fin 360 – Flashcard
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There are only 3 possible courses of action when developing alternatives for decision making.
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false There are 4 possible courses of action when making decisions: continue the same course of action, expand the current situation, change the current situation, and take a new course of action.
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Attempts to increase income through employment are part of the _____________ component of financial planning.
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Planning
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Risks associated with many financial decisions are easy to identify and evaluate.
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falseThese risks are difficult to identify and evaluate.
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Inflation is a rise in the general level of prices and it reduces the buying power of the dollar.
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true
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Which of the following intermediate goals is stated most clearly using the SMART approach?
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Purchase a house with a mortgage no greater than $150,000 within 5 years
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The Rule of 72 is:
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Used to estimate how fast prices will double using a given annual inflation rate
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Jennifer Rodriguez plans to attend graduate school in 5 years. She thinks that she will need a total of $32,000 to pay for school, and she wants to save money each month to reach her goal. What type of computation should she use?
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simple interest
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When prices are increasing at a rate of 4 percent, the cost of products would double in about 18 years.
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true
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Increased consumer saving and investing is likely to be accompanied by
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higher interest rartes
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The financial activities for a young, single person will probably be the same as those for an older couple with no dependent children at home.
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falseIn Exhibit 1-1, specialized financial activities differ for a young, single versus an older couple without children.
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Changes in the cost of money is referred to as ____________ risk.
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interest- rate
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The tangible and intangible factors that create a less than desirable situation is referred to as ____________ risk.
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personal
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Which of the following goals would be the easiest to implement and measure?
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Save $100 a month to create a $2,400 emergency fund in 2 years.
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Place the following steps for a personal financial plan in the proper order: 1. Review and revise the financial plan 2. Identify alternative courses of action 3. Create and implement your financial action plan 4. Determine your current financial situation 5. Evaluate alternatives 6. Develop your financial goals
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4, 6, 2, 5, 3, 1
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If inflation is expected to be 8 percent, how long will it take for prices to double?
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9 years
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The loss of a job or encountering an illness results in ____________ risk.
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income
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Purchasing an appliance is an example of a consumable-product goal.
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false
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A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities is a(n)
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financial plan
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An example of a personal opportunity cost would be
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Time comparing several brands of personal computers. Time is an important personal opportunity cost.
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Personal financial planning is the process of managing your money to achieve personal economic satisfaction.
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true
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Jim Johnson was laid off from his job two months ago. He just received an offer for a position that pays 3/4 the salary of his old job. Why should he set up a financial plan?
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To increase the effectiveness of obtaining, using, and protecting his financial resources.
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Purchasing a car is an example of a durable-product goal.
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true
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Using the services of financial institutions or financial specialists (such as insurance agents or investment advisers) to seek relevant information is done in which step in the financial planning process?
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Evaluate your alternatives.
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Which of the following short-term goals is stated most clearly using the SMART approach?
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Buy a car for less than $15,000 within 6 months
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The major function of personal financial planning is to
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Achieve personal economic satisfaction.
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Financial service activities through your smartphone or tablet include text banking, mobile web banking, and banking apps.
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true
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A school ID that includes prepaid amounts for school lunches is called a debit card.
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false
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Brandon lost his debit card. When he realized it was gone, his account had $238 in unauthorized charges. Since he was embarrassed about his loss, he didn't contact his financial institution for 45 days. What is the most that he is liable for?
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238
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When Flo says she's "going to the bank," she may be implying that she is visiting a credit union or stopping at an ATM.
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true
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In general, which fees have doubled or tripled in price at some financial institutions for checking accounts?
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All of the above fees have increased. Stop-payment orders. Overdraft fees. Check printing.
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The text discusses several types of bonds. Which bond pays interest for 30 years that is exempt from state and local taxes?
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series ee
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If you think that rates will fall in the future, you should buy a long-term CD to lock in your rate now.
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true
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A drawback of a regular savings account is
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alow rate of return
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Which of the following usually offers money market funds?
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An investment company
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A credit card is a type of
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loan/borrowing
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A commercial bank is the same thing as a credit union.
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False Both are financial institutions; however, they are different types of organizations.
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The FDIC insures a depositor's savings account up to $200,000 per insured financial institution.
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false 250000
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Due to Check 21, the processing time for deposited checks has increased.
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flase
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Will wants to open an account with $500 that will allow him easy access to his funds (by checks, ATMs, or debit card usage) from many locations. He also wants to earn at least a low interest rate and have federal deposit insurance. What kind of account should he open?
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An interest-earning checking account
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The only question you should ask yourself when selecting a financial service provider is "Where can I get the best return on my savings?"
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false This is only one of the basic questions to be asked. You should also ask "How can I minimize the cost of checking and payment services?" as well as "Will I be able to borrow money if I need it?"
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Smishing is a scam that uses email spam or pop-up messages to deceive you into revealing your credit card number, social security number, passwords, or other private information.
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false Phishing is the scam related to email whereas smishing is the scam related to cell phone text messages.
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Two years ago, Sean deposited money into a savings account and received a toaster as a free gift, which required him to leave his money on deposit for a year. The value of the toaster reduced the amount of interest he earned for the first year.
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false If Sean had withdrawn his money before a certain time period, he may have received less interest, which means some of the earnings may have been used to cover the cost of the toaster.
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Which of the following is NOT correct?
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A. Check 21 decreases the processing time for checks. B. A substitute check is a digital reproduction of the original paper check. C.Check 21 allows a substitute check to be an equivalent of the original check. D.....Check 21 increases the fees banks can charge for checking accounts. E. All of the above are correct.
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When Imogene brought a necklace to a _______, she received a loan based on its value.
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pawnshop
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Karen wanted a certificate of deposit that would definitely be available the entire length of time until maturity. She would NOT want to consider a
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Callable CD
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Which of the following is a type of electronic payment?
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Smart card
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An asset management account is an all-in-one account that is also called a cash management account.
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true
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Which of the following is correct?
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Bank customers typically are provided with online access to view and print checks that have been paid.
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All of the following are non-deposit institutions except
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A payday loan company.
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If you rent a big-screen television from a rent-to-own center for a week, you will be certain to own it at the end of the first week.
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You must complete a certain number of monthly or weekly payments in order to own the item.
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A person who is named to receive the proceeds from a life insurance policy is a(n)
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beneficiary
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premium payments are fixed with a variable life policy
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trru
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Life insurance benefits may be used to pay off a home mortgage or other debts at the time of death.
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true
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Frank, age 38, was killed in a car accident. Which of the following riders provided an additional benefit for his heirs?
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accidental death benefit
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Which of the following allows an individual to receive an amount of income that will change based on the income received from stocks or other investments over a certain period of time, or over his or her life?
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variable annunity
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Which of the following annuities is purchased with a lump-sum payment and allows an individual to receive income payments beginning now?
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Immediate annuity
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Which of the following statements is correct?
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An immediate annuity allows an individual to receive income payments from an annuity beginning at once.
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An immediate annuity allows an individual to receive income payments from an annuity beginning at once.
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false The fee may be $25 or $30 per year or a percentage of your account value (usually 0.15% per year).
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Which of the following is NOT a type of permanent life insurance?
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Adjustable life Whole life Variable life ---Decreasing term Universal life
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Tim and Tammy are updating their financial plan and are concerned that they might not have enough life insurance coverage for their family, which includes two children, ages 4 and 10. They have determined that their annual income is $70,000 and their net worth is now $150,000. What is the amount of life insurance they should carry using the "nonworking" spouse method?
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The "nonworking" spouse method uses this calculation: (18 - Youngest child's age) × $10,000 = (18 - 4) × $10,000 = $140,000.
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If you shop for insurance on the internet, the website is secure if the URL begins with "https:" or if the lock icon is in the address bar.
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true
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The settlement option that pays the life insurance proceeds to the beneficiary for as long as she or he lives is called
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life income option
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Which of the following provisions requires the policyholder to again qualify as an acceptable risk and pay overdue premiums with interest in order to put a lapsed policy back in force?
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Policy reinstatement
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Which of the following households most likely has the greatest need for life insurance?
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Household with children.
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Purchasing a life insurance policy is a basic and inexpensive purchase.
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Life insurance is one of the most important and expensive purchases you may ever make.
