Why might rising interest rates depress stock prices?

Rising interest rates can result in lower business profits

U buy 40 shares of stock at $80 a share. Later, the corporation approves a 2-for-1 stock split.

Then U will own 80 shares the price of each share is $40

Your health insurance policy requires U to pay the first $500 of medical costs each year.

This is called your annual deductible

Sam planned to cash his paycheck at a check cashing store. U told him to cash it at his bank

A store may typically charge high fees

How can individuals be prepared for losing their job or having a large medical expense?

Save at least three months of income

Insurance is frequently described as a method of "sharing the risk" because the

the risk of loss is shared with all the other policy holders

U had a $20,000 whole life insurance policy for 5 years. If you surrender it now, you will get

a sum of money calculated by the insurance company.

U own a small house that has three rental apartments. Your profits would be lower if

one of the apartments is not rented.

Which is the best example of a way to reduce fees paid for ATM transactions

If using a debit card, add $50 in cash to the transaction

You just got a very expensive piece of jewelry. What should you say to your insurance agent?

"I think I need a personal property floater."

Before the Kiss Corporation can issue stocks or bonds, it must register the issue with

The Securities and Exchange Commission (SEC)

Travelers checks are often used for vacations because they

Function as cash and are easily replaced if lost

The cost to use someone else's money for a period of time is called the

Interest rate expressed as a percentage

U buy a flat screen, plasma TV. Why should U add a personal property floater to your insurance?

If the TV gets damaged/stolen, the insurance will replace it

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IC - April Test Prep #2

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Random questions from Money Power to prepare for Certification

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Questions 20

Answers

1
Why might rising interest rates depress stock prices?
Rising interest rates usually means the economy has less
Investors are lured away from savings to stocks
Rising interest rates can result in lower business profits
Rising interest rates can result in higher business profits
2
U buy 40 shares of stock at $80 a share. Later, the corporation approves a 2-for-1 stock split.
Then U will own 20 shares and the price of each share is $80
Then U will own 80 shares the price of each share is $40
Then U will own 40 shares and the price of each share is $40
Then U will own 80 shares and the price of each share is $80
3
The dollar amount a lender charges to borrow money is called the:
Finance charge
Annual Percentage Rate (APR)
Loan balance
Principal
4
Your health insurance policy requires U to pay the first $500 of medical costs each year.
This is called the major medical benefit
This is called the co-insurance clause
This is called your annual deductible
This is called the premium
5
Sam planned to cash his paycheck at a check cashing store. U told him to cash it at his bank
A store will generally require a co-signor
There is a limit on the size of the check he can cash
A store will require a 2 day waiting period
A store may typically charge high fees
6
To determine the time value of depositing $100 in savings, U need to know the interest rate and
whether the account is FDIC protected
her total income
whether the bank offers overdraft protection
the rate of inflation
7
Buying a treasury bill (T-bill) is best for investors who are looking for
a place to invest between $100-$500.
a secure, low risk investment
an investment that matures in 10-30 years
a higher yield on the investment than corporate bonds offer
8
What is the largest equities market in the world?
New York Stock Exchange (NYSE)
Over-the-counter (OTC) market
NASDAQ market
American Stock Exchange (AMEX)
9
How can individuals be prepared for losing their job or having a large medical expense?
Pay credit card bills on time
Save at least three months of income
Prepare a budget
Maintain a checking account with sufficient funds
10
Insurance is frequently described as a method of "sharing the risk" because the
Risk of loss is shared with the insurance company salesman
risk of loss is shared with the government
the risk of loss is shared with ancient alien astronauts
the risk of loss is shared with all the other policy holders
11
U had a $20,000 whole life insurance policy for 5 years. If you surrender it now, you will get
a sum of money calculated by the insurance company.
a sum of money that must be used to buy term life insurance
one-fifth of the $20,000 face value
$20,000 less the premiums paid
12
U own a small house that has three rental apartments. Your profits would be lower if
a tenant in an apartment decides to paint the hallways
one of the apartments is not rented.
taxes on the house are lowered
the mortgage on the house is paid off
13
Which is the best example of a way to reduce fees paid for ATM transactions
Only take out $20 at an ATM machine located in a near store
If using a debit card, add $50 in cash to the transaction
Use any bank ATM rather than going to a branch of your bank
Use any ATM at night and on the weekends
14
You just got a very expensive piece of jewelry. What should you say to your insurance agent?
"I think I need a personal property floater."
"I think I need a vicarious liability policy."
"I will deduct the cost of the jewelry from my premium."
"I think I should get speculative risk insurance."
15
Before the Kiss Corporation can issue stocks or bonds, it must register the issue with
Its Board of Directors
The World Bank
The Federal Reserve
The Securities and Exchange Commission (SEC)
16
Travelers checks are often used for vacations because they
Are equivalent to credit cards
Are FDIC insured
Function as cash and are easily replaced if lost
Are free at all banks and credit unions
17
The cost to use someone else's money for a period of time is called the
Opportunity cost
Minimum payment
Inflation rate
Interest rate expressed as a percentage
18
This federal law requires the cost of credit be disclosed to U in bold print on loan agreements
Fair Debt Collection Practices Act
Truth in Lending Act
Fair Credit Reporting Act
Equal Credit Opportunity Act
19
U buy a flat screen, plasma TV. Why should U add a personal property floater to your insurance?
To reduce the premium on the homeowner’s insurance.
To protect U from liability for damages caused by the TV
If the TV gets damaged/stolen, the insurance will replace it
To show the insurance company that U buy good stuff
20
When a person declares bankruptcy that fact will appear on the person’s credit report
for a 10 year period
until the person repays all debts owed
until the person is able to receive a new credit card
for a 3 year period

IC - April Test Prep #2 Flashcards | StudBud