1. There are four means of dealing with risk. Purchasing insurance is one method of

2. The Tylers borrowed $20,000 to fix up their home. They plan to sell the home within a few months, so they signed a 90-day note at 7.5% interest on July 18. (An actual, not a banker's year, is being used to calculate interest.) The lender will be paid at the time the house sale closes. If the house is sold on September 24, the Tylers will owe what amount on the note?

3. When preparing financial statements that accompany a loan application, it is ethically permissible for the financial manager of a business to overstate the value of assets owned by the business, but it is not considered to be acceptable to omit amounts owed to creditors.

4. The main reason that companies may be reluctant to establish credit accounts for teenagers without having parents co-sign the application is that

5. Helen Troy insures her car with Slambang Direct Property and Casualty Company. She has full coverage, including 500-200-50 personal injury liability, $100,000 maximum coverage for property damage, collision with a $500 deductible, and comprehensive with a $350 deductible. Her personal injury protection (also known as 'medical payments) requires that she pay the first $1,000. The insurance company pays 75% of the next $5,000 and everything above that amount. One day, Helen swerved to avoid hitting a possum. Her car went across the center line, sideswiped another car, and slid down the side of a hill. The occupants of the other car were not hurt, but Helen suffered a broken leg and some additional minor (but painful) injuries. The damage to the other car came to $2,400. Helen's car required $4,100 in repairs. Her medical bills totaled $9,250. The amount the insurance company will pay out in claims for this incident is

6. The 'prime rate' is the interest rate that

7. Qadri Mohammedi borrowed money from Silver City National Bank and agreed to repay the entire amount plus interest for six monhts at the annual rate of 8-1/4%. On the due date, he paid $7,549.06 to cover principal plus interest. How much did he initially borrow?

8. The practice of buying debt at a discount is known as

9. Water Systems Technology, Inc. is a 'C' corporation that pays taxes on its net profits according to the following schedule: 15% of the first $50,000 - 25% of the next $25,000 - 34% of the next $25,000 - 39% of the next $235,000 - The firm's net taxable income for last fiscal year was $274,200. What is its corporate tax liability for that period?

10. Abel writes a check to Baker. Baker then endorses the check to Clyde, at which time the document involved becomes a(n)

11. The purpose of a financial statement analysis is to compare the firm's financial performance with its own past efforts, with generally established financial standards, and with other firms in the same industry. People analyze financial statements in order to predict the future performance of a firm. The component of financial analysis that compares figures over a period of several years is

12. Many banks do not return checks along with the depositor's monthly bank statement. Most banks use digital imaging to photograph both sides of checks and will make copies if depositors need them. One disadvantage of this practice is that

13. Most states have 'financial responsibility' laws for motorists. The most common way to comply with these laws is for automobile owners to purchase insurance. At the very least, drivers must have

14. Ari Levy invested $46,500 in the Mayflower Aggressive Growth Fund. This fund charges a 3% front-end load but no back-end load. Two years later, the value of his investment had grown by $9,620, and Ari elected to invest these funds in another mutual fund. At the time of the withdrawal, Ari's account balance was

15. Nellie Jones is 71 years old. She receives social security checks each month. Her only other income comes from her stock and bond portfolio, which is currently invested with the securities firm Mickey, Pluteau, and Donald (MP&D), which has an office near her home. Recently, Dewey Dukk, a young securities representative from MP&D, has been trying to convince her to increase the return on her investments by selling most of her bonds and putting the money into the somewhat risky stocks. His sales pitch to her is, 'You're not going to live forever so you might as well make more money now.' Which of the following is true about this situation?

16. Sources of short-term business financing include all of the following except

17. LeVar Franklin wants to open an account at the brokerage firm Rox Stones Bolldurs. The securities representative for RSB reviewed Mr. Franklin's financial situation and knows what types of securities products are appropriate for him. LeVar signed a number of documents to open the account. However, Mr. Franklin did not get around to signing the disclosure document required of new customers where he indicates his individual investment objectives. All other paperwork was satisfactorily completed, and LeVar left a $20,000 check with the representative so funds would be available for trading. During the discussion, Mr. Franklin stated that he was 'anxious to get started with his investment program.' He and the broker agreed upon several stocks that would be purchased with part of the funds. Mr. Franklin then promptly left on an extended vacation and cannot be reached. Since this was the only form not signed, the RSB representative should

18. Savings accounts are insured by the Federal Deposit Insurance Corporation, but balances in checking accounts are not.

19. Before the Fair Credit Reporting Act was enacted in 1970, there was $556 billion of credit outstanding in the USA. As of 2003, outstanding credit account balances in the United States totaled approximately

20. One disadvantage of using a blank endorsement is that

21. Customers of securities firms can establish links between their accounts with stock and bond brokerages and their checking account that enable funds to be transferred electronically back and forth.

22. A standard rule of thumb for home mortgage lenders is that the monthly cost of buying and owning a home (including mortgage payments, property taxes, and homeowner's insurance) should not be more than 28% of a borrower's monthly gross income. Josh and Alicia Bennett combine to earn $4,100 a month. Their withholding is 15% of their pay. If lenders follow the 'rule of thumb,' the Bennett's maximum monthly housing expense would be

23. The Equal Credit Opportunity Act allows lenders to deny credit to an applicant who

24. 'Check conversion' is the process of

25. Jeun Kim Lee owns 500 shares of Porkburger Class C convertible preferred stock. Each share is convertible into three shares of Porkburger common stock. At the close of business yesterday, Porkburger Class C preferred sold for $56 a share. The common stock sold for $20.65 a share. If Mr. Lee were to exercise the conversion feature, the value of his portfolio would