Question 1

An adjustable rate mortgage with a baseline rate of 4%,a margin of 1%,and an annual cap of 1% would have an initial mortgage rate no higher than 6%.

Accepted Answer

A) True 
 B)False

Question 2

When purchasing a vehicle,____ should be settled first.

Accepted Answer

A)  cost of the vehicle 
B)  type of loan required 
C)  whether to take a rebate or low-interest loan offer 
D)  value of trade-in 
E)  c and d

Question 3

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement.
-The term condominium/townhome refers to a type of [architecture | ownership].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 4

One who leases an automobile is typically responsible for early termination costs,even when early termination is due to theft or auto accidents.

Accepted Answer

A) True 
 B)False

Question 5

Private Mortgage Insurance (PMI)protects the lender from loss on a loan.

Accepted Answer

A) True 
 B)False

Question 6

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement.
-The interest rate on an ARM can be increased [automatically every year | only when a designated index increases].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 7

Reasons why auto leasing is so popular include all of the following except:

Accepted Answer

A)  lower monthly payments 
B)  lower down payment 
C)  lower total cost 
D)  getting more expensive car for the same monthly payment 
E)  rising new car prices

Question 8

____ is a fixed auto ownership cost.

Accepted Answer

A)  Gasoline 
B)  Installment loan payment 
C)  Auto insurance 
D)  Maintenance 
E)  b and c

Question 9

Sean and Lisa (age 25 and 28,respectively)are purchasing their first home for $200,000 with a 5% down payment.They will withdraw the down payment from Lisa's IRA.They will have to pay ____ on the IRA withdrawal.

Accepted Answer

A)  federal income taxes 
B)  an early withdrawal penalty 
C)  Social Security taxes 
D)  a and b 
E)  a,b,and c

Question 10

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement.
-The first major expenditure most people make is to buy a [house | car].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 11

The ____ would be included in a rental contract or lease agreement.

Accepted Answer

A)  amount of the monthly payment 
B)  payment date 
C)  length of lease agreement 
D)  deposit required 
E)  all of these would be included

Question 12

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement.
-Talk with the auto dealer about auto leasing and financing [before | after] negotiating the best price on the vehicle.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 13

If you made a down payment of $11,000 on a $110,000 house,the lender no doubt will require ____ as a result of the size of the down payment.

Accepted Answer

A)  closing points 
B)  a bond 
C)  mortgage insurance 
D)  application fees 
E)  homeowner's insurance

Question 14

Leslie has been offered the choice of either a $1,000 rebate or a 5.5%,48-month loan for the new car she is purchasing.If Leslie will be financing $15,000 and she can get a 7.5%,48-month loan at her credit union,should she take the $1,000 rebate or the 5.5% loan? (Show all work. )

Accepted Answer

The answer of Leslie has been offered the choice of...

Question 15

An automobile is a personal use asset for most buyers.

Accepted Answer

A) True 
 B)False

Question 16

____ is a reason for owning your own home.

Accepted Answer

A)  Pride of ownership 
B)  A feeling of permanence 
C)  A sense of stability 
D)  A tax shelter 
E)  All of these are reasons.

Question 17

A fee charged by lenders as a condition of a mortgage loan that effectively raises the interest rate is called

Accepted Answer

A)  mortgage points. 
B)  a down payment. 
C)  a commission. 
D)  an add-on charge. 
E)  loan fee.

Question 18

When you lease your apartment from the corporation that owns the building and your lease is an ownership share,your apartment is

Accepted Answer

A)  expensive. 
B)  a cooperative. 
C)  a condominium. 
D)  a duplex. 
E)  permanent.

Question 19

The sticker price is an important number to know when negotiating a good price on a new car.

Accepted Answer

A) True 
 B)False

Question 20

According to federal law,private mortgage insurance on most loans currently made ends automatically once the mortgage is paid down to 80% of the original value of the house.

Accepted Answer

A) True 
 B)False

Exam 5: Making Automobile and Housing Decisions

An adjustable rate mortgage with a baseline rate of 4%,a margin of 1%,and an annual cap of 1% would have an initial mortgage rate no higher than 6%.

When purchasing a vehicle,____ should be settled first.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -The term condominium/townhome refers to a type of [architecture | ownership].

One who leases an automobile is typically responsible for early termination costs,even when early termination is due to theft or auto accidents.

Private Mortgage Insurance (PMI)protects the lender from loss on a loan.

Reasons why auto leasing is so popular include all of the following except:

____ is a fixed auto ownership cost.

Sean and Lisa (age 25 and 28,respectively) are purchasing their first home for $200,000 with a 5% down payment.They will withdraw the down payment from Lisa's IRA.They will have to pay ____ on the IRA withdrawal.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -The first major expenditure most people make is to buy a [house | car].

The ____ would be included in a rental contract or lease agreement.

If you made a down payment of $11,000 on a $110,000 house,the lender no doubt will require ____ as a result of the size of the down payment.

Leslie has been offered the choice of either a $1,000 rebate or a 5.5%,48-month loan for the new car she is purchasing.If Leslie will be financing $15,000 and she can get a 7.5%,48-month loan at her credit union,should she take the $1,000 rebate or the 5.5% loan? (Show all work. )

An automobile is a personal use asset for most buyers.

____ is a reason for owning your own home.

A fee charged by lenders as a condition of a mortgage loan that effectively raises the interest rate is called

When you lease your apartment from the corporation that owns the building and your lease is an ownership share,your apartment is

The sticker price is an important number to know when negotiating a good price on a new car.

According to federal law,private mortgage insurance on most loans currently made ends automatically once the mortgage is paid down to 80% of the original value of the house.