FIN 801 - TMU PRACTICE EXAMINATION
2026 QUESTIONS WITH ANSWERS
GRADED A+
◍ TRUE OR FALSE: Credit report is routinely used to predict credit
worthiness.
Answer: True
◍ Why do many households place funds with financial institutions?.
Answer: Flexible maturities, lower denominations, better liquidity, and less
price risk.
◍ What is the duration of a zero-coupon instrument?.
Answer: Equal to the time to maturity.
◍ What are revolving loans?.
Answer: Credit lines on which a borrower can both draw and repay many
times over the life of the loan contract.
◍ What is the term used when a banker refuses to make loans to residents
living within certain geographic boundaries?.
Answer: Redlining.
◍ Anna purchased a vehicle six years ago for $25,000. She recently sold it for
$5,000. Over the years, she paid a total of $5,800 on auto insurance, $4,800
on gas and maintenance, and $2,500 in interest. What was her depreciation
cost on this vehicle?.
Answer: $20,000
◍ TRUE OR FALSE: When comparing two installment loans with the same
principal and APR, the loan with the shorter maturity will have the lower
monthly payment and the lower total costs..
, Answer: False
◍ You are solvent if your .....
Answer: total assets exceed total liabilities
◍ What is the duration of a 5-year par value zero coupon bond yielding 10
percent annually?.
Answer: 5.00 years.
◍ What is true about an unsecured loan?.
Answer: It does not have a claim to specific assets of the borrower in case of
default.
◍ These financial institutions are legally allowed to solicit and accept
monetary deposits from individuals or entities.
Answer: Depository Institution
◍ TRUE OR FALSE: When loaning money to a friend or family member, it is
advisable to lend only the amount that you can afford to give away..
Answer: True
◍ In 2014, the total social security tax was ....
Answer: 6.2%
◍ What can sustained credit quality problems drain from an FI?.
Answer: Capital and net worth.
◍ What does regulatory forbearance refer to?.
Answer: Allowing insolvent banks to continue to operate.
◍ This is the name given to interest that is paid only on an investor's initial
investment and not on any previously earned interest.
Answer: Simple interest
◍ For tax purposes, head-of-household refers to ....
Answer: single individual with dependents
◍ TRUE OR FALSE: To refinance a mortgage, the lender typically requires at
least 20% equity in the home.
2026 QUESTIONS WITH ANSWERS
GRADED A+
◍ TRUE OR FALSE: Credit report is routinely used to predict credit
worthiness.
Answer: True
◍ Why do many households place funds with financial institutions?.
Answer: Flexible maturities, lower denominations, better liquidity, and less
price risk.
◍ What is the duration of a zero-coupon instrument?.
Answer: Equal to the time to maturity.
◍ What are revolving loans?.
Answer: Credit lines on which a borrower can both draw and repay many
times over the life of the loan contract.
◍ What is the term used when a banker refuses to make loans to residents
living within certain geographic boundaries?.
Answer: Redlining.
◍ Anna purchased a vehicle six years ago for $25,000. She recently sold it for
$5,000. Over the years, she paid a total of $5,800 on auto insurance, $4,800
on gas and maintenance, and $2,500 in interest. What was her depreciation
cost on this vehicle?.
Answer: $20,000
◍ TRUE OR FALSE: When comparing two installment loans with the same
principal and APR, the loan with the shorter maturity will have the lower
monthly payment and the lower total costs..
, Answer: False
◍ You are solvent if your .....
Answer: total assets exceed total liabilities
◍ What is the duration of a 5-year par value zero coupon bond yielding 10
percent annually?.
Answer: 5.00 years.
◍ What is true about an unsecured loan?.
Answer: It does not have a claim to specific assets of the borrower in case of
default.
◍ These financial institutions are legally allowed to solicit and accept
monetary deposits from individuals or entities.
Answer: Depository Institution
◍ TRUE OR FALSE: When loaning money to a friend or family member, it is
advisable to lend only the amount that you can afford to give away..
Answer: True
◍ In 2014, the total social security tax was ....
Answer: 6.2%
◍ What can sustained credit quality problems drain from an FI?.
Answer: Capital and net worth.
◍ What does regulatory forbearance refer to?.
Answer: Allowing insolvent banks to continue to operate.
◍ This is the name given to interest that is paid only on an investor's initial
investment and not on any previously earned interest.
Answer: Simple interest
◍ For tax purposes, head-of-household refers to ....
Answer: single individual with dependents
◍ TRUE OR FALSE: To refinance a mortgage, the lender typically requires at
least 20% equity in the home.
