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Front 1

• It is December 10, 2018 and you own a stock that you purchased January 5, 2018, which has increased in value by more than $3,000. You think the stock will not significantly increase or decrease in value over the next two months, and you would like to realize your gain. Considering tax consequences only, which of the following would be the best decision?

Back 1

o Sell the stock after January 6th of next year

Front 2

When you buy a bond, you are buying part ownership in a company and that company is obligated to pay you at the maturity date.

Back 2

False

Front 3

• There are three common mistakes when investing. Which of the following is not one of them?

Back 3

Purchasing without a broker

Front 4

You can earn a positive return on a stock without price appreciation.

Back 4

True

Front 5

• What is the general relationship between market cap and growth?

Back 5

o On average, smaller market cap stocks grow faster

Front 6

• Which of the following statements about the value of a bond is true?

Back 6

o When the interest rate rises, the value of the bond falls

Front 7

• Which of the following statements about mutual funds is correct?

Back 7

o The lower the expense ratio, the more is returned to you as the investor

Front 8

• Purchasing stock on margin is a strategy to minimize investment loss.

Back 8

False

Front 9

• In budgeting, it is useful to compare ________ with the budgeted amounts to determine the accuracy or error of the budget and adjust it as necessary.

Back 9

o Both actual inflows and outflows

Front 10

• If you are working part time while going to school and have no dependents other than yourself, do not itemize deductions and have no capital asset transactions, which Federal Income Tax return form should you file?

Back 10

1040EZ

Front 11

• A personal exemption can be claimed for the person filing a tax return, for a spouse, and for each dependent

Back 11

True

Front 12

• In general, the more liquid an asset, the higher its return

Back 12

False

Front 13

• *The ability to save funds is ____ when credit payments are ____.

Back 13

o Both increased; small and reduced; large are correct

Front 14

• Credit issued by department stores for relatively long periods of time is called non-installment credit

Back 14

False

Front 15

Improper use of credit may

Back 15

Make it necessary to file for bankruptcy

Front 16

• Credit extended to consumers for short periods of time to make specific purchases is

Back 16

o Non-installment credit

Front 17

• Which of the following can be used by a creditor in deciding whether or not to grant credit?

Back 17

Credit history

Front 18

• Which of the following statements is not true regarding reviewing your credit report?

Back 18

o It will help determine if there are credit cards that you should apply for to improve your credit standing.

Front 19

• Your credit report can be requested online and should be checked periodically for errors.

Back 19

True

Front 20

• If you receive a phone call that seeks to verify or update personal information you should

Back 20

o Obtain the person's name and phone number and call the company to verify his or her credentials.

Front 21

• When you apply for a credit card, the potential creditor will look at which of the following as a source of future debt payments if necessary?

Back 21

o Balances in savings accounts

Front 22

• When using credit cards, there is no way to keep track of individual expenditures.

Back 22

False

Front 23

• One advantage of using a credit card is that you receive a list of your purchases, which enables you to keep track of your spending.

Back 23

True

Front 24

• It is not difficult to find a credit card company that is eager to extend credit to you.

Back 24

True

Front 25

When using your credit card frequently, it is wise to

Back 25

o Pay off the balance every month

Front 26

• In comparing credit cards to other forms of credit, which of the following is true?

Back 26

o Credit cards are generally the most expensive form of credit

Front 27

• For good financial management, you should treat a credit card as

Back 27

o A means of convenience

Front 28

• Because credit card interest rates are usually quite high, you should pay off your credit card balances before you invest funds anywhere else.

Back 28

True

Front 29

• The annual percentage rate (APR) is useful because it allows you to easily compare financing costs among various possible creditors.

Back 29

True

Front 30

• On a credit card, a finance charge is applied to

Back 30

o Any balance not previously paid

Front 31

• It is a good practice to review your credit card statement online as often as daily or weekly in order to

Back 31

o Make sure there are no fraudulent charges, make sure there are no duplicate or erroneous charges from merchants and monitor your spending patterns are all correct.

Front 32

• If a loan is cosigned and the borrower defaults, the lender has the right to sue the cosigner or try to seize the cosigner's assets just as if that person were the borrower.

Back 32

True

Front 33

• Which of the following is the most common source of financing for personal loans?

Back 33

o Financial institutions

Front 34

• Which of the following would probably not be required when applying for a personal loan?

Back 34

o A personal resumé

Front 35

• On an amortization schedule, more interest and less principal is paid each month as the loan matures

Back 35

False

Front 36

• Personal loans from family members or friends

Back 36

o Should have a loan agreement in writing to avoid problems later on.

Front 37

• Which of the following methods of calculating interest is the most expensive?

Back 37

o Add-on interest

Front 38

• Which is true regarding resale value of cars?

Back 38

o Resale values can be determined from the Internet and other sources and should be a consideration in buying a car.

Front 39

• The proceeds from a home equity loan can be used for any purpose including a vacation, tuition payments, or health care expenses.

Back 39

True

Front 40

• When obtaining a mortgage you should

Back 40

Maintain some funds for liquidity

Front 41

• Most real estate agents agree that location is the most important influence on a home's future resale value.

Back 41

True

Front 42

When obtaining a mortgage you should

Back 42

Maintain some funds for liquidity purposes to cover unanticipated bills

Front 43

• Most individuals pay for a home with a down payment of 5% or less and then obtain a mortgage to finance the rest.

Back 43

o False (20%)

Front 44

An advantage of using online real estate services is that

Back 44

o The commissions and fees are often less than those charged by traditional full-service real estate agents.

Front 45

• Before buying a home you should do the following

Back 45

o Have your real estate agent complete a market price analysis for comparable properties, Have a certified home inspector complete an inspection of the home inside and out and Check your budget to make sure the home including all associated costs is affordable are all important.

Front 46

• If you obtain an FHA or VA loan you will make additional payments each month to cover your home insurance and property taxes that will be placed in an account called a(n)

Back 46

o Escrow account

Front 47

• A ________ is responsible for determining the value of the home as part of the loan process.

Back 47

o Real estate appraiser

Front 48

• Over the life of a mortgage, the payment to principal ________ and the portion to interest expense ________.

Back 48

o Increases; decreases

Front 49

• Making extra mortgage payments does which of the following?

Back 49

o Reduces the length of the loan

Front 50

• Since there is no limit on how much and how fast adjustable rate mortgages

(ARMs) can increase, most homeowners are afraid to take out this kind of loan.

Back 50

False

Front 51

• Having liability coverage as part of auto and homeowner's policies helps protect your ________ in the event of an accident.

Back 51

o Net worth

Front 52

The first step in the risk management process is to insure against risk.

Back 52

False

Front 53

• ________ is not a suggested risk management method.

Back 53

o Ignoring risks

Front 54

• Lessening your exposure to an illness by getting periodic health checkups is an example of

Back 54

o Reducing risks

Front 55

• Since insurance companies rely mostly on their premiums to cover claims, they price their insurance policies to reflect the probability of a claim and the size of the claim.

Back 55

True

Front 56

• Medical payments coverage insures against costs of medical care for you and other passengers in your car when you are at fault in an accident.

Back 56

True

Front 57

• Most states have financial responsibility laws that require individuals who drive cars to purchase a minimum amount of liability insurance.

Back 57

True

Front 58

Comprehensive coverage would cover financial losses due to

Back 58

•

o Damage to your car caused by wind or hail.

Front 59

• Collision and comprehensive coverage is optional in most states unless you are financing your car in which case you must have this coverage to protect the lender.

Back 59

True

Front 60

• The amount of damage that you will be required to cover if your car is involved in an accident that is your fault is your

Back 60

Deductible

Front 61

• *Auto insurance rates are based upon

Back 61

o The number of miles and the type of driving you do each year.

Front 62

• Which of the following may be a reason why an insurance company decides not to renew your policy?

Back 62

o Both You caused an accident as a result of drunk driving and Your driver's license was suspended are correct

Front 63

• Once drivers are labeled as "high risk," they will not be able to get automobile insurance at any price.

Back 63

False

Front 64

• The additional living expenses component of a homeowner's policy is designed to

Back 64

o Pay for temporary housing while your home is required from covered damage

Front 65

• Your home insurance provides for replacement value for personal property losses. Your china hutch was vandalized and completely destroyed. Your hutch cost $400 four years ago, but a new one will cost you $600. How much will the insurance company pay?

Back 65

o $600

Front 66

• Homeowners insurance premiums are heavily influenced by all of the following except

Back 66

o Number of children who live in the home

Front 67

• Which of the following is not a difference between health insurance and other types of insurance like home and auto?

Back 67

o Health insurance helps protect your net worth

Front 68

• Which of the following is usually not offered as part of a benefits package to employees?

Back 68

o Auto insurance

Front 69

• Indemnity health care plans have

Back 69

o More flexibility and choices than managed care plans.

Front 70

• Compared to indemnity plans, what is an advantage of managed health care plans?

Back 70

o You will have lower insurance premiums

Front 71

• Most people obtain health insurance through group plans offered by employers.

Back 71

True

Front 72

• Interest rate changes are affected by the relationship of the total supply of funds provided by all investors and the total demand for funds by all borrowers

Back 72

True

Front 73

When the fed loosens monetary policy, interest rates will ____ and money supply will ___

Back 73

Go down, go up

Front 74

• To achieve both liquidity and an adequate return, you should consider investing in

Back 74

o Multiple money market investments with varied returns and levels of liquidity

Front 75

• An asset management account combines

Back 75

o Deposit account with a brokerage account

Front 76

• An asset management account combines

Back 76

o Deposit account with a brokerage account

Front 77

• Kayla deposits $1,500 into a NOW account that requires a minimum balance of $500 and offers an interest rate of 2.4%. How much interest will she earn in one year in the NOW account?

Back 77

$36

Front 78

Growth stocks tend to pay ________ dividends and have ________ appreciation of stock prices.

Back 78

Lower, higher