MONEY (BUS 201) EXAM #1 QUESTIONS WITH
ACCURATE ANSWERS
= Assets correct answer Liabilities + Net Worth
= Net Worth correct answer Assets - Liabilities
5 Cs of credit correct answer (what the creditors look for)
Character: borrower's attitude about their credit obligations
Capacity: borrower's financial ability to meet credit obligations
Capital: borrower's assets or net worth
Collateral: a valuable asset is pledged to ensure loan payments
Conditions: the economic conditions that can affect a borrower's ability to pay
adjusted-gross income (AGI) correct answer Your gross income after certain
additions and reductions have been made.
advantages of credit correct answer Provides immediate possession for needs,
flexibility, safety (you don't need to carry cash), and emergency funds.
annual percentage yield (APY) correct answer The percentage rate expressing the
total amount of interest that would be received on a $100 deposit based on the
annual rate and frequency of compounding for a 365-day period.
annuity correct answer Multiple deposits or payments of a fixed amount.
, asset management account correct answer An all-in-one account that includes
savings, checking, borrowing, investing, and other financial services for a single
fee, also called a cash management account.
assets correct answer Cash and other tangible property with monetary value.
balance sheet correct answer A report that shows what you owe (liabilities) and
what you own (assets).
budget correct answer A specific plan for spending that helps you live within your
income, spend your money wisely, reach your financial goals, prepare for financial
emergencies, and develop wise financial management habits.
cash flow statement correct answer A summary of cash receipts and payments for
a given period, such as a month or year.
certificate of deposit (CD) correct answer A savings plan requiring that a certain
amount be on deposit for a stated time period to earn a specific rate of return.
close-end credit correct answer One-time loans that the borrower pays back in a
specified period of time and in payments of equal amounts.
compounding correct answer A process that calculates interest based on
previously earned interest.
consumer credit correct answer The use of credit for personal needs (except for a
home mortgage) by individuals and families, in contrast to credit used for a
proposed business.
ACCURATE ANSWERS
= Assets correct answer Liabilities + Net Worth
= Net Worth correct answer Assets - Liabilities
5 Cs of credit correct answer (what the creditors look for)
Character: borrower's attitude about their credit obligations
Capacity: borrower's financial ability to meet credit obligations
Capital: borrower's assets or net worth
Collateral: a valuable asset is pledged to ensure loan payments
Conditions: the economic conditions that can affect a borrower's ability to pay
adjusted-gross income (AGI) correct answer Your gross income after certain
additions and reductions have been made.
advantages of credit correct answer Provides immediate possession for needs,
flexibility, safety (you don't need to carry cash), and emergency funds.
annual percentage yield (APY) correct answer The percentage rate expressing the
total amount of interest that would be received on a $100 deposit based on the
annual rate and frequency of compounding for a 365-day period.
annuity correct answer Multiple deposits or payments of a fixed amount.
, asset management account correct answer An all-in-one account that includes
savings, checking, borrowing, investing, and other financial services for a single
fee, also called a cash management account.
assets correct answer Cash and other tangible property with monetary value.
balance sheet correct answer A report that shows what you owe (liabilities) and
what you own (assets).
budget correct answer A specific plan for spending that helps you live within your
income, spend your money wisely, reach your financial goals, prepare for financial
emergencies, and develop wise financial management habits.
cash flow statement correct answer A summary of cash receipts and payments for
a given period, such as a month or year.
certificate of deposit (CD) correct answer A savings plan requiring that a certain
amount be on deposit for a stated time period to earn a specific rate of return.
close-end credit correct answer One-time loans that the borrower pays back in a
specified period of time and in payments of equal amounts.
compounding correct answer A process that calculates interest based on
previously earned interest.
consumer credit correct answer The use of credit for personal needs (except for a
home mortgage) by individuals and families, in contrast to credit used for a
proposed business.
