Personal Finance Final ****ing Exam

Privately owned businesses are common in which type of economy? A). Gift economies B). lanned economies C). Socialist economies D). Capitalist economies D
Capitalism is characterized by which of the following? A). Privately owned businesses B). Profits C). A market economy D). All of the above D
In the United States, which agency oversees workplace safety and ensures that businesses comply with safety and health regulations to protect workers and consumers? A). Department of Justice B). Occupational Safety and Health Administration C). National Institute of Health D). Department of Natural Resources B
What is the study of the ways in which money is created and used in society? A). Sociology B). Economics C). Political Science D). Monitarism B
Which of the following is NOT a characteristic of market economies? A). Competition B). Economic Freedom C). Government ownership of businesses D). Economic Incentives C
When did economies begin? A). 1600 B). 1850 C). 1125 D). Ancient times D
What are companies that have complete control over a particular product or industry? A). Monopolies B). Oligarchies C). Capitalists D). All of the above A
Anti-trust laws or suits may be used to break up which of the following? A). Oligarchies B). Polyisms C). Monopolies D). Tariffs C
The Babylonians in Sumer used what as a monetary commodity? A). Yen B). Dime C). Shekel D). Arrayo C
Individuals have little effect on the overall health of the economy. A). True B). False B
What happens in one sector of the economy often affects other sectors of the economy. A). True B). False A
Individuals play what role in the economy? A). Minimalist B). Important C). Random D). They have no role. B
While the economies of countries like the United States are generally considered capitalist, they are not pure market economies. A). True B). False A
Laissez-faire situations are characterized by a high degree of governmental involvement. A). True B). False B
Tariffs are used to encourage global trade between two countries. A). True B). False B
In economic terms, marginal is another word for which of the following? A). Outside B). Rare C). Additional D). Boundaries C
Which of the following is an economic resource? A). Money B). Investments C). Entrepreneurial ability D). All of the above C
Stock market crashes have relatively little effect on the overall economy. A). True B). False B
An economy where more money is being collected than is being allocated or spent is known as what type of economic stance? A). Expansionary B). Contractionary C). Neutral D). Exceptionary B
What is true about economic resources? A). Economic resources include only money. B). Economic resources are limited. C). Economic resources exist only at the individual level. D). Economic resources are always controlled by the government. B
In economic terms, “land” refers only to physical plots of ground. A). True B). False B
“Free” items only cost the company that gives them away. A). True B). False B
What is true about the stock market? A). Investors always make money from investing in the stock market. B). All stock markets feature physical location-based auctions of stocks. C). Even non-investors are influenced by the stock market. D). All of the above are true C
Entrepreneurial ability refers to the human resource of finding resources, making business decisions, and creating new products. A). True B). False A
The difference between unlimited wants and limited resources affects both individuals and the economy. A). True B). False A
A share of ownership in a company is known as which of the following? A). Stock B). Investment C). Rebate D). Bond A
When talking about economic resources, capital refers to which of the following? A). Money B). Tools and machinery to manufacture goods. C). Investments and stocks D). All of the above B
What is a sort of auction for stocks in which traders verbally submit their offers? A). Open outcry B). Public caucus C). Verbal auction D). Loud session A
Why do most companies sell shares of stock? A). All companies are required to sell shares of stock. B). To let more people vote on company decisions. C). To generate income for the company. D). To gain a greater reputation. C
What is one economic principle? A). Resources are unlimited. B). Individuals have no rational self-interest. C). Resources are limited. D). The wants of society are limited. C
As we age, the number and complexity of the financial decisions that we make increases. A). True B). False A
About what percentage of lottery winners end up with financial troubles? A). 2 percent B). 18 percent C). 45 percent D). 70 percent D
What is an amount of money multiplied by the interest rate and the amount of time that the money will be earning interest? A). Present value B). Future value C). Past value D). None of the above B
There are two the means for achieving financial goals–you either need to increase your savings or reduce your spending. A). True B). False A
What is true about personal financial planning? A). You only need to list long-term goals. B). You don’t need a financial plan until about the age of 35. C). Your financial goals will change over time. D). All of the above C
Reviewing your spending habits rarely provides useful information to help you reach your financial goals. A). True B). False B
Making financial decisions is fairly rare; most people make only a few during their lifetime. A). True B). False B
Our financial decisions decrease once we reach adulthood. A). True B). False B
Experts recommend hat you revisit your financial goals about how often? A). Every 10 to 20 years B). Every 2 to 5 years C). Every year D). A few times a year D
What should be left out of financial decisions whenever possible? A). Emotion B). Shared decision making C). Financial plans D). All of the above A
Interest rate risks would be most relevant to what purchase? A). Airline tickets B). A house C). A sweater D). Patio furniture B
Personal financial planning is the process of creating and achieving financial goals. A). True B). False A
What is the final step in personal financial planning? A). Setting goals B). Reviewing and revising goals C). Creating strategies for meeting goals D). None of the above B
Shared decision making is always a positive strategy to take. A). True B). False B
Each action you might take in reaching your goal has risks or costs. A). True B). False A
Mutual savings institutions are owned by who? A). Stock holders B). Members of the institution C). Government D). All of the above B
401k accounts are those that are partially funded by employers using a portion of wages before tax. A). True B). False A
In the United States, all financial institutions are required to conduct business at a physical location only. A). True B). False B
What is true about certificates of deposit? A). They offer lower interest rates than savings account. B). They are the most liquid account available. C). The money has to remain in the account for a specified period of time. D). All of the above are true. C
Mutual fund companies are what type of companies? A). Mortgage B). Investment C). Credit card D). Insurance B
Financial experts recommend that you compare at least several different financial institutions in these areas and find the one that best meets your needs. A). True B). False A
Brokerage firms make their profits primarily in which of the following ways? A). Consumer deposits B). Government deposits C). Dividends D). Fees or commissions on sales or transfers D
What is true about credit unions? A). They are not insured by the government. B). They are generally member owned. C). They only offer savings accounts. D). All of the above are true. B
How many government agencies does the United Kingdom have to oversee the financial industry? A). One B). Three C). Five D). Eleven A
All financial institutions offer the same products and services to consumers. A). True B). False B
What is the end of the CD account time when the money can be withdrawn? A). Maturity date B). End date C). Completion date D). Withdrawal date A
The Federal Deposit Insurance Corporation (FDIC) is an insurance agency that is supported by the government in the United States. A). True B). False A
Credit unions are non-profit organizations. A). True B). False A
Estate taxes are taxes on a person’s estate when that person dies. A). True B). False A
Taxes are used for which of the following? A). Maintaining roads B). Parks and public cultural sites C). Social services D). All of the above D
The United States has a regressive tax system. A). True B). False B
Estimated payments are often used by individuals who are self-employed, have investments, or other income where employer withholding is not offered. A). True B). False A
All sources of income is also known as which of the following? A). Gross income B). Adjusted gross income C). Taxable income D). Whole income A
In a progressive tax system, who pays a greater proportion of their income in taxes? A). Those with low incomes B). Those with high incomes C). Those who have the most deductions D). Everyone pays the same B
Preparing a tax return yourself can be less expensive, but individuals not familiar with preparing taxes may miss eligible deductions and credits. A). True B). False A
In the United States, if someone is unable to file by the tax deadline, they can file an extension, but any taxes due must still be paid by the deadline to avoid penalties. A). True B). False A
The United States began collecting federal income tax in which year? A). 1776 B). 1861 C). 1913 D). 1955 C
What is a federal and/or state tax on specific goods like gasoline, tires, airfare, or cigarettes? A). Estate tax B). Income tax C). Excise tax D). Goods tax C
In the United States, it is possible for someone to give a gift up to how much money per year to another person without that money being taxed? A). $1,000 B). $8,000 C). $10,000 D). $12,000 D
In the United States, only five states currently charge sales tax on purchases. A). True B). False B
All individuals in the United States file their taxes under the same status. A). True B). False B
Which of these is a common tax form in the United States? A). 40B B). 1001Z C). 1040 EZ D). All of the above C
Which type of audit occurs at your home or business? A). Field B). Office C). Correspondence D). All of the above A
What is the amount of money that the policy holder will pay before the insurance company will pay on an insured loss? A). Deductible B). Rider C). Premium D). Exclusion A
Verbal contracts can never be legally enforced. A). True B). False B
Negligence is typically thought of as a failure to take reasonable actions to prevent injury or damage. A). True B). False A
If someone dies without a will, who handles the distribution of the person’s estate? A). Their spouse B). A lawyer of the family’s choice C). Their children D). The state D
A simple will leaves your possessions to whom? A). A spouse B). Your spouse and a charitable organization C). Your spouse and in trust for other heirs D). A charitable organization A
Everyone has the same amount of risk. A). True B). False B
The power of attorney is a legal document that gives the person of your choice the authority to act on your behalf. A). True B). False A
What is NOT true about contracts? A). They are legal agreements. B). They can be either oral or written in some cases. C). Both parties have to be legally competent to enter into the agreement in the contract. D). A contract can be enforced even if the agreement contains an illegal activity. D
If someone dies without a will, a situation known as intestate, the state will step in to handle the distribution of the estate, even if it is not what you may have wanted. A). True B). False A
What are clauses in the insurance contract that specify the losses that are not covered by the insurance? A). Riders B). Exclusions C). Risks D). Premiums B
Consensus ad idem means which of the following? A). Meeting of the minds B). Agreement of the people C). Agreement to pay D). None of the above A
The specific protection that the insurer provides to the policy holder is known as which of the following? A). Exclusion B). Rider C). Coverage D). Premium C
What is NOT part of all contracts? A). The offer B). Time requirements C). Premiums D). Consideration C
What document details the type of medical care that you wish to receive if you become incapacitated due to a physical or mental illness? A). Formal will B). Holographic will C). Statutory will D). Living will D
What is a legal document that outlines all of the conditions of the bond? A). Bond indenture B). Bond asset C). Bond contract D). Bond allocation A
Preferred stocks share characteristics with which of the following? A). Common stocks and corporate bonds B). Real estate and common stocks C). Government bonds and corporate bonds D). Mutual funds and government bonds A
All investments carry the same amount of risk. A). True B). False B
Speculative investments are high risk investments with the possibility of high returns in a short period of time. A). True B). False A
What is true about investing? A). It is less risky than using a savings account. B). It is used to generate money. C). Investing includes only common stocks. D). All of the above B
Real estate is a great investment for everyone, particularly since the money is more liquid than common stocks. A). True B). False B
Although stocks can generate greater revenue, they are also more risky than many forms of investments. A). True B). False A
What is the process of earning interest on interest that you’ve already earned? A). Interesting B). Compounding C). Accumulating D). Saving B
A bond indenture is which of the following? A). Dividend B). Legal document C). Contract between two corporations D). A type of municipal bond B
Individuals have to choose whether to save or invest, since it is not recommended to do both. A). True B). False B
The broad types of investments are known as which of the following? A). Asset classes B). Speculative investments C). High risk types D). Dividends A
T-bills are offered in what monetary increment? A). $1 B). $10 C). $100 D). $1000 D
What is when someone invests in a variety of places to reduce the overall risk of investing? A). Asset classes B). Asset speculation C). Asset allocation D). Asset bonds C
One of the advantages of having a savings account is that it is money that can be used for emergency purposes, whereas money in bonds, CDs, or investments may not be readily available. A). True B). False A
Municipal bonds are issued by whom? A). Federal government B). State or local government C). Corporations D). All of the above B
Individuals who do not pay off their credit card balances each month are known as which of the following? A). Borrowers B). Convenience users C). Consumer users D). None of the above A
Those who pay off their credit balances in full each month and avoid the finance and interest charges are known as convenience users. A). True B). False A
What is the most common form of open-end credit? A). Mortgages B). Lump-sum credit C). Credit cards D). Installment sales credit C
Lenders always accept applications for credit. A). True B). False B
What is a typical grace period for a credit card? A). 2 to 5 days B). 10 to 14 days C). 20 to 25 days D). 35 to 40 days C
What is true about debit cards? A). They are linked to a savings or checking account. B). They cannot be used at ATMs or more retail stores. C). They include a computer chip. D). All of the above A
What is a disadvantage of using credit? A). It can be tempting to overspend. B). It’s convenient. C). It may offer special advantages. D). All of the above A
One advantage of credit is that it can give you a “float” time between buying the product and when you need to pay for the product. A). True B). False A
What is one of the best ways to avoid credit problems? A). Use your credit as often as possible. B). Apply for as many credit cards as you can. C). Pay your credit bills on-time each month. D). All of the above C
If you are trying to establish credit history, what is a good place to start? A). Gasoline or department store credit card B). Bank line of credit C). A Visa or MasterCard D). You should never use credit A
What is a reason why someone would use a secured credit card? A). To purchase goods in another country B). To help overcome a bad credit history C). To have every purchase guaranteed with a five year warranty D). All of the above B
The assets that you currently own are known as which of the following? A). Credit B). Capital C). Capacity D). Collateral B
What type of card includes a computer chip with additional information on it? A). Debit card B). Credit card C). Smart card D). Stored value card C
Experts recommend that if you have a credit card balance, you keep the balance below what percent of the total credit limit? A). 10 B). 15 C). 20 D). 30 D
Consumer credit has very few advantages and is best avoided at all times. A). True B). False B
The first step in creating a cash flow statement is which of the following? A). Recording financial goals B). Recording expenses C). Recording income D). Recording tax information C
What is simply a spending plan that we create to help manage our money? A). Personal balance sheet B). Cash flow statement C). Net worth D). Budget D
What is a characteristic of a successful budget? A). Inflexible B). Kept private C). Realistic D). All of the above C
Personal financial statements are a good way of measuring our current finances and giving us information about our financial activities. A). True B). False A
Only individuals that make over $50,000 per year should worry about creating a cash flow statement. A). True B). False B
What is an example of a liquid asset? A). Money in a savings account B). Real estate C). Boat D). All of the above A
Liquid assets are those that cannot be easily converted to cash. A). True B). False B
What is a reason for keeping organized financial records? A). Paying bills B). Filing taxes C). Measuring financial status D). All of the above D
A credit card bill is best kept in which of the following places? A). Safe deposit box B). Off-site backup C). Home file D). This bill doesn’t need to be kept. C
It is not important to keep financial records since they can all be found online. A). True B). False B
What is a record of income and expenditures for a particular period? A). Personal balance sheet B). Cash flow statement C). Net worth D). None of the above B
What is a common mistake made in budgeting? A). Over-estimating expenses B). Budgeting for financial goals or savings last C). Writing the budget down D). All of the above B
What budgeting option is best used only with limited resources and expenses? A). Mental budgeting B). Physical budgeting C). Written budgeting D). Software budgeting A
What types of records are best kept in safe deposit boxes? A). Credit card bills B). Budgets C). Cash flow statements D). Valuable records like marriage records or stock certificates D
Net worth is the difference between your assets and your liabilities. A). True B). False A
Advertisements are paid for by whom? A). Sponsors B). Debtors C). Phishers D). Pretexters A
What is a strategy for reducing the risk of identity theft? A). Throw out personal information in black trash bags. B). Carry only the cards and personal identification that you need. C). Use your social security number instead of other personal information like a driver’s license. D). All of the above B
What advertising technique focuses on the positive and ignores any negative aspects in the product? A). Glittering Generalities B). Weasel Words C). Endorsements D). Card Stacking D
One of the first steps that you can take is to place a fraud alert on your credit reports from Equifax, Experian, and TransUnion. A). True B). False A
It is hard for identity thieves to steal any identity in today’s society. A). True B). False B
Which of the following issues credit reports? A). Equifax B). MasterCard C). Herman Miller D). All of the above A
In order for ads to be effective, what is the first thing that they must do? A). Offer reasons why the product is better than others B). Be seen and get the attention of consumers C). Get the consumer to visit a store D). None of the above B
What is a partial refund of the purchase price of an item? A). Pretext B). Sale C). Rebate D). Phishing C
Credit freezes prevent anyone from viewing your credit report, essentially blocking the creation of new credit accounts in your name. A). True B). False A
The Glittering Generalities technique involves using appealing words to sell the product. A). True B). False A
Fraud alerts and credit freezers are the same thing. A). True B). False B
Weasel Words involve advertising all of the good things about a product while ignoring the negative aspects of the product. A). True B). False B
What might be a consideration in deciding where to buy something? A). The location of the store B). The price of the item you wish to buy C). Customer service D). All of the above D
What involves special devices that steal your credit card or debit card information when you use the card for a purchase? A). Pretexting B). Phishing C). Sponsoring D). Skimming D
Experts recommend that you don’t wait for sales before buying an item, since the item is likely to rise in price in the time you wait. A). True B). False B

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