Chapter 5

Question 0

cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan

Answer 0

Annual Percentage Rate(APR)

Question 1

What does “Caveat Emptor” mean?

Answer 1

buyer beware

Question 2

regretting a purchase soon after making it

Answer 2

Buyer’s Remorse

Question 3

consumer awareness that a particular brand exist. It is part of product positioning.

Answer 3

Brand Recognition

Question 4

to buy an item with credit; paying over time.

Answer 4

Financing

Question 5

having a beginning and an end

Answer 5

Finite

Question 6

to buy an item without thinking about it

Answer 6

Impulse Purchase

Question 7

the true cost of something in terms of what you have to give up to get the item; the benefits you would have received by taking the other action.

Answer 7

Opportunity Cost

Question 8

pre-payment penalty in a financing contract; the portion of a “90 days same as cash” agreement that states that the entire loan amount plus the interest accumulated over the first 90 days becomes due immediately.

Answer 8

Rule of 78

Question 9

an amount of money you spend, usually $300 or more, that causes some pain to part with.

Answer 9

Significant Purchase

Question 10

What are the five steps you should follow before making a significant purchase?

Answer 10

1. wait overnight
2. consider your buying motives.
3. never buy anything you do not understand.
4. consider the opportunity costs of your money.
5. seek wise counsel.

Question 11

Companies use every angle to aggressively compete for what?

Answer 11

your money

Question 12

The average American is exposed to about how many advertisements daily?

Answer 12

around 3,000

Question 13

What are the four major ways that companies compete for your money?

Answer 13

1. Personal selling
2. advertising as a marketing tool.
3. tv, radio, internet, and other media.
4. product positioning

Question 14

What is the sign of a well trained salesperson?

Answer 14

They answer your question with another question.

Question 15

What are product positioning techniques used to get the attention of consumers?

Answer 15

• brand recognition
• color
• shelf position
• packaging

Question 16

What percentage of “90 days same-as-cash” contracts convert to payments which are usually at 24% APR with rule of 78’s prepayment penalty?

Answer 16

88%

Question 17

How much is spent on online advertising directed at kids?

Answer 17

$15 billion

Question 18

True or False;
According to Harvard University, for every hour of tv per week that you watch, you spend an average of $100 extra a year.

Answer 18

False: $200

Question 19

True or False; Contentment comes from material items.

Answer 19

False; no amount of stuff can equal contentment.

Question 20

What does the spoiled, red-faced, grocery store kid living inside of us all represent?

Answer 20

immaturity