Refer to Figure 10-2. A few months later, Todd and his wife were driving through town
when they were hit by Frank, an uninsured driver, who ran a stop sign. Todd sustained
injuries of $12,000, and his wife’s injuries were $25,000. The car cost $5,500 to repair.
How much will the Todd€s auto policy pay for these damages?
a.$37,000 for bodily injury and $5,250 for the car
b.$32,000 for bodily injury and $5,250 for the car
c.$37,000 for bodily injury and $5,400 for the car
d.$32,000 for bodily injury and $5,400 for the car
George and Kelly have a renter’s policy with $1,000 per person no-fault medical
payments coverage. Following a party at their home, Brian,one of their guests, fell on
the stairs and broke his ankle. How much of the $1,850 medical bills will George and
Kelly€s renter’s policy pay?
a.$1,850
b.$1,000
c.$850
d.$0
The primary reason for giving a child an allowance is to
a.pay the child for work around the house.
b.teach the child about how to manage money.
c.encourage the child to get a job at an early age.
d.have a way to withhold a privilege in order to control the child€s behavior.
A dealer is quoting a $10,000 face 180-day T-bill quoted at 2.75 bid, 2.65 ask. You
could buy this bill at ______________ or sell it at _______________. Buy at 10,000
[1-(0.0265 180/360)]; sell at 10,000 [1-(0.0275 180/360)]
A.$9,869.23; $9864.36
B.$9864.36; $9,869.23
C.$9,867.50; $9,862.50
D.$9,862.50; $9,867.50
E.none of the options
Under the Affordable Care Act, a health policy that cost 8 percent of your income for
premiums or 9.5 percent of family income if obtained through an employer is referred
to as
a.Medicare.
b.benchmark premium.
c.individual shared responsibility fee.
d.affordable health insurance.
Ben and Susan Shew, filing jointly, would pay $7,054 in taxes on $53,100 of taxable
income. If Ben won $6,000 in the lottery, they would pay $7,954, in taxes. What is the
couple’s marginal tax rate?
a.10 percent
b.15 percent
c.25 percent
d.28 percent
The swap market’s primary direct government regulator is (the)
A.SEC.
B.CFTC.
C.NYSE.
D.WTO.
E.Nobody.
You have taken a stock option position and, if the stock’s price increases, you could lose
a fixed small amount of money, but if the stock’s price decreases, your gain increases.
You must have ________________________________.
A.bought a call option
B.bought a put option
C.written a call option
D.written a put option
E.purchased a straddle
Form 1040-X is used to obtain a refund when overpaid insurance because of a tax filing
mistake from earlier years.
a.True
b.False
IBM creates and sells additional stock to the investment banker Morgan Stanley.
Morgan Stanley then resells the issue to the U.S. public.
Morgan Stanley is acting as a(n)
A.asset transformer.
B.asset broker.
C.government regulator.
D.foreign service representative.
You would want to purchase a security if P ____________ PV or E(r) ____________ r.
A.¥;£
B.¥;¥
C.£;¥
D.£;£
If M > 1 and you solve the following equation to find i: PV * (1 + (i/M))M*N= FV, the
i you get will be
A.the rate per compounding period.
B.the EYE.
C.the bond equivalent yield.
D.the TOE.
E.the EAR.
Refer to Figure 10-2. How much will Todd’s auto insurance policy pay for the bodily
injury liability claims in this accident?
a.$100,000
b.$139,000
c.$143,000
d.$153,000
Bank A has an increase in deposits of $20 million dollars and all bank reserve
requirements are 10 percent. Bank A loans out the full amount of the deposit increase
that is allowed. This amount winds up deposited in Bank B. Bank B lends out the full
amount possible as well and this amount winds up deposited in Bank C. What is the
total increase in deposits resulting from these three banks?
20 + (20 X 0.90) + (18 X 0.90)
A.$48.00 million
B.$54.20 million
C.$56.33 million
D.$57.10 million
E.$60.00 million
Approximately ____ percent of all households invest in mutual funds.
a.10
b.25
c.50
d.75
It is especially important to use “key phrases” when preparing your resume because
a.many employers will be impressed with your vocabulary.
b.you want to show that you are well educated.
c.computer software is typically used to scan resumes and select better qualified
candidates.
d.it saves time when writing your resume.
Sue is a single mom in the 15 percent marginal tax bracket. Her son, Billy, is in
daycare, which costs $8,600 annually. How much will Sue’s dependent care credit be if
she qualifies for a 30 percent credit?
a.$6,020
b.$2,580
c.$903
d.$387
An interest rate floor is designed to protect an institution from
I. falling interest rates.
II. falling bond prices.
III. increased credit risk on loans.
IV. swap counterparty credit risk.
A.I and IV
B.II and III
C.I and III
D.II and IV
E.I only
You buy a car for $38,000. You agree to a 60-month loan with a monthly interest rate of
0.55 percent. What is your required monthly payment?
A.$634.24
B.$745.29
C.$605.54
D.$764.07
E.None of the options
Households are increasingly likely to both directly purchase securities (perhaps via a
broker) and also place some money with a bank or thrift to meet different needs. Match
up the given investor’s desire with the appropriate intermediary or direct security.
I. Money likely to be needed within six months
II. Money to be set aside for college in 10 years
III. Money to provide supplemental retirement income
IV. Money to be used to provide for children in the event of death
1>Depository institutions
2>Insurer
3>Pension fund
4> Stocks or bonds
A.2, 3, 4, 1
B.1, 4, 2, 3
C.3, 2, 1, 4
D.1, 4, 3, 2
E.4, 2, 1, 3