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Finance Flashcards

Finance Exam 2

fixed costs The concept of operating leverage involves the use of _________ to magnify returns at high levels of operation
trading off higher fixed costs for lower per-unit variable costs. Firms with a high degree of operating leverage are
short-term interest rates are generally lower than long-term interest rates and most firms do not have basic access to the capital markets. Generally, more use is made of short-term financing because
more fixed than variable costs. A highly automated plant would generally have
rapidly expanding sales. Pressure to increase current asset buildup often results from
there are high fixed costs. A high degree of operating leverage means
current assets. Working capital management is primarily concerned with the management and financing of
All of the options are true. If fixed costs rise while other variables stay constant
heavy reliance on equity. A conservative financing plan involves
is helpful in analyzing the short-term outlook of the firm, particularly when it is in trouble financially. Cash break-even analysis
the break-even point rises. If the sales price per unit decreases because of competition but the cost structure remains the same
long-term funds. Normally, permanent current assets should be financed by
equal to zero. At the break-even point, a firm’s profits are
inventory will increase. If a firm uses level production with seasonal sales and sales decline further than expected,
All of the options Which of the following questions does break-even analysis attempt to address?
revenue and costs are a linear (constant) function of volume. A weakness of break-even analysis is that it assumes
working capital management. A financial executive devotes the most time to
the relationship of debt and equity in the capital structure. Financial leverage deals with
All of the options are true. The term structure of interest rates
an operating profit. If sales units exceeds the break-even point in units, the firm will experience
A lag exists between writing a check and clearing it through the banking system “Float takes place because
ordering costs The cost of carrying inventory do not include
The effective rate In determining the cost of bank financing, which is the most important factor?
Are used by banks as a substitute for charging service fees Compensating balances
The level of inflation The three primary policy variables to consider when extending credit include all of the following except
An interest rate paid on Eurodollar loans in the London Market LIBOR is
long term corporate bonds A firm that wishes to minimize risk when investing idle cash would be LEAST likely to buy
The monetary policy of the Federal Reserve Cash flow does not rely on which of the following?
Commercial paper Which of the following securities represents an unsecured promissory note issues by a corporation?
Ratio of debt to equity Which of the following is not a valid quantitative measure for accounts receivable collection policies?
Seasonal bulges in inventory and recievables From the banker’s point of view, short-term bank credit is an excellent way of financing
Provides the lowest overall inventory costs Use of the economic order quantity
Trade credit What is generally the largest source of short-term credit for small firms?
A decrease in interest rates occurs. Which of the following is NOT evident during a credit crunch?
Net suppliers of trade credit Large firms tend to be
Float. The difference between the amount of cash on the firm’s books and the amount credited to it by its bank is
It can usually be issued below the prime rate Commercial paper is very popular with many firms because
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Finance Flashcards

Personal Finance Vocabulary

401(k) a savings plan for retirement
APR Annual Percentage Rate for interest paid on a card
APY Annual Percentage Yeild describes interest paid to a savings account or certificate
Assets what you own or have paid for
ATM Automated Teller Machine where and individual can withdraw, deposit, or transfer money within their account
Audit a process where accounts are rechecked for accuracy and completeness
Balance the existing amount in an account
Benefit something an employer offers an employee beyond salary (health coverage)
Check a written order directig a bank to take money from your account and pay someone you have designated on the order
Closing the final arranging of details for the sale of a house
Co-pay a partial payment for the benefits or service (doctor visit)
Co-sign to add your signature to a loan made by someone else, promising that you will repay if the other person does not
Credit a transaction that adds to an account
Credit Card a card that allows an individual to charge the cost of a purchase to a credit account (an instant loan)
Credit Limit the amount of money a bank or credit card company is willing to loan you
Credit Rating a report that tells you how well you repay your loans
Debit a transaction that takes money from an account
Debit Card a card that allows an individual to pay for a purchase with money electronically withdrawn from their account (similar effect as a check)
Debt the sum of money or obligations you owe
Deductible the amount that the indivual must pay before the insurance company pays its share
Defaulting on a loan not repaying a loan as promised
Donation money given to charity
Down payment a percent of the purchase price of an expensive item that must be paid before a bank issues a loan
Employee someone who is hired and works for someone else
Employer someone who hires workers
Endorsing a check writing your signature on the back of a check made out to you
FICA Federal Insurance Contribution Act, also known as Social Security tax (payroll tax that supports a minimum living allowance in retirement)
Fixed Income income that can’t be increased
Gross toatal pay before payroll taxes
Incentive a reward or something positive that is generally used to encourage someone to do something
Interest money paid by the bank for the use of your money, of paid by you for the use of bank money
Interview a face-to-face meeting with someone who may hire you
Ledger a book or chart that lists financial transactions; also called a register
Liability Insurance insurance that protects individuals from lawsuits where they may have been at fault
Loan a writtin agreement to repay borrowed money; also called a note
Maintenance the cost of keeping something in working order
Medicare federal insurance that pays for hospitalization for the elderly
Minimun Hourly Wage a dollar amount per hour established by the government that defines the leastamount all employers must pay their employees
Minimum Payment the least amount you may pay each month on a credit card charge account
Mortgage a special loan that generally refers to money borrowed to buy a house
Negotiating a Check cashing a check or depositing it into an account
Net total pay minus payroll taxes
Net Worth the value of your assets minus your debts
Note another name for a loan
Overtime time beyond your normal workweek that is sometimes paid at a higher rate
Payroll taxes taken out of the pay before issuing the paycheck, including, federalincome tax, FICA, and Medicare
Pension a percent of your salary paid after you ritire
Percent a math term to describe a part of a whole; means per “100”
Philanthropist an idividual who donates a lot of their money to charities
Physical Damage Insurance insurance that covers fire, theft, and water damage
PIN Number a secret number that an individual uses to identify themself at an ATM
POS Point of Sale, where the person uses their debit card
Post to record
Principal the initial amount of a loan before interest charges
Property Taxes taxes paid to the town or city based on the value of your house and land
Retirement the period of time after you stop working; generally at age 65
Rubric a scoring sheet keyed to standards and used to evaluate work
Salary a fixed amount paid for work, but often regards for hours worked
Savings money set aside, generally in a bank or investments, which earns interest
Take-Home another name for net pay
Title Search a legal search of town records to be certain that the owner can can legally sell their house
Transaction activity within an account, either a deposit, transfer, or withdrawal
Used Car one that has been owned and used by someone else
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Finance Flashcards

Finance Exam

The current yield on a bond is equal to the annual interest divided bythe:A. issue price.B. maturity value.C. face amount.D. current market price.E. current par value. d
Which statement is true?A. Bonds are generally called at par value.B. A current list of all bondholders is maintained whenever a firm issuesbearer bonds.C. An indenture is a contract between a bond’s issuer and its holders.D. Collateralized bonds are called debentures.E. A bondholder has the right to determine when his or her bond is called. c
If inflation is expected to steadily decrease in the future, the termstructure of interest rates will most likely be:A. upward sloping.B. flat.C. humped.D. downward sloping.E. double-humped. d
A semiannual 5.4 percent coupon bond currently sells for par value.What is the maturity on this bond?A. The bond must mature in one year.B. The bond could have any maturity date.C. The bond must be maturing today.D. The bond must mature in 10 years.E. The bond must be a perpetual security b
Bond ratings classify bonds based on:A. liquidity, market, and default risk.B. liquidity, interest rate, and default risk.C. default risk only.D. interest rate, inflation rate, and default risk.E. default and liquidity risks. c
An agent who buys and sells securities from inventory iscalled a:A. floor trader.B. dealer.C. commission broker.D. broker.E. floor broker. b
Which one of the following must equal zero if a firm paysa constant annual dividend?A. Dividend yieldB. Capital gains yieldC. Total returnD. Par value per shareE. Book value per share b
Dividends are:A. payable at the discretion of a firm’s president.B. treated as a tax-deductible expense of the issuing firm.C. paid out of aftertax profits.D. paid only to preferred stockholders.E. only partially taxable to high-income individualshareholders. c
Which one of the following statements is correct?A. A longer payback period is preferred over a shorter paybackperiod.B. The payback rule states that you should accept a project if thepayback period is less than one year.C. The payback period ignores the time value of money.D. The payback rule is biased in favor of long-term projects.E. The payback period considers the timing and amount of all of aproject’s cash flows. c
The payback period is the length of time it takes aninvestment to generate sufficient cash flows to enable theproject to:A. produce a positive annual cash flow.B. produce a positive cash flow from assets.C. offset its fixed expenses.D. offset its total expenses.E. recoup its initial cost. e
The internal rate of return is the:A. discount rate that causes a project’s aftertax income toequal zero.B. discount rate that results in a zero net present value forthe project.C. discount rate that results in a net present value equal tothe project’s initial cost.D. rate of return required by the project’s investors.E. project’s current market rate of return. b
What condition must exist if a bond’s coupon rate is to equal both the bond’s current yieldand its yield to maturity? Assume the market rate of interest for this bond is positive.A. The clean price of the bond must equal the bond’s dirty price.B. The bond must be a zero coupon bond and mature in exactly one year.C. The market price must exceed the par value by the value of one year’s interest.D. The bond must be priced at par.E. There is no condition under which this can occur. d
Which one of the following terms applies to a bond that initially sells at a deep discount andonly makes one payment to bondholders?A. CallableB. IncomeC. Zero couponD. ConvertibleE. Tax-free c
The term structure of interest rates represents the relationship between which of thefollowing?A. Nominal rates on risk-free and risky bondsB. Real rates on risk-free and risky bondsC. Nominal and real rates on default-free, pure discount bondsD. Market and coupon rates on default-free, pure discount bondsE. Nominal rates on default-free, pure discount bonds and time to maturity e
Which one of the following represents additional compensation provided to bondholders tooffset the possibility that the bond issuer might not pay the interest and/or principal paymentsas expected?A. Interest rate risk premiumB. Inflation premiumC. Liquidity premiumD. Taxability premiumE. Default risk premium e
When a bond’s yield to maturity is less than the bond’s coupon rate, the bond:A. had to be recently issued.B. is selling at a premium.C. has reached its maturity date.D. is priced at par.E. is selling at a discount b
Which one of the following statements is true?A. The current yield on a par value bond will exceed the bond’s yield to maturity.B. The yield to maturity on a premium bond exceeds the bond’s coupon rate.C. The current yield on a premium bond is equal to the bond’s coupon rate.D. A premium bond has a current yield that exceeds the bond’s coupon rate.E. A discount bond has a coupon rate that is less than the bond’s yield to maturity. e
All else held constant, the price of a bond increases when the:A. coupon rate decreases.B. yield to maturity decreases.C. current yield increases.D. time to maturity of a premium bond decreases.E. time to maturity of a zero coupon bond increases. b
Which one of the following bonds is the most sensitive to changes in market interest rates?A. 5-year, zero couponB. 5-year, 5 percent couponC. 5-year, 8 percent couponD. 10-year, zero couponE. 10-year, 5 percent coupon d
An unexpected decrease in market interest rates will cause a:A. coupon bond’s current yield to increase.B. zero coupon bond’s price to decrease.C. fixed-rate bond’s coupon rate to decrease.D. zero coupon bond’s current yield to decrease.E. coupon bond’s yield to maturity to decrease. e
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Finance Flashcards

Personal Finance Unit 4

True A company issues stock to raise money
False There are two kinds of stock, ordinary and preferred
False Common stock holders don’t have the right to vote on company issues.
True Investors should consider selling their stocks during a bull market
True The rule of 72 describes how long an investment will take to double
False The NASDAQ is the largest stock market in the United States
True Global events can have an effect on investments such as gold.
False Compounded interest is worse for the investor because the principle decreases
True The stock market is based on the laws of supply and demand
True A company has the option to pay dividend or not
True Equity financing is a method of raising money by issuing stock
False Dividends can not be issued as cash payments
True The principal of an investment is the amount that was originally invested
False The right to company assets and earnings is not a benefit of owning stocks
False Collectibles are a low risk because everyone wants a Baseball card
Bull Market When the stock market is doing well, it is considered to be a
The greater to potential risk, the greater the potential return When it comes to investing, what is the typical relationship between risk and return?
By diversifying their investment portfolio How can investors receive compounding returns
Brokerage Firm Where do you purchase a Certificate of Deposite
Stocks Which of the following investments is affected by global events
Stock allows investors to own a portion of the company; bonds are loans to the company Which best describes the difference between stocks and bonds?
Bond When you buy a ____, you are loaning money to an organization
NASDAQ Which of the following only allows electronic trading
Stock Which investment would you purchase if you were hoping to earn dividends?
Collectibles Which of these investments is considered to be the riskiest?
It helps you to balance your risk across different types of investments Diversification is important in investing because?
Medium What level of risks are mutual funds considered?
To raise money to grow the company What is the primary reason to issue stock?
DOW Jones Which of the following is not a stock market in the United States?
Face Value This is the dollar amount an investor will receive at the maturity date of a bond.
Inflation The consistent rise in the price of goods and services
Dividends A distribution of a portion of a company’s earnings
Maturity The amount of time it takes for a bond to reach its full value
Preferred Stock Type of stock ownership that has a higher claim on assets but may not have the same voting rights
Common Stock Type of stock ownership that allows shareholders one voting right per share of stock
Supply The total amount of a good service that is available to consumers
Demand The consumer willingness and desire to pay a price for a particular good or service.
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Finance Flashcards

Personal finance

The baby steps can best be described as A systematic process for getting out of financial mess, series of 7 sequential steps, and will work in good times and bad.
Using the rule of 72, how long will it take your money to double at 12% interest? 6 years
The risk return ratio says When the risk goes up general the return will go up
Which is a good investment Mutual funds
What is the best thing to do with your retirement plan when you leave a company? Do a direct transfer into an IRA
Which if the following is a risk to consider when investing? You could lose all of your money, inflation, your money isn’t liquid.
Which is not a key to saving money? How much you earn.
Your piece of ownership in a company is called Share of stock
Which of the following is true about using credit? You spend more
Payday lending and cash advance companies are aggressively targeting which group of people? Military
If 80% of millionaires are first generation rich, then one can conclude: They started with nothing, and did smart stuff.
On average, payday lending, cash advance and title pawn loans cost the consumer 400% or more annually
Which statement is not true about debt consolidation? You end up saving money because you get a lower interest rate
Which is not true about making purchases with credit cards You spend 12 to 18% less when using a credit card
Why do people think that the home equity loan is a good idea There is a good tax refund, serves as a substitute for an emergency fund, it’s the only way to consolidate debt.
Kevin has the following depts home-equity loan $24,000 Visa $1200 student loan’s $5000 car $12,000. how should he prioritize his debt snowball? Visa, student loan, car, home equity loan
Which type of loan would you use your house for collateral Home-equity
How is a debit card like a credit card Both can have a Visa or MasterCard logo, a debit card can be swiped and require your signature like a credit card
Baby step two is Pay off all debt using a debt snowball
Why should you avoid lending money The relationship changes, often ends completely, The person borrowing money is in bondage to you
Which of the following is not a myth 78% of Americans do not pay off their credit card balance every month
Which of the following is not part of product positioning Price
A clerk assisting a customer is an example of Personal selling
Which of the following is not part of power over purchase when making a significant purchase That’s not good enough
Which is not part of the federal fair debt collection practices act Requires creditors to collect any inaccuracies on your account
Which of the following is not forgiven under a bankruptcy Student loans
Which of the following is one of the four walls Transportation, food, clothing
In which case are you most likely to get sued if you are behind in paying bills If you are making no payments, if you have stopped all contact
Which of the following is not one of the steps to take if you are a victim of identity theft Pay up to $50 to each account on which a charge was made
Which is not a precaution to prevent your identity from being stolen Keep your social security card on you at all times
An overdone payment is called Delinquency
To reclaim possession of an item because of the borrower failed to make payments Repossession
Why is gazelle intensity so important in getting out of the cycle of debt So you arent stuck in debt forever, to help build momentum
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Finance Flashcards

Personal Finance Ch. 6

Total amount of money a worker earns in a pay period gross pay
Total amount of money a worker takes home in a pay period net pay
Another term for net pay is take-home pay
What is NOT the main purpose of taxation ? Retailing
Public programs such as nation defense, public schools, Social Security, and fire and police protection are all paid for through tax revenue
A sales tax is sent to the government by the merchant who sold the item
Real estate taxes are calculated based on the estimated value of the property
In general, which type of tax is typically used to fund local schools ? real estate
Federal income taxes, state taxes, and Social Security withholding’s are all payroll taxes
FICA refers to payroll taxes withheld for Social Security and Medicare
Which of the following would LEAST likely be included on an employee’s pay stub ? the employee’s total tax owed for the year
What is the government body that enforces federal tax laws and collects the taxes ? IRS
You would use a 1040 or a 1040EZ to file a tax return
Taxes are figured based on your earnings during which time period the calendar year
The deadline for filing your federal tax return each year is April 15th
A tax paid as part of the purchases price of an item sales tax
The total amount of money an individual takes home during a pay period net pay
Money for the government withheld from an individual’s paycheck tax
Any money collected by a government from its citizens for the purpose of operating the government payroll tax
the total amount of money an individual earns in a pay period gross pay
an annual report of all information related to your income taxes tax return
a tax paid to the government based on the value of the property an individual owns real estate tax
primarily used to fund local schools real estate taxes
include federal and state income taxes payroll taxes
a tax for which taxpayers often receive a separate bill real estate taxes
collected by merchants and sent to the government sales taxes
are not paid in the same way by people who are self employed payroll taxes
imposed by many states but not by the federal government sales taxes
include FICA payments payroll taxes
____ may be listed as OASDI (Old-Age, Survivors and Disability Insurance) Medicare and Social Security taxes
An employer matches employees’ contributions to ___ and sends the total amount to the government FICA taxes
What provides payments to eligible retirees and people with disabilities Social Security
Medicare is a government ____ program health insurance
In general, the more money a person earns, the ____ they must pay taxes higher the rate is at which
typically a tax of 6.20% of your salary Social Security
a tax of 1.45% of your salary Medicare
the amount of salary taxed is capped at a certain level Social Security
FICA tax both Social Security and Medicare
a government health insurance program Medicare
benefits for older Americans both Social Security and Medicare
Single, head of household, and married filing joint return are all examples of filing status
in general, your applicable tax rate and rules differ depending on which ____ you chose filing status
Most people are considered dependents of their parents or guardians by the IRS until they reach the age of 18
When your parent or guardian claims you as a dependent on a tax return, they are able to lower what they owe in taxes
The first step in determining the amount of federal tax you owe is calculating your gross income
Shortly after the end of the year, you will receive a ____ form summarizing all of your relevant income and tax withholding information from each employer you worked for during the year W2
AGI stands for adjusted gross income
A winner of any cash prize, such as those won in a lottery, or game show, totaling over $600 would be best advised to expect a pay about ____ of the prize in taxes 50%
What source of income would NOT be counted as part of an individual’s gross income ? child support payments reveived
The standard deduction is a fixed amount ___ are allowed to deduct from their ____ to reduce their tax liability all taxpayers; AGI
The amount of the standardizes deductions varies according to your ___ and whether you are over or under the age of 65 filing status
Which of the following would you currently LEAST likely be able to claim as an itemized deduction on your federal tax return money paid in rent
Accurate completion of your tax return will show whether you underpaid your taxes and need to pay additional income tax or if you overpaid and will receive a refund
When filing their tax returns, some low income families will receive more money back in the form of a ____ than was withheld from their paychecks earned income credit
figured by taking an individual’s total income and subtracting certain allowable amounts adjusted gross income
a fixed amount anyone is allowed to subtract from their AGI to reduce tax liability standard deduction
a specific expense that can be subtracted from an individual’s AGI to reduce tax liability itemized deduction
the total amount of a person’s income from almost any source gross income
the positive difference between what you sold an asset for and what you paid for it capital gain
Briefly explain the purpose of taxation run government, schools, services such as police, and fire department
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Finance Flashcards

Personal Finance

Baby Step 1 1,000 in an emergency fund (or $500 if you make less than $20,000 a year)
Baby Step 2 Pay off all debt except the house utilizing the debt snowball.
Baby Step 3 Three to six months expenses in savings.
Baby Step 4 Invest 15% of your household income into Roth IRAs and pre-tax retirement plans.
Baby Step 5 College Funding.
Baby Step 6 Pay off your home early.
Baby Step 7 Build wealth and give!
You should save money for three basic reasons: 1. Emergency fund 2. Purchases 3. Wealth-Building.
Emergency fund: Emergencies are going to happen. Count on it.
Sinking fund Saving money for a purchase and letting the interest work for you rather than against you.
Amoral Money is neither good nor bad.
Money Market Emergency fund goes here.
Compound Interest Interest on interest.
Murphy’s Law If it can go wrong, it will; unexpected events.
Discipline Key to wealth building.
For most people a fully funded emergency fund will be about: 10,000-15,000.
Ben and Arthur illustrate which principle of saving? Compound interest.
Saving is about contentment and: Emotion.
The following is true about PAC’s: Stands for Pre-Authorizes Checking.Helps build discipline when saving.
The saving habits of Ben and Arthur help to illustrate the principle of compound interest. True.
Daves 80/20 rule says when it comes to money, 80% is head knowledge and 20% is behavior. False.
Your income level greatly affects your savings habits. False.
Interest is money paid to a saver by a financial institution. True.
The correct order for using your money is: pay bills, save, then give. False.
Diversification To spread around.
Diversification Lowers risk.
With virtually all investments, as the ____ goes up, so does the potential return. Risk
When discussion investments ____ is availability. Liquidity.
As there is more liquidity, there is typically _____ less return. Less
A.C.D is a __________________, typically at a bank Certificate of deposit.
Money market mutual funds are _____ low risk money market accounts with check writing privileges. These are great for emergency funds. Low.
Single stock investing carries an extremely _______ degree of risk. High.
When you buy stock, you are buying a small piece of ___________ in the company. Ownership.
Your return comes as the company increases in ______ or pays you, its owner, some of the profits (dividends). Value.
A bond is a ______ instrument by which the company owes you money. Debt.
Your return is the fluctuation in price and the _________ rate paid. Few individuals do well with single bond purchases. Interest.
Investors pool their _______ to invest. Money.
Portfolio managers manage the pool or _____. Fund.
Your return comes as the ________ of the fund is increased. Value.
Mutual funds are good ______ term investments. Long.
You should have lots of _______ before using estate as an investment. Cash.
Annuities are _______ accounts with an insurance company. Savings.
Fixed annuities are at a low interest rate of around 5%, are not really fixed, and are a _____ investment. Bad.
_________ annuities are mutual funds sheltered by the annuity covering, thereby allowing the mutual fund to grow tax-deferred. Variable.
___________________:Gold Commodities & Futures, Day Trading Viaticals. Horrible Investments.
Growth and Income Funds Large-Cap.
Always check this record when investing. 5-10 year track record.
Spread around the risk. Diversification.
Piece of ownership in company stock. Share.
List of your investments. Portfolio.
Least liquid of all investments. Rental real estate.
Degree of uncertainty of the return on an investment. Risk.
Aggressive Growth Funds. Small-Cap.
Savings account within an insurance company. Annuity.
Risk goes up, return goes up. Risk return ratio.
Liquidity means to spread around and lower risk. False.
A single stock is the best place to keep your emergency fund. False.
A certificate of deposit is the best place to keep an emergency fund. False.
Diversification lowers your risk with investing. True.
Commodities and futures are extremely speculative and carry a high risk. True.
____% of any 10 year period in the stock market has made money. 100.
Long-term investments properly diversified include the following mutual funds: Growth, growth, and income, international, aggressive growth.
What is the KISS rule of investing? Keep it Simple Stupid.
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Finance Flashcards

Finance Quizes CH 6

The riskiness of publicly traded bond issues is rated by independent agencies. According to Moody’s rating system, an Aaa bond and a Caa bond are ________ and ________ respectively. prime quality; speculative
A(n) ________ is secured by real estate. mortgage bond
The size of a loan and its issuance costs (as a percentage of the amount borrowed) are ________. inversely related
A(n) ________ is a graphic depiction between the maturity and rate of return for bonds with similar risks. yield curve
The yield curve in an economic period where higher future inflation is expected would be ________. upward-sloping Corr
________ are secured by stock and/or bonds that are owned by the issuer. Collateral trust bonds
The ________ feature allows bondholders to change each bond into stated number of shares of stock. conversion
A bond rated AAA according to Moody’s, is considered ________. a prime quality bond
The purpose of the restrictive debt covenant that prohibits the sale of accounts receivable is to ________. limit the realization of current assets to cash
Which of the following affects the slope of yield curve? liquidity preferences
The ___ is the compound annual rate of interest earned on a debt security, purchased, and held to maturity yield to maturity
____ are secured by stocks and or bonds that are owned by the issuer collateral trust bonds
If the required return rate is less than the compound rate, a bond will sell at _____ a premium
A bond AAA according to moody’s is considered ____ A premium Quantity Bond
A(n) ___is issued with no or very low coupon rate or below its par value. Zero or low coupon bond
The yield curve in an economic period where higher future inflation is expected would be _____ Upward Sloping
The purpose of the debt covenant that requires maintaining a minimum level of net worth capital to ____ ensure a cash shortage does not cause an inability to meet current obligations
The value of the bond is the present value of the ____ interest payments and maturity value
Bonds are ___ long term debt instruments to raise large sums of capital
A debenture is a _____ a second bond that only credit worthy firms can issue
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Finance Flashcards

finance chapter 9

the best type of identity theft insurance is one that: both a and b
in general, a good way to save on insurance premiums is to increase your deductible
which is a type of insurance to avoid? mortgage insurance
which of the following will not likely lead to reduced insurance rates? speeding ticket
an elimination period is the time period: between disabling events and when payments begin
which of the following is not a true statement about an HSA? It is a good plan for people who have a lot to medical expenses
which of the following statements is not true about cash value life insurance? cash value is essential for anyone over 65
term life insurance necessary
credit card protection insurance not necessary and you should avoid
identity theft protection necessary
cancer insurance not necessary and you should avoid
the purpose of insurance is to increase your investments false
the stop-loss is what you pay before insurance will begin to pay false
collision insurance pays for the damage to your car if you cause an accident true
a good homeowner’s insurance policy will include guaranteed replacement cost true
term life insurance is more expensive because it funds a savings plan false
Term life insurance is for a specified period, is more expensive, and has no savings plan built into it false
Whole life insurance is normally for life and is cheaper because it funds a savings plan false
life insurance for a specified period of time term insurance
the amount you pay annually, quarterly, or monthly for insurance premium
provides an income if the insured person is unable to perform the job he/she trained for occupational disability
also known as universal or whole life insurance cash value insurance
the time between the disabling event and when payments actually begin elimination period
filed with an insurance company to get coverage for a loss claim
covers the contents of a house or apartment when you rent it renter’s insurance
portion of the medical bill you pay before insurance kicked in deductible
covers damage to a vehicle due to an accident collision
covers damage to a vehicle not due to an accident comprehensive
whole life insurance not necessary
mortgage insurance not necessary
term life insurance necessary
identity theft insurance necessary
cancer insurance not necessary
credit card protection insurance not necessary
accidental death insurance not necessary
occupational disability insurance necessary
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Finance Flashcards

PERSONAL AND FAMILY FINANCE UNIT ONE (one of these is incorrect and i don’t know which one)

Societies did not develop monetary commodity systems until the mid-nineteenth century.A. True B. False B. FALSE
What are taxes that are levied on imports and/or exports?A. TariffsB. CapitalC. Free Enterprise FinesD. Excesses A. Tariffs
Capitalism is an example of a planned economy.A. TrueB. False B. False
Which of the following is NOT a characteristic of market economies?A. CompetitionB. Economic FreedomC. Government ownership of businessesD. Economic Incentives C. Government ownership of businesses
Privately owned businesses are common in which type of economy?A. Gift EconomiesB. Planned EconomiesC. Socialist EconomiesD. Capitalist Economies D. Capitalist Economies
Tariffs are used to encourage global trade between two countries.A. TrueB. False B. False
Individuals have little effect on the overall health of the economy.A. TrueB. False B. False
The Babylonians in Sumer used what as a monetary commodity?A. YenB. DimeC. ShekelD. Arrayo C. Shekel
Anti-trust laws or suits may be used to break up which of the following?A. OligarchiesB. PolyismsC. MonopoliesD. Tariffs C. Monopolies
What are companies that have complete control over a particular product or industry?A. MonopoliesB. OligarchiesC. CapitalistsD. All of the above A. Monopolies
Market economies operate on the principle of supply and demand.A. TrueB. False A. True
What is the main characteristic of a laissez-faire economy?A. A highly active governmentB. An economy protected by organizationsC. A lack of regulationsD. All of the above C. A lack of regulations
While the economies of countries like the United States are generally considered capitalist, they are not pure market economies.A. True B. False A. True
In a pure market economy, the government controls most actions.A. TrueB. False B. False
Laissez-faire situations are characterized by a high degree of governmental involvement.A. True B. False B. False