Principles of Investment Answers

The type of credit people are most likely to use for small purchases during their lifetime is

Which activity is done in Step 2 of comparison shopping?

Read the scenario.Raoul has just been promoted to a supervisor’s position, which is a steady job. He likes to enjoy life, take vacations, and change things up every now and then. That’s why he will not have a lot of extra money to spend on repairs and maintenance on his car.

At what point does buying in bulk stop being a wise spending choice?

Read the scenario.Brad has a steady job, earns a solid income, and plans to live in a nearby city for the long term. He is looking to purchase both a car and a place to live, and he is very interested in building up equity and credit.

The point at which it is no longer advantageous to buy in bulk is known as marginal

What best determines whether a borrower’s interest rate on an adjustable rate loan goes up or down?

A monthly fixed rate mortgage payment

Frank is worried about identity theft. He does not like to give access to his checking account to anyone but the bank. What is the best option for him to pay his bills?

Veronique and Lily each bought a piece of luggage that had the same price in different stores. The table below shows how they will pay for the item. Payment for PurchasesNamePayment TypePayment Amount (Including Finance Charges)Number of Months to Pay for ItemVeroniqueStore financed$2510LilyCredit card$357Who made the better financial decision and why?

Barbara has $70.00 in her pocket and a $20 gift card. Which purchase will she be able to make without having to use her credit card?

Mr. and Mrs. Atoll are planning a party for 10 people and want to make sure they have enough soda for everyone to have two bottles. Which of the following makes the most economic sense?

Shondra is thinking of making payments for her laptop by setting up automatic withdrawals with the store. What must Shondra consider before she decides to pay with automatic withdrawals?

The chart describes how four of Susan’s friends handle their money.Handling MoneyPersonDescription of SpendingSylviaShe uses her whole paycheck to buy food and necessities and pay the minimum amount on her bills each month. Then, she buys new clothes and pays for them with a credit card.NancyShe uses her whole paycheck to buy food and necessities and then takes a trip each month, which she pays for by adding to a personal loan with her credit union.FionaShe buys food and necessities and pays more than the minimum due on her bills each month. She goes out with her friends using some of the money that is left over in her checking account.UliShe buys food and necessities and pays the minimum amount on her bills each month. She goes out with her friends using the money that is left over in her savings.Which person is most creditworthy?

Error

The chart describes four situations involving financial responsibility.Financial ResponsibilityPersonFinancial DecisionsHallieHas multiple loans at the same timeHaydenHas more income than the amount of debtAlisonMade payments less than the minimum amount dueJoelMade late payments several times before the bill was paidWhich person is financially responsible?

Which payment option provides consistency in on-time bill payment?

Anastasia makes a good salary but wants to be sure she has good credit so she can buy a condominium when she has saved enough money for a down payment on a mortgage. What is the best thing she can do to improve her creditworthiness?

Which describes an example of using unsecured credit?

Which is a long-term consequence of making late payments on your bills?

George’s parents are going on a cruise and are concerned about paying their bills while they are gone because they will not have the usual means of communication. What is the best payment method for them to use while they are gone?

When companies spend millions of dollars developing logos and slogans, or use celebrity endorsements to encourage consumers to buy particular products, this is called

Read the scenario.Casey has been saving for a new car and is ready to make a purchase. Having a substantial amount to put down as a down payment, Casey approaches the car dealership. The salesperson and the loan officer view Casey's willingness to make a high down payment positively.Why would Casey be considered a lower risk by the lender for planning to make a high down payment?

Which is a short-term consequence of making a late payment on your bill?