Exam1 FIN474 Spring 2011 ANSWER

Exam1 FIN474 Spring 2011 ANSWER

 

1.Time deposits consist of

A.Profits earned by a financial institution

B.Savings accounts

C.Loans and charge accounts

D.Government securities

E.Checking accounts

 

2.A certificate of deposit usually has

A.A variable rate of return

B.Low safety for savers

C.No minimum deposit amount

D.High interest-rate risk

E.Limited liquidity

 

3.If a $1,000 investment increases to $1,080 in a year, the rate of return is ____ percent.

A.0.80

B.80.00

C.8.00

D.1.

 

4.Restrictions on how property in an area can be used are

A.Refinancing clauses

B.Common areas

C.Title insurance provisions

D.Cooperative agreements

E.Zoning

 

5.A person who pays $4,500 in real estate property taxes and is in the 28 percent tax bracket, wouldreduce the amount paid for federal income taxes by

A.$1,260

B.$2,500

C.$4,500

D.$3,240

E.$500

 

6.Arisk premiumassociated with interest rates refers to

A.Lower consumer prices

B.Higher potential earnings due to uncertainty

C.Expanded exports

D.A loan with a short maturity

E.Expected lower inflation

 

7.Shaunik’s monthly net income is $3,000. What is the maximum amount he should spend on credit cardpayments?

A.$300

B.$600

C.$400

D.$700

E.$500

 

8.Renting is more advantageous than buying a home for

A.Lower short-term living costs

B.Financial benefits

C.Receiving tax benefits

D.Permanence of residence

E.Long-term investment purposes

 

9.George Washburn had earnings from his salary of $34,000, interest on savings of $800, a contributionto an individual retirement account of $1,500, and dividends from mutual funds of $600. George’s adjustedincome (AGI) would be

A.$35,400

B.$34,000

C.$33,900

D.$34,600

E.$34,800

 

10.The purpose of a service contract is to

A.Obtain regular maintenance on a product

B.Protect a product owner from expensive repairs

C.Prevent legal action due to a defective product

D.Reduce the chance of repairs of an appliance

E.Have legal assistance for consumer complaints

 

11.Tax-deferred retirement plans are a type of

A.Tax shelter

B.Passive income

C.Exemption

D.Itemized deduction

E.Tax credit

 

12.Which is often the source of theleastexpensive loan?

A.Savings and loan associations

B.Parents or family members

C.Loan sharks

D.Banks

E.Finance companies

 

13.Current liabilities differ from long-term liabilities based on

A.The financial situation of the creditor

B.The amount owed

C.The interest rate charged

D.When the debt is due

 

13.Current liabilities differ from long-term liabilities based on

A.The financial situation of the creditor

B.The amount owed

C.The interest rate charged

D.When the debt is due