Question 1

What is needed to determine the time value of depositing $100 in a savings account?

Accepted Answer

the rate of inflation.

Answer

her total income.

Answer

whether the account is FDIC protected.

Answer

whether the bank offers overdraft protection.

Question 2

What does the time value of money refer to?

Accepted Answer

Received today is worth more than the same amount of money received in the future.

Answer

Is the foundation for developing a financial plan

Answer

Money will double in value over seven years

Answer

Changes in value along with interest rates

Question 3

What is the annual percentage rate (APR)?

Accepted Answer

The true cost of credit that must be disclosed on a loan agreement.

Answer

Always expressed in dollars

Answer

Required by the Securities Exchange Commission

Answer

Required by the Comptroller of the Currency

Question 4

Who benefits the most from inflation?

Accepted Answer

Long-term fixed rate borrowers.

Answer

The government

Answer

Lenders

Answer

Persons on fixed incomes

Question 5

Which type of financial institution usually pays the highest rate of interest on savings accounts?

Accepted Answer

Credit unions.

Answer

Savings and loan associations

Answer

Investment firm money market accounts

Answer

Commercial banks

Question 6

What will a person receive if they surrender a $20,000 whole life insurance policy with a cash value clause?

Accepted Answer

a calculated amount of money which includes the premiums paid as well as the interest on that money.

Answer

$20,000 less the premiums paid.

Answer

one-fifth of the $20,000 face value.

Answer

a calculated amount of money that must be converted to a term life insurance policy

Question 7

What should a woman with homeowner's insurance say to her agent after receiving an expensive piece of jewelry?

Accepted Answer

I think I need a personal property floater.

Answer

I will deduct the cost of the jewelry from my premium.

Answer

I realize that if this jewelry is stolen it will be considered vicarious liability.

Answer

I think I should get speculative risk insurance.

Question 8

Why would it be appropriate to add a personal property floater to homeowner’s insurance for a flat screen television?

Accepted Answer

To cover the cost of replacement should the television get damaged or stolen.

Answer

To protect the person who owns the television from liability for damages.

Answer

To show the insurance company a good faith investment has been made.

Answer

To reduce the premium on the homeowner’s insurance.

Question 9

Generally, what happens to the premium when the deductible on an insurance policy is higher?

Accepted Answer

lower the premium.

Answer

more frequently the premium has to be paid.

Answer

less frequently the premium has to be paid.

Answer

greater the premium.

Question 10

Why is term life insurance usually the least expensive type of life insurance?

Accepted Answer

The policy only pays a death benefit.

Answer

The policy builds a cash value.

Answer

The policy provides coverage for a lifetime.

Answer

The policy is available to all consumers.

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