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For the past five years, Ralph 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
part of 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
John buys 100 shares of Apple at $100
and two years later sells the shares for
$200 each, which of the following is true:
a) He will have a capital loss of $10,000
b) He will have a capital gain of $10,000
c) He will have a dividend of $10,000
d) He will have ordinary income of $10,000
The stock market is performing well and its
future is thought to be very positive and
promising. This would be considered:
a) A bear market
b) A pig market
c) A lion market
d) A bull market
Sally's health insurance policy requires her
to pay the first $500 of medical costs each
year before the insurance company will pay
any of her medical bills. This policy provision
is the:
a) Co-insurance clause
b) Premium
c) Annual deductible
d) Major medical benefit
When Jessie needs health care, she must first go to
her primary care physician who coordinates her
care and decides whether Jessie should see a
specialist. Jessie pays $10 as the co-pay when she
sees her primary care doctor. Jessie has which
type of health insurance?
a) Fee-for-service health plan
b) Managed care health plan
c) Medicaid health plan
d) Traditional health plan
The only type of life insurance that
does not develop a cash value is:
a) Term life insurance
b) Whole life insurance
c) Universal life insurance
d) Variable universal life insurance
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.
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
Mutual funds are:
a) An investment portfolio managed by the
investor
b) An investment that holds a wide range
of different investment instruments,
providing diversification
c) Usually less risky than investing in a
money market
d) Guaranteed to increase in value
Which of the following is true about Credit
Reports?
a) They are a 3 digit number which indicates your
creditworthiness and ability to pay your debts
b) You must always pay to receive a credit report
c) You are eligible to receive one free credit report
per year from each of the three credit reporting
companies
d) If you declare bankruptcy, it does not appear on
your credit report
Which of the following is true about bonds?
a) The only way to make money on bonds is
through interest payments.
b) Bonds pay interest as well as dividends.
c) The price of a bond remains the same
throughout the term of the bond.
d) When interest rates in an economy increase, the
price of bonds go down.
Which of the following is NOT true about credit
unions?
a) They tend to charge higher interest rates on
loans than traditional banks.
b) They tend to pay higher interest rates on CDs
and other savings accounts than traditional
banks.
c) They are owned by their members who are
usually members of a union.
d) They are not-for-profit institutions.
All other things being equal, you would rather
that the interest on your savings account be
compounded:
a) Daily
b) Monthly
c) Quarterly
d) Annually
The Federal Reserve System (or Fed) is
responsible for?
a) Regulating the money supply
b) Setting bank reserve requirements
c) Supplying paper currency
d) All of the above
The Federal Deposit Insurance Corporation
(FDIC) insures commercial bank accounts for
up to?
a) $100,000
b) $200,000
c) $250,000
d) $150,000
The Securities and Exchange Commission
(SEC) was formed to?
a) Help people with their tax reporting
b) Prevent accounting fraud
c) Provide for the defense security of our country
d) Act as an agent for exchanging foreign currency
If you need to cash your certificate of deposit
(CD) prior to its maturity date:
a) You lose the full value of your CD
b) You will not be charged a penalty if you pay it
back within 30 days
c) You will lose interest and may be subject to a
penalty fee
d) None of the above
Where can you go to get a loan?
a) Banks or Credit Unions
b) Finance Companies
c) Pawnshops or Payday Lenders
d) All of the above
Which institutions charge the highest interest
rates on loans?
a) Pawnshops
b) Payday lenders
c) Finance companies
d) tax preparers
The new credit card regulations allow
consumers to opt in for overdraft protection.
This means?
a) No penalties for going over your credit limit
b) You can never go over your credit limit
c) You can go over your credit limit
d) None of the above
The time value of money means?
a) The current worth of future sums of money
b) How many times you forget to save money
c) How many years till retirement
d) How long money can be used before it needs to
be replaced
Which type of investment offers more
liquidity?
a) One year CD
b) One year treasury bill
c) Savings account
d) 5 year adjustable rate mortgage
According to the rule of 72 how many years
will it take for a $100 investment to double
assuming a 9% interest rate?
a) 10
b) 6
c) 8
d) 9
Why do you need to reconcile a checking
account?
a) To prevent identity theft
b) You don’t need to reconcile a checking account
c) To match your check register to the bank
statement
d) You like math
If you default on your student loan?
a) The federal and state government can withold
any income tax refunds due you
b) The government can garnish your wages
c) Your credit score will decline
d) All of the above
Tax anticipation loans are?
a) Loans to help cover the cost of taxes due
b) Loans in anticipation of tax refunds
c) Loans to cover payroll taxes
d) None of the above
Which of the following best describes the
primary sources of income for most people age
20-35?
a) Dividends and interest
b) Salaries, wages, tips
c) Profits from business
d) Rents
__________ is access to funds to cover any
short-term cash deficiencies.
a) cash management
b) money management
c) Credit management
d) Liquidity
The purpose of the tax form W-4 is:
a) A form used to file annual income tax returns
b) A form that reports an employee's annual
wages and the amount of taxes withheld from
his or her paycheck.
c) A form used by your employer to withhold the
proper amount of federal income tax from your
paycheck
d) All of the above
Regarding the federal income tax withholding
tables, the amount of each employee's earnings
withheld is affected by:
a) the age of the employee
b) the number of exemptions claimed
c) the number of years working for the company
d) all of these
If you give something up as a result of making a
decision, you are incurring a(n):
a)
b)
c)
d)
net cost
Liquidity problem
Opportunity cost
Financing cost
Inflation can cause difficulty in many ways.
Which group would have the greatest problem
during periods of high inflation that last several
years?
a) Older, working couples saving for retirement
b) Young working couples with children
c) Older people living on fixed retirement income
d) Young couples with no children who both work
The U.S. Treasury is responsible for:
a) Issuing all Treasury bonds, notes and bills
b) Collection of taxes and enforcement of tax laws
(through the IRS)
c) Overseeing U.S. banks
d) All of the above
If your income exceeds the amount that you
wish to spend, you should __________ your
investments or __________ loans.
a) reduce; repay existing
b) increase; repay existing
c) increase; obtain more
d) reduce; obtain more
Which of the following "backs" the value of
money in the United States?
A. The gold stored in the Federal Reserve Bank of
New York
B. The acceptability of it as a medium of exchange
C. The willingness of foreign government to hold
U.S. dollars
D. The size of the budget surplus in the U.S.
government.
To keep high inflation from eroding the value of
money, monetary authorities in the United States:
A. Create token money that is less than its intrinsic
value
B. Make paper money legal tender for the payment
of debt
C. Establish insurance on checkable deposit accounts
D. Control the supply of money in the economy
Which of the following is not true?
a) When a company does an IPO, it is going public
b) When a company goes public those shares are
first sold in a secondary market
c) An IPO enables companies to generate money
for the company
d) Once a company goes public they must report
their financial results to the public
If a person has $450,000 in liabilities and
$700,000 in assets, what is their net worth?
a) - $250,000
b) $250,000
c) $450,000
d) $700,000
In which of the following retirement plans
would you have money taken from each
paycheck as specified by you?
a) Roth Individual Retirement Account (IRA)
b) Traditional IRA
c) 401K plan
d) Social Security
In which of the following retirement plans is
the money you contribute placed in a pool
for the benefit of many individuals rather
than in a plan specifically for you?
a) Roth Individual Retirement Account (IRA)
b) Traditional IRA
c) 401K plan
d) Social Security
If a person’s house could be sold for $500,000
and they currently owe $300,000 on their
mortgage, what is the equity they have in the
house?
a) Nothing
b) $200,000
c) $300,000
d) $500,000
Why do you need to reconcile a checking
account?
a) To prevent identity theft
b) You don’t need to reconcile a checking account
c) To match your check register to the bank
statement
d) You like math
If you default on your student loan?
a) The federal and state government can withhold
any income tax refunds due you
b) The government can garnish your wages
c) Your credit score will decline
d) All of the above
To keep high inflation from eroding the value of
money, monetary authorities in the United States:
A. Create token money that is less than its intrinsic
value
B. Make paper money legal tender for the payment
of debt
C. Establish insurance on checkable deposit accounts
D. Control the supply of money in the economy
What is a cash loan from a credit card that often has
a significantly higher interest rate:
A. Bank Loan
B. Cash Advance
C. Credit Card Loan
D. Credit Advance
Which act regulates what companies can advertise
and say about the benefits of their loans or services
and what information must be disclosed?
A. Credit CARD Act
B. Fair Credit Reporting Act
C. Truth in Lending Act
D. Credit Repair Organizations Act
How does the degree of risk influence the interest
rate charged for a credit card?
A. Higher risk, higher rate
B. Higher risk, lower rate
C. Lower risk, higher rate
D. No influence, everyone gets the same rate
Your debt-to-credit ratio compares:
A. how much you owe with the amount of credit
available to you
B. the average age of your accounts
C. the mix of different categories of credit you have
D. new credit inquiries
Who should you are a victim of identity theft, who
should you contact?
A. FDIC
B. FDA
C. FTC
D. FBI
Which of the following is NOT a characteristic of
predatory lending?
A. Higher rates than the borrower qualifies for
B. Excess or hidden fees in the amount financed
C. Inadequate disclosure of true costs and risks
D. Loan terms or structures that make it possible to
reduce or pay indebtedness
Which of the following is NOT an example of a loan
backed by collateral?
A. Mortgage
B. Car Loan
C. Student Loan
D. Secured Credit Card
Where can you bring in something you own, and if
the broker is interested, he will offer you a loan? He
keeps your item until you repay the loan. The loan
amount will likely be a small fraction of the item's
actual value.
A. Bank
B. Pawnshop
C. Government
D. Credit Union
A basic principle of insurance is sharing the financial
consequences of events that are unlikely to occur;
many people pay to cover the losses of a few. This is
known as:
A. Claims
B. Premiums
C. Deductibles
D. Risk Sharing
Collision Insurance will reimburse the insured for any
damage sustained to their personal automobile that is
due to the fault of the insured driver. When should you
drop collision coverage?
A. When you buy a brand new car
B. When you lease a brand new car
C. When your vehicle depreciates in value to $2,500
D. When your vehicle depreciates in value to $25,000