WorksheetsChapters 4, 5, and 6 Test
Total questions: 98
Worksheet time: 49mins
Regular savings accounts typically offer higher interest rates than high-yield savings accounts.
True
False
Funds from your checking account are withdrawn by writing a certified check.
True
False
Which of the following is an interest-paying checking account?
Certificate of deposit (CD)
Series EE U.S. savings bond
Negotiable order of withdrawal (NOW) account
Treasury bill
Money is automatically withdrawn from your account when you use a debit card.
True
False
What does the compounding method in savings plans do?
Reduces savings balance over time
Lowers the overall return
Enhances the growth of savings through interest
Penalizes early withdrawal
Funds invested in which of these should not be withdrawn for a stated period in order to avoid an interest penalty?
Savings account
U.S. Treasury bill
Negotiable order of withdrawal (NOW) account
Certificate of deposit (CD)
Which financial service helps manage money wisely?
Crowdfunding
Credit counseling
Online and mobile banking
Car loans
You are going on an overseas trip and want to carry checks. You should purchase:
certified checks.
traveler's checks.
guaranteed checks.
cashier's checks.
Which factor most influences the selection of a savings plan?
Popularity of the plan
Rate of return, liquidity, safety, and fees
Interest rates only
Restrictions and fees only
A Liquid CDs allows you to:
Has interest rates that increase at set periods
Requires no minimum deposit
Withdrawal penalty-free
Bases interest on inflation rates
Which of these does the Federal Deposit Insurance Corporation (FDIC) insure up to a stated maximum dollar amount at any given financial institution?
Shareholder
Bank
Financial transaction
Depositor
What is an important question to consider when selecting a financial service provider?
Where can I get the best return on my savings?
Do they offer free parking?
How many branches do they have?
What is the provider's stock price?
What is a certified check?
A check with a guaranteed payment from your personal funds
A check that earns interest
A check used only for travel
A digital check only used online
You should regularly monitor payment dates for your checking account.
True
False
Online and mobile banking services have declined since the pandemic.
True
False
If you write a check for an amount greater than your account balance, the result will be a(n):
endorsement.
overdraft.
share draft.
reconciliation.
When managing CDs, what should you avoid?
Regularly checking on it
Consider a CD portfolio
Take money out before maturation date
Investing in more CDs
Using a credit card allows you to accumulate points on your daily purchases.
True
False
Which financial service has become more popular for hygiene reasons?
Digital Wallets
Certified Checks
Credit Cards
Cash Payments
Money Market Deposit Accounts are federally insured.
True
False
Liquid CDs allow withdrawal of money without penalty, but may still require a minimum balance.
True
False
The FDIC protects the money depositors place in insured banks in the unlikely event of an insured bank failure. Each depositor is insured to at least (a) per insured bank.
2,500,000
205,000
250,000
2,500
Using a credit card for online purchases offers better protection than using a debit card.
True
False
Which is true about swings in interest rates?
Low rates tend to drop stock prices
Low rates tend to help people purchase large assets
High rates tend to increase consumer spending
High rates tend to increase stock prices
Using your debit card will drastically improve your credit score.
True
False
What is a common cash management mistake?
Investing in stocks
Creating a Budget
Impulsively Spending
Having both a High Yield and Certificate of Deposit account
ATMs can be used for various banking transactions, but it's important to be cautious about fees.
True
False
Which of the following is NOT a cash management alternative?
Checking and Savings Accounts
Online Gambling
Certificates of Deposit
U.S. Treasury Bills
An asset management account combines:
Loans, savings, and retirement
Cash management and bill payment
Checking, investing, and borrowing
Stocks, bonds, and real estate
Which is a step in managing your checking account?
Writing multiple checks at once
Regularly reconciling your checkbook
Ignoring small transactions
Making deposits only at the end of the month
What is a "rising-rate CD"?
A CD with a fixed rate
A CD that earns interest based on the stock market
A CD with rates that rise at set periods
A CD that you can withdraw from any time
Using digital payments comes with no concern for fraud.
True
False
Which of the following statements regarding the cost of a checking account is true?
Most banks and other depository institutions allow unlimited free check-writing privileges.
Most banks charge a fee when a checking account balance drops below a required minimum.
Most banks use the daily balance in an account to determine whether to levy a service charge.
Most banks do not charge for using the automated teller machine (ATM) of another bank that is not a member of the same network.
Why should you be cautious with unknown public networks while using online banking?
They offer low transaction limits
They always charge extra fees
They increase the risk of privacy and security issues
They slow down payments
Which is NOT a benefit of online and mobile banking?
Protection from all types of fraud
Instant access to account information
Convenience of ATM use
Instant Payments
Digital wallets like Apple Pay and Google Pay are expected to become less popular in the future.
True
False
Digital payment services such as PayPal and Venmo allow:
Cash deposits at ATMs
Instant money transfers globally
Contactless point-of-sale payments
Credit card protection
When using mobile payment apps like Venmo or Cash App, you should:
Be cautious of scammers and fraudulent requests
Pay fees for every transfer
Share your account information freely
Use the app for every purchase
What is one key difference between debit and credit cards?
Debit cards impact your cash balance immediately
Credit cards limit you to one transaction per day
Debit cards provide better fraud protection
Credit cards immediately deduct funds from your account
Which of the following is an aspect of asset management accounts (AMAs)?
A) “Sweeping” of excess balances into money market deposit account (MMDA)
B) Limited free checking of available balance
C) Fixed annual fees and account charges on deposit account
D) Deposits protected by the Securities Investor Protection Corporation (SIPC)
Which of the following is NOT a feature of a High Yield Savings account?
Penalties upon withdrawal of money
Funds can be withdrawn at any time
Easy access to funds
Higher interest than banks
Why is it better to use a credit card for online purchases?
Credit cards offer better protection for returns and fraud
Debit cards offer higher spending limits
Credit cards charge fewer fees
Debit cards are not accepted online
How can you avoid ATM fees?
Withdraw small amounts frequently
Make online transfers
Use your bank’s ATMs
Use any ATM available
What is an advantage of digital wallets like Apple Pay?
They are immune to fraud
They store virtual debit and credit cards for contactless transactions
They reduce the number of checks written
They require passwords for every transaction
Overspending impulsively is a common cash management strategy.
True
False
A used vehicle that has been inspected and reconditioned, and comes with a manufacturer-backed warranty is called a(n):
trusted used vehicle
certified lender vehicle
corporate pre-owned vehicle
certified pre-owned vehicle
Which of the following is a disadvantage of using a real estate agent to buy a home?
Higher closing costs due to agent's commission
Limited access to available properties
Less professional advice
Longer transaction times
A mortgage with an interest rate that may change periodically based on market conditions after an initial fixed-rate period (usually 3, 5, 7, or 10 years) are called:
reverse-annuity mortgages
fixed-rate mortgages
adjustable-rate mortgages (ARMs)
rollover mortgages
Which of the following characteristics would cause a person to prefer buying a house over renting?
unknown job stability in the area
lower upfront costs
no market risks
equity building
Which of the following characteristics would cause a person to prefer renting over buying housing?
equity building
freedom to make changes and renovations
Reduced maintenance responsibilities and lower upfront costs
investment opportunity
With pre-qualification, a buyer can:
correct any problems on their credit report.
bargain for additional time in a property deal.
reduce the required down payment.
get a comprehensive list of all the suitable properties in a locality.
Increasing the down payment on a given home will
reduce the equity in the property.
reduce the amount of the monthly payments.
increase the amount of interest paid.
increase the amount of the loan
Which of the following will help a buyer know ahead of time the specific mortgage amount that they will be eligible for (subject to changes in rates and terms)?
Loan-to-value ratio
The interest rate
Pre-qualification
Anchoring
The data in a Multiple Listing Service (MLS):
eliminate the need for a real estate agent.
consist of a comprehensive listing of properties for sale in a given community area.
deal only with undervalued properties that are authorized by the government within a geographic location.
include the entire ownership history of the listed properties.
What is a "short sale" in real estate?
A quick sale of a property at market value
A sale in which the proceeds are less than the mortgage balance owed
A foreclosure process
A sale of a home for a higher-than-market price
If you make a down payment of 10% on a house worth $110,000, the lender will require which of these because of the size of the down payment?
Application fees
Private mortgage insurance (PMI)
Closing points
A bond
A foreclosure happens when the:
borrower is planning to restructure the loan taken for making mortgage payments.
rates of interest prevalent in the housing market are extremely volatile, forcing the lender to demand additional collateral from the borrower.
borrowers repay their housing loan well before the estimated closing period of the loan.
lenders attempt to recover loan balances from borrowers who have quit making payments by forcing the sale of the home.
The loss in the value of an automobile that occurs over its period of ownership is called:
reinsurance.
the acquisition payment.
the market price.
depreciation.
Why should you be cautious when buying from an independent used car lot?
They usually offer high-quality cars with warranties
They only sell new cars
They only sell cars over 10 years old
They have lower overhead but no uniform industry standards
Which type of loan is designed for first-time homebuyers with a low down payment requirement?
VA Loan
FHA Loan
FBLA Loan
USDA Loan
Which of the following is true about home inspections?
Inspections are mandatory for all real estate transactions
Inspections help identify potential issues with the property
Inspections are performed by the seller
Inspections guarantee that there are no issues with the property
For most people, a (a) will be their second largest purchase.
boat
car
house
horse
Which of the following is a disadvantage of buying a used car?
Lower maintenance costs
Less warranty coverage
Higher insurance premiums
Immediate depreciation
For much of the life of a fixed-rate mortgage loan, the majority of each monthly payment goes to pay the:
interest.
property taxes.
homeowner's insurance.
private mortgage insurance (PMI).
What does a real estate agent typically help with?
Financing a mortgage loan
Determining the fair market value of the property and finding properties that fit your needs.
Performing home inspections
Providing the title insurance
What is a foreclosure in real estate?
A quick sale at market value
A process in which the lender repossesses the property due to non-payment
A mortgage type for first-time buyers
A sale in which the seller cannot recover the balance owed
What does a contingency clause in a real estate contract typically allow for?
Withdrawal from the contract under certain conditions
An automatic price reduction
Immediate property transfer
A waiver of title insurance
In a real estate transaction, what does the closing statement detail?
The buyer's credit score
A final inspection report
The costs that both buyer and seller are responsible for
The inspection results for termites
Earnest money is the sum of money the home buyer pledges with the:
lender to guarantee the purchase.
seller to indicate the intent to purchase.
realtor for finding the desired home within a preset budget.
financial institution to prequalify for a mortgage loan.
If the interest rate and monthly mortgage payment do NOT change over the life of your mortgage, you have a(n):
reverse-annuity mortgage.
fixed-rate mortgage.
adjustable-rate mortgage (ARM).
graduated-payment mortgage.
Which of the following best describes a condominium (condo)?
A free-standing home with no shared walls
A multi-story building with shared common areas
A multi-unit building where each unit is rented out
A home built specifically for one family
Which type of housing involves sharing one or two walls with adjacent properties but having separate entrances?
Single-family home
Condo
Apartment
Townhouse
Which of the following costs is usually the biggest fixed auto ownership cost?
Fuel
Oil
Installment loan payments
Maintenance and repair
Which of the following is an example of a multi-family home?
Detached single-family house
Townhouse
Duplex
Condominium
Which of these is provided to both buyer and seller at or before the actual closing and accounts for monies that change hands during the transaction?
Closing statement
Contingency clause
Title check
Buydown
What does the "sticker price" on a new car represent?
The dealer's cost for the car
The final price after negotiations
The manufacturer's suggested retail price
The total price including tax and fees
The expenses that borrowers pay during the final step of a real estate purchase are called:
amortization costs.
closing costs.
property taxes.
mortgage interest expenses.
Which of the following is NOT typically included in a real estate sales contract?
A description of the property
The buyer's credit score
The names of the buyers and sellers
The price and terms of the sale
Condominium homeowner's fees do NOT include funds to pay
maintenance of the common areas.
maintenance of the property amenities
maintenance of the buildings
monthly mortgage payments of property owners.
Which of these governs closings on owner-occupied houses, condominiums, and apartment buildings of four units or fewer?
Truth-in-Lending Act
Equal Credit Opportunity Act
Real Estate Settlement Procedures Act
Real Estate Agents Act
For a borrower to avoid having to pay private mortgage insurance (PMI), a lender will usually require a down payment of:
5% or less
20% or more
10% or less
15% or less
A veteran might be able to buy a home with no down payment with:
FHA mortgage insurance.
a buydown.
graduated-payment mortgage.
a VA loan guarantee.
What is one of the primary disadvantages of buying a new car?
Lower maintenance costs
Immediate depreciation
No financing options
Limited availability of models
A behavioral bias in which an individual tends to allow an initial estimate (of value or price) to dominate their subsequent assessment (of value or price) regardless of new information to the contrary is called:
foreclosing.
depreciating.
leasing.
anchoring.
Leasing a vehicle is essentially the same as
renting a vehicle
buying a vehicle on credit
postponing the purchase
financing the vehicle
What is the primary purpose of a title check before purchasing property?
To assess the property's market value
To determine the closing date
To calculate the mortgage interest rate
To ensure the seller has legal ownership and the title is clear
What is the advantage of a larger down payment when purchasing a home or car?
Lower monthly payments
Higher interest rates
Shorter loan term
Higher monthly payments
A Carfax report can provide many benefits when purchasing a used car except:
Vehicle history
Maintenance
Unreported accidents
Resale value
Which of the following is NOT a common real estate financing option?
Fixed-rate mortgage
Adjustable-rate mortgage (ARM)
Reverse mortgage
Payday loan
What is a trade-in when buying a car?
A down payment made in cash
The car you exchange for a credit toward your purchase
A form of lease agreement
The dealer's cost for the car
The first step in the auto-buying process should be to:
analyze how much you can afford to spend on the car.
consider alternative buying strategies.
begin negotiations on various automobiles.
purchase an extended warranty
At the end of your car lease period, you intend to turn in the car, and you will not pay extra at that time based on the residual value of the car. Which kind of lease do you have?
Residual
Open-end
Purchase option
Closed-end
A real estate sales contract will include:
the amount you have paid as an earnest money deposit.
the movement in the value of the property over the last 20 years.
the current value of the properties in the neighboring locations.
expected home maintenance costs.
A vehicle that uses a combination of an internal combustion engine and an electric motor to move the car is called a(n):
Electric vehicle
Diesel vehicle
Hybrid vehicle
none of the above
What is a major advantage of leasing a car?
Ownership after the lease term ends
Lower monthly payments compared to buying
No need for a down payment
Freedom from mileage limits
Chapter 7 of the U.S. Bankruptcy Code:
restores all the losses incurred by the borrower.
results in the loss of all the assets of the debtor.
requires the debtor to pay back the debt in the future.
is also referred to as "straight bankruptcy."
Which government act regulates credit reporting and ensures that you can correct errors in your credit file?
The Equal Credit Opportunity Act
The Fair Credit Reporting Act
The Fair Debt Collection Practices Act
The U.S. Bankruptcy Act
What is the primary purpose of the Equal Credit Opportunity Act (ECOA)?
To allow creditors to discriminate based on age and marital status
To ensure creditors offer the same interest rates to all consumers
To reduce the amount of credit available to low-income consumers
