his car to work. Of the following choices, which is the best course of action for Matt? a) Pay the service center with his Visa credit card
Finance Flashcards

Finance Exam

Proprietorship An unincorporated business owned by one individual.
Partnership An unincorporated business owned by two or more persons.
Corporation A legal entity created by a state, separated and distinct from its owners and managers, having unlimited life, easy transferability of ownership, and limited liability.
Earnings per share Net income / Shares
Corporate character A document filed with the secretary of the state in which a business is incorporated that provides information about the company, including its name, address, directors, and amount of capital stock.
bylaws A set of rules drawn up by the founders of the corporation that indicates how the company is to be governed; includes procedures for electing directors, rights of stockholders, and how to change the bylaws when necessary.
limited liability partnership (LLP) A partnership wherein at least one partner is designated as a general partner with unlimited personal financial liability, and the other partners are limited partners whose liability is limited to amounts they invest in the firm.
limited liability company (LLC) Offers the limited personal liability associated with a corporation; however the company’s income is taxed like that of a partnership.
S corporation A corporation with no more than 100 stockholders that elects to be taxed in the same way as proprietorships and partnerships, so that business income is only taxed once.
stockholder wealth maximization The appropriate goal for management decisions; considers the risk and timing associated with expected cash flows to maximize the price of the firm’s common stock.
Value The present, or current, value of the cash flows that an asset is expected to generate in the future.
agency problem A potential conflict of interest between outside shareholders (owners) and managers who make decisions about how to operate the firm.
hostile takeover The acquisition of a company over the opposition of its management.
Business ethics A company’s attitude and conduct toward its stakeholders (employees, customers, stockholders, and community). Ethical behavior requires fair and honest treatment of all parties.
corporate governance Deals with the set of rules that a firm follows when conducting business; these rules identify who is accountable for major financial decisions.
stakeholders Those who are associated with a business, including managers, employees, customers, suppliers, creditors, stockholders, and other parties with an interest in the firm’s well-being.
proxy votes Voting power that is assigned to another party, such as another stockholder or institution.
industrial group Organizations of companies in different industries with common ownership interests, which include firms necessary to manufacture and sell products; network of manufacturers, suppliers, marketing organizations, distributors, retailers, and creditors.
multinational companies Firms that operate in two or more countries.
exchange rates The prices at which the currency of one country can be converted into the currencies of other countries.
annual report A report issued by a corporation to its stockholders that contains basic financial statements, as well as the opinions of management about the past year’s operations and the firm’s future prospects.
balance sheet A statement that shows the firm’s financial position—assets and liabilities and equity—at a specific point in time.
common size balance sheet Dollar amounts on the balance sheet are stated as a percent of total assets.
common stockholders’ equity (net worth) The funds provided by common stockholders—common stock, paid-in capital, and retained earnings.
common stock at par total shares issued * per share par value
retained earnings The portion of the firm’s earnings that have been reinvested in the firm rather than paid out as dividends.
book values Amounts reported in financial statements—accounting numbers.
market values Values of items—asset, liability, and equity—in the marketplace outside the firm.
income statement A statement summarizing the firm’s revenues and expenses over an accounting period, generally a quarter or a year.
dividends per share common dividend / shares
net cash flow net income + depreciation and amortization
operating cash flows Those cash flows that arise from normal operations; the difference between cash collections and cash expenses associated with the manufacture and sale of inventory.
accounting profits A firm’s net income as reported on its income statement.
statement of cash flows A statement that reports the effects of a firm’s operating, investing, and financing activities on cash flows over an accounting period.
Increase in a liability or equity account Borrowing funds or selling stock provides cash
decrease in a liability or equity account paying off a loan or buying back stock uses cash
decrease in an asset account selling inventory or collecting receivables provides cash
increase in an asset account buying fixed assets or buying more inventory uses cash
statement of retained earnings A statement reporting the change in the firm’s retained earnings as a result of the income generated and retained during the year. The balance sheet figure for retained earnings is the sum of the earnings retained for each year that the firm has been in business.
liquid assets An asset that can be easily converted into cash without significant loss of the amount originally invested.
liquidity ratios Ratios that show the relationship of a firm’s cash and other current assets to its current liabilities; they provide an indication of the firm’s ability to meet its current obligations.
Current ratio current assets / current liabilities
quick ratio current assets – inventory / current liabilities
market value ratios Companies with high research and development (R&D) expenses tend to have high P/E ratios.
Book Value per share Common equity / shares outstanding
managing underwriter The investment bank that sets up the deal and organizes and manages an issue’s underwriting syndicate
industrial group organizations comprised of companies in different industries with common ownership interests, which include firms necessary to sell and manufacture products.
primary goal of a financial manager is to maximize the market value of the firm’s stock
Compared to corporations, what is the primary disadvantage of partnerships as forms of business organizations? The owners of a partnership, that is, the partners, have unlimited liability when it comes to business obligations whereas the owners of a corporation have limited liability.
The degree to which the managers of a firm attempt to magnify the returns to owners’ capital through the use of financial leverage is captured in debt management ratios True
An increase in a firm’s debt ratio, with no changes in its sales and operating costs, could be expected to lower its profit margin on sales. What can lower profit margin on sales?
ratio analysis 1.General conclusions about a firm should not be made by examining one or a few ratios, ratio analysis should be comprehensive. 2.Classifying a large, well-diversified firm into a single industry often is difficult because many of the firm’s divisions are involved with different products from different industries. 3.Computing the values of the ratios is fairly simple; the toughest and most important part of ratio analysis is interpretation of the values derived from the computations.4.Sometimes firms attempt to use “window dressing” techniques to make their financial statements look better than they actually are in the current period.
Real risk-free (r*) rate on short term US treasury security (no inflation)
Liquidity risk premium (LP) premium added to the equilibrium interest rate on a security that cannot be bought or sold quickly enough to prevent or minimize loss
Inflation premium (IP) premium added to the real risk-free rate to compensate for a decrease in purchasing power over time
Maturity risk premium (MRP) premium that reflects the risk associated with changes in the interest rates for a long-term security
nominal risk-free (rrf) adding the inflation premium to r*
default risk premium (DRP) difference between the interest rate on a US treasury bond and a corporate bond of the same profile-that is, the same maturity and marketability.
Finance Flashcards

Finance Exam 1

Primary goal of financial management maximize the current value per share of the existing stock
Capital Budgeting the process of planning and managing a firm’s long-term investments
Capital Structure the mixture of debt and equity maintained by a firm
Working Capital Management the managing of short-term assets and liabilities
A good example of a Pure discount loan, an Interest-only loan, and an Amortized loan is Treasury bill, a corporate bond, and mortgage loan respectively
capital structure decision determining how much debt should be assumed to fund a project
Sole proprietorship owner is personally liable for all company’s debts
Amortized loans must have which one of these characteristics? Either equal or unequal principal payments over the life of the loan
An example of capital budgeting decision is deciding Whether or not to purchase a new machine for the production line
What will increase the present value of an amount to be received sometimes in the future A decrease in the interest rate
Working Capital management decisions include determining The minimum level of cash to be kept in a checking account
Ratios that measures a firms liquidity are known as …. ratios Short-term solvency
Seconds markets securities are bought and sold after the original sale
Dealer Markets (OTC) Electronic trading
Auction markets (exchanges) Physical locationMatch buyers and sellersNYSE (fewer firms, but much larger firms)
Primary markets markets in which corporations raise capital by issuing new securities
Liquidity Ratios Measures of the short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash.
Debt Management Ratios degree to which a firm can meet it’s long-term financial obligations
asset management ratios A set of ratios that measure how effectively a firm is managing its assets.
Profitability Ratios measure the income or operating success of a company for a given period of time
Market Value Ratios Ratios that relate the firm’s stock price to its earnings and book value per share.
Finance Flashcards

Finance- Chapter 13

Which one of the following is minimized when the value of a firm is maximized? B. WACC
16. Assume you are comparing two firms that are identical in every aspect, except one is levered and one is unlevered. Which one of the following statements is correct regarding these two firms? E. The unlevered firm will have higher EPS at relatively low levels of EBIT
Capital structure percent of debt and equity used to fund the firm’s assets
Capital restructuring changing the amount of leverage without changing the firm’s assets
The level of financial risk to which a firm is exposed is dependent on the firm’s: debt-equity ratio.
M& M Proposition II, without taxes, states that the: cost of equity increases as a firm increases its debt-equity ratio.
M&M Proposition I with taxes states that the levered value of a firm exceeds the firm’s unlevered value
Which one of the following is an example of a direct bankruptcy cost Incurring legal fees for the preparation of bankruptcy filings
A prepack: is the joint filing of both a bankruptcy filing and a creditor-approved reorganization plan
Which one of the following statements is correct regarding bankruptcies post-2005? Section 363 speeds up the bankruptcy process via a bidding process
Greenwood Motels has filed a petition for bankruptcy but hopes to continue its operations both during and after the bankruptcy process. Which one of the following terms best applies to this situation? Reorganization
Which one of the following terms refers to the termination of a firm as a going concern? Liquidation
Which one of the following best defines legal bankruptcy A legal proceeding for liquidating or reorganizing a business
Which one of the following terms is inclusive of both direct and indirect bankruptcy costs? Financial distress costs
The use of borrowing by an individual to adjust his or her overall exposure to financial leverage is referred to as: homemade leverage.
Which one of the following is the equity risk arising from the daily operations of a firm? Business risk
Which one of the following is the equity risk arising from the capital structure selected by a firm? Financial risk