Around the World

Review Questions

1.  What is principal?

2.  Interest is a fee paid on borrowed assets such as loans, or money received from a savings account. There is a formula to find interest. What do the initials stand for?

3.  The ability of an asset to be quickly and easily converted into cash is ______.

4.  Document indicating ownership of stock.

5.  Earning interest on interest.

6.  Savings deposit that earns a specific amount of interest over a designated time span.

7.  Savings account in which your money is invested in securities

8.  Pay half of the face value of the bond

9.  The interest rate earned on a money market deposit account is generally higher than the interest earned on a savings account.

10.  The spreading of risks among many types of investments is portfolio.

11.  A technique to estimate the number of years required to double your money at a given rate of return is the Rule of 72.

1.  Before there was an official currency how did people acquire things?

2.  Why is it important to keep accurate bank records?

3.  List two ways you can protect your online banking account?

4.  What is the government doing to prevent counterfeiting of U.S. currency?

5.  How does a blank check endorsement differ from a restrictive check endorsement?

6.  How does a credit union differ from a community or commercial bank?

7.  When you make a deposit into your checking account you record it in your check register as a debit or a credit?

8.  How do overdraft fees and consistent negative balances affect your financial future?

9.  Why do you feel electronic banking, including automatic payments and automatic deposits, is so widely used in our society today?

10.  Which President was in office when FDIC was created?

11.  What does FDIC stand for?

12.  The ______is known as the banker’s bank and the governments bank.

13.  The booklet used to record any debits or credits to an account and keep accurate account records.

14.  One of the first forms of currency used in the United States, made from white shells.

15.  The convenient machine used to make fast withdrawals of your money, located all over the country.

16.  Which would be an example of commercial bank?

1. Limited liability associated with stock ownership implies that shareholders can only lose the amount of money they have invested in the company.

A. True B. False

2. In the event of bankruptcy, shareholders' claims are paid before bond holders' claims are paid.

A. True B. False

3. Common stockholders not only have the right to elect the board but also must approve day-to-day decisions of the chief executive officer.

A. True B. False

4. Stock splits increase the number of the shares you own. Therefore a stock split increases the percentage of the firm you own.

A. True B. False

5. Growth stocks are issued by companies that have exhibited sales and earnings growth well above their industry averages.

A. True B. False

6. Income stocks are stocks that are not nearly as affected by swings in the economy, and in some cases, actually perform better during downturns.

A. True B. False

7. The price/earnings ratio is an indication of how much investors are willing to pay for a dollar of the company's earnings.

A. True B. False

What is the difference in a bear market and a bull market? How can you easily remember the stock price trends when you hear these terms? (6 points)

T/F and Multiple Choice (3 points each)

1.  Usually there is no set limit on open credit.

A. True B. False

2.  The average daily balance method calculates interest payments based on the ending balance of the previous period.

A. True B. False

3.  Using your credit cards for cash advances is a relatively cheap way to borrow money because you usually do not start paying interest until the next billing period.

A. True B. False

4.  A single-purpose card is a credit card that can be used only at a specific company.

A. True B. False

5.  A credit bureau is a private organization that maintains credit information on individuals, which it allows subscribers to access for a fee.

A. True B. False

6.  The most important factor in determining your credit score is the length of your credit history.

A. True B. False

7.  Someone who pays off the credit card balance each month is considered a credit user, because they can use all of their allotted credit and interest is irrelevant to them.

A.  True B. False

8.  Makes purchases over the phone or internet easier, itemized billing, and obligating future income are all advantages of having a credit card.

A.  True B. False

9.  Length of credit is the most important factor in determining your credit score.

A.  True B. False

10.  A traditional charge account is a source of open credit.

A.  True B. False

  1. Assets or property offered as security to obtain credit describes what “C.”
  2. Collateral
  3. Capital
  4. Capacity
  5. Condition
  6. ______involves receiving cash, goods, or services with obligation to pay later
  7. APR
  8. Grace period
  9. Average daily balancing method
  10. Credit
  11. APR stands for
  12. Annual Payment Rate
  13. Average Percentage Rate
  14. Annual Percentage Rate
  15. Annual Percentage Ratio
  16. ______requires that all consumer loan agreements disclose the APR in bold print
  17. FCRA
  18. Truth and Lending Act
  19. FACT Act
  20. Credit Bureau
  21. The total of the previous billing period less any payments and returns made describes which balancing method?
  22. Average daily balance
  23. Previous balance method
  24. Adjusted Balance method
  25. None of the above
  26. Which of the following is a reason you would NOT use a cash advance?
  27. You begin paying interest immediately
  28. Pay higher rate on cash advance
  29. Upfront fees
  30. All of the above
  31. Sense of responsibility with respect to debt payment describes which “C” of credit?
  32. Collateral
  33. Condition
  34. Character
  35. Capital
  36. Size of your financial holdings or investment portfolio describes which “C” of credit?
  37. Character
  38. Capacity
  39. Collateral
  40. Capital
  41. Impact the current economic environment may have on your ability to repay any borrowing describes which “C” of credit?
  42. Collateral
  43. Condition
  44. Character
  45. Capacity
  46. A ______card is a card issued in conjunction with a specific charity or organization and sends a portion of the annual fee back to the sponsoring organization.
  47. Charitable Organization Card
  48. Sponsoring Card
  49. Affinity Card
  50. Single-Purpose Card
  51. A mother wants her 16 year old daughter to have a BP Credit card for gas, but doesn’t want her to have a Visa card that she can use at the mall, in this case which card would be best for this teen?
  52. Affinity
  53. Bank card
  54. Secured card
  55. Single-Purpose card
  56. Identity theft is ______.
  57. 100% preventable
  58. Using identifying information by someone other than you without your knowledge to commit fraud or other crimes
  59. Affects over 10 million people each year
  60. Both A and C
  61. Both B and C
  62. Which is a way that you would NOT deter from identity theft?
  63. Shredding mail with personal information
  64. Sending your bank account over email instead of by phone.
  65. Avoid carrying your SSN card with you.
  66. Giving out personal information to anyone who asks, they are probably asking for a good reason!
  67. Ability and willingness to repay any charges is ______.
  68. Trustworthiness
  69. Credit
  70. Creditworthiness
  71. Capacity
  72. You can receive a free copy of your credit score once every ______months.
  73. 3 months
  74. 6 months
  75. 12 months
  76. 18 months

Short answer (5 points each)

  1. List 3 ways teens can improve their creditworthiness.
  1. Name 2 ways credit scores affect your life.
  1. List 2 reasons why it is a good idea for college students to have a credit card.
  1. Name the three credit bureaus we discussed in class…
  1. What are three things you can do that will HURT your credit.