Edward paid an annual premium of $2,000 in total coverage for his homeowner's insurance, including $250,000 in damage coverage and $250,000 in liability coverage. Six years into his policy, a tree fell on Edward's home and caused $50,000 worth of damage. Edward's insurance company paid the claim.Did the cost of the annual premiums outweigh the benefit of transferring the risk to the insurance company?
  • The credit card company applies a penalty rate, increasing the card's interest rate.
  • Yes, the cost of the annual premium for 12 years was less than the accident claims
  • No, the cost of the annual premium for six years was less than the accident claims
  • Consider less costly housing options
You earn $50,000 per year, and the federal tax rate is 10 percent. Your gross income is
  • $50,000
  • $2,700
  • $4,000
  • stocks
Gerald buys name brand pain relief medication even though he knows the generic store brand, with identical contents, costs two dollars less. Gerald's decision seems to be less driven by price and more driven by
  • Bonds and mutual funds
  • The Federal Reserve raised the federal funds rate
  • A compound interest account
  • individual preferences
If the Federal Reserve raises the federal funds rate, what will likely happen to certificates of deposit offered by banks?
  • The Federal Reserve raised the federal funds rate
  • The interest rate offered will increase
  • The credit card company applies a penalty rate, increasing the card's interest rate.
  • The one-cent reduction makes the price seem more attractive.
Which type of credit involves a set limit based on what a consumer pays up front?
  • start earning sooner
  • Secured credit cards
  • Building the home in the floodplain of a river
  • Installment credit
Jeanine paid an annual premium of $1,200 in total liability coverage for her car, including up to $400,000 in bodily injury coverage and $100,000 in property damage coverage. Twelve years into her policy, Jeanine caused an accident that resulted in the other driver claiming $40,000 in medical costs and $15,000 in car damage. Jeanine's insurance company paid the claim.Did the cost of the benefit of transferring the risk to the insurance company outweigh the cost of the premium?
  • Yes, the cost of the annual premium for 12 years was less than the accident claims
  • The credit card company applies a penalty rate, increasing the card's interest rate.
  • Consider less costly housing options
  • No, the cost of the annual premium for six years was less than the accident claims
Who would pay the most as a percentage of income under a progressive tax?
  • Entertainment
  • His credit score will suffer
  • shares of stock
  • CEO earning $2.5 million per year
Which of the following actions would likely raise homeowner's insurance premiums?
  • Building the home in the floodplain of a river
  • Bonds
  • Gasoline tax ?
  • Installment credit
Which tax uses the same rate for all income levels?
  • Proportional
  • Stocks
  • Progressive
  • Gasoline tax ?
Johann maintains a $75,000 insurance policy on his boat. He pays $50 per month in premiums and his deductible is $2,If he is involved in an accident and makes a claim of $3,000 on the policy, how much will he have to pay?
  • $4,000
  • $20,000
  • not $2,500
  • $2,700
Samuel needs to decrease his expenses. To which category should he make cuts first?
  • CEO earning $2.5 million per year
  • shares of stock
  • Entertainment
  • His credit score will suffer
Patrick has $12,000 saved for medical school from gifts and summer jobs. Because the cost of college has risen each year, Patrick knows he needs a savings account that will help him meet these increases. In the 10 remaining years before he receives his medical degree, which of the following would most help Patrick to meet these increases?
  • individual preferences
  • A compound interest account
  • Bonds and mutual funds
  • Consider less costly housing options
"Tax bracket" is a term associated with which type of taxation?
  • stocks
  • Proportional
  • Gasoline tax ?
  • Progressive
If an investor possesses a portfolio heavily concentrated in bank checking accounts, a financial advisor would most likely suggest which of the following aggressive investments to diversify the portfolio?
  • $4,000
  • Futures
  • Bonds
  • stocks
A young investor would be best served by which kind of portfolio?
  • Bonds and mutual funds
  • start earning sooner
  • deny her a line of credit
  • Diverse and aggressive
Making a down payment reduces the
  • loan principle amount
  • Secured credit cards
  • decreases monthly payments
  • Bonds and mutual funds
Which of these investments may pay dividends?
  • Proportional
  • Bonds
  • Stocks
  • Gasoline tax ?
Anna's job pays $10 per hour, and she works 40 hours per week. Her tax rate is 20 percent. Assuming she works 50 weeks per year, the amount she will pay in taxes is
  • $4,000
  • $50,000
  • $20,000
  • $2,700
Laurent saves money from his lawn service to buy a new $20,000 mower and trailer. He would like to buy the new equipment as soon as possible but only has $12,000 in his simple interest savings account. To reach his goal sooner, Laurent should
  • Entertainment
  • The Federal Reserve raised the federal funds rate
  • Consider less costly housing options
  • Move his money to a compound interest account
Which of these are loans to businesses or governments?
  • Stocks
  • Building the home in the floodplain of a river
  • Bonds
  • Gasoline tax ?
The purple section (C) for a nearly-retired investor would most likely represent
  • $2,700
  • Bonds
  • stocks
  • $50,000
A common marketing strategy used by retailers to make products appear more attractive is to list a $100 item for
  • $2,700
  • $4,000
  • stocks
  • $99.99
If an investor possesses a portfolio heavily concentrated in Certificates of Deposit, a financial advisor would most likely suggest which of the following aggressive investments to diversify the portfolio?
  • $20,000
  • Futures
  • stocks
  • not $2,500
A young investor would best plan to have the blue section (D) represent
  • shares of stock
  • Gasoline tax ?
  • Diverse and aggressive
  • Secured credit cards
Chloe's history of non-payment of monthly utility bills will probably cause a lender to
  • start earning sooner
  • deny her a line of credit
  • Diverse and aggressive
  • Secured credit cards
The rate of return being offered by banks on money market accounts is 3% and increasing. Which of the following might cause this to happen?
  • The interest rate offered will increase
  • The credit card company applies a penalty rate, increasing the card's interest rate.
  • The one-cent reduction makes the price seem more attractive.
  • The Federal Reserve raised the federal funds rate
Why might buyers be more inclined to purchase a product if it is listed for sale at $49.99, rather than $50?
  • The interest rate offered will increase
  • The one-cent reduction makes the price seem more attractive.
  • The Federal Reserve raised the federal funds rate
  • The credit card company applies a penalty rate, increasing the card's interest rate.
Jonah has a high-paying job and would like to start saving for retirement. He has evaluated his budget in order to add savings to his expenses. He has a moderate amount of debt, and he spends a great deal on housing. His utilities, transportation, and health, expenses are fixed, and he spends little on recreation or eating out. Which action is he most likely to take?
  • No, the cost of the annual premium for six years was less than the accident claims
  • A compound interest account
  • Consider less costly housing options
  • The interest rate offered will increase
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