Money Matters Final review

Opportunity costs are only associated with money management decisions involving long-term financial security. (True/False) _________

False

A FICO credit score of ____________________ would represent the least risky borrower.

850

A budget deficit results when a person's ________________________________________.

actual spending is greater than planned spending

Employment in housing-related industries increases and decreases based on changes in interest rates. (True/False) _________

True

If you worry the cost of a TV will rise from $500 to $800 if you wait, you are concerned about ____________________ risk.

Inflation

Cash and items of value that can be easily converted to cash are known as ____________________ assets.

Liquid

A ____________________ benefit is a perk on which you pay no income taxes.

Tax-exempt

The value of items owned minus the amounts owed to others equals ____________________.

Net work

According to the Rule of 72, to double savings in 8 years, you need a return of ____________________ percent.

9.00%

Future value calculations involve the process of ____________________.

compounding

The method of payment that is almost always cheaper than using credit is ____________________.

cash

Capital gains refer to profits from the sale of stocks, bonds, or real estate. (True/False) _________

True

What a person gives up by making a choice is known as ____________________.

Opportunity cost

Catherine Jones has determined the following information about her own financial situation. Her checking account is worth $850 and her savings account is worth $1,200. She owns her own home that has a market value of $98,000. She has furniture and appliances worth $12,000 and a home computer and laptop worth $3,300. She has a car worth $12,500. She has recently purchased a mutual fund worth $4,500 and she has a retirement account worth $62,300. What is the value of her investment assets? ____________________.

$66,800

Choices that are difficult to convert to cash when you need funds involve ____________________ risk.

Liquidity

Inflation increases the purchasing power of money. (True/False) _________

False

A personal ____________________ presents a summary of what you own and what you owe.

Balance sheet

A certificate of deposit usually has a ____________________ for early withdrawal of funds.

Penalty

Marjorie Wilcox borrows $300 at 21% APR with a $6 service fee; her total cost of credit is ____________________.

$69

Refinancing of a mortgage is recommended when interest rates ____________________.

Fall

Kate plans to rent instead of buy; an advantage she will realize is ____________________.

Ease of mobility

Kevin Brown rides a bike to work specifically to avoid car accidents; this is ____________________.

Risk avoidance

Reimbursement for extractions, fillings, and oral exams is provided by ____________________ insurance.

dental

Equity in a home increases at a faster rate with a ____________________ mortgage.

15-year

The most consistent quality is usually found with national-brand products. (True/False) _________

True

Vandalism, such as slashed tires, is covered under ____________________ insurance.

Comprehensive physical damage

The financial strength of an insurance company may be a major factor in holding down premium costs. (True/False) _________

True

The largest fixed expense typically associated with a new automobile is ____________________.

Depreciation

The purpose of a ____________________ deposit is to pay for damages during a lease.

Security

The most common and costly natural disaster in the United States is ____________________.

Floods

Medical payments coverage in a home insurance policy is designed to pay for legal action taken against a homeowner. (True/False) _________

False

Brokerage firms and banks have home pages where you can obtain valuable investment information. (True/False) _________

True

Lindsey Holt knows her dividend is $1.50 per share; she likely owns ____________________ stock.

Preffered

A 28-year-old with a long-term investment program should consider ____________________ stocks.

Growth

Generally, options are conservative, long-term investments. (True/False) _________

False

Setting aside $100 for savings before spending on personal expenses is called ____________________.

Paying him/herself first

When Beverly Foster lists all her assets and liabilities, she is ________________________________________.

analyzing her current assets and liabilities

The date a bondholder receives the face value of a bond is the ____________________ date.

Maturity

A safe investment that attracts conservative investors is called a ____________________ stock.

Blue chip

An investment bank assists corporations in raising funds via new security issues. (True/False) _________

True