Personal Finance Final Exam Part 2 Flashcards
True or False
One of the six components of your financial plan should be financing your large purchases.
True
True or False
Fewer than 10% of millionaires have law or doctoral degrees.
True
True or False
Under the U.S. Department of Education’s federal student loan program the U.S. Treasury is your lender.
False
True or False
The Fed conducts expansionary monetary policy by buying bonds and decreasing the money supply.
False
True or False
Time value of money is only applied to single dollar amounts.
False
True or False
The larger the number of payments in an annuity used in determining a future value, the smaller the future value at the end of the period.
False
True or False
Compounding is the process of obtaining present values; discounting is the process of obtaining future values.
False
True or False
Depository institutions are financial institutions that accept deposits (that are insured up to a maximum level) from individuals or firms and provide loans.
True
True or False
Overdraft protection for a checking account is a low-cost short-term loan.
False
True or False
Revolving open-end credit typically does not specify a maximum amount that can be borrowed.
False
True or False
Buying health insurance through employer-sponsored plans is somewhat more expensive than buying your own policy individually.
False
True or False
Obtaining money, goods, and services are the only reasons for identity theft.
False
True or False
The beneficiaries of life insurance policies can only be family members or those directly affected by a person’s death.
False
True or False
The federal income tax is part of Article I in the U.S. Constitution.
False
You should claim itemized deductions if
Itemized deductions exceed standard deductions
The highest tax rate a taxpayer is charged on his or her federal tax return is called the effective tax rate.
False
True or False
Interest paid on student loans is adjusted from gross income to calculate a taxpayer’s adjusted gross income.
True
True or False
The decision to purchase versus lease a car is highly dependent on the estimated market value of the car at the end of the lease period.
True
True or False
A shorter financing period will reduce the depreciation of a new auto.
False
True or False
If you have good health insurance, you should probably not take out medical payments coverage on your automobile policy.
False
True or False
Uninsured Motorist (UM) coverage includes payments for certain medical expenses, lost wages, and pain and suffering.
True
True or False
Collision and comprehensive coverage is optional in most states unless you are financing your car in which case you must have this coverage to protect the lender.
True
The schedule that discloses the monthly payment that you will make, based on a specific mortgage amount, a fixed interest rate level, and maturity is called
Amortization table
True or False
The schedule that shows your monthly home payment and the amounts applied to principal and interest each month is called a depreciation table.
False
True or False
Since there is no limit on how much and how fast adjustable rate mortgages (ARMs) can increase, most homeowners are afraid to take out this kind of loan.
False
True or False
The proceeds from a home equity loan can be used for any purpose including a vacation, tuition payments, or health care expenses.
True
