Personal Finance Fundamentals, Exams of Nursing

Download Personal Finance Fundamentals and more Exams Nursing in PDF only on Docsity! WISE TEST In order to get spending under control, a person should first A. seek help on investing from a financial planner. B. consult a credit counseling service. C. create a budget of current income and expenses. D. subscribe to financial newsletters and magazines. - correct answer ✔✔C Comparison shopping for a car is necessary because A. each dealer sells cars with different colors. B. lenders want to be sure consumers get the best price. C. the price for the car can vary a great deal. D. it is a requirement to qualify for car insurance. - correct answer ✔✔C Financial planners generally stress the importance of starting to save and invest early because A. a person can stop saving at age 40. B. of the power of compounding and appreciation. C. there are fewer bills to pay when a person is young. D. a person will not need insurance. - correct answer ✔✔B An important feature of a good financial goal is that the goal A. has a specific time frame. B. is appropriate for the person's age. C. can last throughout the person's life. D. will take at least ten years for the person to achieve. - correct answer ✔✔A Purchasing power decreases and it costs more money to buy goods when there is A. a bear market. B. inflation. C. deflation. D. a bull market. - correct answer ✔✔B What strategy can help a person achieve her goal to buy a house? A. Using credit cards to pay for expenses. B. Paying for large purchases in cash. C. Following a budget that allows for savings. D. Applying for more credit cards to increase her credit score. - correct answer ✔✔C A college student has to live on a tight budget. Before making a decision to buy the newest cell phone, which question should he ask himself first? A. Is the new cell phone cheaper than the one being used? B. Is the new cell phone on sale? C. Is the new cell phone a need or a want? D. Will my friends like the new cell phone? - correct answer ✔✔C Which of the following quotes is sound financial advice? A. "He who hesitates is lost." B. "A penny saved is a penny earned." C. "Don't put off today what can be done tomorrow." D. "The window of opportunity may only open once." - correct answer ✔✔B Fixed expenses include A. food. B. vacations. C. entertainment. D. rent. - correct answer ✔✔D A. $ 5,000. B. $10,000. C. $15,000. D. $20,000. - correct answer ✔✔B Don and Bill work together in the finance department of the same company and earn the same salary. Bill spends his free time taking work-related classes to improve his computer skills. Don spends his free time socializing with friends or watching TV. After five years, what is most likely to be true? A. Don will make more because he is more physically fit. B. Don will make more because Bill is likely to become over qualified. C. Bill will likely make more money because he is more valuable to his company. D. Don and Bill will continue to make the same amount of money. - correct answer ✔✔C Which of the following is an example of a long-term debt? A. A student loan. B. A debit card purchase. C. A term life insurance policy. D. A stock portfolio. - correct answer ✔✔A A person earned a salary of $70,000 last year. Additionally, he had $1,000 in interest income and $2,000 in dividend income. His total income for this year is A. $70,000. B. $71,000. C. $72,000. D. $73,000. - correct answer ✔✔D An example of an opportunity cost is A. buying a dress at a sale price instead of paying the original price. B. using coupons when food shopping. C. buying concert tickets instead of buying a textbook for a course. D. using a credit card when making a large purchase. - correct answer ✔✔C A person strongly feels that going into debt is wrong. This is an example of the influence of A. values on decisions. B. age and stage in life. C. marketing and advertising. D. general economic conditions. - correct answer ✔✔A Which of the following describes what happens during a depression? A. Businesses produce more goods and services. B. Very few individuals are having financial problems. C. Unemployment is extremely high. D. More individuals are buying homes. - correct answer ✔✔C When the amount of income on a budget is greater than the amount actually spent on expenses, the person has a A. surplus. B. deficit. C. balanced plan. D. new liability. - correct answer ✔✔A When interest is computed once on a dollar amount (the principal), it is A. simple interest. B. principal interest. C. the APY. D. compound interest. - correct answer ✔✔A A person decided to have six months of income in an emergency savings account. Is this a good decision? A. No, because he should place the money in a diversified portfolio. B. No, because emergency accounts are no longer advisable. C. Yes, because the money can be used as a down payment when buying a used car. D. Yes, because the money in the emergency account can be used if he loses his job. - correct answer ✔✔D Students applying for financial aid to attend college usually need to A. complete a Free Application for Federal Student Aid (FAFSA) form. B. obtain a transcript. C. write an essay. D. send a credit report from one of the three credit reporting agencies. - correct answer ✔✔A A person choosing a mortgage usually selects a fixed-rate loan because she knows that A. the interest rate remains the same for the life of the mortgage. B. her income will increase within the next three years. C. the interest rates are going down. D. her homeowners insurance premiums will be lower. - correct answer ✔✔A Why does a bank pay interest to a depositor? A. The bank is able to use deposits to earn profits. B. It is a requirement of the Federal Deposit Insurance Corporation (FDIC). C. It helps the bank invest in the local community. D. It is a benefit of having a bank credit card. - correct answer ✔✔B It is generally better for a person to buy a home that she can afford than to rent an apartment because she will A. build equity. C. A person can get cash anywhere in the world using an ATM with no fee. D. A person must have a bank account to have an ATM card. - correct answer ✔✔d Which of the following financial products is good to have so that a person can cover cash needs today? A. Bonds. B. Individual Retirement Account (IRA). C. Life insurance. D. Regular checking account. - correct answer ✔✔d A person writes a check for more money than he has in his checking account. In order for the check to be paid by the bank, he needs to have A. overdraft protection. B. credit insurance. C. a joint account. D. a credit history. - correct answer ✔✔a Many companies offer a service to electronically deposit an employee's net pay into his designated bank account. This service is known as A. barter. B amortization. C. automatic savings. D. direct deposit. - correct answer ✔✔D When a person cashes a $300 check and only receives $285, she most likely went to a/an A. investment bank. B. check cashing store. C. savings bank. D. credit union. - correct answer ✔✔b A debit card allows a person to: A. pay for purchases directly from a checking or savings account. B. build wealth. C. borrow money for a short term. D. spend more money than deposited in a checking or savings account. - correct answer ✔✔A The highest interest rate on a loan is charged by a A. savings bank. B. credit-card company. C. pawnshop. D. investment bank. - correct answer ✔✔C Electronic banking allows customers to A. access accounts only during business hours six days a week. B. perform transactions with the help of a teller during business hours. C. stop the need to reconcile checking accounts. D. perform transactions 24 hours a day. - correct answer ✔✔D When a person asks her bank not to honor a specific check, it is called A. an overdraft. B. a stop-payment order. C. a cancellation. D. a limit order. - correct answer ✔✔B What can a person expect as a customer of a credit union? A. Higher account fees and lower interest rates on loans than a commercial bank offers. B. Higher account fees and higher interest rates on loans than a commercial bank offers. C. Lower account fees and higher interest rates on loans than a commercial bank offers. D. Lower account fees and lower interest rates on loans than a commercial bank offers. - correct answer ✔✔D What type of information is not found on a consumer's credit report? A. Personal medical information. B. Criminal records. C. Employment history. D. Current and past addresses. - correct answer ✔✔A Hillary and Stephanie have both borrowed $15,000 from the same bank to buy the same model of a new car. Hillary's credit score is 732 and Stephanie's credit score is 588. Who is likely to pay a lower finance charge? A. They will pay the same because they used the same bank. B. Hillary. C. Stephanie. D. They will pay the same because they bought the same car. - correct answer ✔✔B Choose the best suggestion for building and maintaining a good credit score. A. Have money in savings and protect against identity theft. B. Keep debt low and pay bills on time. C. Make safe investments and set clear financial goals. D. Comparison shop and follow a budget. - correct answer ✔✔B What is true about loans? A. The lower the APR, the more interest is paid. B. The larger the down payment, the lower the principal. C. The shorter the length of the loan, the smaller the payments. D. The higher the APR, the less interest is paid. - correct answer ✔✔B This is an example of A. an installment plan. B. a predatory loan. C. a cash purchase. D. a line of credit. - correct answer ✔✔A A loan can be denied by a lender because of a person's A. education. B. health. C. credit history. D. gender. - correct answer ✔✔C Which of the following individuals has financial problems? A. A person who is borrowing money to buy a house. B. A person who has a loan for college. C. A person who uses a credit card to make most purchases. D. A person who is unable to pay his rent. - correct answer ✔✔D A low credit score can negatively affect a person's ability to A. rent an apartment. B. get approved for a debit card. C. open a savings account. D. qualify for a driver's license. - correct answer ✔✔A One difference between a debit card and a credit card is that A. debit cards can only be used when the person makes a large transaction. B. debit cards provide better consumer protection than credit cards. C. debit card payments are immediately deducted from the person's bank account. D. debit cards generate unsecured debt. - correct answer ✔✔C An advantage of having a credit card is that it helps a person to A. limit the amount of cash she has to carry. B. buy without thinking about her budget. C. spend more than she earns. D. owe an unlimited amount of money. - correct answer ✔✔A Which of the following helps to build a strong credit history? A. Having a steady employment record. B. Reporting a lost credit card within 24 hours. C. Using an ATM several times a month. D. Being a responsible driver. - correct answer ✔✔A The grace period refers to the time A. taken to process a credit card application by the credit card company. B. permitted for paying a credit card bill to avoid a late fee. C. allowed to notify a creditor of an error in billing. D. used for calculating interest. - correct answer ✔✔B The Truth-in-Lending Act requires that borrowers be given A. information on the cost of the loan. B. 45 day notice if interest is being increased. C. the features of the extended warranty. D. the reasons credit has been denied. - correct answer ✔✔A Which of the following credit cards makes the most sense for a person that pays his balance every month? A. A credit card with a 5% fixed interest rate. B. A credit card with a 0% interest rate for the first six months. C. A credit card that offers 1% cash back rewards on all purchases. D. A credit card with a high APR. - correct answer ✔✔C A company that keeps files and records on people who apply for and use credit is called a A. credit union. B. commercial bank. C. finance company. D. credit reporting agency. - correct answer ✔✔D What type of financial aid needs to be repaid? A. Loan. B. Grant. C. Scholarship. D. Work-study. - correct answer ✔✔A A computer scam that uses spam or pop-up messages to deceive consumers into disclosing their card numbers, bank account information, Social Security numbers, passwords, or other personal information is called A. soliciting. B. phishing. C. scamming. D. consuming. - correct answer ✔✔B The maximum amount of money a person can borrow is called a credit A. history. B. rating. C. report. D. line. - correct answer ✔✔D A. general and fixed-rate. B. valuable and indemnified. C. term and whole life (permanent). D. annual and tax exempt. - correct answer ✔✔C When shopping for life insurance, the best strategy is to A. do what the insurance salesperson recommends, since he is an expert. B. buy coverage at work if possible. C. figure out how much is needed, then get prices from different companies. D. buy insurance coverage after age 40 so the risk will be lower. - correct answer ✔✔C The purpose of life insurance is to A. pay a person's outstanding credit card bills. B. provide investment income to pay expenses during retirement. C. help meet the financial needs of dependents upon a person's death. D. protect against financial loss during a person's lifetime. - correct answer ✔✔C Which of the following financial products has the highest risk? A. Checking accounts. B. Certificates of deposit (CDs). C. Stocks. D. Savings accounts. - correct answer ✔✔C One reason investors purchase stock is to A. increase wealth. B. borrow money. C. earn interest. D. balance a budget. - correct answer ✔✔A Before a person begins investing, he should have A. taken more than one business course. B. a meeting with a licensed financial planner/advisor. C. a minimum of $5,000 to invest. D. strong self confidence in his ability to make money. - correct answer ✔✔B The New York Stock Exchange (NYSE) can be described as a A. marketplace where stocks are bought and sold. B. market for trading bonds. C. place to barter goods and services. D. location where government officials meet. - correct answer ✔✔A A person wants to invest in a low-risk investment product. Which of the following would be the best investment for her? A. US Treasury bond. B. Mutual fund. C. Common stock. D. Speculative stock. - correct answer ✔✔A The stock price of a corporation is most likely to increase when the corporation announces a A. decrease in the expected profit for this year. B. budget deficit. C. new product being released for sale. D. serious problem with its product. - correct answer ✔✔C A method of reducing investment risk is known as A. speculation. B. diversification. C. consolidation. D. negotiation. - correct answer ✔✔B Profit from the sale of stocks, bonds, or real estate is called A. equity capital. B. gift income. C. capital gains. D. tax-free income. - correct answer ✔✔C A company that sells shares of ownership through a stock exchange to investors is a A. sole proprietorship. B. public corporation. C. securities exchange. D. private corporation. - correct answer ✔✔D One of the main reasons for buying a stock mutual fund is that it is A. safe. B. managed by a professional. C. guaranteed to provide income. D. backed by the government. - correct answer ✔✔B Investments with greater potential returns generally have higher A.risk. B.fees. C.liquidity. D.deductibles. - correct answer ✔✔A When a person buys a company's bond, he A.owns a part of the company. B.has lent money to the company.