ALLIED FIN202 MODULE 2 CHECK YOUR UNDERSTANDING

A person’s net worth would increase as a result of:
a. reduced amounts
owed to others.
b. reduced earnings.
c. increased
spending for current living expenses.
d. decreased value
of personal possessions.
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2. Which of
the following statements regarding debit and credit card liability is correct?
a. A credit card
carries more risk of loss to the cardholder.
b. A debit card
carries more risk of loss to the cardholder.
c. There is no
cardholder liability if either type of card is lost.
d. The Federal
Government insures losses on credit, but not debit cards.
3. Which of
the following are considered to be personal financial statements?
a. Budget and credit
card statements
b. Balance sheet and
cash flow statements
c. Checkbook and
budget
d. Tax returns
4. The
Truth-in-Savings law requires that financial institutions:
a. provide insurance
for savings accounts.
b. send customers
monthly bank statements.
c. report annual
percentage yield on savings.
d. offer adjustable
rate savings accounts.
5. A home
file should be used for:
a. storing all
financial documents and records.
b. financial records
for current needs.
c. documents that
require maximum security.
d. obsolete financial
documents.
6. A person
borrows $200 from a payday loan company and pays $10 interest for two weeks.
This would result in an annual interest rate of approximately ________,
ignoring compounding.
a. 260
b. 130
c. 40
d. 20
Hint: p. 147
7. Ben Chase
needs to pay some of his debts over the next few months. Which item on his
balance sheet would help him decide what amounts are due in the near future?
a. Budget variance
b. Investment assets
c. Long-term
liabilities
d. Current
liabilities
8. Time
deposits consist of:
a. checking
accounts.
b. loans and charge
accounts.
c. savings accounts.
d. government
securities.
9. Which of
the following are considered to be personal financial statements?
a. Budget and credit
card statements
b. Balance sheet and
cash flow statements
c. Checkbook and
budget
d. Tax returns
10. Joan Zemke
expects interest rates to decline over the next few months. To maximize her
earnings, she should use a(n):
a. regular savings
account.
b. interest-bearing
checking account.
c. five-year
certificate of deposit.
d. six-month
certificate of deposit.
11. An
all-purpose account that provides several services is a(n):
a. NOW account.
b. asset management
account.
c. EFT account.
d. mutual fund.
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12. Which type
of financial records includes stock and bond reports?
a. Investment
b. Insurance
c. Estate planning
d. Tax
13. To avoid
high fees for loans, a person should avoid borrowing from a:
a. credit union.
b. savings and loan
association.
c. pawnshop.
d. commercial bank.
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14. A family
with $45,000 in assets and $22,000 of liabilities would have a net worth of:
a. $45,000.
b. $23,000.
c. $22,000.
d. $67,000.
15. To
determine a person’s solvency, which financial document should be consulted?
a. Cash flow
statement
b. Budget
c. Debt
consolidation system
d. Balance sheet
16. The
Expedited Funds Availability Act requires that funds be available to
depositors:
a. within 5 days for
local checks.
b. within 2 days for
local checks.
c. within 2 days for
both local checks and out-of-town checks.
d. within 2 days for
out-of-town checks.
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17. The rate
of return on a savings account is also referred to as:
a. liquidity.
b. compounding.
c. yield.
d. opportunity cost.
Hint: p. 154
18. Liabilities
are amounts representing:
a. debts.
b. items of value.
c. living expenses.
d. taxable income.
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19. Items that
you own with a monetary worth are referred to as:
a. liabilities.
b. variable
expenses.
c. net worth.
d. assets.
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20. Opportunity
costs refer to:
a. current spending
habits.
b. changing economic
conditions that affect a person’s cost of living.
c. storage
facilities to make financial documents easily available.
d. trade-offs
associated with financial decisions.