BUSN 380 Final Exam


BUSN 380 Final Exam
(TCO 3) Identify two or three sources of consumer credit and discuss the advantages and disadvantages of each type…

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BUSN 380 Final Exam

BUSN 380 Final Exam


(TCO 1) Marinda Smart is interested in purchasing new appliances for her kitchen that collectively will cost her approximately $5,000. She knows that she could obtain financing for her purchase, but recently heard rumors that there may be layoffs where she works and is concerned about her employment. What type of risk is Marinda concerned about? (Points : 4)

Inflation risk

Interest rate risk

Income risk

Personal risk

Liquidity risk

(TCO 1) The Zarnella family formulated a budget in which it would spend $450 a month on groceries. If the family spent $436 last month, then we could classify this difference as a (Points : 4)



Fixed living expense.

Budget reduction.

Contribution to net worth.

(TCO 1) Which step in the financial planning process is demonstrated by a situation in which Royanne decides to stop traveling through Europe and return back to the States to seek a part-time job and take smaller, less costly trips? (Points : 4)

Developing her financial goals

Identifying alternative courses of action

Evaluating her alternatives

Implementing her financial plan

Reviewing and revising her financial plan

(TCO 1) When you only have to pay taxes on an investment at a future point in time, this is referred to as a(n) (Points : 4)

Cafeteria-style benefit.


Tax-deferred benefit.

Tax-exempt benefit.


(TCO 1) When you take the time to review a variety of job search websites and find 10 potential employment opportunities that fit your skills and abilities, which step in the career planning process have you completed? (Points : 4)

Assess and research personal goals and abilities.

Evaluate the employment market to identify specific employment opportunities.

Develop a resume and cover letter to apply for specific positions.

Interview for specific positions and assess the interview performance.

Evaluate financial and other factors of positions offered.

(TCO 1) Jacob has moved into a home with a large acreage and is now finding that his smaller lawnmower is no longer functional. He needs to purchase a riding mower. How would you categorize Jacob’s goal? (Points : 4)

Consumable-products goal

Durable-products goal

Intangible goal

Intermediate goal

Long-term goal

BUSN 380 Final Exam

(TCO 1) A family has a net worth of $175,000 and liabilities of $123,000. What is the amount of its assets? (Points : 4)






(TCO 1) Sherry O’Neal is interested in opening a savings account and her bank offers several types. Her main concern is that she wants to have the ability to withdraw her money whenever she wants. She has an interest in opening an account that is best categorized as (Points : 4)

Money management.

An opportunity cost.

A limited asset.

A liquid asset.

Net worth analysis.

BUSN 380 Final Exam

 (TCO 2) An example of _____ would involve a situation in which Judy Smith and Tom Smith each write their daughter a check for $12,500 for graduation, instead of giving her one $25,000 check, so they will not have to pay a gift tax. (Points : 4)


Tax evasion

Tax exclusion

Tax avoidance

Tax-deferred income

 (TCO 2) Your bank statement shows a balance of $870. Your checkbook register shows a balance of $362. You earned interest of $5 and had a service charge of $10. There are no outstanding deposits. What is the amount of outstanding checks? (Points : 4)






(TCO 2) The most liquid type of account would be a (Points : 4)

Certificate of deposit.

Checking account.

Money market account.

Brokerage account.

Share of stock.

(TCO 2) Megan McMillan has just won a Mega Millions lottery. This income would be classified as (Points : 4)

Earned income.

Investment income.

Passive income.

Other income.

Deferred income.

(TCO 3) A _____ will tend to work more with a borrower if he or she is facing legitimate payment problems. (Points : 4)

Credit union

Payday advance company

Finance company

Department store

Commercial bank

(TCO 3) One disadvantage of a store-based gift card is that it (Points : 4)

Looks nothing like typical debit cards.

Has decreased in popularity since the mid-1990s.

Works the same as a credit card.

May be eroded by fees and eventually expire.

Is currently being used for very limited purposes.

(TCO 3) If Jerry Rickland is applying for a loan and the bank determines that he owns a home worth $175,000 and a vacation home worth $125,000, the bank is examining which of the five Cs? (Points : 4)






BUSN 380 Final Exam

(TCO 3) If Terry White would default on his loan that he was approved for in order to purchase a Chevrolet, then (Points : 4)

An advance notice would be required before his car was repossessed.

No advance notice would be required before repossession.

The federal consumer credit laws would give him protection from his car being repossessed.

He wouldn’t have to pay the full balance due on his automobile loan.

He would pay 50% of the balance due on his automobile loan.

(TCO 3) All of the following are disadvantages of leasing a vehicle except (Points : 4)

Automatic ownership interest in the car.

Unlimited mileage on the car.

No need to meet credit requirements.
Lease payments are likely to be lower than loan payments.

All of the other answers are advantages.

 (TCO 3) An example of a credit bureau would be (Points : 4)


the Better Business Bureau.



 (TCO 3) If Anthony Fontain makes a decision to accept a variable-rate loan instead of a fixed-rate loan, he is _____ with the lender and reducing the lender’s risk. (Points : 4)

Sharing the interest rate risk

Increasing his monthly payments

Taking a larger stake in the asset he is purchasing

Repaying the loan over a faster period of time

Pledging collateral

(TCO 5) A(n) _____ market is one in which financial securities are purchased using an investment bank. (Points : 4)






BUSN 380 Final Exam

(TCO 5) ABC Corporation has assets that total $15 million and liabilities that total $4 million. It also has 500,000 shares of stock outstanding. What is ABC’s book value per share? (Points : 4)






(TCO 5) When researching current price information for a bond or stock investment, the most readily available source of information for most consumers can be found within (Points : 4)

The daily newspaper.

Government publications.

Corporate reports.

Investor newsletters.

Business periodicals.

(TCO 5) A characteristic of serial bonds is that they (Points : 4)

Will pay no interest payments.

Will have varying issue dates.

Will have a series of maturity dates.

Cannot be called.

Will all mature 10 years from the date of issue.

(TCO 5) If Hugh is considering a risky investment that can provide him with a large profit in a short amount of time, most likely, he is interested in investing in (Points : 4)

U.S. Treasury bills.

Certificates of deposit.

Low-growth stocks.

Speculative stocks.

Low-risk bonds.

 (TCO 5) If a corporation is facing a cash shortfall, _____ would be paid first. (Points : 4)

Dividends to common stock owners

Cash to buy shares of stock from shareholders

Cash to buy bonds from current bondholders

Interest to bond owners

Dividends to preferred stock owners

(TCO 5) _____ involves the analysis of charts and historical data in order to make stock purchasing decisions. (Points : 4)



Efficient market



(TCO 5) Dave Harris has just purchased a bond with a face value of $1,000 that pays 6%. The purchase price of the bond was $900, and the bond will mature in 5 years. What is the yield to maturity for this bond? (Points : 4)






 (TCO 5) What is the current yield for a $1,000 corporate bond that pays 9% and has a current market value of $825? (Points : 4)






 (TCO 1) Melba Anderson has a document that allows her new microwave to be repaired or replaced within a certain time frame if it stops working. She has a (Points : 4)




Rain check.

Class action suit.

(TCO 3) When a loan is made based on the equity value of a home and the loan provides a homeowner with tax-free income until the home is sold (to pay back the loan), this is called a(n) (Points : 4)

Conventional mortgage

Growing equity mortgage

Second mortgage

Reverse mortgage

Adjustable-rate mortgage

BUSN 380 Final Exam

(TCO 3) A credit purchase with 24 monthly payments of $80 and a down payment of $125 would have a total cost of (Points : 4)






 (TCO 4) Your home insurance policy has a $500 deductible. If a windstorm causes $2,500 of damage to your home, what amount of the claim would the insurance company pay? (Points : 4)






(TCO 4) A(n) _____ is an addendum to a life insurance policy that can add additional benefits, such as an accidental death benefit payable to a beneficiary. (Points : 4)

Accelerated benefits clause

Policy dividend

Guaranteed insurability clause

Second-to-die rider

Double indemnity rider

(TCO 4) John Brown owns a home in Oakland, California and because of the risk of earthquakes, he decides to purchase _____ to cover potential losses. (Points : 4)

Building and other structures

Additional living expenses

Personal property

Personal liability

Specialized coverage

(TCO 4) Martina has a policy that includes a $500 deductible and a coinsurance provision requiring her to pay 10% thereafter. Her medical bills total $5,500. What amount is she required to pay personally? (Points : 4)






BUSN 380 Final Exam

(TCO 4) _____ is a healthcare institution that directly contracts with specific medical care specialists in order to provide healthcare services in exchange for a fixed, prepaid monthly premium. (Points : 4)

Blue Cross

Blue Shield




 (TCO 4) If Larry has a term life insurance policy that is _____, this means that the payments to his beneficiaries would become smaller over time. (Points : 4)






(TCO 6) If Wilson Fischer has purchased 10 rare silver coins from a broker, he is investing in (Points : 4)

Direct investment in real estate.
Indirect investment in real estate.

Precious metals.


(TCO 6) The Capitalist Mutual Fund’s net asset value is $28.25. The fund has liabilities of $3 million and 1,600,000 shares have been issued. What is the value of the fund’s portfolio? (Points : 4)

$42 million

$45.2 million

$48 million

$48.2 million

$3 million

(TCO 6) A mutual fund that invests in companies with a market capitalization of less than $2 billion is called a(n) (Points : 4)

Socially responsible fund

Sector fund

Small-cap fund

Index fund

Growth fund

(TCO 6) One disadvantage associated with real estate investments is that an investor must
face (Points : 4)

Lack of involvement in property maintenance

A hedge against inflation


Lack of financial risk

Possible high capital requirements for total venture

 (TCO 6) If Jeremiah’s employer makes nontaxable contributions to a plan in his name and his salary is reduced by the same amount, Jeremiah has a (Points : 4)

Money-purchase pension plan

Stock bonus plan

Profit-sharing plan

Defined benefit plan

403(b) plan

(TCO 6) Jasmine owns a vehicle worth $25,000 and a home worth $225,000. She has a checking account balance of $500, a savings account balance of $1,500, and a mutual fund worth $85,000. Her personal assets are worth $90,000. She still owes $10,000 on her car, $100,000 on her home, and $1,000 on her credit card. What is Jasmine’s net worth? (Points : 4)






(TCO 7) The benefits of establishing a trust include the fact that (Points : 4)

It can reduce or provide payment for estate taxes

It can allow you to avoid probate and transfer assets immediately to beneficiaries

It can free you from managing your assets, while providing you a regular income

It can ensure that your property serves a desired purpose after you die

All of the above

(TCO 7) Marion would be acting in the capacity of a(n) _____ if she is selected to manage the assets of her 16-year-old niece until the niece reaches the age of 21. (Points : 4)






BUSN 380 Final Exam

(TCO 1) Your brother-in-law has come to you in confidence expressing a concern with managing his finances. Your initial recommendation is that he consider using a budget. How would you explain the purpose of a budget and what would you suggest that he take into consideration in order for the budgeting process to be successful? (Points : 10)

Click Here: Your Brother in Law Has Come to You

Having a budget would be critical to help manage one’s finances effectively.  A budget helps to control…

(TCO 2) What are the advantages of a Roth IRA? (Points : 10)

Click Here: What Are the Advantages of a Roth IRA

A Roth IRA is a special retirement account where one can purchase common security types such as stocks or…

(TCO 3) Carla Brown wants to know what price home she can afford. Her annual gross income is $45,000. She owes $1,050 per month on other debts and expects her property taxes and homeowners insurance to cost $250 per month. She knows she can get a 5.0%, 30-year mortgage, so her mortgage payment factor is 5.37. She expects to make a 20% down payment. What is Carla’s affordable home purchase price? Assume a lender will use a 38% monthly gross income guideline. Round your answer to the nearest $100. (Points : 10)

Click Here: Carla Brown Wants to Know What Price Home

Lender assumes Carla can afford to spend 38% of her gross income for mortgage payment/ expenses: $45,000….

(TCO 3) Identify two or three sources of consumer credit and discuss the advantages and disadvantages of each type selected. (Points : 10)

Click Here: Identify Two or Three Sources of Consumer Credit

The two common sources of consumer credit are commercial banks and…

(TCO 5) Clayton and Barbara Patterson were married immediately after graduating from college and have been married for 20 years. They both started investments early in life, but the majority of their funds were placed in speculative stock funds. Their portfolios performed well until the last few years, when they faced losses due to an economic downturn. Explain how asset allocation could have helped the Pattersons. (Points : 10)

Click Here: Clayton and Barbara Patterson Were Married

Asset allocation is a method of ensuring that one’s investments are placed in various types of assets that can…

(TCO 7) When completing the process of estate planning, what federal and state tax considerations must be taken into account? (Points : 10)

Click Here: When Completing the Process of Estate Planning

One of the main objectives of estate planning is to maximize or preserve the value of family assets that will….

BUSN 380 Final Exam