Multiple Choice
Identify the choice that best completes the
statement or answers the question.
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1.
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A debt security represents
a. | ownership in a company. | c. | profits of a
company. | b. | borrowing by a company. | d. | taxes paid by a company. |
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2.
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An example of an equity security is a
a. | type of debt. | c. | share of stock. | b. | bond. | d. | municipal bond. |
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3.
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A municipal bond represents
a. | ownership in a company. | b. | an investment in a foreign
corporation. | c. | a corporate debt. | d. | borrowing by a state or local
government. |
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4.
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A Series EE savings bond purchased for $50 would have a maturity value of
a. | $100 | c. | $75 | b. | $50 | d. | none of the
above. |
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5.
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The market value of a stock can be affected by
a. | how well a business is doing. | b. | the state of the economy. | c. | the current phase of
the business cycle. | d. | all of the
above. |
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6.
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For their first residence, many people rent
a. | a townhouse | c. | a mobile home. | b. | a condominium. | d. | an apartment. |
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7.
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A mortgage is used to
a. | rent a apartment. | c. | borrow money to buy a home. | b. | insure
property. | d. | invest in stocks
and bonds. |
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8.
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Julie is concerned about changing interest rates in the future. Which
mortgage would be the best recommendation?
a. | adjustable rate | c. | condominium | b. | fixed rate | d. | equity |
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9.
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A professional trained to assist people with buying or selling a home is
a. | a real estate agent. | c. | a lawyer. | b. | an appraiser. | d. | an assessor. |
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10.
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An appraiser helps a home buyer by
a. | estimating the value of a home that is being considered. | b. | reducing the taxes
owed on a home. | c. | providing current information on mortgage rates. | d. | showing various
homes available for sale. |
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11.
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The assessed value of a home is used to determine a homeowner’s
a. | insurance bill. | c. | mortgage payments. | b. | maintenance expenses. | d. | property tax. |
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12.
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Items of personal interest that can decrease in value in the future are
called
a. | commodities. | c. | essentials. | b. | futures. | d. | collectibles. |
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13.
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Examples of products that consumers buy include
a. | food | c. | appliances | b. | clothing | d. | all of the
above. |
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14.
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Consumers pay for services each time they go to
a. | a movie. | c. | a car wash. | b. | a dentist. | d. | all of the
above. |
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15.
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Underwriters Laboratories, Inc., which concerns itself with fire and electrical
safety, is an example of
a. | a product-testing organization. | c. | a broadcast
organization. | b. | a print publisher. | d. | all of the above |
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16.
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Useful advertisements often tell you what the product is, how it is made,
and
a. | what the product defects are. | c. | how much it cost to
make. | b. | what it will do. | d. | none of the above. |
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17.
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A type of advertising that originates with the consumer is
a. | labels. | c. | word-of-mouth. | b. | customer service
departments. | d. | none of the
above. |
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18.
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Sales used to clear merchandise that stores no longer wish to carry in stock
are
a. | promotional sales. | c. | special purchase sales. | b. | clearance
sales. | d. | holiday
sales. |
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19.
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A name given to a product or service that is intended to distinguish it from
other similar and/or competitive products or services is
a. | brand name. | c. | a convenience store. | b. | a price index. | d. | none of the
above. |
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20.
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An example of a store brand is
a. | Craftsman. | c. | Sony. | b. | Green Giant. | d. | Timex. |
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21.
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Stores that emphasize lower prices on their products are
a. | convenience stores. | c. | discount stores. | b. | full-service stores. | d. | specialty
stores. |
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22.
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Stores that have a special line or products for sale are
a. | convenience stores. | c. | discount stores. | b. | full-service stores. | d. | specialty
stores. |
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23.
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The Consumer Bill of Rights was presented by
a. | Gerald Ford. | c. | John F. Kennedy. | b. | Bill Clinton. | d. | Richard Nixon. |
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24.
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The agency that has the authority to set safety standards is the
a. | Food and Drug Administration. | b. | Consumer Product Safety
Commission | c. | US Department of Agriculture. | d. | Federal Trade
Commission. |
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25.
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Consumer responsibilities include
a. | being honest and reasonable. | c. | being informed and
involved. | b. | reporting unethical practices. | d. | all of the
above. |
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26.
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The person to whom a check is written is the
a. | drawer | c. | payee | b. | drawee | d. | forger |
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27.
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“Drawee” refers to the
a. | owner of a checking account | b. | bank or other financial
institution | c. | person to whom a check is written | d. | person who endorses a
check |
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28.
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Writing another person’s signature on a check without his or her
permission is
a. | forgery | c. | postdating | b. | overdrawing | d. | scaling |
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29.
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Writing checks for more than the amount deposited in an account is called
a. | stopping payment | c. | postdating | b. | forgery | d. | overdrawing |
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30.
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A postdated check refers to a check that is
a. | dated later than the date on which it is written | b. | written
illegally | c. | written by someone not authorized on the account | d. | void after a certain
number of days |
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31.
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If a check is lost, you should consider completing
a. | a signature card | c. | an overdraft request | b. | a stop-payment order | d. | a forged check |
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32.
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A person without a checking account who needs to send money to a company in
another state would probably use a
a. | certified check | c. | personal check | b. | money order | d. | traveler’s
check |
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33.
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The process of returning and paying checks within the banking system is called
a. | reconciliation | c. | clearing | b. | forgery | d. | overdrawing |
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34.
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A bank statement has the purpose of
a. | insuring a savings account | b. | reporting transactions for a checking
account | c. | reporting errors for electronic banking transactions | d. | assisting a person
to open a checking account |
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35.
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Canceled checks are those that have
a. | not cleared the banking system | b. | been issued illegally | c. | cleared the banking
system | d. | stop-order payments issued for them |
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36.
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The document prepared to show agreement between the bank balance and the
customer’s checkbook balance is
a. | bank statement | c. | canceled check report | b. | bank
reconciliation | d. | check
register |
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37.
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Which check is one that has not yet been presented for payment?
a. | overdrawn | c. | forged | b. | canceled | d. | outstanding |
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38.
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Anyone who buys on credit or receives a loan is known as the
a. | lender | c. | creditor | b. | debtor | d. | obligator |
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39.
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A business that receives an invoice with the terms 2/10, n/30
a. | must pay the entire amount right away | b. | must pay $10 now and $30
later | c. | can deduct 2% from the amount owed if payment is made within ten
days | d. | does not have any time limit on the amount to be paid |
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40.
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Which of the following are typical uses of credit by American consumers?
a. | buying fairly expensive products | c. | borrowing to pay
taxes | b. | paying for medical care | d. | all of the above |
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41.
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Which of the following is NOT true about credit references?
a. | They are important to creditors. | b. | They are usually ignored by
creditors. | c. | They may be asked to verify a credit record. | d. | They may be asked
about a bill payment record. |
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42.
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Your honesty and willingness to pay your debits is called
a. | capacity | c. | capital | b. | character | d. | none of the
above |
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43.
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Which of the following is a benefit of credit?
a. | establishing a credit rating | b. | buying larger quantities of things you
want | c. | not having to shop around | d. | getting lower prices for
merchandise |
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44.
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Which of the following is NOT a disadvantage of credit?
a. | careless buying | c. | overuse | b. | overbuying | d. | savings |
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45.
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Which of the following would make it possible for a teenager to get a credit
card in his or her name?
a. | if she or he had a part-time job | b. | if she or he had good grades in
school | c. | if she or he got a parent or guardian to cosign the agreement | d. | none of the
above |
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46.
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A partial payment of the purchase price is called
a. | a finance charge | c. | a regular payment | b. | a down payment | d. | none of the
above |
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47.
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A two-month loan made on March 10 would be due on
a. | April 10 | c. | May 10 | b. | April 11 | d. | May 11 |
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48.
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Special insurance that repays the balance owed if the borrower dies or becomes
disabled is
a. | Credit Insurance | c. | Lenders’ Insurance | b. | Borrower’s
Guaranty | d. | Financial
Insurance |
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49.
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What is the major purpose of having the APR stated?
a. | To increase the cost of lending money. | b. | To make it easier to compare the cost of
credit. | c. | To make it easier for consumers to get loans. | d. | None of the
above. |
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50.
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Which of the following should be checked when getting a loan?
a. | The annual percentage rate. | b. | The amount of the monthly
payments. | c. | The finance charge. | d. | All of the
above. |
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51.
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Which of the following can be used as credit references?
a. | Banks where you have checking and/or savings accounts. | b. | Former
employers. | c. | Other creditors where you have account balances. | d. | All of the
above. |
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52.
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A credit bureau is
a. | a credit reporting agency. | c. | a credit granting
agency. | b. | a credit rating agency. | d. | all of the above. |
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53.
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A record of your transactions completed during a billing period is called
a
a. | statement of account. | c. | credit memorandum. | b. | receipt. | d. | credit check. |
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54.
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An agreement developed cooperatively by a creditor and a debtor to reduce
monthly payments to a more manageable level is called
a. | a truth-in-lending plan. | c. | a debtor ripoff
plan. | b. | a debt-repayment plan. | d. | none of the above. |
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55.
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Investing commonly refers to
a. | opening a savings account. | b. | using your savings to earn more
money. | c. | putting money in a safe place in your home. | d. | storing important
documents in a safe-deposit box. |
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56.
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Savings grow over the years as a result of
a. | dividends received. | c. | interest earned. | b. | depreciation. | d. | higher tax
rates. |
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57.
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A person’s savings would grow faster if the money was compounded
a. | annually. | c. | monthly. | b. | quarterly. | d. | daily. |
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58.
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Liquidity refers to an investment that
a. | has no risk. | b. | is easily changed into
cash. | c. | is insured by a federal government agency. | d. | pays a high rate of
return. |
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59.
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Which of the following has the lowest liquidity?
a. | a savings account | c. | a checking account | b. | government savings bonds | d. | real estate |
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