Personal Finance (The Mcgaw-hill/Irwin Series in Finance, Insurance, and Real Estate) 11th Edition

1) Which of the following reasons explain why investors purchase bonds? A.To provide asset allocation B.To produce income for current financial needs C.To match maturity dates with future financial needs D.To have a conservative investment during an economic downturn E.Investors purchase bonds for all of these reasons. Answer: E Answer: E Answer: E 2) Investors purchase corporate bonds for: A.interest income. B.possible increase

1) People born after 1928 need at least how many quarters of coverage to qualify for Social Security benefits? A.20 B.40 C.60 D.80 E.100 Answer: B Answer: B Answer: B 2) Which of the following would not be considered personal property under a typical homeowner's insurance policy? A.Furniture B.Clothing C.Buildings and other structures D.Jewelry E.A silverware set Answer: C Answer: C Answer: C 3) Bond interest is typically paid: A.monthly. B.at the time

1) Most speculators use a buy and hold technique. Answer: FALSE Answer: FALSE Answer: FALSE 2) The most frequent users of payday loans are workers who have become trapped by debts or poor financial decisions. Answer: TRUE Answer: TRUE Answer: TRUE 3) A renter is required to pay a security deposit of $800, on which 4 percent interest will be paid.

1) Tax evasion is the use of illegal actions to reduce one's taxes. Answer: TRUE Answer: TRUE Answer: TRUE 2) In order to calculate savings ratio, the amount saved each month is divided by net income. Answer: FALSE Answer: FALSE Answer: FALSE 3) A payment cap keeps the payments on an adjustable-rate mortgage at a given level or limits the amount

1) The primary reason people buy a vacation home is: A.to use as a family vacation retreat. B.for tax reasons. C.for rental income. D.for their grown children to live in. E.to eventually use it as their primary residence. Answer: A Answer: A Answer: A 2) Which of the following assets owned by a company can be used to secure a mortgage

1) Federal laws limit the amount of fraudulent charges that a consumer is liable for in the case of a lost or stolen card to: A.$50 B.$100 C.$150 D.$250 E.$500 Answer: A Answer: A Answer: A 2) Over the past 50 years, stocks have returned approximately 10 percent a year while U.S. government bonds have returned about what percent? A.1 B.3 C.5 D.7 E.9 Answer: C Answer: C Answer: C 3) The

1) Which of the following might qualify Amy Farmer for a premium discount on her automobile insurance? A.Completing a driver's training program B.Earning straight A's in college C.Installing an alarm system in her car D.Participating in a carpool five days a week E.All of these might qualify Amy for a discount. Answer: E Answer: E Answer: E 2) A market for

1) This type of financial institution is known to frequently offer the lowest loan rates: A.Commercial bank B.Savings and loans association C.Mutual savings bank D.Credit union E.Investment companies Answer: D Answer: D Answer: D 2) James Brewer purchased 100 shares of stock for $72 a share. James also paid $55 commission. What was the total purchase price for this transaction? A.$55.00 B.$127.00 C.$7,237.50 D.$7,255.00 E.$7,347.50 Answer: D

1) What kind of audit requires that a taxpayer visit an IRS office to clarify some aspect of his or her tax return? A.Office audit B.Correspondence audit C.Field audit D.Taxpayer compliance measurement program audit E.Random audit Answer: A Answer: A Answer: A 2) In how many of the years since 1926 have stocks lost money? A.0 B.10 C.25 D.40 E.55 Answer: C Answer: C Answer: C 3) Analyzing your current financial

1) The process of establishing a monetary fund to cover the cost of a loss is called: A.risk avoidance. B.self-insurance. C.risk shifting. D.risk reduction. E.endorsement. Answer: B Answer: B Answer: B 2) Up to what percent of your Social Security benefits may be subject to federal income tax? A.10 B.25 C.50 D.75 E.85 Answer: E Answer: E Answer: E 3) Which type of life insurance is the least popular today? A.Endowment life

1) For government bonds, the price that a dealer is willing to pay for a government security is called the: A.dirty price. B.asked price. C.bid price. D.clean price. Answer: C ENone of these. Answer: C ENone of these. Answer: C ENone of these. 2) A simple will, which leaves everything to the spouse, is also sometimes called a(n): A.traditional marital

1) Debit cards are also often called: A.bank cards. B.ATM cards. C.cash cards. D.check cards. E.All of these Answer: E Answer: E Answer: E 2) As of 2013, what is the maximum yearly amount that an individual can give as a gift without incurring gift tax liability or having to report the gift to the IRS? A.$5,000 B.$14,000 C.$15,000 D.$20,000 E.$25,000 Answer: B Answer: B Answer: B 3) Which of

1) Which of the following can cause a bond investor to lose money? A.Selling a bond prior to maturity and at a time when the market interest rate exceeds the bond's interest rate B.Converting a bond into shares of common stock that have a lesser combined value and immediately selling those shares C.By the

1) Prepaid interest may be a part of a mortgage agreement. Answer: TRUE Answer: TRUE Answer: TRUE 2) In the U.S., administrative costs consume nearly 11 percent of health care dollars, compared to 1 percent under Canada's socialized system. Answer: TRUE Answer: TRUE Answer: TRUE 3) A home equity loan is based on the difference between the current market value of

1) Ease of mobility is an advantage of renting. Answer: TRUE Answer: TRUE Answer: TRUE 2) Trade balance is defined as the difference between a country's exports and its imports. Answer: TRUE Answer: TRUE Answer: TRUE 3) Real estate advisors suggest a price-to-rent ratio of 25 or lower when you buy to possibly avoid lower home value after your purchase. Answer: FALSE Answer:

1) An escrow account is designed to reduce the cost of a mortgage. Answer: FALSE Answer: FALSE Answer: FALSE 2) A list of grades received in school is commonly included on a resume. Answer: FALSE Answer: FALSE Answer: FALSE 3) Financial planning has specific techniques that will be effective for every individual and household. Answer: FALSE Answer: FALSE Answer: FALSE 4) In most states, third-party debt collectors

1) Last year, High-Tech Electronics earned $1.50 per share. If the current market value for a share of stock is $45, what is the firm's P-E ratio? A.0.03 B.3.30 C.30.00 D.33.00 E.45.00 Answer: C P/E = $45/$1.50 = 30 Answer: C P/E = $45/$1.50 = 30 Answer: C P/E = $45/$1.50 = 30 2) A scam that involves malicious software or

1) Which one of the following is an advantage of renting? A.Unrestricted lifestyle B.Tax benefits C.Fewer responsibilities D.An ability to build equity E.Increased equity Answer: C Answer: C Answer: C 2) Personal risks are the uncertainties surrounding the loss of income or life due to all except: A.professional misconduct. B.premature death. C.illness. D.disability. E.unemployment. Answer: A Answer: A Answer: A 3) Time deposits are another name for: A.checking accounts. B.loans and charge accounts. C.savings

1) Which statement is not true about an ethical will? A.It is used to pass on your values and beliefs to your heirs. B.It is a legally binding document. C.It dispenses emotional and spiritual wealth. D.It requires earnest self-examination. E.It can be prepared without an attorney's assistance. Answer: B Answer: B Answer: B 2) The legal document involved in renting

1) The expected value of a vehicle at the end of a lease is called the: A.residual value. B.unit price. C.sticker price. D.capitalized cost. E.money factor. Answer: A Answer: A Answer: A 2) A ______ is a financially independent firm that acts as the bondholder's representative. A.bond parent B.bond holder C.mediator D.trustee E.guardian Answer: D Answer: D Answer: D 3) In addition to inflation and consumer demand, what is another factor

1) Which type of government agencies publish materials to assist consumers with buying decisions and financial planning? A.Federal B.Local C.State D.All of these E.None of these Answer: D Answer: D Answer: D 2) A REIT is a firm that pools investor funds and invests them in real estate or uses them to make what kind of loans? A.New car loans B.Construction loans C.Mortgage loans D.Both

1) A ____________ resume presents a person's education, work experience, and other information in a reverse time-sequence. A.goal-oriented B.functional C.chronological D.targeted E.data base Answer: C Answer: C Answer: C 2) A cost associated with renting would be: A.property insurance. B.maintenance costs. C.title insurance. D.security deposit. E.points. Answer: D Answer: D Answer: D 3) A home equity loan may also be referred to as a ____________ mortgage. A.shared-appreciation B.graduated-payment C.growing-equity D.second E.buy-down Answer: D Answer: D Answer: D 4) Starting a small

1) Ashley Riley wants to buy the stock of XYZ Company at a specified price. What type of order should she place? A.Market order B.Limit order C.Stop order D.Discretionary order E.Common order Answer: B Answer: B Answer: B 2) The first step of the career planning process is to: A.evaluate the job market. B.identify potential job opportunities. C.develop a resume and cover letter. D.plan for

1) If an investor uses a reinvestment plan to invest income dividends and capital-gain distributions: A.then both the income dividends and capital-gain distributions are tax-exempt. B.only the income dividends are tax-exempt. C.only the capital-gain distributions are tax-exempt. D.both the income dividends and capital-gain distributions are currently taxable. Answer: D Ethen both the income dividends and capital-gain

1) Which of the following would be an advantage of leasing a vehicle? A.Automatic ownership interest in the car B.Unlimited mileage on the car C.No need to meet credit requirements D.Lease payments are likely to be lower than loan payments E.All of these are advantages. Answer: D Answer: D Answer: D 2) For an entry-level position, a person's resume is likely

1) An advantage of purchasing diamonds for investment purposes is that: A.diamonds are not easily turned into cash. B.diamonds are relatively limited in supply. C.diamonds are largely controlled by DeBeers Consolidated Mines of South Africa. D.the grading of diamonds is not an exact science. Answer: B Ediamonds are typically bought at retail and sold at wholesale. Answer: