A financial institution that makes short-term, high-interest loans to borrowers who are considered high risk is a: C A life insurance company is an example of a(n): D How does fractional reserve banking increase the money supply? B. By automatically converting foreign currencies into U.S. dollars on deposit C. By guaranteeing that all deposits are held in reserve as cash at all times D. By using deposited money to make loans without reducing the value of the deposits D Which phrase best completes the diagram? Business banks Both: accept deposits to checking accounts Retail banks: A. Provide credit and debit cards B. Provide cash management services C. Offer certificate of deposit investments D. Require care titles as collateral B A bank receives a deposit for $60,000. If the bank has a 10 percent reserve requirement, approximately how much money could this initial deposit eventually add to the economy? A. $60,000 C how does the practice of fractional reserve affect banks? A. it gives banks the freedom to change interest rates on loans at any time B. It ensures that banks always have cash reserves equal to their total deposits. C. It prevents banks from profiting off loans they provide with deposited funds. D. It allows banks to keep only a small percentage of their deposits in reserve. D What role do retail and business banks play in the US economy? A. they provide free financial services to all citizens B. They take in deposits and use the money to provide the loans. C. They ensure that title pawn lenders obey federal regulations. D. They keep the overall money supply as low as possible. B How does the fractional reserve system increase the money supply in a country? A. by giving banks the authority to print their own money in an economic emergency B. By using deposited money to make loans without reducing the value of the deposits C. By automatically converting foreign currencies into U.S. dollars on deposit D. By guaranteeing that all deposits are held in reserve as cash at all times B which problem would be best addressed by a retail bank? A. A person with a poor credit history needs a short-term loan to pay a medical bill B. A corporation needs help with cash management for it's large staff. C. An entrepreneur financing to build a new office for her tech company. D. A couple needs to get a mortgage loan to buy a home after moving to a new city. D financial institutions play an important role in the US economy by: B. collecting taxes for state governments. C. printing paper money and minting coins. D. investing money in new businesses. D Which person would most likely be in the market for a student loan? Person A: I just got a great new job, so I want to buy a bigger house. I'd like to take out a big loan that I can pay off over a long time while i'm living in a new house Person B: I want to buy a new video game, but I don't want to take out a real loan. I'd rather just get an advance on my next paycheck so I can buy the game right now. Person C: I just got into medical school, but the tuition is really expensive. I need to borrow some money to pay for school, and I'll pay it back after I start working as a doctor. Person D: I don't need to borrow money right now, but I want to have access to money whenever I might need it. It would be nice to be able to pay off some bigger purchases over time. person C how does a low credit score affect a person who applies for a loan? A. it makes banks more likely to give the person a large, long-term loan B. It causes banks to charge the person higher interest rates on the loan C. It allows banks to give the person a loan without checking his or her tax records D. It makes it easier for the person to get a loan with a poor debt-to-loan ratio B A bank that has not received payment on a loan can try to get its money back by: A. ordering the borrower to work for the bank without earning any money B. hiring a collection agency to seize the money from the borrower. C. contacting the police and requesting the borrower be jailed. D. taking out a larger loan in the borrower's name to cover the initial debt. B Which pair of phrases correctly matches the specific type of loan with the broader category it best fits? A. credit card - long-term loan D One advantage of a long-term loan compared to a short-term is that a long-term loan: A. does not require the borrower to have a good credit score B. does not force the borrower to make payments every month C. can be paid off in full without the borrower paying any interest. D. allows a person to borrow more money at a lower interest rate. D A cash advance loan with very high interest that must be repaid in two weeks is an example of: A. a short-term loan C What is one major consequence if a person is consistently late making payments on borrowed money? A. having a lower credit score A A person's debt-to-income ratio describes: A. how much the person has borrowed compared to how much he or she earns B. how often the person's credit score changes based on increasing levels of debt C. how frequently a person has to make payments on a significant debt. D. how much money a person can borrow from a bank at any given time. A Someone who is applying for a loan from a bank can expect the bank to: A. check the person's credit history to make sure he or she pays debts on time B. investigate the person's parents to see if they were financially responsible C. demand that the person close all of his or her accounts at competing banks D. request proof that the person who graduated from a good college. A People who take a loan from a bank have a responsibility to: A. pay the full amount of each monthly payment without being late B. spend all of their savings to pay off the loan as quickly as possible. C. use the same bank whenever they want to take out another loan. D. never take out another loan until the first one is paid off. A Why are mutual funds considered a high-risk form of investment? B. They are owned and controlled by the federal government. C. They rely on risky practices such as investing borrowed money. D. They cannot be withdrawn for at least 30 years after investment. A Diversification is a helpful investment strategy because it: A. guarantees that an investment will grow at a certain rate B.focuses all investments on a single stock or company C.protects an investor in case on investment fails D.ensures that no capital can be lost in an investment C Which speaker is most likely to make high-risk investments? Speaker A: I want to invest in a lot of different companies. You never know when a company is going to have a surprisingly good or bad year Speaker B: I invest to get as much money as I can as quickly as I can. I'm not worried about losing money at all Speaker C: I'm nearing retirement, so I need to make sure my investments are safe. The worst
thing that could happen would be losing all of my investments right before I need them. Speaker B Capital formation is the process through which: A. financial managers invest capital in high-risk funds B. consumers spend capital to acquire real estate. C. investors increase the amount of capital they control. D. banks charge interest rates for making capital loans. C Which statement best describes the relative risk of two type of investment? A. Bonds are riskier than stock B Which situation best illustrates the process of capital formation? A. A restaurant server decides to use his savings to buy stock in a business B. A pilot tries to save money by limiting her weekly spending. C. A banker takes out a high-interest loan to buy a new car. D. A farmer diversifies his crops by growing many different kinds. A low-return investments are sometimes a better option than high-return investments because: A. they are more likely to produce huge returns on investment B. they are less likely to charge expensive fees to purchase C. they are less likely to cause the investor to lose money D. they are more likely to focus on bran-new companies C What is one major advantage of a capital formation strategy that focuses only on high-risk investments? A. It offers the possibility of extremely large returns over time B. It protects the initial investment from losing any of its value. C. It is a highly predictable strategy that guarantees stable growth. D. It is the most diversified strategy for capital investment. A Which option is an example of a low-risk investment? A.Mutual funds D Which type of investment best completes the diagram? _______________________ -> Most balance between risk and return A. Low-risk investment Not A Which factor would credit card companies most likely use to determine an applicant's creditworthiness? A. Size of family B What is one effective strategy for managing credit card debt? A. Ensuring that all of your credit card bills are paid on time B. Spending your full credit limit before making a payment C. Replacing low-interest credit cards with high-interest options D. Paying only the minimum monthly payment on all credit cards A Which action is most likely to improve a person's credit score? A. Filling for bankruptcy protections B. Completing a credit card application C. Reaching the credit limit on a credit card D. Paying all credit card bills on time
D One major advantage of credit is that it allows consumers to: A. earn a higher salary for each year at the same job B.eliminate debts that they are unable to pay off C. Make a large purchase and pay for it over time D. Earn interest on money they put in savings accounts C Which type of borrowing option would most likely result in the borrower paying the highest amount of interest? A. A card with a low simple interest rate B. A card with a low compound interest rate C. A card with a high compound interest rate D. A card with a high simple interest rate C Customers with high credit scores are likely to be approved for credit because: A. they pay the highest application fees to demonstrate their high level of income B. they have agreed that they will not file for bankruptcy if their debts are too high C. they are applying for credit for the first time and have no history of borrowing money D. they are considered more likely to pay back borrowed money in a timely manner D The percentage of money a credit card company charges customers who pay back loans over time is called: B. Credit Card Limit C. The interest rate D. the minimum monthly payment C What is one drawback of declaring bankruptcy? A. It can be used only if a person has good credit. B. It severely lowers a person's credit rating. C. It often results in a civil lawsuit. D. it prevents a person from getting further education B One major difference between compound interest is that simple interest: A. is not eligible for forgiveness as part of a bankruptcy B. is charged on the interest accumulated on a loan. C. is charged only on the original amount borrowed. D. is only available on loans to businesses. C vehicle insurance would be most useful to a person who: A One major similarity between vehicle and pet insurance is that both types of insurance: D. cover property rather than people, D A person would most likely be able to justify the added cost of title insurance in which situation? A. The person has purchased a huge piece of property that hasn't been fully inspected B. The person has opened a business that could be the target of lawsuits by customers. C. The person has moved to an area with lots of hurricanes and other natural disasters. D. The person has taken a job that can be extremely dangerous for its employeesSUBM A What is an insurance premium? A. The percentage of a bill that a customer must pay without insurance B. The money paid each month to receive insurance coverage C. The estimated cost of an insurance plan over 20 years D. The maximum amount of money an insurance policy will pay out B An entrepreneur has bought an apartment building to remodel. Before renting out the units, she wants to limit her risks. She plans to buy an insurance policy that covers her if a tenant ever sues her. She also wants to make sure that any existing problems with the building will be covered without her having to pay additional expenses. Which two types of insurance would best address the entrepreneur's concerns? A. Liability and title insurance B. Title and homeowner's insurance C. Liability and vehicle insurance D. Life and health insurance A Which diagram best matches a problem with the type of insurance that protects against it? A. Disability insurance -> being sued for negligence B. Title insurance ->Damaging your car in an accident C.Life insurance -> Losing a home in a natural disaster D. Health insurance -> Being diagnosed with a serious illness D The deductible on an insurance policy refers to: A. the monthly fee a person after using insurance for the first time. B. the number of different types of insurance a policy can provide. C. the total value of an insurance policy minus its cost to the consumer. D. the money a person pays before his or her insurance covers expenses. D Why do people typically purchase insurance policies? A. they believe insurance policies will increase in value over time B. They anticipate that they will never have to pay their deductibles. C. They calculate that their insurance premiums will be greater than their benefits. D. They would not be able to pay for major expenses without insurance. D At what point does insurance stop beneficial for a customer? A. when the cost of the premiums becomes greater than the value of the benefits B. When the value of the benefits becomes greater than the cost of the deductible. C. When the value of the benefits becomes greater than the cost of the premiums D. When the cost of the deductible becomes greater than the cost of the premiums. A Which type of insurance would a person most likely purchase if he or she has recently bought a property and wants to be protected against any preexisting costs? A. Disability insurance B. Liability insurance C. Title insurance D. Life insurance C Which speaker would most likely benefit from renting a home instead of getting a home mortgage? Speaker A: I think people should view their home as a financial investment. You don't want to give your money away to a landlord Speaker B: I hate the hassle of fixing appliances and making repairs to my home. I'd much rather let somebody else handle those problems. Speaker C:I want to be able to completely change my home every couple of years. That means new carpets, new paint, and even new appliances. Speaker D: It's important to me that my family will be able to stay in our home for many years. I don't want to be surprised by costs suddenly increasing B Short-term savings strategies are designed to: A. allow a person to improve his or her financial education B. set aside some money to deal with unexpected expenses. C. help a person create a reasonable household budget. D. maximize the growth of money used for investments. B What is one major advantage of long-term savings strategies? A. They make more money available for nonessential purchases. B.They allow savings to grow significantly over time. C.They generally have the lowest available interest rates. D. They make it easier to pay for monthly expenses B Which phrase best completes the list? - Characteristics of
Long-term savings strategies A. earn higher interest than saving accounts B. Are used to pay for expenses as they arise C. Include keeping money in your home D. Are less risky than savings accounts A For which person would renting a home be a better option than getting a mortgage? A. Someone who considers a home to be an investment that will grow in value B. Someone who wants his or her monthly payments to remain stable for years C. Someone who does not have a lot of money for an initial investment D. Someone who enjoys performing maintenance tasks in his or her home C What is one major advantage of having a home mortgage instead of renting a home? A. A mortgage helps the homeowner build wealth. B. A mortgage makes it easier to move to a new home. C. A mortgage reduces maintenance responsibilities. D. A mortgage requires a smaller initial investment. A Nonessential spending includes expenses such as: A. buying health insurance B. paying federal taxes. C. paying interest on loans. D. going to the movies. D People build household budgets in order to: A. get jobs that offer better salaries and benefits B. decrease their monthly mortgage or rent payments C. manage the money they spend on different expenses D. increase the value of their long-term investments C Which type of living expense describes the money paid to federal, state, and local governments each year? A. utilities D a tax on the amount of money a person earns in a year is a(n) A. property tax C What is one way people can reduce the amount of taxes they owe in a year? A.
Work longer hours B What is one major difference between income tax and sales tax? A. Income tax is based on taxable income, while sales tax is based on gross income B. Income tax is regressive, while sales tax is progressive. C. Income tax is based on gross income, while sales tax is based on taxable income. D. Income tax is progressive, while sales tax is regressive. D In which situation would a person pay a higher property tax than he or she did the year before? A. the salary the person earned increased B. The value of the person's home increased. C. The number of dependents the person had increased. D. The amount the person spent on electronics increased. Not A A tax rate that is higher for people with higher incomes is a _______________________ A. regressive tax C Which person has the highest taxable income? Person A: Earns $50,000 per year with $5,000 in deductions Person B: Earns $60,000 per year with $10,000 in deductions Person C: Earns $90,000 per year with $30,000 in deductions Person D: Earns $100,000 per year with $60,000 in deductions Person C A person has $50,000 in taxable income for a year and pays a 10% income tax rate, equal to $5,000. Which action would reduce the amount the person paid in taxes to $1,000? A. Receiving a $4,000 tax deduction B. Receiving a $49,000 tax deduction C. Receiving a $49,000 tax credit D. Receiving a $4,000 tax credit D A person has gotten a new job with a much higher salary. He plans to spend his extra money on a new car and great stereo system for his apartment. Which statement best describes the tax situation this person will likely face in the next year? A. He will pay more in both property tax and income tax B. He will pay more in sales tax but less income tax C. He will pay more in both income tax and sales tax D. He will pay more in income tax but less in property tax C Which form does a person complete to demonstrate his or her legal ability to work and pay taxes on income? A. W-2 D A person who earns $30,000 per year pays $3,000 in tuition to go back to college. As a result, her total income tac bill is reduced from $6,000 to $3,000. This is an example of a ______________ A. tax assessment D A short - term savings strategy is most useful for people who want to: A. withdraw their savings to pay for unexpected expenses B. create a household budget that uses all of their monthly income C. increase the value of their investments as much as possible D. avoid putting their money into banks or credit unions A A person earns $100,000 per year, while person B earns $45,000 per year. Which conclusion is most likely true for these people when they pay their income taxes? A. Person B will pay at a higher income tax rate than person A B. Person A will pay at a higher income tax rate than person B C. Neither person A nor person B will have to pay income tax D. Both person A and person B will pay at the same income tax rate Maybe B Income tax is money that has to be paid to the government based on: A. the number of cars a person owns B. the value of a person's home or land C. the cost of a product being purchased D. the amount of money a person earns D Before an insurance company pays for a policyholder's expenses, the policyholder must first contribute a certain amount of money toward those expenses. This is called a ________________ A. premium B The main purpose of a contractual institution is to: A. provide guaranteed payments to depositors under specific conditions B. hold deposits in accounts and use that money to offer loans C. use deposited money to purchase stocks and bonds in order to make a profit D. allow customers to deposit money into accounts at no charge A How does fractional reserve banking increase the money supply in an economy? A. It allows foreign currencies to be directly substituted for US dollars B. It takes money deposited in banks and makes it available as loans. C. It pressures depositors to withdraw money held in banks for long periods. D. It requires the government to print money when deposit levels increase B A partnership of investors that often uses high-risk strategies to achieve large returns on investment is a(n) _________________ A. hedge fund A The main function of a low-risk investment is to: A. make a variety if investments to balance risk and reward B. make sure that an investment does not lose money. C. quickly earn as much return on investment as possible. D. protect an investment from government fees and taxes. B Which phrase best completes the diagram? - Consequences for not repaying a loan A. Prison sentences D Which phrase best completes the diagram? A. Pay for vital services like water B. Are paid to the government C. Allow a person to buy a home D. Do not need to be paid monthly Not C. Maybe A What is a main problem associated with getting a mortgage? A. The cost can be unstable and increase each year B. The money invested is unlikely to increase in value. C. The homeowner cannot modify the home in any way. D. The initial required investment is very high. D Insurance that protects a person against the costs associated with lawsuits is called ___________ insurance A. title D A mortgage is a long-term loan a person takes out in order to: A. pay for college tuition. B. buy luxury goods. C. pay off existing debt. D. purchase a new house D Which sentence best completes the diagram? ______________________ -> A person's credit score gets worse A. A person is late paying credit card bills over several months B. A person spends part of a credit card's credit limit. C. A person opens an expensive new business D. A person pays the full balance of a credit card. A Which situation is an example of a person making use of credit? A. A mechanic borrows money from a bank to buy a new set of expensive tools. B. A farmer changes the type of crops she grows to make a greater profit. C. An architect puts his weekly paychecks into a savings account at a local bank. D. A college student saves money in order to buy a cheap used car. A - Effective strategies for managing credit? A. Paying bills on time B. Frequently filing for bankruptcy C. Spending over credit limits D. Avoiding all credit cards A A retail bank helps drive economic growth by: A. keeping all deposited funds in reserve at all times. B. providing loans and financial services to corporations. C. requiring all loans to be paid back within a few weeks D. offering affordable mortgage loans to home buyers. D |
Which phrase best completes the diagram consequences for not repaying a loan apex
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