02.10 Module Two Exam
Making a down payment on a loan will (4 points)
a. discourage punctual loan payments
b. increase the length of a loan
c. make a borrower seem less stable
Selected:d. decrease the amount of interest paidThis answer is correct.
4/4
Question 2
(02.04 LC)
What are stocks? (4 points)
a. Loans people make to a government and expect to be repaid
b. A pool of money from investors that is invested in many ways
c. Retirement savings accounts that are tax deferred
Selected:d. Shares of ownership in a company that may pay dividendsThis answer is correct.
4/4
Question 3
(02.06 MC)
What is likely to happen if a borrower misses a payment on a credit card account? (4 points)
a. The credit card company will not notice a missed payment.
b. The credit card company requires the entire balance be paid in full immediately.
Selected:c. The credit card company applies a penalty rate, increasing the card’s interest
rate.This answer is correct.
d. The customer will never be able to open another credit account.
4/4
Question 4
(02.06 LC)
Samuel needs to decrease his expenses. To which category should he make cuts first? (4
points)
Selected:a. EntertainmentThis answer is correct.
b. Housing
c. Transportation
d. Utilities
4/4
Question 5
(02.06 MC)
What will happen if Jonathan is habitually late on loan payments? (4 points)
a. He will be more likely to get future loans
b. He will have a high credit score
c. His credit limit will be increased
Selected:d. His credit score will sufferThis answer is correct.
4/4
Question 6
(02.05 MC)
Rachel finds a new apartment that she loves in the center of downtown, but she ultimately
decides against renting it because the $1,500 per month price tag greatly exceeds her budget.
Rachel’s decision to forgo the new apartment is mainly based on (4 points)
a. a lack of amenities
Selected:b. her limited incomeThis answer is correct.
c. her design preferences
d. the unsuitable location
4/4
Question 7
(02.08 MC)
You earn $50,000 per year, and the federal tax rate is 10 percent. Your gross income is (4
points)
a. $5,000
b. $10,000
c. $45,000
Selected:d. $50,000This answer is correct.
4/4
Question 8
(02.07 MC)
Jeanine paid an annual premium of $1,200 in total liability coverage for her car, including up to
$400,000 in bodily injury coverage and $100,000 in property damage coverage. Twelve years
into her policy, Jeanine caused an accident that resulted in the other driver claiming $40,000 in
medical costs and $15,000 in car damage. Jeanine’s insurance company paid the claim.
Did the cost of the benefit of transferring the risk to the insurance company outweigh the cost of
the premium? (4 points)
a. Yes, the cost of the annual premium for 12 years was more than the accident claims
Selected:b. Yes, the cost of the annual premium for 12 years was less than the accident
claimsThis answer is correct.
c. No, the cost of the annual premium for 12 years was the same as the accident claims
d. No, the cost of the annual premium for 12 years was more than the accident claims
4/4
Question 9
(02.03 LC)
To what does tax progressivity refer? (4 points)
a. The amount of tax money spent on technology advancements
b. The connection between income tax rate and spending
Selected:c. The relation of tax rate to incomeThis answer is correct.
d. The use of taxes for social programs
4/4
Question 10
(02.04 MC)
The image shows a pie graph with four sections. Section A is 20 percent of the graph. Section B
is 10 percent of the graph. Sec
The purple section (C) for a nearly-retired investor would most likely represent (4 points)
a. a money-market account
b. bonds
c. an IRA
Selected:d. stocksThis answer is correct.
4/4
Question 11
(02.05 LC)
A common marketing strategy used by retailers to make products appear more attractive is to
list a $100 item for (4 points)
Selected:a. $99.99This answer is correct.
b. $100.00
c. $100.01
d. $100.10
4/4
Question 12
(02.07 MC)
Johann maintains a $75,000 insurance policy on his boat. He pays $50 per month in premiums
and his deductible is $2,500. If he is involved in an accident that does $2,000 worth of damage
to the boat, how much will he have to pay? (4 points)
Selected:a. $2,000This answer is correct.
b. $2,500
c. $3,000
d. $5,500
4/4
Question 13
(02.04 MC)
Kyle and Lyle want to pool their inheritance money to make a joint investment. They are young
and are willing to accept moderate to high risk over a number of years. Which combination of
investment options best suits their needs? (4 points)
a. Money market account and bonds
Selected:b. Mutual funds and stocksThis answer is correct.
c. Savings account and bonds
d. Stocks and futures
4/4
Question 14
(02.04 MC)
Rudy is a 52-year-old freelance writer who wants a short-term, low-risk investment with low
liquidity. Which of these investment vehicles should he consider? (4 points)
Selected:a. CDThis answer is correct.
b. IRA
c. Mutual fund
d. Stocks
4/4
Question 15
(02.03 MC)
Your friend’s job pays $10 per hour, and he works 40 hours per week. His tax rate is 20 percent.
Assuming he works 50 weeks of the year, his yearly gross income is (4 points)
a. $4,000
b. $16,000
Selected:c. $20,000This answer is correct.
d. $40,000
4/4
Question 16
(02.04 MC)
If an investor possesses a portfolio heavily concentrated in bank checking accounts, a financial
advisor would most likely suggest which of the following aggressive investments to diversify the
portfolio? (4 points)
a. A money market account
b. An Individual Retirement Account
c. Certificates of Deposit
Selected:d. StocksThis answer is correct.
4/4
Question 17
(02.04 MC)
Principal Interest Year 1Interest Year 10 Interest Year 20 Total Savings After 20
Years
$12,000 in Simple Interest Account $12,000 x 5%
= $600
= $12,600 $12,000 x 5%
= $6000
= $18,000 $12,000 x 5%
= $12000
= $24,000 $12,000 + 20 years of simple interest
= $24,000
$12,000 in Compound Interest Account $12,000 x 5%
= $600
= $12,600 ($12,000 + $6,615.94)
$18,615.94 x 5%
= $19546.74 ($12,000 + $18,323.40)
$30,323.40 x 5%
= $31,839.57 $12,000 + $20 years of compound interest
$31,839.57
Laurent saves money from his lawn service to buy a new $20,000 mower and trailer. He would
like to buy the new equipment as soon as possible but only has $12,000 in his simple interest
savings account. To reach his goal sooner, Laurent should (4 points)
a. keep his money where it is and be patient
b. move his money to an IRA or Certificate of Deposit
Selected:c. Move his money to a compound interest accountThis answer is correct.
d. Move his money to a business checking account
4/4
Question 18
(02.03 MC)
Austin earns $18,000 per year. His earnings put him in the 15% tax rate. What is his tax owed?
(4 points)
Selected:a. $2,700This answer is correct.
b. $15,300
c. $18,700
d. $22,000
4/4
Question 19
(02.07 MC)
Which of the following actions would likely raise life insurance premiums? (4 points)
a. Being a non-smoker
Selected:b. Going skydiving every weekendThis answer is correct.
c. Living a healthy lifestyle
d. Refraining from drinking alcohol
4/4
Question 20
(02.06 LC)
Which type of credit card carries the most risk? (4 points)
a. Secured with fixed interest rate
b. Secured with variable interest rate
c. Unsecured with fixed interest rate
Selected:d. Unsecured with variable interest rateThis answer is correct.
4/4
Question 21
(02.03 MC)
Which of these is an example of indirect tax? (4 points)
a. Corporate income tax
Selected:b. Gasoline taxThis answer is correct.
c. Paycheck withholdings
d. Property tax
4/4
Question 22
(02.08 MC)
Jonah has a high-paying job and would like to start saving for retirement. He has evaluated his
budget in order to add savings to his expenses. He has a moderate amount of debt, and he
spends a great deal on housing. His utilities, transportation, and health, expenses are fixed, and
he spends little on recreation or eating out. Which action is he most likely to take? (4 points)
Selected:a. Consider less costly housing optionsThis answer is correct.
b. Pay off his debt
c. Reduce his recreation expenses
d. Search for a job with a higher salary
4/4
Question 23
(02.02 LC)
Compared to attending a technical school, completing a four-year college degree allows you to
(4 points)
Selected:a. earn more over a lifetimeThis answer is correct.
b. enter the workforce sooner
c. lower the costs of education
d. select from fewer career options
4/4
Question 24
(02.03 MC)
Imagine you live in a society with progressive taxation. Your friend makes half of your salary and
pays 20 percent in income taxes. Which rate most likely would be your income tax rate? (4
points)
a. 2 percent
b. 10 percent
c. 20 percent
Selected:d. 40 percentThis answer is correct.
4/4
Question 25
(02.04 MC)
The rate of return being offered by banks on money market accounts is 3% and increasing.
Which of the following might cause this to happen? (4 points)
a. The federal funds rate has been held constant
b. The Federal Reserve lowered the federal funds rate
Selected:c. The Federal Reserve raised the federal funds rateThis answer is correct.
d. The rate of return on savings accounts is decreasing
03.02 What are Factors of Production Quiz
Question 1
(03.02 LC)
Which of these are considered capital resources? (5 points)
a. Money, employees, raw materials
Selected:b. Factory, machines, investmentsThis answer is correct.
c. Hiring process, truck, manager
d. Ideas, tools, licensing process
5/5
Question 2
(03.02 LC)
Which of the following includes ideas, innovation, and risk-taking? (5 points)
a. Capital
Selected:b. EntrepreneurshipThis answer is correct.
c. Labor
d. Land
5/5
Question 3
(03.02 MC)
Serena invents a device that uses body heat to power electronic devices. How would Serena’s
idea for this invention be classified? (5 points)
a. Capital
Selected:b. EntrepreneurshipThis answer is correct.
c. Labor
d. Land
5/5
Question 4
(03.02 MC)
You and a friend are designing and selling artisan smartphone covers. The covers are
decorated with tiny manufactured rhinestones. In terms of factors of production, what are the
manufactured rhinestones? (5 points)
Selected:a. CapitalThis answer is correct.
b. Entrepreneurship
c. Labor
d. Land
5/5
Question 5
(03.02 MC)
Michiko wants to open a restaurant. She has gotten the necessary permits and licenses, chosen
a location with a building and restaurant equipment, obtained a local food producer to supply
fresh ingredients, and secured a loan. What is Michiko missing? (5 points)
a. Capital
b. Entrepreneurship
Selected:c. LaborThis answer is correct.
d. Land
03.03 Who is the Boss Quiz
Question 1
(03.03 LC)
What kind of business organization requires more money up front, entails shared profits and
responsibilities, but protects personal assets through shareholding? (5 points)
a. Sole proprietorship
b. Partnership
c. Limited liability company
Selected:d. CorporationThis answer is correct.
