Question 1

Advantages of buying a used car rather than a new car include

Accepted Answer

A)  good mechanical condition. 
B)  will depreciate more quickly. 
C)  more choices available. 
D)  less expensive. 
E)  all of the above.

Question 2

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-A convertible ARM will have a [higher | lower] interest rate than a traditional ARM.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the

Question 3

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 4

Most lenders do not want mortgage payments to exceed ____ percent of your gross monthly income.

Accepted Answer

A)  10-15 
B)  15-18 
C)  25-30 
D)  30-33 
E)  33-38

Question 5

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-The interest rate on an ARM can be increased [automatically every year | only when a designated index increases].

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the

Question 6

The act requiring mortgage lenders to give borrowers HUD booklets and good faith estimates of the closing costs is called the

Accepted Answer

A)  Equal Credit Opportunity Act. 
B)  Truth-in-Lending Act. 
C)  Real Estate Settlement Procedures Act. 
D)  Mortgage Lenders Act of 1980. 
E)  None of the above.

Question 7

Low-balling is a sales technique where the salesperson quotes a low price for a car then tries to get you to purchase a different,more expensive vehicle.

Accepted Answer

A) True 
 B)False

Question 8

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-In the same geographic area,the cost of a [detached home | condo] will usually be lower.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the

Question 9

Which of the following is not associated with buying a home with a lower-than-typical down payment?

Accepted Answer

A)  Adjustable-rate mortgage 
B)  Fannie 3/2 
C)  Fannie 97 
D)  FHA mortgage 
E)  VA mortgage

Question 10

The money factor on an auto lease is similar to the interest rate on a loan.

Accepted Answer

A) True 
 B)False

Question 11

Homeowner's insurance will cost about ____ percent of the market value of the home.

Accepted Answer

A)  1/4 
B)  1/4 to 1/2 
C)  1/2 
D)  1/2 to 3/4 
E)  3/4

Question 12

Gasoline is a variable cost of automobile ownership.

Accepted Answer

A) True 
 B)False

Question 13

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 14

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-It would make sense to purchase a vehicle at the end of a close-end lease period if the residual value in the lease agreement was [more | less] than the car's market value.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the

Question 15

Which of the following is tax deductible if one itemizes deductions?

Accepted Answer

A)  Principal,interest,real estate taxes,and insurance 
B)  Principal,interest,and real estate taxes 
C)  Principal and interest 
D)  Interest,real estate taxes,and insurance 
E)  Interest,PMI,and real estate taxes

Question 16

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-A real estate agent will typically be paid by the [buyer | seller] of the house.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the

Question 17

If a lender requires that mortgage payments cannot exceed 30% of gross income and total loan payments cannot exceed 38% of gross income,calculate the monthly payment for which a person with the following financial data could qualify.

Accepted Answer

The answer of If a lender requires that mortgage payments...

Question 18

You should secure the trade in value of your current automobile before you start negotiating the final price on the car you are purchasing.

Accepted Answer

A) True 
 B)False

Question 19

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-A decrease in the "rent ratio" indicates that housing is relatively [more | less] affordable than renting.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the

Question 20

For most homeowners,the most important financial reason for owning a home is

Accepted Answer

A)  security for loans. 
B)  an inflation hedge. 
C)  a tax shelter. 
D)  a cash flow item. 
E)  psychic income.

Exam 5: Making Automobile and Housing Decisions

Advantages of buying a used car rather than a new car include

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -A convertible ARM will have a [higher | lower] interest rate than a traditional ARM.

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

Most lenders do not want mortgage payments to exceed ____ percent of your gross monthly income.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -The interest rate on an ARM can be increased [automatically every year | only when a designated index increases].

The act requiring mortgage lenders to give borrowers HUD booklets and good faith estimates of the closing costs is called the

Low-balling is a sales technique where the salesperson quotes a low price for a car then tries to get you to purchase a different,more expensive vehicle.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -In the same geographic area,the cost of a [detached home | condo] will usually be lower.

Which of the following is not associated with buying a home with a lower-than-typical down payment?

The money factor on an auto lease is similar to the interest rate on a loan.

Homeowner's insurance will cost about ____ percent of the market value of the home.

Gasoline is a variable cost of automobile ownership.

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

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -It would make sense to purchase a vehicle at the end of a close-end lease period if the residual value in the lease agreement was [more | less] than the car's market value.

Which of the following is tax deductible if one itemizes deductions?

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -A real estate agent will typically be paid by the [buyer | seller] of the house.

If a lender requires that mortgage payments cannot exceed 30% of gross income and total loan payments cannot exceed 38% of gross income,calculate the monthly payment for which a person with the following financial data could qualify.

You should secure the trade in value of your current automobile before you start negotiating the final price on the car you are purchasing.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -A decrease in the "rent ratio" indicates that housing is relatively [more | less] affordable than renting.

For most homeowners,the most important financial reason for owning a home is