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Financial Planning > Final Exam review > Flashcards

Final Exam review Flashcards

1
Q

What is a benefit of having a deductible of $0 for a homeowner’s insurance policy?

A

When you file a claim you are not responsible for any damages.

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2
Q

The failure to take ordinary or reasonable care to prevent accidents from happening

A

Negligence

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3
Q

The purchaser of an insurance policy

A

Policyholder

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4
Q

Buying an insurance policy is an example of risk

A

Shifting

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5
Q

Wearing a seat-belt would be an example of risk

A

Reduction

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6
Q

A request for payment from an insurance company to cover financial loss

A

Claim

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7
Q

Provides protection against possible financial loss

A

Insurance

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8
Q

Making a payment past the due date can result in

A

A late fee and/or a negative impact on your credit history.

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9
Q

What is an example of a good credit score to have

A

The higher the number the better

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10
Q

A fee charged at the same time each year for having a credit card, not all credit cards charge this

A

Annual fee

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11
Q

What happens when you only pay the minimum payment on your credit card bill?

A

It takes long to pay off the balance and you pay a lot in interest.

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12
Q

The low rate charged by a lender for an initial period to entice customers to sign up or switch credit cards.

A

Introductory APR

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13
Q

A method insurance companies use to determine claim settlements for renters or homeowners policies, under which the payment will be for the cost to reimburse you for an equal amount it would cost to go buy the same item in store today

A

Replacement Value

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14
Q

If you had a robbery in your house and your deductible was $1000, how much would the insurance company pay for the theft of a total of $5,000.

A

$4000

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15
Q

What refers to loss in value as an item gets older?

A

Depreciation

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16
Q

A person joins an insurance company by purchasing a contract called

A

A policy

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17
Q

Coverage that provides protection for your owned residence and its associated risks, such as damage to personal property and injuries.

A

Homeowners insurance

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18
Q

For insurance purposes, the chance of loss or injury is known as a

A

Risk

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19
Q

Additional property insurance that covers the damage or loss of a specific item of high value above the normal coverage limit.

A

Personal Property Floater

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20
Q

To get a credit card, individuals under 21 must

A
  1. Have parent/guardian cosigner

or

  1. Prove they have sufficient income to repay their debt
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21
Q

What has the most impact on your credit score?

A

Payment history

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22
Q

What are disadvantages of using a credit card?

A
  1. Feeling of an extension of income
  2. High Interest Rates
  3. Potential for more debt
  4. Credit Fraud
  5. Too easy to use
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23
Q

An APR that remains the same unless there is a penalty increase

A

Fixed APR

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24
Q

What are the 3 Credit Bureaus

A

Experian
Equifax
Transunion

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25
Q

Charge imposed for not paying on time

A

Late payment fee

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26
Q

A federal law passed by the US Congress and signed by President Barack Obama on 5/22/09. It establishes a more fair and transparent credit card industry.

A

CARD Act

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27
Q

A number, roughly between 300 and 850, that reflects the credit history detailed by a person’s credit report.

A

Credit Score

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28
Q

Which of the 5 C’s of credit, represents the savings, investments, and other assets that can help repay the loan?

A

Capital

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29
Q

If you default on a loan, it will stay on your credit report for

A

7 years

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30
Q

When a person agrees to be responsible for loan payments if the other party fails to make them

A

Co-signing

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31
Q

The best annual fee for a credit card would be

A

No Fee

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32
Q

The smallest amount you can pay and remain a borrower in good standing

A

Minimum monthly payment

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33
Q

The amount of money that a person borrows is called

A

Principal

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34
Q

Insures the accuracy and privacy of information, kept by credit bureaus and consumer reporting agencies. It gives consumers the right to know what information credit bureaus and consumer reporting agencies are distributing about them to creditors, insurance companies, and employers

A

Fair Credit Reporting Act

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35
Q

A document containing financial information about a person, focusing on his or her credit including history of paying obligations, available credit lines, outstanding balances

A

Credit Report

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36
Q

In regards to a credit score, the higher the score the _______________ the risk

A

Lower

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37
Q

What activity describes a person buying insurance?

a. Spending $1,000 a year on a mortgage
b. Spending $500 for a 10 year certificate of deposit
c. Spending $1,000 a month on a mutual fund
d. Spending $500 a year on premiums to protect a renter against losses due to theft or fire

A

Spending $500 a year on premiums to protect a renter against losses due to theft or fire

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38
Q

It would be in your best interest to have what type of APR for a loan?

A

Low as possible

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39
Q

Requires creditors to disclose in writing certain cost information, such as the annual percentage rate (APR), before consumers enter into credit transactions

A

The Truth in Lending Act

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40
Q

The maximum amount of money a creditor has made available to a person

A

Credit Line

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41
Q

Which documents should be stored in a safe-deposit box?

A

Social security cards, deeds to house, titles to car, birth certificate

42
Q

The type of credit where you receive a one time loan that you will pay back over a specified period of time usually in payments of equal amounts

A

Close end/installment credit

43
Q

An asset used as a form of security to help guarantee that a creditor will be repaid. It can be taken in case a debt is not paid

A

Collateral

44
Q

Customers who file for bankruptcy are not responsible for what type of payments

A

Alimony
Child support
student loans

45
Q

A legal process in which some or all of the assets of a debtor are distributed among the creditors because the debtor is unable to pay his or her debts.

A

Bankruptcy

46
Q

An entity such as a bank, finance company, credit union, business, or individual to which money is owed

A

Creditor

47
Q

Tony has $50 a month transferred electronically from his checking account to his savings account. This is an example of:

A

A savings plan

48
Q

Having your paycheck put directly into your account is

A

Direct Deposit

49
Q

To earn high interest rates on a certificate of deposit, you must

A
  1. Leave money in for the term of the CD
  2. Pay penalties if you withdraw money early
  3. Deposit a minimum amount to open the account
50
Q

What is the maximum monetary protection covered by the FDIC per account at a bank?

A

$250,000

51
Q

Who would receive the death benefit first for a life insurance policy?

A

Primary beneficiary

52
Q

The most liquid type of investment is

A

A savings account

53
Q

The portion of a covered loss that is your responsibility

A

Deductible

54
Q

The total amount of money in your bank account is called

A

The balance

55
Q

Credit cards allow you to

A
  1. Spend up to an available line of credit
  2. Borrow money for a short period of time
  3. Buy now, pay later
  4. Purchase online
56
Q

A time period during which no finance charges are added to a credit card account when you no existing balance.

A

Grace period

57
Q

You have a checking account balance of $100 and you deposit a personal $200 check from your brother in your checking account. When will you be able to withdraw $150 in cash?

A

3 to 7 days later. Time enough for the banks to confirm that money is in the payor’s account.

58
Q

The FDIC insures depositors against losing their money in the case of

A

Bank Failure

59
Q

If you spend $4 a week on ATM fees what will the annual charge be?

A

$208

60
Q

What are the 5 C’s in regards to credit?

A

Character, Collateral, Capital, Capacity, Conditions

61
Q

Compared with commercial banks, credit unions generally offer

A
  1. Lower fees

2. Lower interest rates on loan

62
Q

If you are selling your car through a newspaper advertisement. Which form of payment should you avoid?

A

Personal checks

63
Q

What is the first thing a consumer should do to begin to correct a mistake on a credit card bill?

A

Call the creditor then notify them in writing

64
Q

You hope the money earned on interest in a savings account will keep up with

A

Inflation

65
Q

When a person buy’s auto insurance with a $500 deductible, the insurance company will

A

Pay any portion of the claim beyond $500

66
Q

What is the disadvantage of having a deductible of a $0 for an auto insurance policy?

A

Paying a higher premium

67
Q

A nonprofit financial institution that is owned by its members and organized for their benefit.

A

Credit union

68
Q

What is the benefit of having a deductible of a $0 for a homeowner’s insurance policy?

A

Paying $0 when filing a claim

69
Q

A card issued by a financial institution that allows you to withdraw money from your accounts or pay for purchases by deducting funds directly from your account.

A

Debit Card

70
Q

A method insurance companies use to determine claim settlements for renters or homeowners policies, under which the payment is based on the replacement cost of an item minus depreciation.

A

Actual Cash value

71
Q

What financial product can you buy for $25, is safe, and will be worth $50 at a future date?

A

Series EE saving bond

72
Q

What equation would give the total cost including sales tax if an item costs $80.00 and sales tax is 8.875%

A

80.00 * 1.08875

73
Q

How much does 2 hundred dollar bills, 3 twenty dollar bills, 1 ten dollar bill, 3 five dollar bills, 4 one dollar bills, 4 quarters, 4 dimes, and 4 pennies equal?

A

$290.44

74
Q

Convert .073 into a percent

A

7.3%

75
Q

A bill for 5 people at a fancy restaurant came to $572.45 before tax. Tax is 8.45%. How much tax would be added to the bill?

A

$48.37

76
Q

What financial services is best suited for saving money over a period of years where you will not need to access the money?

A

Certificate of Deposit (CD)

77
Q

A check you have written that has been paid by the bank.

A

Cancelled check

78
Q

A report that accounts for the difference between your bank statement and your check register balance.

A

Bank Reconciliation

79
Q

A check you wrote been has not been cashed or deposited yet.

A

Outstanding check

80
Q

A check that was a mistake and will never be paid.

A

Voided Check

81
Q

The term used to describe the ease and speed with which you can convert savings or an investment to cash is:

A

Liquidity

82
Q

Banks use savings account deposits to:

A

Give loans to other consumers and businesses

83
Q

The following number in written form would be: 884,104.53

A

Eight hundred eighty four thousand, one hundred four and fifty three hundredths

84
Q

The following number in numerical form would be:

Thirty three million, six hundred fifty two thousand, eighty and thirty five hundredths

A

33,652,080.35

85
Q

You purchase the following items from your local grocery store in Colorado where all food purchased is taxable. Toothpaste - $2.56, Seltzer - $.99, Broccoli - $2.99, OJ - $3.49. You have a 20% off coupon for the OJ. Determine how much tax you would pay if tax is 7%?

A
  1. 49 * .20 = .70
  2. 49 -.70 = 2.79
  3. 79 + 2.56 + .99 + 2.99 = 9.33
  4. 33 * .07 = .65
86
Q

Round $74.6781 to the nearest cent.

A

$74.68

87
Q

If you buy an item that costs $56 and there is a discount of 40%, what is the discount?

A

56 * .40 = $22.40

88
Q

Convert 1.345% into a decimal.

A

0.01345

89
Q

Tips are generally calculated from what part of the bill?

A

Subtotal

90
Q

The cost of an insurance contract is referred to a as the

A

Premium

91
Q

New Jersey state sales tax is

A

7%

92
Q

Another word for a tip is?

A

Gratuity

93
Q

What may happen when eating out with a large group of 8 or more people seating together?

A

A mandatory tip of 18% or more may be added

94
Q

Sales tax is generally expressed as a

A

Percent

95
Q

A failure to meet a financial obligation

A

Default

96
Q

An example of open-end credit is

A

Credit card or Home Equity Loan

97
Q

Prohibits credit discrimination on the basis of sex, race, martial status, religion, national origin, age, or receipt of public assistance.

A

Equal Credit Opportunity Act

98
Q

What is the New Jersey sales tax rate in an urban enterprise zone?

A

3.5%

99
Q

After rounding a number to the nearest cent or hundredths place, how many decimal places will you have?

A

2

100
Q

A winter jacket regularly costs $399.99. There is a markdown $30.00, what will the sale price be?

A

$369.99

Financial Planning (5 decks)

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