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Exam 18: Appendix: Personal Finance

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Question 1

Multiple Choice

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Alex holds a corporate bond in a wool manufacturing company. This bond is a formal IOU issued by the company. As a bondholder, Alex's relationship with the company is that of a(n) :

A) creditor.
B) borrower.
C) stockholder.
D) owner.

E) B) and C)
F) C) and D)

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Question 2

Multiple Choice

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Allen is a college graduate, whereas his friend Glen has only completed high school. As a college graduate, Allen will most likely:

A) earn more during his lifetime than his friend.
B) have less median weekly earnings than his friend.
C) have a higher income but less job security than his friend.
D) be disinterested in internships.

E) B) and C)
F) None of the above

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Question 3

Multiple Choice

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Wendy has purchased several furnishing items from a home decor store. She pays for the entire purchase through her credit card. Wendy has 21 days to pay back the amount to the issuer of the credit card. In the context of credit cards, the number of days Wendy is given to pay back the balance is called the _____.

Tom, a finance graduate, wants to identify the average credit scores among trainees in an organization. His research results show that the average credit score based on the Fair, Isaac and Company (FICO) scale is 695. This average credit score indicates that the trainees fall under the _____ category of creditworthiness.

A full-service broker:

Thomas is a bondholder in the municipal corporation of Oklahoma. Not being much of a risk-taker, Thomas prefers these kinds of bonds as they are usually viewed as safe investments and interest income earned on these bonds is exempt from federal income taxes. Given this information, one can conclude that Thomas holds _____.

Albert, a first-time investor in the stock market, has limited knowledge in trading in the stock market. He thus needs someone to guide him while buying and selling shares. He also needs assistance in financial planning and identifying good investment opportunities. In this scenario, Albert should hire a(n) _____.

On the Fair, Isaac and Company (FICO) scale, Donald falls in the poor to below average category of creditworthiness. Based on the FICO scale, Donald is most likely to have a credit score between:

Max wants to invest in the stock market. Although he has expert knowledge in trading in the stock market, he does not have the time needed to engage in these transactions and hence needs someone to buy and sell stocks on his behalf. In this case, Max should hire a(n) _____ to fulfill his requirement.

The Consumer Financial Protection Bureau was created by the _____.

After reviewing Brenda's current financial situation, Ronald, her friend, assesses that she has an unpaid credit card balance of $4,500, on which an annual percentage rate of 15% is applicable. In this case, the best advice Ronald can give Brenda is to:

__________refers to your ability to obtain goods or resources without having to make immediate payment.

Isabella, who has worked for the last 30 years, has reached her retirement age and is eligible for the 403(b) employee-contribution retirement plan. Which of the following organizations is Isabella most likely working in?

Which of the following is an employee-contribution retirement plan?

Investing refers to reducing consumption in the current time period in order to build future wealth.

Which of the following statements is true of employees who choose the Roth version of employee payroll-deduction retirement plans?

A _____ allows the cardholder to make a purchase now and pay the card issuer later.

In the context of credit card practices, a mandate of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 is that:

Which of the following is a similarity between stockholders and bondholders?

Unlike his friend who has a credit score of 450, Rashid has a credit score of 688, which lets him purchase more goods on credit than his friend. In the context of the Fair, Isaac and Company (FICO) scale, Rashid falls under the _____ category of creditworthiness.