1) Credit card blocking is the process whereby the merchant may notify the credit card
issuer to put a hold on your account for the anticipated total amount of the charge.
2) Consumer installment loans typically are made with a fixed interest rate.
3) Tax deferral with a traditional IRA allows investment income to grow without being
taxed until it is withdrawn.
4) Young workers can afford to be in higher risk investment options with their
retirement accounts.
5) Applicants with low credit scores are often only able to obtain credit in the subprime
lending market.
6) When comparing similar investments, your objective is to earn the best after-tax
return.
7) Uninsured motorist coverage provides protection for the driver and passengers in a
car that is hit by an uninsured driver.
8) Closed-end shares are actively traded like common stocks and bonds, primarily on
the New York Stock Exchange.
9) Younger families should be wary of using retirement money for living expenses after
the death of an income provider.
10) For most employees, their employer’s health care plan is their most important
employee benefit.
11) Union or professional dues qualify as a miscellaneous itemized deduction.
12) The longer the number of years you expect to live in a house, the more likely you
would benefit from refinancing.
13) The three digit code on the back of a credit card that helps protect against
unauthorized use of the card is called its card verification value.
14) You can use the liquidity ratio to determine the number of months that you could
continue to meet your expenses using only your monetary assets should all income
cease.
15) A discharged debtor cannot use Chapter 7 of the Bankruptcy Act again for at least
six years.
16) Most younger people rent but 80 percent of those aged 55-64 are homeowners.
17) Shareholder fees are charged directly to investors for specific transactions, such as
purchases, redemptions, or exchanges..
18) ________ clauses specify that certain conditions must be satisfied before a home
purchase contract is binding.
a. Contingency
b. Home warranty
c. Deed
d. Title
19) There are several different types of scores used by lenders today including
a. FICO and Vantage scores
b. FICO and Experience scores
c. Vantage and Equity scores
d. Experience and Equity scores
20) Advantages of real estate investing include
a. low financial risk
b. simplicity compared to alternative investments
c. minimal time requirement to manage
d. none of these
21) What is the break even price of an option to buy 100 shares of XYZ with a $33
strike price if the cost of the option was $250?
a. $30.50
b. $31.50
c. $33.00
d. $35.50
22) ____ would not be included in a list of speculative investments.
a. Gold
b. Rare coins
c. Treasury securities
d. Diamonds
23) The rate of return on cash-value life insurance has historically ____ what can be
achieved by a diversified portfolio of stock and bond mutual funds.
a. lagged well behind
b. remained higher than
c. been even with
d. fluctuated above and below
24) Over the past few years, the price of houses has been increasing at an annual rate of
4 percent nationally. How many years will it take for costs to double at this rate?
a. 7
b. 9
c. 15
d. 18
25) Amy Lou Young purchased a health insurance policy with a $500 deductible and 40
percent coinsurance. If Amy Lou incurs $6,500 in covered medical expenses, her policy
will pay
a. $2,400
b. $3,600
c. $3,900
d. $6,000
26) According to the U.S. Census Bureau a person with an advanced degree earns about
how much more per year than someone with a bachelors degree?
a. $22,000
b. $26,000
c. $34,000
d. $56,000
27) Which of the following is not an example of nonprobate property?
a. Property owned by joint-tenancy with rights of survivorship
b. Property designated in a will
c. A retirement account such as a 401(k) or IRA
d. A bank account with a payable-on-death designation
28) Victoria Singer has a homeowner’s policy with personal property coverage of 50
percent of insurance on her home. What will the insurance company pay for her stolen
property under the following situation?
Contents replacement-cost coverage
a. $34,500
b. $39,500
c. $44,500
d. $45,000
29) Lenders charge a loan origination fee to pay for the cost of
a. processing the mortgage loan
b. investigating the borrower’s credit rating
c. the title search
d. all of these
30) ____ is when the home is financially and legally transferred to the new owner.
a. Foreclosure
b. Closing
c. Mortgage lock-in
d. Deed day
31) The statistic that measures the value of all goods and services produced in the
United States is the
a. consumer price index
b. index of leading economic indicators
c. federal funds rate
d. gross domestic product
32) Which of the following types of investments can potentially provide tax-exempt
interest if the principal and interest are used to pay a child’s college education?
a. Certificates of deposit
b. A government-issued super NOW account
c. Series EE U.S. government bonds
d. Money market mutual fund
33) Life insurance needs are ____ until your first child is born, then the need is ____
until the youngest child is ten, and then the need ____ until retirement.
a. high; low; increases
b. high; low; decreases
c. low; high; increases
d. low; high; decreases
34) One can lower insurance premiums by doing all of the following except
a. increasing the deductible
b. avoiding coinsurance
c. reducing hazards
d. practicing loss reduction
35) In managing property and liability risk, you should
a. buy only the legal minimum coverage on the liability insurance for your car
b. select low deductibles on property insurance for your home and car
c. keep good records that could serve to document insured property losses
d. be more concerned with loss frequency and less concerned with loss severity
36) Eric Jones develops computer software for a major company. Eric’s salary and
bonuses total $82,000, but he pays $29,233 in income and Social Security taxes. If
Eric’s annual debt repayments are $33,620, what is his debt service-to-income ratio?
a. 41 percent
b. 64 percent
c. 36 percent
d. 77 percent
37) Which of the following is most valuable to a taxpayer for the tax savings it
provides?
a. $200 charitable contribution
b. $200 dependent care credit
c. $200 unreimbursed medical expense
d. $200 employee business expense
38) Of the following sources of information to investors, which is the least helpful in
terms of solid, objective information?
a. Prospectus
b. 10-K
c. Annual report
d. SEC filings
39) Preferred stock that pays the stockholder previously skipped dividends before the
common stockholders can be paid any dividends is called ____ preferred stock.
a. cumulative
b. callable
c. participating
d. convertible
40) A form of housing ownership where the owner holds legal title to a specific housing
unit and a proportionate interest in the common grounds and facilities is
a. a cooperative
b. a condominium
c. a manufactured house
d. both a cooperative and a condominium
41) The retirement plan contribution credit would allow a single person whose AGI is
less than $27,750 to
a. reduce their income taxes by up to $2000
b. reduce their income taxes by $1 for every $1 they put into a retirement plan
c. take an income tax deduction of up to $2000
d. take an income tax deduction of $1 for every $1 they put into a retirement plan
42) One cannot rely on workman’s compensation to cover health care needs because it
a. covers only disability income needs
b. is too expensive for the average worker to carry
c. covers only job-related injuries and illnesses
d. is paid out at the discretion of the employer
43) The first step in creating an insurance contract is
a. underwriting
b. determining a premium
c. completing an application
d. issuing the policy
44) Other factors being equal, ____ bonds will offer the highest yields.
a. U.S. Treasury
b. BBB-rated corporate
c. BB-rated corporate
d. AA-rated corporate
45) Endorsements may be added at any time during the life of the policy to
a. expand coverage
b. raise policy limits
c. make other changes
d. all of these
46) People invest to
a. achieve financial goals
b. increase current income
c. gain wealth and a feeling of financial security
d. all of these
47) The ____ are the broadly defined coverages provided under the policy.
a. insuring agreements
b. declarations
c. endorsements
d. exclusions
48) The reduction of risk that occurs with purchasing insurance is primarily due to the
a. hazards you face
b. principle of indemnity
c. law of large numbers
d. large-loss principle
49) A stock that tends to trade at a low price relative to its company fundamentals is
labeled a
a. value stock
b. income stock
c. growth stock
d. preferred stock
50) A cash-flow statement shows the value of your assets and liabilities as of a specific
date.
51) The rule for tax-related records is, “When in doubt, throw it out.”
52) Americans have the highest savings rates among the major countries of the world.
53) According to a recent study, approximately 5 percent of those applying for credit
are turned down.
54) If you plan to purchase the vehicle at the end of the lease period, you would pay the
actual cash value if your lease was closed-end.
55) The IRS disallows deductions for expenses for business-related trips.
56) Financial planning is a single, customized plan regarding a person’s financial
affairs.
57) Most investors prefer to show a negative cash flow on a real estate investment.