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NEW YORK STATE FBLAPERSONAL FINANCE2012PLEASE DO NOT OPEN THIS TEST UNTIL DIRECTED TO DO SOTest DirectionsComplete the information requested on the answer sheet.PRINT YOUR NAME on the “Name” line.PRINT the name of the event, PERSONAL FINANCE on the “Subject” line.PRINT the name of your CHAPTER on the “DATE” line.All answers will be recorded on the answer sheet.Please do not write on the test booklet.Scrap paper will be provided.Read each question completely before answering. With a NO. 2 pencil, blacken in your choices completely on the answer sheet. Do not make any other marks on the answer sheet, or the scoring machine will reject it.You will be given 60 minutes for the test. You will be given a starting signal and a signal after 50 minutes have elapsed.Tie will be broken using the last 10 questions of the test.1.Which of the following transactions would likely be difficult to make without a credit card?a.purchasing a carc.buying a houseb.reserving a hotel roomd.buying groceries2.Tammi wants to buy a new stereo system. She finds one for $500 at Stereo City. She withdraws $250 from her account at First National Bank and obtains a loan from her parents for the rest of the amount. Then she purchases the stereo. In this scenario, who is the debtor?a.First National Bankc.Stereo Cityb.Tammid.Tammi’s parents3.You must file your tax return by this date every year.a.December 31c.April 15b.June 1d.January 14.A check is written to Taylor Thomas. On the back of the check, Taylor writes “Pay to the order of Rose Dryer,” then signs her name. What kind of endorsement is this?a.blank endorsementc.special endorsementb.partial endorsementd.restrictive endorsement5.The more allowances you claim,a.the longer you have to file your tax return.b.the less tax you will have withheld from your paycheck.c.the less your tax liability will be.d.the more tax you will have withheld from your paycheck.6.Rate ? Hours Worked =a.Overtime Pay.c.Incentive Pay. Pay.d.Gross Pay.7.Which of the following would be considered the lowest risk investment?a.a corporate bondc.real estateb.an annuityd.a stock8.A will written in a person’s own handwriting is called aa.trust will.c.codicil.b.simple will.d.holographic will.9.When a bond issuer cannot meet the interest and/or principal payments, what has occurred?a.bond defaultc.bond redemptionb.short sellingd.hedging10.Interest paid on the original principal plus accumulated interest is pound interest.c.adjustable interest.b.value-added interest.d.yield.11.Which of the following is a sales charge paid when you sell an investment?a.a back-end loadc.a capital gainb.a front-end loadd.a dividend12.The person who cashes a check is called thea.maker.c.demander.b.payee.d.depositor.13.In the United States, the responsibility for filing a tax return rests with the individual. This defines the concept ofa.pay-as-you-go.c.the ability-to-pay principle.b.voluntary compliance.d.the graduated income tax system.14.The widest variety of banking services is provided at mercial bank.c.credit union.b.savings bank.d.savings and loan association.15.An employer must provide employees copies of Form W-2 for the previous tax year no later than _____ of the current year.a.January 31c.January 1b.April 15.d.February 15.16.The first loan you take out from your bank or credit union should be for no longer thana.six months.c.two years.b.one year.d.five years.17.The unpaid portion of a loan is calleda.collateral.c.rate.b.principal.d.equity.18.The right, but not the obligation, to buy or sell a commodity or stock for a specified price within a specified time period is called a(n)a.discount bond.c.future.b.annuity.d.option.ernment student loansa.are not available for consolidation.b.usually do not require payments until after graduation.c.never need to be paid back.d.do not accrue interest.20.An investment-grade bonda.offers the highest possible yield.b.is considered the highest-quality, lowest-risk bond.c.is highly speculative.d.has no rating at all.21.Which of the following is the first step most people take to establish a good credit record?a.open a checking accountc.open a store credit accountb.open a savings accountd.apply for a credit card22.A typical down payment for a house is about ___ percent of the purchase price.a.30 to 40c.10 to 20b.5 to 10d.20 to 3023.A common stocka.pays a fixed dividend.b.allows stockholders to influence corporate policy.c.is less risky than preferred stock.d.has no voting rights.24.A person or institution that manages property for the benefit of someone else under a special agreement is called a(n)a.notary public.c.maker.b.trustee.d.executor.25.For employees, the Social Security deduction is withheld at the rate ofa.6.2 percent of the first $102,000 earned.c.1.45 percent of all pay earned.b.1.45 percent of the first $102,000 earned.d.6.2 percent of all pay earned.26.Professional investment planners who are trained to give investment advice based on your goals, age, lifestyle, and other factors are calleda.certified financial planners.c.certified public accountants.b.day traders.d.discount brokers.27.This form—which you fill out when you start working for an employer—asks for your name, address, Social Security number, marital status, and the number of exemptions you claim for income tax purposes.a.job application formc.Form W-4b.tax bracket formd.Form W-228.Stocks in young, often small corporations that have higher overall risk than stocks of successful, long-established companies are calleda.emerging stocks.c.growth stocks.b.blue chip stocks.d.defensive stocks.29.Which of the following is organized primarily to lend money for home mortgages?a.full-service bankc.savings and loan associationb.brokerage firmd.credit union30.Work-study programs allow students to earn money by workinga.on campus.c.at their parents’ place of employment.b.from home.d.all of the above.31.Which of the following would be considered a long-term need?a.car repairc.home ownershipb.major appliance purchased.a weekend getaway vacation32.Which of the following would NOT be considered a disadvantage of bankruptcy?a.some debts can be reaffirmedc.exempted assets are retainedb.cosigners must repay their loansd.you may not qualify for liquidation33.When preparing a budget, you need to focus mostly on youra.gross income.c.disposable income.b.taxable income. income.34.What is the goal of an income fund?a.to earn returns from capital gains aloneb.to produce current income in the form of interest or dividendsc.to produce current income from interest aloned.to earn returns from both dividends and capital gains35.Savings and checking accounts at a credit union are usually calleda.share accounts.c.certificates of deposit.b.passbook accounts.d.money market accounts.36.Credit reports are issued bya.credit bureaus.c.banks and savings and loans.b.credit unions.d.your employer.37.Corporations usually agree not to call bonds for the first ___ years after issuance.a.5c.10b.20d.3038.Which of the following might be included in your credit report?a.your addressb.your occupationc.your marital statusd.all of the above can be included in your credit report39.The amount a bondholder will be paid at maturity is calleda.yield.c.face value.b.market value.d.dividend.40.Which of the following is a defined-contribution plan for employees of schools, nonprofit organizations, and government units?a.SEP-IRAc.403(b) planb.401(k) pland.Keogh plan41.When bonds sell for more than their face value, they are selling at aa.discount.c.premium.b.capital gain.d.cut rate.42.Which of the following is least likely to offer service credit?a.a furniture storec.a doctor’s officeb.the telephone companyd.a dry cleaner43.Savings accounts protected by the FDIC are protected from loss for up toa.$1,000,000.c.$250,000.b.$500,000.d.$100,000.44.Social Security retirement benefits area.paid to all Americans, whether or not they have ever worked.b.sufficient to allow most seniors to retire comfortably.c.based on your taxable income during the last year you worked.d.taxable in some states.45.When you have insufficient income and assets to pay your debts, you are said to bea.liquidated.c.unsecured.b.indigent.d.insolvent.46.A scam that uses online pop-up messages or e-mail to deceive you into disclosing personal information is calleda.phattening.c.phreaking.b.phishing.d.encrypting.47.One main distinction between stocks and bonds is thata.bonds are shares of ownership in a corporation, not loans.b.bonds represent equity, not debt.c.a bond’s interest does not go up and down, like stock dividends.d.corporations are required to pay dividends on stocks but not bonds.48.Many financial advisers suggest that you will need between ___ of your preretirement income to live comfortably.a.50 to 60 percentc.95 to 100 percentb.60 to 75 percentd.75 to 85 percent49.A service available to charge customers whereby purchases are not billed until much later than the standard billing time is calleda.deferred billing.c.a leveraged payment plan.b.a secured loan.d.a line of credit.50.Which of the following is a variable expense?a.grocery billc.car loanb.rentd.utility bill51.The price for which a stock is bought and sold in the marketplace is called thea.market value.c.par value.b.dividend.d.yield.52.You can authorize your employer to make automatic deductions from your paycheck each period with a(n)a.payroll savings plan.c.money market deposit account.b.electronic funds transfer plan.d.direct deposit plan.53.Money paid for the use of someone else’s money is calleda.assets.c.interest.b.collateral.d.dividends.54.All of the following are characteristics of a solid mutual fund company excepta.it provides customers with easy-to-read statements.b.it is a large company that manages investments for millions of people.c.is has no presence on the Internet.d.it has been in business for 20 or more years.55.The price of a share of stock divided by the corporation’s earnings over the past 12 months is thea.ROI.c.percent yield.b.earnings per share.d.P/E ratio.56.According to the Rule of 72, if an investment of $5,000 is yielding an average of 6 percent, it will take ___ years for that investment to be worth $10,000.a.6c.36b.12d.7257.A professionally managed group of investments bought using a pool of money from many investors is called aa.savings bond.c.mutual fund.b.passbook account.d.Ponzi scheme.58.A revenue bond is a type of municipal bond thata.is backed by specific assets that serve as security to assure repayment of the debt.b.is repaid with the government’s general revenue and borrowings.c.is backed by the power of the issuing government to levy taxes to pay back the debt.d.finances public-works projects such as airports and hospitals.59.All of the following are danger signs that you are overextending your credit excepta.your credit cards are all near the limit.b.your credit rating is rising.c.you skip some payments in order to make other payments.d.you often pay one credit card by using another credit card.60.Which of the following types of bonds cannot be purchased through TreasuryDirect?a.corporate bondsc.Series EE savings bondsb.Treasury securitiesd.Series I savings bonds61.A computer program that organizes data in columns and rows and can perform calculations using the data is called aa.scheduler.c.calculator.b.spreadsheet.d.database.62.With this type of debt adjustment, a finance company lends you money to pay off your debts, and you make a monthly payment to the finance company until the debt is repaid.a.debt negotiation programc.debt consolidation loanb.credit payment pland.debt adjustment service plan63.A legal process where property used as collateral is sold to pay off a debt is calleda.defaulting.c.bankruptcy.b.foreclosure.d.garnishment.64.The use of long-term savings to earn a financial reward is calleda.gambling.c.investing.b.diversifying.d.speculating.65.One difference between a charge card and a credit card is thata.the full balance on a charge card must be paid each month.b.charge cards are open-end credit, whereas credit cards are closed-end credit.c.charge cards almost always have lower credit limits than credit cards.d.none of the above; there is no difference between the two.66.A type of incentive pay based on quality of work done or years of service on the job is called aa.pension plan.c.profit sharing plan.b.stock option.d.bonus.67.Internet Explorer and Netscape browsers sometimes display a small closed-lock symbol on the bottom of your screen. This means thata.the site you have entered is not trustworthy.b.you have been locked out of the site and cannot proceed.c.you have entered a secure web page.d.you have been the victim of a spam attack.68.A tax-deferred retirement plan available to small businesses is aa.defined-benefit plan.c.Keogh plan.b.simplified employee pension plan.d.money market plan.69.Current Profit on Stock ÷ Purchase Price + Commission =a.Interest Ratec.Return on Yieldd.Earnings per Share70.If you go over your credit limit or make your payment late, you will likely be charged a(n)a.annual fee.c.maintenance fee.b.penalty fee.d.transaction fee.71.A legal document authorizing someone to act on your behalf is called aa.joint tenancy agreement.c.power of attorney.b.codicil.d.inter vivos.72.When creditors apply the finance charge only to the amount owed after you’ve paid your bill each month, they are using thea.previous balance method.c.adjusted balance method.b.two-cycle billing method.d.average daily balance method.73.Farm products such as wheat, corn, and cattle and metals such as gold and silver are calleda.options.c.futures.modities.d.collectibles.74.Darren writes a check to the phone company for $45.60. He should record this amount in his checkbook register in thea.Balance column.c.Fee column.b.Payment/Debit column.d.Deposit/Credit column.75.This type of risk is caused by the business cycle.a.political riskc.industry riskb.interest-rate riskd.market risk76.In a balanced budget,a.expenses = savings.b.expenses – savings = gross income.c.expenses + savings = earnings + borrowing.d.gross income = disposable income.77.You should beware of any credit-assistance company thata.requires you to pay a fee before they act on your behalf.b.guarantees to restore your credit.c.advises you to start a new credit report under a different Social Security number.d.all of the above are true.78.When a check is returned to the payee’s bank due to insufficient funds, the check is said to havea.bounced.c.been canceled.b.been postdated.d.floated.79.A legal business that makes high-interest loans based on the value of personal possessions is called aa.finance company.c.fence.b.loan shark.d.pawnbroker.80.An increase in the value of a stock over time is called a(n)a.investment.c.yield.b.dividend.d.capital gain.81.The total dollar amount of all interest and fees you pay for the use of credit is called thea.balance due.c.collateral.b.principal.d.finance charge.82.When you buy an item that serves as collateral, you are taking out a(n)a.unsecured loan.c.secured loan.b.variable-rate loan.d.microloan.83.You will receive a payback in the form of points that can be redeemed for merchandise if your credit account has a(n)a.rebate plan.c.rewards program.b.good customer program.d.profit sharing plan.84.Simon pays his bills on the due date or within a ten-day grace period. This would probably earn him a(n)a.fair credit rating.c.good credit rating.b.excellent credit rating.d.poor credit rating.85.The amount for which you could sell your home now is itsa.appraised value.c.current market value.b.assessed value.d.true value.86.A daily newspaper that provides detailed coverage of the business and financial world isa.Barron’s.c.The Economist.b.The Wall Street Journal.d.Kiplinger’s Personal Finance.87.The IRS has the legal right to audit your tax returns and supporting records for ___ years from the date of filing.a.10c.3b.5d.288.Maximization of return in the next five to ten years is the goal of which investment strategy?a.strategic investingc.systematic investingb.speculationd.initial investing89.A Roth IRA differs from a traditional IRA in thata.contributions are taxed but earnings are not.b.earnings as well as contributions are taxed when you withdraw the money at retirement.c.contributions are not tax-deductible.d.there is no penalty for early withdrawal.90.A check written by a bank on its own funds is called aa.certified check.c.money order.b.cashier’s check.d.traveler’s check.91.All of the following are wise investment practices excepta.define your financial goals.b.seek good investment advice.c.make your decisions quickly to take advantage of the market.d.keep good financial records.92.Using dividends previously earned on a stock to buy more shares is calleda.short selling.c.dividend reinvestment.b.preferred reinvestment.d.direct investment.93.An interest-bearing checking account that pays a higher rate of interest than a usual account, but typically has more restrictions, is called aa.special account.c.money market account.b.standard account.d.share account.94.The amount of monthly or annual pay that you earn for working is calleda.overtime.c.benefits.b.profit.d.salary.95.A request that a bank not honor a specific check is called a(n)a.void request.c.overdraft order.b.cancellation request.d.stop-payment order.96.Which part of a check provides a place for you to write the purpose of the check?a.the memo linec.the routing numberb.the payee lined.the signature line97.Most experts recommend saving ___ percent of your disposable income each pay period.a.10c.50b.20d.3098.Bond pricesa.tend to react in the same direction of stock prices.b.are by law always lower than stock prices.c.tend to remain steadier than do stock prices.d.can never change once you’ve purchased a bond.99.The need for credit arose in the United States with the dawn of thea.Industrial Revolution.rmation Age.b.American Revolution.d.Great Depression.100.Jenny has just received a promotion at work. She will now probablya.be doing more challenging work.c.have less authority than before.b.be making less money than before.d.need to find a new job.ANSWER KEY1.B26.A51.A76.C2.B27.C52.A77.D3.C28.A53.C78.A4.C29.C54.C79.D5.B30.A55.D80.D6.D31.C56.B81.D7.A32.C57.C82.C8.D33.C58.D83.C9.A34.B59.B84.C10.A35.A60.A85.C11.A36.A61.B86.B12.B37.A62.C87.C13.B38.D63.B88.A14.A39.C64.C89.A15.A40.C65.A90.B16.A41.C66.D91.C17.B42.A67.C92.C18.D43.C68.B93.C19.B44.D69.C94.D20.B45.D70.B95.D21.B46.B71.C96.A22.C47.C72.C97.A23.B48.D73.B98.C24.B49.A74.B99.A25.A50.A75.D100.A ................
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