Review
Arya has a homeowner’s policy that covers up to $400,000. Her house is completely destroyed in a fire. When an assessment is made of the house and possessions, it is decided that her losses are only worth about $350,000. How much money will Arya receive from her insurer (assuming there is no deductible)? A. $50,000 B. $200,000 C. $350,000 D. $400,000
C. $350,000
What is MOST likely to happen once someone purchases stock? A. If the company loses money, the stockholder has to pay additional fees to help the company recover. B. It gives the stockholder the right to vote on major decisions being made within the company. C. The stockholder is guaranteed to receive dividends quarterly from the company. D. The investment income can only be collected by the purchaser on the stock’s maturity date.
B. It gives the stockholder the right to vote on major decisions being made within the company.
Rinaldo’s dad left a handwritten will that he had prepared by himself in his own handwriting. He left everything to his dog Rusty. Which type of will is this? A. statutory will B. formal will C. simple will D. holographic will
D. holographic will
What is an example of an asset class? A. dividends B. inflation C. common stocks D. compounding interest
C. common stocks
Why is real estate often a great investment? A. The initial investment is considerably lower than most other investments. B. Over time, houses can increase in value while also serving as a dwelling for the investor. C. It is a liquid investment that allows homeowners access to their cash immediately. D. Renting real estate takes all of the responsibility off of the investor.
B. Over time, houses can increase in value while also serving as a dwelling for the investor.
People often use the quote, “A penny saved is a penny earned.” Which statement BEST demonstrates the meaning of this quote? A. When a person invests in a warehouse membership, they can save money in the long-term. B. If a person saves money by buying something on sale, they can invest the money they saved. C. Using a credit card means allows you to have more cash on hand for other immediate purchases. D. Shopping at a superstore often means spending more money than making purchases at a local thrift shop.
B. If a person saves money by buying something on sale, they can invest the money they saved.
Terrance has just signed a contract with a bank to get a loan to buy a new house. What is TRUE about this contract? A. Both the bank and Terrance share power of attorney. B. Terrance has participated in a guarantee of gain. C. Both parties now have an obligation to their agreement. D. Terrance is required to submit a verbal agreement.
C. Both parties now have an obligation to their agreement.
Raisa is purchasing a life insurance policy in which the premiums, death benefits, and cash value of the insurance remain fixed. At the time of her death, the cash value of the insurance becomes the insurance company’s and the death benefits are paid to the beneficiaries. Which type of policy is Raisa purchasing? A. whole life insurance B. permanent life insurance C. term life insurance D. healthy life insurance
A. whole life insurance
What is generally TRUE about deductibles in insurance policies? A. With a $500 deductible, the insurer pays the first $500 of any claim. B. Deductibles apply for every quarter of the year (every three months.) C. Policies with higher deductibles have extremely high premiums. D. Policies with lower deductibles have higher premiums.
D. Policies with lower deductibles have higher premiums.
Credit tends to cost individuals more than paying in cash.
True or False
True
Lydia would like to invest in government bonds, but she wants a quick payout—ideally in six to eight weeks. Which type of bond would Lydia MOST likely prefer? A. Treasury Inflation-Protected Securities
B. T-bills C. treasury notes D. treasury bonds
B. T-bills
Elizabeth and Niko are very organized and do an excellent job organizing their personal financial records. How will this BEST help them when they file their taxes? A. If they have organized records, they won’t likely have to file taxes. B. This can help them maximize their deductions. C. Their tax return will definitely not be audited. D. They are guaranteed to get a tax refund instead of owing taxes.
B. This can help them maximize their deductions.
Eduardo obtained credit to buy a car. He has failed to make any payments over the past few months. What is MOST likely to happen? A. He will make one giant payment to cover the past months without penalty. B. The lender will take possession of his car. C. The amount of debt owed will decrease the longer he waits to make a payment. D. Nothing—people are allowed to miss several payments without consequences.
B. The lender will take possession of his car.
Which of the “five C’s of credit” essentially represents the lender’s net worth? A. character B. capacity C. collateral D. capital
D. capital
Which is NOT one of the “five C’s of credit”?
A. courage B. capital C. capacity D. collateral
A. courage
A company has created an ice cream that has zero calories, but it is made with chemicals that recently were proven to cause cancer in rats. They decide to design an ad campaign that focuses solely on the zero-calorie aspect of the product and market it as a “super healthy, zero-calorie, sweet treat for the whole family!” What advertising method does this MOST likely demonstrate? A. endorsements B. facts and figures C. card stacking D. weasel words
C. card stacking
Rajiv has a liability on his car. How is this BEST demonstrated? A. He has insurance in case of an accident. B. He owns his car with no debts. C. He owes $15,000 on his car. D. He is trying to sell his car.
C. He owes $15,000 on his car.
What is a partial refund of the purchase price of an item? A. pretext B. sale C. rebate D. phishing
C. rebate
Mikhail was recently hired at a company that allows him to deduct money from his paycheck to invest in a retirement account. Which type of investment is Mikhail MOST likely participating in? A. direct stock plan B. 401k account C. mutual fund D. corporate bond
B. 401k account
You have been asked to give a talk about how best to avoid different methods of identity theft. What is the BEST advice you can give to help someone avoid becoming a victim of phishing? A. Shred all of your documents before you put them in the trash. B. When carrying a purse, hold it tight to your body. C. Don’t use an ATM that looks as if it has been altered in some way. D. If someone calls you to ask for personal information, don’t reveal anything.
D. If someone calls you to ask for personal information, don’t reveal anything.
If Damien loses his job due to injury, he worries that his family won’t be able to survive without his income. He decides to purchase disability insurance that will provide money for him and his family if he should ever become physically unable to work. By purchasing this type of insurance, from which type of risk is Damien trying to protect himself? A. property risk B. liability risk C. inheritance risk D. personal risk
D. personal risk
Jorge is concerned that something might happen to his most valuable documents such as his passport and Social Security card. He would like to store these in a very secure place. Where is the MOST logical place for Jorge to store these items? A. a neighbor’s home B. a home file C. a computer file D. a safe deposit box
D. a safe deposit box
You are creating a budget with your family. What is one important thing to keep in mind as you come up with a plan for spending? A. Ignore your past spending habits because a budget focuses on future spending. B. Remember to include unexpected income, such as gifts or tips. C. If your income varies every month, use the higher estimates for your budget. D. Don’t forget to include a way to save money for possible emergency situations.
D. Don’t forget to include a way to save money for possible emergency situations.
Francisco, an older gentleman who is very typically very conservative in his approach to money management, thinks he wants to invest some of his money in stocks because he’s heard doing so can generate a good return. What should Francisco know before he begins? A. Stock investments promise a guaranteed return. B. Stock investments rarely generate a better return than savings. C. Stocks are riskier than other types of investments. D. People are not able to choose which stocks to invest in.
C. Stocks are riskier than other types of investments.
Jordan borrowed $10,000 so he could make some improvements to his basement. He will pay back the money (plus interest) by making $1000 monthly payments for the next 12 months. Which type of credit did he use? A. an installment sales credit B. an installment cash credit C. a single lump-sum credit D. a bank line of credit
B. an installment cash credit