Quiz 2: Cash Management and Budgeting

1. Which of the following types of accounts used in cash management are available from financial institutions?
   Demand Deposits
   Time Deposits
   Money Market Accounts
   NOW Accounts
   All of the Above
   

2. Which of the following is NOT a factor in determining how much you earn on your investment funds?
   Whether the banking institution is a federal or a state-chartered bank
   The initial investment and any subsequent deposits
   The amount of time the money is left on deposit
   Tbe rate of interest being paid
   The method of interest calculation
   

3. The amount to which today’s investment will grow over a given period of time at a specific rate of interest is known as:
   Current Value
   Future Value
   Compound Value
   Simple Value
   

4. The first step in budgeting is to:
   Decide how much each month you can devote to savings.
   Project your income and expenses for the next year.
   Record historical information concerning your income and expenses.
   Target any areas in your spending which need to be changed.
   

5. The statement which shows your financial condition as of a certain date is called a:
   Cash Flow Statement
   Budget Statement
   Credit application
   Financial Statement
   Liquidity Statement
   

6. A total of monthly debt repayment should not exceed what percentage of monthly take-home pay?
   10%
   20%
   33%
   40%
   50%
   

7. The method of calculating finance charge on credit accounts which is most expensive for the consumer is the:
   Average Daily Balance Method
   Previous Balance Method
   Adjusted Balance Method
   Past Due Balance Method
   

8. The guideline that mortgage lenders use in determining what house payment you will generally qualify for is that your monthly house payment including principal, interest, taxes, and insurance should not exceed _________ of your gross monthly income, and this house payment plus payments for all other debts should not exceed _________ of your gross monthly income:
   50% and 100%
   33% and 50%
   28% and 38%
   15% and 25%
   

9. The type mortgage in which the interest rate changes during the life of the loan is called a:
   Fixed Rate Loan
   Balloon Mortgage
   Adjustable Rate Mortgage
   Growing Equity Mortgage
   Reverse Mortgage
   

10. The following should be considered when determining whether or not to refinance an existing home mortgage:
    The closing costs on the new loan
    The anticipated length of ownership of the home
    The difference in payments between the old a new payment
    Whether or not the existing loan has a prepayment penalty
    All of the above
    

11. All of the following are true statements concerning an auto lease EXCEPT:
    A lease never requires a down payment.
    Mileage during the lease is limited to a specific amount.
    Additional fees may apply if you terminate the lease early
    The leasing company retains ownership of the vehicle