W!SE Review #3

A person may be entitled to a tax refund if she:

• had capital gains

• earned more money this year

• collected her stock dividends last year that were not taxed

• had more taxes deducted from her pay than necessary

The price paid to a lender for borrowing money is called the:

• Principal

• Premium

• Loan Balance

• Finance Charge

A person has $300 a month transferred from his checking account to a creditor to make a loan payment. This is an example of a(n):

• Installment purchase

• Electronic funds transfer (EFT)

• ATM transaction

• Credit card transaction

It is advisable to avoid lending money to a friend or relative unless the person:

• Has a promissory note signed by the borrower in the presence of a witness

• Give the money to the borrower in cash

• Deducts taxes from the amount being borrowed before giving the money

• Checks that the borrower is employed before giving the loan

Use the information about the company, American Railroads Inc. to determine what the 52-week stock price indicates.

• The highest and the lowest price of the stock during the past 52 weeks

• The highest and the lowest price paid for the stock 52 weeks ago

• The lowest and the highest price that the stock is permitted to sell for

• The highest and lowest price predicted for the stock in the next 52-week period

A person buys a home for $300,000. The person makes a down payment of $100,000 at the time of purchase and has a mortgage for $200,000. How much mortgage insurance is advisable?

• $100,000

• $200,000

• $250,000

• $300,000

The possibility that a borrower will fail to repay a loan on time and will not be able to repay the loan is known as the:

• Interest rate risk

• Credit risk

• Default

• Investment risk

When interest rates are low, it is a good time to:

• Sell stocks

• Keep savings in a safe deposit box

• Take out a fixed-rate car loan

• Place money into a certificate of deposit (CD)

A person will generally AVOID buying investment products if she:

• Is interested in building wealth

• Need the money to be liquid

• Wants to make money quickly

• Has a stock portfolio

Using a credit card creates:

• Wealth

• Debt

• Capital gains

• Income