89 terms

Family Economics Exam

STUDY
PLAY
By saving and investing, people are much more likely to have funds available for future consumption.
True.
You cannot build financial security or wealth unless you spend less than you earn.
True.
Compound interest will produce larger investment values than simple interest.
True.
High-demand occupations tend to pay low salaries.
False.
Posting your resume to monster.com is all you need to do to get a good job.
False.
Financial planning begins by examining one's values.
True.
Specific financial goals drive to creation of budgets.
True.
The major purpose of budgeting is to reach your financial goals.
True.
Financial assets include cash and near-cash items hat can be readily converted to cash.
True.
It is usually easy to reduce a fixed expense.
False.
Liquidity is the speed and ease with which an asset can be converted to cash.
True.
Keeping good records is important for effective financial planning.
True.
The internal revenue service is the agency that collects federal income taxes.
True.
A progressive tax is one that demands a higher percentage of a person's income as income increases.
True.
State sales tax is an example of a regressive tax.
True.
Tax avoidance is illegal whereas tax evasion is legal.
False.
Credit unions with federal charters have their accounts insured through FDIC.
False.
When you use a debit card, funds are almost instantaneously removed or held from your account.
True.
Fixed-time deposits specify a period of time that the savings must be left on deposit.
True.
In general, the shorter the maturity time on a certificate of deposit, the higher the rate of interest that will be paid.
False.
Checks mailed to the bank for deposit should always be endorsed with a restrictive endorsement.
True.
The additional dollar cost for using credit is referred to as the APR.
False.
Experian, Equifax, TransUnion are the three largest national groups of credit bureaus.
True.
The U.S. Government measures inflation using:
the consumer price index
________ income is exempt from taxes in the current year but is subject to taxation in a later year.
tax-sheltered
Which of the following is the best example of a well-stated financial goal?
Buy a $3,000 computer in 18 months.
The first step in the budgeting process is
setting financial goals
Which of the following is classified as a tangible asset?
motorcycle
The formula for calculating net worth is
assets - liabilities
Which of the following tax is progressive
federal income taxes
Earned income is reported to the federal government on some version of a
1040 Form
The Federal Deposit Insurance Corporation (FDIC) insures accounts in
commercial banks
_____ typically pays the highest rates of interest of savings
credit unions
A check drawn on a financial institution's finances, and made out to a specific payee is called a
cashier's check
In general, you will receive higher rates of interest on your certificate deposit the _____ the maturity and the ____ the dollar amount.
longer; larger
Which of the following is the best advice for people who want to start saving?
pay yourself first
According to financial advisers, a family with monthly living expenses of $2,500 should maintain readily accessible savings of at least
$7,500
The best use of credit using the following examples is probably to:
obtain an education
The ____ the APR, the ___ the true cost of credit.
lower, lower
your continuing record of credit usage is called your
credit history
a lender can legally discriminate in granting credit based on
credit history
what are the three c's of credit?
capacity
character
collateral
needs and wants should both be considered necessities.
false.
a car's sticker price is the manufacturer's suggested retail price.
true.
The sticker price on a new car is typically the final sales price.
False.
You can estimate the trade-in value of your car on the websites for the National Automobile Dealer's Association, Edmunds, and Kelley Blue Book
True.
Sellers are the only source of financing for big ticket items.
False.
To be most successful in negotiating, one must be willing to walk away from the deal.
True.
Buying a home represents the largest expenditure most people ever make
True.
A lease typically protects the landlord but not the renter.
False.
A housing unit that is detached from other units is called a single-family dwelling.
True.
The actual transfer of ownership of real estate occurs at the closing.
True.
The abbreviation PITI stands for principal, interest, taxes, investment.
False. Principle, interest, tax, insurance.
When the purchase contract is signed, the seller keeps the earnest money as a deposit against the purchase price.
True.
Property insurance protects you from financial losses resulting from the damage to or destruction of your property or possessions.
True.
Deductibles are requirements that the insured pay a n initial portion of any loss.
True.
Independent agents typically represent more than one insurance company
true.
uninsured motorist coverage provides protection for the driver and passengers in a car that is hit by an uninsured driver.
true.
Earthquake insurance is covered under the standard homeowner's insurance policies.
False.
The federal government administers the national flood insurance program.
True.
A group health care plan is sold collectively to an entire group of persons rather than individuals.
True.
Open-enrollment periods are common in group health care plans.
True.
Medicaid pays for the costs of indigent nursing home care.
True.
A student who has lost health care coverage under his parent's employer group plan is eligible for coverage through COBRA.
true.
Life insurance is insurance that protects against financial losses resulting from death.
True.
The largest potential financial loss resulting from premature death is lost income.
True.
Term life insurance costs far more than cash-value life insurance.
False.
When purchasing a term life policy, it is generally best to purchase a guarantee a renewable policy.
True.
Once a life insurance policy is issued, the insurance company cannot refuse to pay a death benefit.
False.
The time limit specified on a suicide clause is generally five years.
False. Two years.
Parents with minor children almost always need life insurance.
True.
Independent agents sell insurance for more than one life insurance company.
True.
Of these four items, which is most aptly described as a need?
shelter
Cal Purcell has found an apartment that has monthly rent payment of $950 and requires the equivalent of one month's rent as a security deposit and a$500 damage deposit. in order to move in, carl will probably be required to pay:
$2400
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
a condominium
an increase in the value of a home is called
appreciation
morgage insurance protects
the lender
the primary difference between a speculative risk and a pure risk is that there is a chance for ___ in a speculative risk but a chance for ___ in a pure risk
gain and loss/ only loss
which of the following types of insurance can be puchased only through a federal government program
flood insurance
the period of time each year when you can make changes in your selection of health care plans available from your employer is called an
open enrollment period
one cannot rely on workman's compensation to cover health care needs because it:
covers only job-related injuries and illness
life insurance should be bought primarily
to provide protection from financial losses
the person who receives the proceeds of a life insurance policy at the death of the person whose life is insured is the
beneficiary
group life insurance would be especially beneficial for persons who:
have health problems
the advantage of term insurance is
more coverage for premium dollar
ratings of the financial strengths of insurance companies are available from:
both standard and poors and AM best company
establish household and personal goals
recognize a problem or opportunity
make the purchase decision
evaluate the purchase decision
purchase the good or service
conduct a post purchase evaluation
...
set investment goals
assess risk and return
select the right investments
manage your investments
...
72 rule
72/rate of return= #of years to double your money
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