AnswersISP ONLY Economics S5000XXInvesting and Financial Markets

Investing and Financial Markets — Unit test Answers

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What is the major difference between a nationwide bank and a community bank?

A
The community bank offers more services.
B
The nationwide bank services only local customers.
C
The nationwide bank has fewer branches.
D
The community bank services only local customers.
82
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Which of these is an advantage of checking accounts?

A
Checking accounts prevent the customer from having overdraft fees.
B
Checking accounts allow convenient ways to deposit or withdraw funds.
C
Checking accounts are processed immediately so customer and bank records always match.
D
Checking accounts offer limited checks but offer higher rates of interest.
83

Which describes an investor’s primary goal of buying a loan?

A
to grow a business
B
to earn a profit off the interest
C
to bolster the economy
D
to provide capital to a business
84

What is the most acceptable and easy way to revise a budget to allow for the purchase of a new couch?

A
Cancel renters' insurance.
B
Skip a car payment for a few months.
C
Advertise for a roommate to reduce rent.
D
Cook dinners at home instead of going out to eat.
85

This chart shows the actual pricing history for three items.

Question illustration
A
game system
B
smartphone
C
DVD
D
It's most beneficial to buy all now.
86

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.

A
buying both a car and a home
B
leasing both a car and home
C
buying a car and leasing a home
D
leasing a car and buying a home
87

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

A
false advertising.
B
undue influence.
C
product branding.
D
quality assurance.
88

Marlene has decided to save $3,500 so that she can attend the nearby community college. Which step in the decision process should Marlene take?

A
Take action.
B
Gather information.
C
Evaluate results.
D
Evaluate alternatives.
89

The chart compares transportation options.

Question illustration
A
the up-front cost
B
the monthly payments
C
the length of payments
D
the cost of insurance and gas
90

What is advertising used for? Check all that apply.influencing consumer tastestracking product popularityincreasing product awarenesspromoting company brandinggathering data about potential consumers

A
influencing consumer tastes
B
tracking product popularity
C
increasing product awareness
D
promoting company branding
E
gathering data about potential consumers
91

Which is true about investments and risk?

A
Low-risk investments have a high return over the long run.
B
High-risk investments usually fail.
C
Safe investments are always somewhat profitable.
D
Every investment carries some degree of risk.
92

How do bonds generate income for investors?

A
Bonds depreciate in value.
B
Bonds protect investors from bankruptcy.
C
Bonds pay interest to the bank that sold the bond.
D
Bonds pay a specified amount to the investor at maturity.
93

Glenn and Maggie own a regional chain of juice bars and are looking to expand in the coming year. They already have fifty shops, but they know they will need a loan to reach their goal of one hundred twenty five shops. Which type of banking institution is most suitable for Glenn and Maggie’s business?

A
a credit union
B
a savings and loan
C
a commercial bank
D
an investment bank
94

[BLANK]

A
budget
B
transportation
C
utilities
D
insurance
95

What is the definition of risk?

A
putting money into more than one investment
B
amount made in profit on an investment
C
using borrowed funds for an investment
D
possibility of losing money on an investment
96

Daniel wants to buy a laptop computer, and he has $300 in savings. He can purchase a new computer for $279 or a refurbished [repaired or renovated] computer for $100. What should Daniel do next?

A
Evaluate his decision to buy a computer.
B
Revise his budget to allow for a new computer.
C
Obtain a credit card to pay for a refurbished computer.
D
Review the pros and cons of the different available computers.
97

Which option below is not a potential risk of purchasing a used car?

A
used cars can require repairs sooner
B
shorter lifespans of the engine and transmission
C
used cars can have lower initial cost
D
unexpected issues may arise
98

What is the relationship between risk and return?

A
A higher risk often means a higher return.
B
A lower risk always means a higher return.
C
A higher risk often means a lower return.
D
A lower risk will always mean a lower return.
99

Building equity in a home is a good thing because

A
mortgage payments decrease as equity increases.
B
credit scores increase as equity increases.
C
equity in a home increases the homeowner’s net worth.
D
property taxes decrease as equity increases.
100

Which details apply to a financing contract? Check all that apply.

A
requires a credit check
B
are always less expensive than using a credit card
C
includes interest rate information
D
requires a signature for rent-to-own agreements
E
can be broken at any time

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