Money/Money Management
Wages are a source of income.
A. Yes
B. No
A. Yes
Money orders are:
A. Distributed by the Treasury Department
B.Available for no fee at banks and retail stores
C.A purchased certificate to pay a specified amount to a specific payee
D.A certified check used to pay a specified amount to a specific payee
C.A purchased certificate to pay a specified amount to a specific payee
A money order is a purchased certificate used to pay a specified amount to a specific payee. They are a safe, convenient way to send payment through the mail as an alternative to personal checks or cash. Money orders sold and backed by the U.S. Postal Service are called postal money orders. Private companies, such as banks, credit unions, supermarkets, convenience stores, and drug stores, also sell money orders for a fee.
The cost to use someone else's money for a period of time is called the:
A. Interest rate expressed as a percentage
B.Opportunity cost
C.Minimum payment
D.Inflation rate
A. Interest rate expressed as a percentage
Consumers usually pay a price for the goods and services they buy. The cost to buy the right to use someone else's money for a period of time is called the interest rate.
What is the largest equities market in the world?
A.American Stock Exchange (AMEX)
B.NASDAQ market
C.New York Stock Exchange (NYSE)
D.Over-the-counter (OTC) market
C. New York Stock Exchange (NYSE)
The largestof these markets is the New York Stock Exchange. It was founded in 1792 under a tree on Wall Street. Also known as the "Big Board" and "the Exchange." the NYSE has the most stringent listing requirements and is governed by a board of directors. Recent events have led the NYSE to develop and enforce stricter rules of corporate governance.
Which of the following insurance covers vehicles?
A Mortgage
B Racing
C Automobile
D Life
C. Automobile
Automobile insurance covers motor vehicles, including automobiles, trucks, and motorcycles, the injuries to the driver and passengers, and possible damage to the other car and its occupants in an accident.
Which statement best describes the relationship between a person's educational level and that person's potential earning power?
A. Education has no effect on a person's potential earning power.
B. A person with a professional degree is likely to earn at least four times as much per year as a person who did not complete high school
C. Attaining a higher educational level affects the earning potential only for people over 40 years old
D.Attaining a higher educational level decreases potential earning power
B. A person with a professional degree is likely to earn at least four times as much per year as a person who did not complete high school
Margaret wants to store a valuable coin collection and important papers. Generally, consumers should:
A. Store valuables in a cabinet at home
B. Rent a safe deposit box for their valuables
C.Hand valuables over to their attorney
D.Store valuables in locked drawer
B. Rent a safe deposit box for their valuables
Bank customers can rent safe deposit boxes from the bank. They are metal boxes kept in the bank vault where customers often keep valuable papers, financial records, jewelry, and collections.
Which of the following is the federal law that requires the cost of credit be disclosed to consumers in bold print on loan agreement?
A. Fair Credit Reporting Act
B.Equal Credit Opportunity Act
C.Truth in Lending Act
D.Fair Debt Collection Practices Act
C. Truth in Lending Act
The Truth in Lending Act requires that the finance charge and annual percentage rate be disclosed to the consumer in advance and specifies how the annual percentage rate must be calculated.
Interest earned on interest is known as:
A.Simple interest
B.True interest
C.Compounded interest
D.Variable interest
C.Compounded interest
Compound interest enables the saver to earn interest on the interest that was earned earlier.
John's job provided the main income for his family. He died unexpectedly and had no life insurance. The probable financial consequence for his wife and two children does not include:
A The loss of John's income
B A reduction in the family's standard of living
C Death-related expenses to be paid
D An increase in income and expenses
D An increase in income and expenses
The largest cost for the surviving family if a spouse dies is ongoing income, especially until the children are grown. Dual-earner families usually need both incomes to maintain their lifestyles and financial obligations, such as mortgages, car loans, and credit card debt. When one wage-earner dies prematurely, the other one needs ongoing income until the debts are paid off and/or lifestyle changes are made. Being under-insured or lack of insurance typically results lowers the family's standard of living.
A man budgeted $200 a month for clothing. This month the man spent $150 on clothing therefore that budget item is considered to have
A. An outflow deficit
B. An income overage
C. A budget variance
D. A budget deficit
C. A budget variance
If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the
A. US Treasury Department
B. Federal Deposit Insurance Corporation (FDIC)
C. State Banking Commission
D. Federal Reserve Board
A. US Treasury Department
n order to track large deposits, the federal government requires that deposits of $10,000 or more be reported to the Treasury Department. Some concerns may be that a person might be trying to avoid paying taxes on game winnings or perhaps illegal gains.
Who benefits the most from inflation?
A.Long-term fixed rate borrowers
B.Lenders
C.Persons on fixed incomes
D.The government
A.Long-term fixed rate borrowers
Inflation reduces the purchasing power of money, so every dollar you spend in the future has less value than it has now. Since the payments on long-term fixed rate loans, like 30-year mortgages remain the same for the term of the loan, future payments will take place with dollars that have less purchasing power. Inflation also raises long-term interest rates, so if you are already locked into a fixed rate loan. your interest rate looks more and more favorable.
A person owns a stock that pays a $2.00 a share dividend. If the person chooses to reinvest that dividend, this means that the $2.00 will go toward buying
A.more of the same stock.
B.stocks that are similar to those already owned.
C.preferred stock in the corporation.
D.bonds in the corporation.
A. More of the same stock
A dividend reinvestment plan is designed to help the shareholder acquire additional shares (or partial shares if there is not enough money) of the stock by immediately reinvesting the dividend in the same company?s stock as soon as the dividend is declared. The shareholder is still responsible for paying taxes on the dividends earned.
If you have a managed health care plan, it means that you:
A Usually must first meet with your primary health care physician
B Can go to any doctor at any time
C Will be responsible for $100 of a doctor bill
D Can apply for an 80% reimbursement of the amount paid to the doctor
A Usually must first meet with your primary health care physician
A managed care health plan refers to prepaid health plans that provide comprehensive health care to members. They are offered by health maintenance organizations, preferred provider organizations, exclusive provider organizations, point-of-service plans, and traditional health insurance companies. While differing from one another, almost all managed care plans require the meeting with the primary care physician first, referral by the primary care physician to specialists, and co-payments
To determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and:
A. Her total income
B. The rate of inflation
C. Whether the account is FDIC protected
D. If the bank offers overdraft protection
B. The rate of inflation
If the annual rate of inflation is .03% and the interest earned on money is .01%, the deposit is actually going to have less purchasing power at the end of the year than it did at the start.
You have a checking account balance of $100 and you deposit a personal $200 check from your brother in your checking account. When will you be able to withdraw $150 in cash?
A.The same day as the $200 deposit
B.3 to 7 days later, depending on your bank's check clearance policy
C.After receiving a checking account statement at the end of the month
D.On the day you make your next deposit
B. 3 to 7 days later, depending on your bank's check clearance policy
Checks deposited into checking accounts need to be on deposit for several days before the money can be withdrawn as cash because the check needs to clear.
When a person declares bankruptcy that fact will appear on the person?s credit report
A.for a 3 year period
B.for a 10 year period
C.until the person repays all debts owed
D.until the person is able to receive a new credit card.
B.for a 10 year period
Most of the adverse information on a credit report appears for 7 years. After a undeclared bankruptcy, the limit is 10 years.
Buying a treasury bill (T-bill) is best for investors who are looking for
A.a place to invest between $100-$500.
B.a secure, low risk investment.
C.a higher yield on their investment than corporate bonds offer.
D.an investment that matures in 10-30 years.
B. a secure, low risk investment.
These bills are backed by the full faith and credit of the US government, therefore considered relatively risk free.
For the past five years, a person has had a $20,000 whole life insurance policy that has a cash value clause. The person decides to surrender the policy. At the time of surrender, the person will receive
A one-fifth of the $20,000 face value.
B $20,000 less the premiums paid.
C a calculated amount of money which includes the premiums paid as well as the interest on that money. D a calculated amount of money that must be converted to a term life insurance policy.
C. a calculated amount of money which includes the premiums paid as well as the interest on that money.
The cash value of a whole life insurance policy is based on premiums paid plus some of the interest earned.
Jami lost her debit card. She did not report it missing for 3 months. If an unauthorized person used her debit card, her maximum liability is:
A. $50
B. $500
C. Unlimited liability
D. No liability because she notified the financial institution
C. Unlimited liability
According to the Electronic Fund Transfer Act, if a consumer reports the theft or loss of an ATM or debit card to the issuing financial institution within two business days, they are liable for not more than $50 of unauthorized purchases. Or 60 days = $500
If reported after 60 days or not reported, the consumer may be liable for the entire amount of unauthorized purchases.
The National Credit Union Administration (NCUA) insures accounts in:
A.Credit unions
B.Commercial banks
C.Brokerage firms
D.Savings banks
A.Credit unions
The decision to give an applicant credit is made a:
A Consumer counseling service
B Credit reporting agency
C Creditor
D Consumer
C Creditor Answer
A credit reporting agency collects credit information from creditors and provides that information to potential creditors to interpret. The potential creditor (such as a credit card company), not the credit reporting agency, decides whether to grant an applicant credit based on information the consumer gives on the application and the information on the credit report provided by a credit reporting agency.
One of the benefits of holding an investment for over a year rather than selling it in less than a year is that the
A.capital gains on the investment will be taxed at a lower rate.
B. fees will not be charged by brokers for selling the investment.
C.money earned on the investment will be considered tax-free.
D. profits on the investment can be averaged over the length of time the investment is held.
A. capital gains on the investment will be taxed at a lower rate.
Capital gains are profits made from the sale of capital assets such as stocks and bonds and are tax deferred until the asset is sold. Capital assets that are held over one year are considered long-term capital gains and are taxed at a lower tax rate or in some cases are not taxed at all.
Why is term life insurance usually the least expensive type of life insurance?
A The policy only pays a death benefit
B The policy builds a cash value
C The policy provides coverage for a lifetime
D The policy is available to all consumers
A The policy only pays a death benefit
Term life insurance is the least expensive type of life insurance because it is only a death benefit and insures the individual for a limited number of years... There is no cash value accumulation. The death benefit is paid only if the insured dies during the term of coverage.
Money for saving, investing, or spending cannot be from:
A. An inheritance from someone who has died
B. Discretionary income or a gift of money
C. Capital gains from a sale of stock
D. Capital losses from the sale of stock
D. Capital losses from the sale of stock
Patty is selling her car through a newspaper advertisement. When she finds a buyer, she wants a form of payment which is guaranteed to be good. Which form of payment should she avoid?
A. Cash
B. Certified check
C. Cashiers check
D. A check
D. A check
A certified check is a check for which the bank guarantees payment. It is stamped by the bank as certified and becomes an obligation of the bank, and the funds to cover it are immediately withdrawn from the depositor's account.
A person's debt ratio shows the relationship between debt and net worth. The lower the ratio the
A.better off financially the person is.
B.worse off financially the person is.
C.more liquid assets the person has.
D.less liquid assets the person has.
A.better off financially the person is.
Since the debt ratio is calculated by dividing liabilities by net worth, the \nlower the debt ratio the better; that is the better off the person is financially.
The interest earned on United States Series EE Savings Bonds is
A.exempt from state and local taxes.
B.paid in a lump sum at the time the face value on the bond is reached.
C.equal to the money paid to purchase it.
D.deducted at the time of the bond's purchase.
A. exempt from state and local taxes.
The interest rate on US savings bonds is exempt from state and local taxes.
Debbie owns a clothing store. She is concerned that a customer who is injured in the store will sue. Which type of insurance should Debbie purchase?
A Social insurance
B Life insurance
C Surety bonds
D Liability insurance
D Liability insurance
A liability is legal responsibility for the financial cost of another person's losses or injuries. Despite taking great care, a person may still be held liable in a situation. Most basic property insurance covers liability up to a specific dollar amount. Additional amounts are frequently recommended.