Finance Exam 2

A demand deposit is also known as A checking account.
A credit card is a type of Loan/borrowing.
A legal agreement that provides for the management and control of assets by one party for the benefit of another is known as A trust
When you select a financial services provider, you should ask all of the following questions except All of the above
All of the following are deposit institutions except A finance company.
Which of the following will likely provide the most expensive loans? A payday loan company
A drawback of a regular savings account is A low rate of return.
Marcus bought a certificate of deposit whose interest rate is based on the stock market. Sometimes, his earnings are higher than other similar cds, and at other times, his earnings are lower. He purchased a Indexed CD.
Which of the following is correct about inflation? In order to increase buying power, you need to earn a rate higher than the rate of inflation.
Which of the following refers to the opportunity to withdraw your money on short notice without incurring a loss in value? Liquidity
Quentin wants his retail purchases to be deducted directly from his checking account. Which of the following tools should he use? A debit card.
Shelby has an account at a financial institution that will waive the monthly fee if she keeps a certain amount in savings. What kind of account does she have? A regular checking account.
Nora bought a used car and was told that she needed a personal check with guaranteed payment. She obtained a Certified check.
Logan paid a bill with a special form. He received this form at his financial institution and had to pay the amount of the check plus a fee. He used a Cashier’s check.
Zoe signed the back of her check with the words “for deposit only.” She used a(n) Restrictive endorsement.
If a check is lost or stolen, you should use a Stop-payment order.
What is the APY for a one-year $4,000 certificate of deposit with $280 interest? 7%
Opal earned 6% in her savings account. If she is in the 25% tax bracket, what is her after-tax savings rate of return? 4.5%
Gwen had three accounts as listed here. In 2014, how much was her total insurance coverage by the FDIC?• Bank A: $250,000• Bank B: $50,000• Bank C: $300,000 $550,000
Becka borrowed $100 from her cousin at the rate of 6% per year. If the inflation rate was 2% that year, what is her cousin’s actual rate of return on the loan? 4%
Paul borrowed $200 to be repaid in one year. He paid 10% interest and a service charge of $3.00. What is his finance charge? $23.00
Timothy Carter has net monthly income of $3,800. He has a monthly auto loan payment of $350, a student loan payment of $150, a mortgage payment of $1,200, and a credit card minimum payment of $45. What is his debt-payments-to-income ratio? 14.3%
If Vince charged $200 on his credit card with 18% APR and he paid his balance in full within the grace period, how much was he required to pay? $200.00
Timothy Carter went out to eat with his girlfriend at a fancy restaurant. When he tried to pay the bill with his Mastercard credit card, he was told that the restaurant accepted only cash or American Express. His waiter suggested that he use the ATM across the street to withdraw cash using his credit card. Tim did as suggested and didn’t pay attention to any fees until he received his credit card statement one month later. He was shocked to see the total fees (3% cash advance), and his APR was increased to 21%. Given the cost of the meal ($125) plus the associated fees, how much did his meal cost him? $130.94.
Under Chapter 7 of the U.S. bankruptcy code, Certain assets receive some protection.
All of the following are warning signs of debt problems except You pay your credit card bills in full each period.
All of the following are consumer credit protection laws except The Credit Lawsuit Act
Who is responsible for a loan repayment? The cosigner and/or the borrower
If you think your identity has been stolen, which of the following actions does the Federal Trade Commission recommend you take immediately? File a police report.
Which of the following is often the first sign of a stolen identity? You receive bills for a credit card account you never opened.
Which of the following acts sets procedures for promptly correcting billing mistakes, refusing to make credit card or revolving credit payments on defective goods, and promptly crediting your payments? Fair Credit Billing Act of 1975
The minimum monthly payment on a credit card is The smallest amount you can pay and remain a borrower in good standing.
Sam is comparing the costs of two loans. The principal amount of each loan is $5,000. One is due in one year and the other is due in four years. Both have the same stated rate of annual interest. Which of the following is true? The interest charges for the one-year loan will be lower than the interest charges for the four-year loan.
The APR is the percentage cost of credit on a(n) ______________ basis. Yearly
The finance charge for credit includes all of the following except The amount borrowed.
If you are denied credit, You are entitled to a free copy of your credit report.
Credit files can include all of the following except Race or nationality.
Credit bureaus get their information from all of the following sources except References.
Which of the following is NOT a valid credit application question? All of the above
A partial refund of the price of a product is called a Rebate
Steve bought a laptop that was defective. This laptop will be fixed or replaced by the manufacturer as long as he returns it in a reasonable amount of time. What type of warranty does he have on his laptop? Full warranty
Frank bought some miniblinds. Although he did not receive a written warranty, the blinds should be expected to open and close properly. What kind of warranty does Frank have? Implied warranty
The text identifies several phases in the research-based buying process. The correct order of the phases is Preshopping activities, evaluating alternatives, selection and purchase, postpurchase activities.
While evaluating alternatives, all of the following are appropriate questions you could ask before making a major purchase except All of the above
Buying a vehicle can be a challenging process. When researching a vehicle, a consumer may want to consider all of the following vehicle options except All of the above
The appearance of a used car can be deceptive. When purchasing a used vehicle, it is a good idea to Have a trained and trusted mechanic of your choice check out the vehicle.
Which of the following is a disadvantage of a car lease? At the end of the lease, you have no ownership interest in the vehicle.
The amount printed on a label with the suggested retail price that is posted on a vehicle is called the Sticker price.
A vehicle lease has several costs. Which of the following is the interest rate used to calculate the monthly cost? Money factor.
A vehicle lease has several costs. Which of the following is the expected value at the end of the lease? Residual value
The lowest payment does not necessarily mean the best credit plan. If your car loan is a long period of time, you may end up owing more than the car is worth, which is called Negative equity.
A variable operating cost for a vehicle is Maintenance and repairs.
The largest fixed expense associated with a new automobile is Depreciation.
Think about consumer complaints. Which of the following is correct? If you don’t get satisfaction from working with the company headquarters, you may get assistance from a mediator in order to avoid legal action.
This provides the tenant protection from rent increases. Lease
Georgina and Henry have a family and are looking at houses. Which of the following is correct? They should assess the school system in the area they want to live.
Kelly selected a home and submitted an offer to the seller. The seller may reject the offer and choose to provide a counteroffer.
Major factors that affect the affordability of your mortgage include all of the following except Size of the home
Quinn applied for a loan. He provided information about his finances and the home he plans to purchase. Results of the affordability mortgage calculation included all of the following except Expected maintenance costs.
If you do not pay back any of the loan amount for a portion of the loan period, you have a(n) Interest-only mortgage.
During the closing for a home purchase , you should Pay all closing costs, settle last-minute details, and sign documents
Brett bought a house five years ago for $150,000. At that time he borrowed $140,000 from his bank. The house is now worth $162,000. The current value of his mortgage must be no higher than — for him to request termination of his PMI policy. $126,360.
Jordan earns an annual salary of $45,000. If a lender uses 33% of monthly gross income as a guideline for the maximum PITI (principal, interest, taxes, and insurance), what is the maximum mortgage that Jordan can apply for? $1,237.50
Jim wants to make an offer to buy an older house. At this point, he should Set up a home inspection.
Rebecca paid extra money to reduce her mortgage interest rate. That extra money is called Points
Trenton wants to buy a house but can provide only a 10% down payment. He probably will be required to have PMI
The primary benefit of a home equity loan is The deductibility of the loan interest on federal taxes.
A reverse mortgage Provides older home owners with tax-free income in the form of a loan that is repaid when the home is sold or the home owner dies.
Alex is buying a new house. First Home Mortgage is providing the financing through a 30-year loan for $ 220,000. Estimate the monthly payment if the interest rate is 4.8% fixed. $ 1,154
Alex is buying a new house. First Home Mortgage is providing the financing through a 15-year loan for $ 180,000. Estimate the total amount of interest paid at the end of the loan if the interest rate is 3.6% fixed. $ 53,216

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