Personal Finance exam 2

T or F: Using credit cards typically provides a “float” of up to 10 days. True
Before buying goods and services on credit, a consumer should NOT consider: Whether the good or service will be worth more because it was purchased with credit instead of cash.
Molly purchased a $1,500 dishwasher from Best Appliances. She will make 12 equal payments over the next year to pay for it. She is using: Closed-end credit.
A cash advance…Requires you to pay interest every day until you repay the cash advance T or F True
Home equity loans… Have interest that is tax-deductible.
What is NOT associated with credit cards? A down payment on a home
hen calculating the debt-to-equity ratio, what is NOT included: Mortgage balance.
The question “What are your assets and net worth?” relates to: Capital.
Which of the following is NOT a valid credit application question?——–How much of a loan are you requesting?What is the account number for your checking account?What is the name of the nearest relative not living with you?How many dependents do you have?All of these are valid credit application questions. All of these are valid credit application questions.
The credit Bureau cannot charge a fee for providing you with a credit report as long as you ask for it within _____ days. 60 days
What are the 3 major credit bureaus/ Experian.Equifax.Trans Union.
If you are denied credit, you are entitled to a… free copy of your credit report.
The finance charge for credit does not include: The amount borrowed.
If a loan is being paid in installments instead of one lump sum at the end of the loan period, the actual rate of interest Will be higher than the stated rate.
Carrie thought she misplaced her checkbook for a few days. When she found it, she noticed that two checks, her cash, and her debit card were missing. She immediately thought about the increase in identity theft in her area and decided to take some action. She should take all of the following steps except——–Stop payment on the missing checks.Cancel her debit card.Get a new debit card with a new personal identification number (PIN).Close her bank account and open a new one.All of these steps are appropriate to take if she suspects identity theft. All of these steps are appropriate to take if she suspects identity theft.
This is Not a consumer credit protection law The Credit Lawsuit Act
Personal bankruptcy can be filed under which section(s) of the U.S. bankruptcy code? Chapters 7 and 13
Under Chapter 7 of the U.S. bankruptcy code, Certain assets receive some protection.
These products are highly advertised and available at many stores. National brands
This type of promotion immediately reduces the amount a family spends on groceries each week Coupons
Most products come with some guarantee of quality. This type of warranty covers the product’s intended use or other basic understandings that are not in writing. Implied warranty
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
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.
Problem identification is part of the ____ phase of the research-based buying process. preshopping activities
Information gathering is part of the ____ phase of the research-based buying process. preshopping activities
Comparison of product features is part of the ____ phase of the research-based buying process. evaluating alternatives
Price analysis is part of the ____ phase of the research-based buying process. evaluating alternatives
Resolution of any purchase concerns is part of the ____ phase of the research-based buying process. postpurchase activities
While evaluating alternatives, comparison shopping will be beneficial for buying all of the following except A hot dog at the baseball park.
The average used car costs about _______ less than the average new car. $10,000
What is an advantage of a car lease? Monthly lease payments are usually lower than monthly financing payments.
The amount printed on a label with the suggested retail price that is posted on a vehicle is called the Sticker price.
The dealer’s cost is also known as the Invoice price.
A no-haggling dealer presents the price of a new car to be accepted or rejected as stated and is called a ___ dealer. Set price.
Jennifer is thinking about leasing a sports car. She will make monthly payments based on a money factor and the price of the vehicle, which is called the Capitalized cost.
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. What is the expected value at the end of the lease? Residual value
George has never bought a new car before. Which of the following techniques should he use to get the best deal? Research the dealer cost and begin negotiations from that point
This is not a fixed operating cost for a vehicle Maintenance and repairs.
This is a variable operating costs for a vehicle Depreciation.
Craig wants to get his old car repaired, but he doesn’t want to spend much money. He probably will NOT want to go to the most expensive repair service, which is from a(n) Car dealer.
Paul bought some bad gasoline that damaged the gas tank of his vehicle. He should provide the gas station with documentation of his purchase and all repair costs.
Which of the following is not a legal option for high-income consumers? A legal aid society
Adolph has a low income and cannot afford his own attorney. He needs legal assistance and should make use of Legal aid society.
If you have a problem whose remedy will be between $1,500 and $3,000, the appropriate tool to use would be (a) Small claims court.
Which of the following is NOT correct?——Renting is usually less costly in the short run.Home ownership usually has long-term financial advantages.Lifestyle and financial factors should be analyzed to determine if you should rent or buy.Traditional financial guidelines suggest that your home should cost about five times your annual income.Renting offers mobility. Traditional financial guidelines suggest that your home should cost about five times your annual income.
What is a disadvantage for renting? Tenants cannot take tax deductions for mortgage interest and property taxes.
A legal document that includes information about the due date of monthly rent is called a Lease.
The owner/landlord is known as the Lessor.
This provides the tenant protection from rent increases. Lease
What expense is NOT usually incurred by a tenant? Property taxes.
a form of housing in which the owners pay a monthly fee for maintenance of the common areas Condominium
a form of housing in which the units are owned by a nonprofit organization Cooperative housing
a form of housing in which shareholders purchase stock to obtain the right to live in a unit of the building? Cooperative housing
Jim wants to make an offer to buy an older house. At this point, he should Set up a home inspection.
Kelly selected a home and submitted an offer to the seller. What happens next? The seller may reject the offer and choose to provide a counteroffer.
Pauline just submitted an offer on her dream home. As evidence of good faith , she also included a(n) Earnest money.
Private mortgage insurance must be terminated automatically when… the homeowner’s equity reaches 22% of the property value at the time the mortgage was executed.
Ricky has a conventional mortgage. He can monitor the reduction of his loan balance through his payments by using _____ information. amortization
Ursula wants to have an interest rate that can increase or decrease during the life of her loan. She should look for a(n) ARM
Veronica has had a variable-rate mortgage for several years. Unfortunately, the monthly mortgage payments have not covered her interest owed. As a result, her home equity is decreasing because of Negative amortization.
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.
What is a reverse mortgage mortgage that 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.
During the closing for a home purchase , you should Pay all closing costs, settle last-minute details, and sign documents
document that transfers ownership of property from one party to another Deed
Lonnie wanted to sell his house but didn’t know what price to ask. He should NOT consider His original cost.
Barbara left a skateboard on her front steps. Her neighbor tripped on the skateboard and was injured. The skateboard was a Hazard
The most common risks are Personal risks.Property risks.Liability risks.
The failure to take ordinary or reasonable care to prevent accidents from happening is called Negligence.
An insurance company will Pure risk but not ________ Speculative risk
If you choose to avoid the risk of a traffic accident by not driving to work, you are using Risk avoidance.
If you choose to wear your seatbelt, you are using Risk reduction.
If you choose to insure your home or your vehicle, you are using Risk shifting.
A question that should be asked when developing a risk management plan is ______ “What do I need to insure?”
The two basic types of risk that people face regarding potential property losses are Physical damage and damage caused by criminal behavior.
Homeowner’s insurance does not cover: Automobiles, Theft of jewelry valued at $25,000.
The best place to keep a household inventory is In a safe deposit box.
When Stanley was visiting Elaine, he tripped on her front porch step and sprained his ankle. His injuries were covered by Elaine’s medical payments coverage.
If you have a loss due to a flood, You must have already purchased special coverage if you live in an area that has frequent floods in order to be covered.
Renters insurance does not cover the building and other structures on the site.
What should you do when applying for insurance on a new home? base the amount of insurance on the price to rebuild or repair the new home.Insure the building under the replacement value method to receive the full cost of repairing or replacing it.use the replacement value method for settling claims to receive the full cost of repairing or replacing his personal belongings.
Amber had permission from Bradley to borrow his car to run some errands. Unfortunately, while Amber was driving, she looked down to change songs on her iPod and sideswiped a car and hit a bicyclist. Based on her experience, which of the following would be true? Amber’s insurance policy should cover any property damage claims since she was driving Bradley’s car with his permission.
Motor vehicle bodily injury coverage typically does not cover: Bodily injury liability of all expenses, no matter the cost, for the most injured.
Paul was driving his kids to a piano lesson in a 2005 minivan. While driving, he was hit by an uninsured motorist. Although Paul and his kids had only minor injuries, their vehicle was totaled. Based on this information, which of the following is correct? Paul’s uninsured motorist’s protection should cover the cost of injuries for Paul and his kids.
Madeline had a severe allergy attack and crashed her car into a telephone pole while sneezing. The damage to the telephone pole would be covered under Madeline’s Property damage liability coverage.

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