Test Answers on 02.10 Module Two Exam

Flashcard maker : Steven Ramirez

 

question

What are stocks?

answer

Shares of ownership in a company that may pay dividends

question

The rate of return being offered by banks on money market accounts is 3% and increasing. Which of the following might cause this to happen?

answer

The Federal Reserve raised the federal funds rate

question

Calliope is in her mid-30s and wants to start saving for retirement. She wants to invest a portion of her income, but she’s wary of high-risk options. How should she best allocate her investment funds?

answer

Bonds and mutual funds

question

Why might buyers be more inclined to purchase a product if it is listed for sale at $49.99, rather than $50?

answer

The one-cent reduction makes the price seem more attractive.

question

“Tax bracket” is a term associated with which type of taxation?

answer

Progressive

question

Johann maintains a $75,000 insurance policy on his boat. He pays $50 per month in premiums and his deductible is $2,500. If he is involved in an accident that does $2,000 worth of damage to the boat, how much will he have to pay?

answer

$2,000

question

Which of these is an example of indirect tax?

answer

Gasoline tax

question

Assume that the blue section (D) of the chart stands for stocks and the red (A) for mutual funds. This would most likely represent the portfolio of a

answer

young investor

question

Your friend’s job pays $10 per hour, and he works 40 hours per week. His tax rate is 20 percent. Assuming he works 50 weeks of the year, his yearly net income is

answer

$16,000

question

Which tax uses the same rate for all income levels?

answer

Proportional

question

Austin earns $18,000 per year. His earnings put him in the 15% tax rate. What is his tax owed?

answer

$2,700

question

What is likely to happen if a borrower misses a payment on a credit card account?

answer

The credit card company applies a penalty rate, increasing the card’s interest rate.

question

Making a down payment reduces the

answer

loan principle amount

question

Your friend’s job pays $5.00 per hour, and he works 20 hours per week. His tax rate is 20 percent. Assuming he works 50 weeks of the year, his yearly gross income is

answer

$5,000

question

Rudy is a 52-year-old freelance writer who wants a short-term, low-risk investment with low liquidity. Which of these investment vehicles should he consider?

answer

– CD – Mutual fund – Stocks

question

Which of the following actions would likely raise homeowner’s insurance premiums?

answer

Building the home in the floodplain of a river

question

If an investor possesses a portfolio heavily concentrated in bank checking accounts, a financial advisor would most likely suggest which of the following aggressive investments to diversify the portfolio?

answer

Stocks

question

Pieta has found that his annual budget does not balance. Which of the following could he most easily adjust first?

answer

Variable expenses

question

Rachel finds a new apartment that she loves in the center of downtown, but she ultimately decides against renting it because the $1,500 per month price tag greatly exceeds her budget. Rachel’s decision to forgo the new apartment is mainly based on

answer

her limited income

question

Jeanine paid an annual premium of $1,200 in total liability coverage for her car, including up to $400,000 in bodily injury coverage and $100,000 in property damage coverage. Twelve years into her policy, Jeanine caused an accident that resulted in the other driver claiming $40,000 in medical costs and $15,000 in car damage. Jeanine’s insurance company paid the claim.

answer

Yes, the cost of the annual premium for 12 years was less than the accident claims

question

Which type of credit involves a set limit based on what a consumer pays up front?

answer

Secured credit cards

question

What will happen if Jonathan is habitually late on loan payments?

answer

His credit score will suffer

question

Kendra wants to become a computer technician, but she has a great deal of debt. She makes a yearly budget and finds that her projected income and expenses do not balance. What should she do to immediately correct this imbalance?

answer

Reevaluate her fixed and variable expenses

question

Laurent saves money from his lawn service to buy a new $20,000 mower and trailer. He would like to buy the new equipment as soon as possible but only has $12,000 in his simple interest savings account. To reach his goal sooner, Laurent should

answer

Move his money to a compound interest account

question

Your friend’s job pays $5.00 per hour, and he works 20 hours per week. His tax rate is 20 percent. Assuming he works 50 weeks of the year, his yearly gross income is

answer

$5,000

Get instant access to
all materials

Become a Member