finance test

Question 1

the study of money management which includes saving, lending and borrowing money

Answer 1

finance

Question 2

giving up one thing in order to obtain another

Answer 2

exchange

Question 3

3 Factors influencing Exchange

Answer 3

a. Value (price)
b. Time (need or want)
c. Personal Preferences

Question 4

4 Forms of Financial Exchange

Answer 4

1) cash
2) debit
3) credit
4) EFT

Question 5

buying something now and agreeing to pay for it later (actually taking out a loan)

Answer 5

credit

Question 6

the amount of the purchase is electronically
deducted from your bank balance

Answer 6

debit

Question 7

is a system of transferring money from one bank account directly to another without any
paper money changing hands

Answer 7

EFT

Question 8

What must you pay to borrow money?

Answer 8

interest

Question 9

5 Types of Currency

Answer 9

1) Paper money
2) Coins
3) Banknote
4) Transfer Bonds
5) Transfer Note

Question 10

Where is paper money printed?

Answer 10

Fort Worth and Washington D.C.

Question 11

Where are the 4 cities in which coins are minted?

Answer 11

1) Philadelphia
2) Denver
3) San Francisco
4) West Point

Question 12

a note issued by a bank representing its promise to pay a specific sum to the bearer on demand and acceptable as money

Answer 12

banknote

Question 13

marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years and make interest payments semiannually

Answer 13

treasury bonds

Question 14

marketable U.S. government debt security with a fixed interest rate and a maturity between one and 10 years

Answer 14

treasury note

Question 15

what is a very safe investment because it’s backed by the government

Answer 15

treasury bonds
treasury note

Question 16

3 Functions of Money

Answer 16

1) Medium of Exchange
2) Unit of Measure
3) Store of Values

Question 17

anything people will accept in exchange for goods or services

Answer 17

Medium of Exchange

Question 18

money determines the value of a good or service in dollar terms

Answer 18

Unit of Measure

Question 19

money can be saved and retrieved at a later
date with the potential of greater value

Answer 19

Store of Values

Question 20

6 Sources of Income

Answer 20

1) Salary
2) Wages
3) Rent
4) Interest
5) Dividends
6) Transfer Payment

Question 21

pay on an annual basis

Answer 21

Salary

Question 22

pay based on an hourly basis

Answer 22

Wage

Question 23

fee charged for the use of equipment or personal property

Answer 23

Rent

Question 24

fee paid for borrowing money or fee earned for loaning money

Answer 24

interest

Question 25

a portion of corporate profits that are shared with stockholders

Answer 25

Dividends

Question 26

the redistribution of income in a market economy

Answer 26

Transfer Payment

Question 27

the value of money figuring in a given amount of interest earned over a given amount of time

Answer 27

Time Value of Money

Question 28

Equation for Calculating Simple Interest:

Answer 28

(Principal) (Rate) (Time)

Question 29

the amount loaned or amount deposited in account

Answer 29

principal

Question 30

the amount of interest charged on loan or paid on account

Answer 30

rate

Question 31

length of the loan or the amount of time money is kept in account

Answer 31

time

Question 32

interest computed on the sum of the original principal and accrued (earned) interest

Answer 32

Compound Interest

Question 33

Compound Interest Equation

Answer 33

A= P(1+r/n)^n x t

Question 34

2 things of Time Value of Money

Answer 34

1) Simple Interest 2) Compound Interest