When applying for a loan, the higher a person’s credit score/rating the

Lower the interest rate will be for the loan

Why are collectibles, such as old coins, considered a risky investment?

Finding buyers can be made is often difficult

A person receives health insurance. He/she has a $15 ins. co-pay. When they visit their doctor

Person is responsible for $15 regardless of cost of visit

What is a good strategy to build wealth for the future?

Deposit money into both savings & nvestment accounts monthly

A person with a job had a baby. She is able to increase her paycheck by

Adding the baby to her payroll exemptions (allowance)

The reason that a person should AVOID making a check payable to “cash” is that

Anyone can cash the check if it is stolen

Who suffers the LEAST when the rate of inflation increases?

People who have a loan with a fixed-interest rate

A person with renter’s insurance can submit a claim on her policy if

Her television is stolen from her apartment

The Rule of 72 helps a person determine the

# of years it takes to double money at a given interest rate

The Federal Reserve System (fed) helps protect depositors and its member banks by setting

Required amt.of $ member bank must have on deposit

Why do financial advisors warn people against taking payday loans?

These loans often result in a pattern of continued borrowing

If a person believes that he is a victim of identity theft, he must

File a report with the police and get a copy of the report

Why does a person renting an apartment buy renters insurance?

To protect her personal property in case of fire or theft

It is usually a good idea to borrow for

Something that increases in value over time

Which financial advisor is recommending a long-term investment that lowers investment risk?

Advisor C: “Invest in mutual funds.”

Bankruptcy allows a person to erase all of the following debts EXCEPT for

Income taxes and child support payments

A person who pays the minimum balance due on a credit card bill will

Be charged interest on the unpaid balance.

One DISADVANTAGE of using a non-bank ATM in a store is that a person

May be charged an ATM fee for the withdrawal

Why do investors buy stocks that pay dividends?

Investors receive payments from the company during the year

Why would a person put a stop payment on a check?

To prevent anyone from cashing a check thats lost or stolen.

As a result of putting a “stop payment” on a check, a person will

Have to pay a fee for the service

Bank customers can use an ATM to

Transfer money between checking and savings accounts

A stock is characterized as a “growth” stock because the expectation is for the corporation to

Have significant increase in sales and earnings

One advantage of having a bank savings account is that it

reliable way to earn interest & establish personal fin. hist

When using a debit card, a person should

Immediately record debit card purchases in chkbk register

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Walker W!SE REMEDIATION 1

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Questions 45

Answers

1
When applying for a loan, the higher a person’s credit score/rating the
Lower the interest rate will be for the loan
Shorter the payment period will be for the loan
The higher the interest rate will be for the loan
Longer the payment period will be for the loan
2
Why are collectibles, such as old coins, considered a risky investment?
Collecting coins is a popular activity
Finding buyers can be made is often difficult
Its necessary to have several copies of each coin
Building a large collection is difficult
3
A person receives health insurance. He/she has a $15 ins. co-pay. When they visit their doctor
Person will only be covered for $15 toward the cost of visit
Doctor will charge the person’s ins. co. $15 for the visit
Person is responsible for $15 regardless of cost of visit
Doctor will deduct $15 from the person’s bill
4
The U.S. Treasury Department is responsible for
Printing money.
Preparing tax returns.
Clearing checks.
Training financial advisors.
5
What phrase is used for putting money into a savings account?
Making a withdrawal
Making a deposit
Verifying the account
Balancing the account
6
What is a good strategy to build wealth for the future?
Pay for goods and services using credit cards
Have paychecks automatically deposited in a checking account
Deposit money into both savings & nvestment accounts monthly
Pay bills when received and use a checking account
7
A person with a job had a baby. She is able to increase her paycheck by
Applying for her baby’s social security number.
Increasing money contributed to her pension.
Opening a savings account for the baby.
Adding the baby to her payroll exemptions (allowance)
8
What action will help a person the MOST to make investment decisions?
Open a brokerage account
Ask friends about their investment.
Read advertisements on the internet
Create financial goals
9
The reason that a person should AVOID making a check payable to “cash” is that
The only place the check can be cashed
Anyone can cash the check if it is stolen
Checks written to cash can only be written for under $100
The check can only be cashed by the person who wrote it
10
Who suffers the LEAST when the rate of inflation increases?
People who are unemployed
People who have a loan with a fixed-interest rate
People who need to borrow money
People who buy goods and services with credit cards
11
A person with renter’s insurance can submit a claim on her policy if
Her television is stolen from her apartment
Her monthly rent on the apartment is more than $500
She is involved in a car accident
She needs to be hospitalized
12
The Rule of 72 helps a person determine the
Amount of money needed to pay for emergencies
Yearly inflation rate
# of years it takes to double money at a given interest rate
Amount of life insurance needed to protect a person’s family
13
Subtracting total dollar amount you owe from the total dollar amount you own, tells you your
Portfolio value
Liabilities
Net worth
Liquidity
14
The Federal Reserve System (fed) helps protect depositors and its member banks by setting
Limits on how many branches a member bank can have
Required amt.of $ member bank must have on deposit
Requirement where member bank advertise products & services
Limits on the number of depositors a member bank may have
15
Why do financial advisors warn people against taking payday loans?
These loans often result in a pattern of continued borrowing
A persons salary cannot be increased until the loan is paid
Employers wont pay for med. insurance until the loan is paid
The loans are often from unlicensed lenders
16
A person generally pays a lower interest rate on a car loan than on a personal loan because the
Price of new cars increase each year
Car is insured
Car is collateral for the loan
Loan on the car requires a cosigner
17
The government taxes cigarettes in order to raise revenue and to
Pay for product advertising in the U.S.
Provide money to small store owners
Encourage tobacco growing
Discourage smoking
18
If a person believes that he is a victim of identity theft, he must
File a report with the police and get a copy of the report
Destroy his debit card monthly statements
Avoid discussing the situation
Rent a safety deposit box at a bank and store his valuables
19
What needs to be included in a will?
Where the will is to be read
The cause of death
person’s monthly budget
The name(s) of beneficiaries
20
Why does a person renting an apartment buy renters insurance?
To lower her monthly rent
To provide income in case she becomes disabled
To meet federal rent laws
To protect her personal property in case of fire or theft
21
A person interested in earning investment income is generally advised to buy stocks that pay
Premiums
Awards
Dividends
Interest
22
Which is the best lifetime investment?
Insurance
Gold
Education
Real Estate
23
It is usually a good idea to borrow for
Anything that will make the person happy
The amount needed to pay bills each month
Anything if the interest rate is low
Something that increases in value over time
24
When determining the dollar value of a job offer which benefit should not be included?
Sick days
Tuition reimbursement
Vacation days
A private office
25
Which financial advisor is recommending a long-term investment that lowers investment risk?
Advisor D: “Invest in speculative stock.”
Advisor C: “Invest in mutual funds.”
Advisor A: “Purchase a used car.”
Advisor B: “Purchase a computer.”
26
Bankruptcy allows a person to erase all of the following debts EXCEPT for
Income taxes and child support payments
Doctors’ fees and hospital charges
Credit card charges and installment loans
Past due rent and car loans
27
When using a debit card to buy something, where does the money come from
The U.S. Treasury Department
A certificate of deposit
A checking account
A stock account
28
Which is the most difficult budget item for a person to change?
Variable expenses
Monthly savings
Fixed expenses
Discretionary income
29
A person who pays the minimum balance due on a credit card bill will
Be charged a fixed fee for having an unpaid balance
Have interest charged on all of his credit card accountsd.
Be charged interest on the unpaid balance.
Get an increase in the annual fee for using the card
30
The cost of car insurance is affected by the
Kind of car owned
Number of times the car has been serviced
Type of gas the care requires
Expertise of the car salesperson
31
The stock market is rising, investors expect stock prices to continue rising, is described as a
Volatile market
Stable market
Bull market
Bear market
32
One DISADVANTAGE of using a non-bank ATM in a store is that a person
Must pay interest on the money withdrawn from the ATM
May be charged an ATM fee for the withdrawal
Will not receive a record of money withdrawn from the ATM
Must withdraw at least $50 from the ATM
33
Why do investors buy stocks that pay dividends?
They stock price will not change
Investors receive payments from the company during the year
Investors are allowed to buy company products at a discount
The price is generally lower
34
Why would a person put a stop payment on a check?
To close the checking account.
To avoid paying a fee for a lost check.
The payee does not have a checking account.
To prevent anyone from cashing a check thats lost or stolen.
35
The best way to ensure a high credit score is to
Make loan payments on time.
Have a high unpaid credit card balance.
Invest in speculative stocks.
Graduate from college.
36
As a result of putting a “stop payment” on a check, a person will
Be asked to close his checking account
increase the minimum balance required for the account
Not be able to use his debit card
Have to pay a fee for the service
37
A financially literate person invests & makes donations by using money thats left after paying
From his pay day loans
From is Roth Individual Retirement Account (IRA)
In his emergency fund
his budgeted monthly expenses
38
A likely consequence of failing to pay a car loan is
An interest rate increase on another loan she has
An increase in taxes withheld each pay period
A new loan for a longer repayment period
Repossession by the lender
39
Which is NOT a mandatory deduction from a person’s salary?
Social Security (FICA)
401(k) contribution
State Unemployment Insurance/State Disability Insurance
State Income Tax
40
Bank customers can use an ATM to
Transfer money between checking and savings accounts
Apply for car loans
Change their credit history
Buy mutual fund, stocks, treasury notes and bonds.
41
A stock is characterized as a “growth” stock because the expectation is for the corporation to
Provided shareholders with dividends
Pay a higher rate of interest monthly
Have significant increase in sales and earnings
Issue bonds to investors
42
The reason corporations issue bonds is to
Encourage Americans to save
Borrow money from investors
Increase the number of their customers
Increase their employee salaries
43
One advantage of having a bank savings account is that it
Guarantee depositors interest-free loans
Protects from paying charges/latefees on other bank accounts
Offers depositors higher interest rate on U.S savings bonds.
reliable way to earn interest & establish personal fin. hist
44
When using a debit card, a person should
Check monthly credit card stmnt to verify debit activity
Know that she has 30 days to pay for purchases made w/debit
Immediately record debit card purchases in chkbk register
Keep the card personal identification number (PIN) in wallet
45
The most important factor when applying for a credit card is the
Annual deductible
Rate of inflation
Annual Percentage Rate (APR)
Color of the card

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