2.10 Module 2 Exam

Sandra earns $22,000 per year. Her earnings put her in the 20% tax rate. What is her tax owed?

$4,400

Which of these is an example of indirect tax?

Gasoline tax

Gerald usually buys name brand pain relievers to treat his headaches, but he recently noticed the generic store brand is two dollars cheaper. Upon trying the product, he discovers it works equally as well as the name brand. This example shows how Gerald

compared the price of alternatives and saved money

If an investor possesses a portfolio heavily concentrated in bank checking accounts, a financial advisor would most likely suggest which of the following aggressive investments to diversify the portfolio?

Stocks

What are stocks?

Shares of ownership in a company that may pay dividends

You earn $50,000 per year, and the federal tax rate is 10 percent. Your gross income is

$50,000

Samuel needs to decrease his expenses. To which category should he make cuts first?

Entertainment

Compared to earning a four-year degree, a technical certification allows you to

start earning sooner

Laurent saves money from his lawn service to buy a new $20,000 mower and trailer. He would like to buy the new equipment as soon as possible but only has $12,000 in his simple interest savings account. To reach his goal sooner, Laurent should

Move his money to a compound interest account

Making a down payment on a loan will

decrease the amount of interest paid

A common marketing strategy used by retailers to make products appear more attractive is to list a $100 item for

$99.99

Johann maintains a $75,000 insurance policy on his boat. He pays $50 per month in premiums and his deductible is $2,500. If he is involved in an accident and makes a claim of $3,000 on the policy, how much will he have to pay?

$2,500

If the Federal Reserve raises the federal funds rate, what will likely happen to certificates of deposit offered by banks?

The interest rate offered will increase

Which of the following actions would likely raise automobile insurance premiums?

Receiving multiple speeding tickets

Kyle and Lyle want to pool their inheritance money to make a joint investment. They are young and are willing to accept moderate to high risk over a number of years. Which combination of investment options best suits their needs?

Mutual funds and stocks

Jill paid an annual premium of $2,000 in total coverage for her homeowner’s insurance, including $250,000 in damage coverage and $250,000 in liability coverage. Ten years into her policy, a friend fell off a ladder while working on the roof of her house and claimed $75,000 in medical expenses. Eleanor’s insurance company paid the claim.

Did the cost of the annual premiums outweigh the benefit of transferring the risk to the insurance company?

No, the cost of the annual premium for 10 years was less than the accident claims

Your friend’s job pays $10 per hour, and he works 40 hours per week. His tax rate is 20 percent. Assuming he works 50 weeks of the year, his yearly gross income is

$20,000

What will happen if Jonathan is habitually late on loan payments?

His credit score will suffer

Kendra wants to become a computer technician, but she has a great deal of debt. She makes a yearly budget and finds that her projected income and expenses do not balance. What should she do to immediately correct this imbalance?

Reevaluate her fixed and variable expenses

Who would pay the most as a percentage of income under a progressive tax?

CEO earning $2.5 million per year

Which type of credit card carries the most risk?

Unsecured with variable interest rate

To what does tax progressivity refer?

The relation of tax rate to income

I got 3 wrong Do Not Pick These

The relation of tax rate to income – Mutual fund Why might a bank offer to make a loan to a customer at a low initial rate which will increase after a set period of time? – To make the loan look more attractive and competitive in the long run A young investor would best plan to have the blue section (D) represent – a bank savings account