Money Power Review Joanie McGlinn

35 Questions

Question 1 Question 1 Which of the following is considered to be open-end credit? A A mortgage. B A car loan. C Department store charge cards. D Installment loans.

Question 2 Question 2 When a person declares bankruptcy that fact will appear on the persons credit report A for a 3 year period. B for a 10 year period. C until the person repays all debts owed. D until the person is able to receive a new credit card.

Question 3 Question 3 What is meant by an uncollateralized loan? A A loan not backed by a co-signer who agrees to cover the amount of the loan. B A personal loan without assets to cover the loan amount. C A home equity loan. D A loan taken on a life insurance policy.

Question 4 Question 4 When a person brings an item to a pawnshop to obtain cash, the transaction is considered A a collateralized loan. B a custodial payment. C an unsecured loan. D a sales agreement.

Question 5 Question 5 A person has three credit cards with very large outstanding balances and is unable to make payments on any of them. Which action should the person take? A Notify a credit reporting agency in order to avoid a late fee. B File for bankruptcy in order to maintain ones current credit score. C Notify the credit card companies in order to negotiate a new payment plan. D Contact the Internal Revenue Service in order to avoid paying income tax this year.

Question 6 Question 6 Which of the following does the Federal Reserve use to regulate the nation's money supply? A Fiscal policy B Proposing legislation C Monetary policy D Regulations

Question 7 Question 7 Money for saving, investing, or spending cannot be from: A An inheritance from someone who has died B Discretionary income or a gift of money C Capital gains from a sale of stock D Capital losses from the sale of stock

Question 8 Question 8 Identify the background color of a U.S. $5.00 bill. A Orange B Blue C Green D Yellow

Question 9 Question 9 When money is not used and goods and services are exchanged for other goods and services, this system is called: A Credit B Money C Barter D Checks

Question 10 Question 10 A man budgeted $200 a month for clothing. This month the man spent $150 on clothing therefore that budget item is considered to have A an outflow deficit. B an income overage. C a budget variance. D a budget deficit.

Question 11 Question 11 One of the benefits of holding an investment for over a year rather than selling it in less than a year is that the A capital gains on the investment will be taxed at a lower rate. B fees will not be charged by brokers for selling the investment. C money earned on the investment will be considered tax-free. D profits on the investment can be averaged over the length of time the investment is held.

Question 12 Question 12 A person's debt ratio shows the relationship between debt and net worth. The lower the ratio the A better off financially the person is. B worse off financially the person is. C more liquid assets the person has. D less liquid assets the person has.

Question 13 Question 13 A person complains about how expensive it is to be a cigarette smoker. One of the reasons cigarettes are so expensive is that A The tobacco supply is controlled by the Federal Trade Commission (FTC). B the tobacco industry imports most of the tobacco. C their cost is controlled by the Food and Drug Administration (FDA). D the government imposes an excise tax on them.

Question 14 Question 14 A company offers a defined-contribution pension plan which means that upon retirement the employee will receive A one-half of the employees last years salary. B the total amount of money contributed plus investment earnings. C an amount of money based only on the length of time the employee worked for the company. D a specified amount of money based totally on the profit earned by the company while the employee worked there.

Question 15 Question 15 After five years of owning a Roth Individual Retirement Account (IRA), a person wants to buy his first home, the person can withdraw money from the Roth IRA A tax and penalty free. B but must pay a set penalty at the time of withdrawal. C and have penalties deferred until retirement. D and owed taxes are deferred until retirement.

Question 16 Question 16 An investor bought 40 shares of ABC corporation's stock at $80 a share. Two weeks later, the investor receives notice that the corporation has approved a 2-for-1 stock split. Based on this information, the investor would own at the moment of the split A 20 shares of the stock and the price of each share is $80. B 40 shares of the stock and the price of each share is $40. C 80 shares of the stock and the price of each share is $40. D 80 shares of the stock and the price of each share is $80.

Question 17 Question 17 Using a brokerage firm, a qualified investor buys 1000 shares of a common stock at $50 a share on 50% margin. This means that the A investor will pay only $5000 for the shares. B investor is buying 2000 shares. C brokerage firm is lending the investor 50% of the money. D brokerage firm will own 50% of the 1000 shares of stock that were purchased.

Question 18 Question 18 Before the Kiss Corporation can issue stocks or bonds, it must register the issue with: A Its Board of Directors B The Federal Reserve C The World Bank D The Securities and Exchange Commission (SEC)

Question 19 Question 19 As an investment, a person decides to buy a small house that has three rental apartments. The profits from this investment may be lower then expected if the A tenant in an apartment decides to paint the hallways. B mortgage on the house is paid off. C taxes on the house are lowered. D one of the apartments is not rented.

Question 20 Question 20 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.

Question 21 Question 21 To determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and A her total income. B the rate of inflation. C whether the account is FDIC protected. D whether the bank offers overdraft protection.

Question 22 Question 22 If a person has $1,000 in a savings account and earns $20 a year in interest on that account, the rate of return on the money is close to A 5%. B 2%. C 10%. D 20%.

Question 23 Question 23 What should a person do when he believes he is being charged too high a rate of interest for a loan by a lending institution? A Accept the loan but pay it off early. B Ask the lending institution to lower its rates. C Notify the lending institution about state usury laws. D Notify the local Better Business Bureau.

Question 24 Question 24 The annual percentage rate (APR) is: A The true cost of credit that must be disclosed on a loan agreement B Always expressed in dollars C Required by the Securities Exchange Commission D Required by the Comptroller of the Currency

Question 25 Question 25 Which of the following is the federal law that requires the cost of credit be disclosed to consumers in bold print on loan agreement? A Fair Credit Reporting Act B Equal Credit Opportunity Act C Truth in Lending Act D Fair Debt Collection Practices Act

Question 26 Question 26 For the past five years, a person 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 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.

Question 27 Question 27 A woman has just received a very expensive piece of jewelry. The woman has homeowner's insurance. Which statement would it be most appropriate for her to make to her insurance agent? A "I think I need a personal property floater." B "I think I should get speculative risk insurance." C "I will deduct the cost of the jewelry from my premium." D "I realize that if this jewelry is stolen it will be considered vicarious liability."

Question 28 Question 28 A person buys a flat screen, plasma, theater-like television. The person has homeowners insurance. Why would it be appropriate to add a personal property floater to that insurance? A To reduce the premium on the homeowners insurance. B To protect the person who owns the television from liability for damages. C To show the insurance company a good faith investment has been made. D To cover the cost of replacement should the television get damaged or stolen.

Question 29 Insurance is frequently described as a method of "sharing the risk" because the: A Risk of loss is shared with the insurance company sales person B Insured shares the risk of loss with all the other policy holders C Insured can share the risk by spreading the cost over a number of years D Risk of loss is shared with the government

Question 30 Question 30 Generally, the higher the deductible on an insurance policy, the A greater the premium. B lower the premium. C more frequently the premium has to be paid. D less frequently the premium has to be paid.

Question 31 Question 31 If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the A US Treasury Department. B Federal Deposit Insurance Corporation. (FDIC). C State Banking Commission. D Federal Reserve Board.

Question 32 Question 32 The National Credit Union Administration (NCUA) insures accounts in: A Credit unions B Commercial banks C Brokerage firms D Savings banks

Question 33 Question 33 Frankie's savings account has earned a lot of interest. He wants to know if he must pay taxes on the interest earned. What would the IRS tell him? A Interest earned on savings accounts is not taxable B A sales tax will be charged on the interest earned C Savings account interest is taxable D If the interest is under $50, it is not taxable

Question 34 Question 34 Pat has a savings account and a car loan from a not- for-profit financial institution owned by its members. She is probably a member of what type of financial institution? A Credit union B Commercial bank C Savings and loan association D Investment club

Question 35 Question 35 Joan wants to open a checking account and wonders if checking accounts pay interest. How would you answer her question? A All checking accounts pay interest B Some types of checking accounts pay interest C Checking accounts never pay interest D Checking accounts pay interest if the account balance does not fall below $300.00

50 QUESTIONS

Question 1 Question 1 If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the A US Treasury Department. B Federal Deposit Insurance Corporation. (FDIC). C State Banking Commission. D Federal Reserve Board.

Question 2 Question 2 Troy has $50 a month transferred electronically from his checking account to his savings account. This is an example of: A An installment payment B A savings plan C An ATM transaction D A debit card transaction

Question 3 Question 3 The best reason for depositing money in a bank or credit union savings account instead of keeping your money "under the mattress" is that: A Money deposited in savings accounts are F.D.I.C. insured B Most savings accounts earn a guaranteed rate of interest C Most savings accounts come with a free credit card D Money in a savings account can be accessed any time during the day or night

Question 4 Question 4 A bank Certificate of Deposit is a: A Savings instrument that requires a deposit for a period of time during which the saver can withdraw money from the plan at any time without a penalty B Savings instrument that requires a deposit for a period of time during which there is a penalty for withdrawals C Cash deposit in a savings account that earns interest D Certificate for deposits that are issued for half the face value

Question 5 Question 5 Frankie's savings account has earned a lot of interest. He wants to know if he must pay taxes on the interest earned. What would the IRS tell him? A Interest earned on savings accounts is not taxable B A sales tax will be charged on the interest earned C Savings account interest is taxable D If the interest is under $50, it is not taxable

Question 6 Question 6 What is meant by an uncollateralized loan? A A loan not backed by a co-signer who agrees to cover the amount of the loan. B A personal loan without assets to cover the loan amount. C A home equity loan. D A loan taken on a life insurance policy.

Question 7 Question 7 When a person brings an item to a pawnshop to obtain cash, the transaction is considered A a collateralized loan. B a custodial payment. C an unsecured loan. D a sales agreement.

Question 8 Question 8 A person has three credit cards with very large outstanding balances and is unable to make payments on any of them. Which action should the person take? A Notify a credit reporting agency in order to avoid a late fee. B File for bankruptcy in order to maintain ones current credit score. C Notify the credit card companies in order to negotiate a new payment plan. D Contact the Internal Revenue Service in order to avoid paying income tax this year.

Question 9 Question 9 To qualify for a Federal Housing Administration (FHA) loan, a person must generally A have at least a high school diploma. B have one-quarter of the cost of the home for a down-payment. C fulfill income guidelines. D provide two individuals to co-sign the loan.

Question 10 Question 10 Which of the following is considered to be open-end credit? A A mortgage. B A car loan. C Department store charge cards. D Installment loans

Question 11 When a person declares bankruptcy that fact will appear on the persons credit report A.For 3 years B. for 10 years C.Until the person repays all debts owed D.Until the person is able to receive a new credit card

Question 12 A creditor determines your creditworthiness based on: A Character, collateral, and capacity B Address C Gender D Education

Question 13 Approximately, what is the annual finance charge for each $100 owed on a credit card with a 16% annual interest rate (APR)? A $.84 B $1.60 C $8.40 D $16.00

Question 14 Which of the following does the Federal Reserve use to regulate the nation's money supply? A Fiscal policy B Proposing legislation C Monetary policy D Regulations

Question 15 Jami lost her debit card. She did not report it missing for 3 months. If an unauthorized person used her debit card, her maximum liability is: A $50 B $500 C Unlimited liability D No liability because she notified the financial institution

Question 16 The denominations of coins in the United States are: A $.01, $.05, $.10, $.25, $.50, and $1.00 B $.01, $.30, $.50, and $5.00 C $.05, $.10, $.50, $.75, and $10.00 D Coins can be in any denomination a consumer desires

Question 17 A high school student has begun to investigate the field of finance as a career choice. In deciding about the field, the student should focus on which question first? A Will I find a balance between financial rewards and personal satisfaction from work? B How many people do I know who work in this field? C Once I train for this area, how long before I will be at the top of the field? D Are there people in this field who are dissatisfied with their jobs?

Question 18 Money for saving, investing, or spending cannot be from: A An inheritance from someone who has died B Discretionary income or a gift of money C Capital gains from a sale of stock D Capital losses from the sale of stock imposes an excise tax on them.

Question 19 One of the benefits of holding an investment for over a year rather than selling it in less than a year is that the A capital gains on the investment will be taxed at a lower rate. B fees will not be charged by brokers for selling the investment. C money earned on the investment will be considered tax-free. D profits on the investment can be averaged over the length of time the investment is held.

Question 20 A person complains about how expensive it is to be a cigarette smoker. One of the reasons cigarettes are so expensive is that A the tobacco supply is controlled by the Federal Trade Commission (FTC). B the tobacco industry imports most of the tobacco. C their cost is controlled by the Food and Drug Administration (FDA). D the government

Question 21 Question 21 A man budgeted $200 a month for clothing. This month the man spent $150 on clothing therefore that budget item is considered to have A an outflow deficit. B an income overage. C a budget variance. D a budget deficit.

Question 22 Question 22 A person's debt ratio shows the relationship between debt and net worth. The lower the ratio the A better off financially the person is. B worse off financially the person is. C more liquid assets the person has. D less liquid assets the person has.

Question 23 Question 23 You can set up an Individual Retirement Account at: A an insurance agency B a bank C a small loan company D a real estate agency

Question 24 Question 24 In creating her budget, Ann realizes that her expenses exceed her income. Ann should immediately try to: A apply for a loan B reduce or eliminate some expenses C ignore her budget until she has more income D open an IRA account

Question 25 Question 25 Expenditures that remain constant from one time period to another are: A Variable expenses B Current expenses C Fixed expenses D Steady assets

Question 26 Question 26 What does a well designed, successful financial plan include? A Wants and needs B Unexpected income C Retirement planning D Bank statements

Question 27 Question 27 You want to gain control over your income and spending so that you will be able to save money. Which step will help you the most? A developing a retirement plan B developing a budget C getting advice from a friend D applying for a loan

Question 28 Question 28 Rossi has a part time job delivering pizzas to raise money for college in two years. Going to college is one of Rossi's: A Goals B Hopes C Values D Dreams

Question 29 Question 29 A company offers a defined-contribution pension plan which means that upon retirement the employee will receive A one-half of the employees last years salary. B the total amount of money contributed plus investment earnings. C an amount of money based only on the length of time the employee worked for the company. D a specified amount of money based totally on the profit earned by the company while the employee worked there.

Question 30 Question 30 After five years of owning a Roth Individual Retirement Account (IRA), a person wants to buy his first home, the person can withdraw money from the Roth IRA A tax and penalty free. B but must pay a set penalty at the time of withdrawal. C and have penalties deferred until retirement. D and owed taxes are deferred until retirement.

Question 31 A pharmacy is to drugs as the American Stock Exchange is to: A Interest B Stock advisors C Securities D Mutual funds

Question 32 Question 32 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.

Question 33 Question 33 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

Question 34 Question 34 The interest earned on United States Series EE Savings Bonds is A exempt from state and local taxes. B paid in a lump sum at the time the face value on the bond is reached. C equal to the money paid to purchase it. D deducted at the time of the bond's purchase.

Question 35 Question 35 Before the Kiss Corporation can issue stocks or bonds, it must register the issue with: A Its Board of Directors B The Federal Reserve C The World Bank D The Securities and Exchange Commission (SEC)

Question 36 Question 36 As an investment, a person decides to buy a small house that has three rental apartments. The profits from this investment may be lower then expected if the A tenant in an apartment decides to paint the hallways. B mortgage on the house is paid off. C taxes on the house are lowered. D one of the apartments is not rented.

Question 37 Question 37 An investor bought 40 shares of ABC corporation's stock at $80 a share. Two weeks later, the investor receives notice that the corporation has approved a 2-for-1 stock split. Based on this information, the investor would own at the moment of the split A 20 shares of the stock and the price of each share is $80. B 40 shares of the stock and the price of each share is $40. C 80 shares of the stock and the price of each share is $40. D 80 shares of the stock and the price of each share is $80.

Question 38 Question 38 Using a brokerage firm, a qualified investor buys 1000 shares of a common stock at $50 a share on 50% margin. This means that the A investor will pay only $5000 for the shares. B investor is buying 2000 shares. C brokerage firm is lending the investor 50% of the money. D brokerage firm will own 50% of the 1000 shares of stock that were purchased.

Question 39 Question 39 Buying a treasury bill (T-bill) is best for investors who are looking for A a place to invest between $100-$500. B a secure, low risk investment. C a higher yield on their investment than corporate bonds offer. D an investment that matures in years.

Question 40 Question 40 The price of a security may be affected by: A Renovations B Destinations C Current events D Wages

Question 41 Question 41 To determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and A her total income. B the rate of inflation. C whether the account is FDIC protected. D whether the bank offers overdraft protection.

Question 42 Question 42 Interest earned on interest is known as: A Simple interest B True interest C Compounded interest D Variable interest

Question 43 Question 43 What should a person do when he believes he is being charged too high a rate of interest for a loan by a lending institution? A Accept the loan but pay it off early. B Ask the lending institution to lower its rate C Notify the lending institution about state usury laws. D Notify the local Better Business Bureau.

Question 44 Question 44 The annual percentage rate (APR) is: A The true cost of credit that must be disclosed on a loan agreement B Always expressed in dollars C Required by the Securities Exchange Commission D Required by the Comptroller of the Currency

Question 45 The "Rule of 72" is an easy way to: A Approximate your savings balance each year B Calculate how fast your savings will double in value at given interest rates C Calculate how much tax you will owe on the interest earned D Calculate the length of time it takes to pay off a credit balance

Question 46 Question 46 A woman has just received a very expensive piece of jewelry. The woman has homeowner's insurance. Which statement would it be most appropriate for her to make to her insurance agent? A "I think I need a personal property floater." B "I think I should get speculative risk insurance." C "I will deduct the cost of the jewelry from my premium." D "I realize that if this jewelry is stolen it will be considered vicarious liability."

Question 47 Question 47 For the past five years, a person 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 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.

Question 48 Question 48 A person buys a flat screen, plasma, theater-like television. The person has homeowners insurance. Why would it be appropriate to add a personal property floater to that insurance? A To reduce the premium on the homeowner's insurance. B To protect the person who owns the television from liability for damages. C To show the insurance company a good faith investment has been made. D To cover the cost of replacement should the television get damaged or stolen.

Question 49 Question 49 Generally, the higher the deductible on an insurance policy, the A greater the premium. B lower the premium. C more frequently the premium has to be paid. D less frequently the premium has to be paid.

Question 50 Question 50 The purpose of Insurance is NOT to: A Diversify an investment portfolio B Share risk with other policy holders and the insurance company C Protect assets D Protect against potential losses

15 Questions

Question 1 Question 1 Before a person borrows money from a bank to make a major purchase, which question is considered most important for the person to answer? A Will I ever have to borrow money again from this bank? B Will this item every go on sale or will it increase in value? C Can I just pay for the item on a credit card and pay off the amount due each month? D Do the benefits of making the purchase outweigh the costs of borrowing the money?

Question 2 An example of closed-end credit is a A major credit card. B debit card. C mortgage. D cash card.

Question 3 Question 3 A person has three credit cards with very large outstanding balances and is unable to make payments on any of them. Which action should the person take? A Notify a credit reporting agency in order to avoid a late fee. B File for bankruptcy in order to maintain ones current credit score. C Notify the credit card companies in order to negotiate a new payment plan. D Contact the Internal Revenue Service in order to avoid paying income tax this year.

Question 4 A person places $1,000 in an investment that is considered a tax shelter. Because it is a tax shelter the person can expect Oops!

Question 5 Question 5 A 60-year-old makes a withdrawal from his Roth Individual Retirement Account (IRA). The money withdrawn will be A tax free. B taxed based on the interest earned. C taxed at lower rate than regular earnings. D looked upon as Social Security income.

Question 6 Question 6 Which product is considered to be an investment? A A certificate of deposit B An initial public offering of stock C A corporate bond D A new car

Question 7 Question 7 In terms of taxes, when stock dividends are reinvested, the owner of the stock A does not have to pay income taxes on the dividends. B still has to pay income taxes on the dividends. C pays income taxes on the dividends only when the stock is sold. D does not pay income taxes on the dividends unless there is a capital gain on the stock.

Question 8 Question 8 When securities are traded in the secondary market, who makes or loses money? A Small businesses B Creditors C The SEC D Investors

Question 9 Question 9 In which situation is a corporation most likely to call (buy back) a bond? A Its stock prices has fallen from $52 to $20 a share. B It issued bonds at a 7.5% interest rate, but its current corporate bonds are now being issued at a 5% rate. C It is planning to issue more stock. D It wants to diversify its public offerings.

Question 10 Question 10 To determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and A her total income. B the rate of inflation. C whether the account is FDIC protected. Dwhether the bank offers overdraft protection.

Question 11 Question 11 A students grandmother has decided to buy a long term health care insurance policy. The students grandmother's decision is most likely related to the fact that this type of coverage A is not offered by Medicare. B pays for prescription drugs. C allows extension of in-hospital acute care days. D provides life-insurance benefits to heirs.

Question 12 Question 12 A woman has just received a very expensive piece of jewelry. The woman has homeowner's insurance. Which statement would it be most appropriate for her to make to her insurance agent? A "I think I need a personal property floater." B "I think I should get speculative risk insurance." C "I will deduct the cost of the jewelry from my premium." D "I realize that if this jewelry is stolen it will be considered vicarious liability."

Question 13 Question 13 For the past five years, a person 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 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.

Question 14 Question 14 A person buys a flat screen, plasma, theater-like television. The person has homeowners insurance. Why would it be appropriate to add a personal property floater to that insurance? A To reduce the premium on the homeowners insurance. B To protect the person who owns the television from liability for damages. C To show the insurance company a good faith investment has been made. D To cover the cost of replacement should the television get damaged or stolen.

Question 15 Question 15 If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the A US Treasury Department. B Federal Deposit Insurance Corporation. (FDIC). C State Banking Commission. D Federal Reserve Board.

The End