GEB 3006 Final Exam questions with
verified correct solutions
If you buy a larger size of a product, the price per unit (such as price per ounce) will always be
lower. - correct answer ✔✔ False
The price per unit of items bought in a warehouse club such as Sams or Costco will always be
lower than a regular retail store. - correct answer ✔✔ False
Retailers commonly offer new items at significantly higher prices, then plan to market the goods
down later to ultimately achieve the desired gross margin goal. - correct answer ✔✔ True
Which of the following would provide the most objective information about a product? - correct
answer ✔✔ A food product ingredient label.
In most cases, service warranty contracts provide excellent protection and are generally good
deals. - correct answer ✔✔ False
Assume you spent $250 for a pressure washer that will save you $50 a year in rental costs.
Using simple payback, how long will it take to get your money back? - correct answer ✔✔ 5
Years
It is never a good idea to prepay something for a discount due to the risk involved. - correct
answer ✔✔ False
When shopping for a car, you should immediately offer your current car as a trade-in to
strengthen your bargaining power - correct answer ✔✔ False
,Zero percent financing is always a great deal since a zero percent interest rate is lower than any
bank would ever offer. - correct answer ✔✔ False
Is is always advisable to have your auto financing arranged in advanced before you start
negotiating on a car. - correct answer ✔✔ True
Assume that a dealer has offered you $10,000 for your car as a trade-in which will save you 7%
sales tax on your new car's tax value.
If you decide to sell the car to a third party, you need to get more than - correct answer ✔✔
$10,700
Assume you drive 10,000 miles per year and get 20 miles to the gallon.
If your car requires premium gas, how much more will this cost you over a 5 year period
assuming that premium gas costs $0.60/gallon more than regular? - correct answer ✔✔ $1,500
Depreciation on autos tends to be highest in years - correct answer ✔✔ 1 to 3
Leasing cars is generally much cheaper than buying cars since the payment is so much lower. -
correct answer ✔✔ False
Generally, you need to plan to stay in a house for about ______ years to reduce the risk of losing
money on the house when you resell it. - correct answer ✔✔ 5 Years
What are some of the disadvantages of owning a house? - correct answer ✔✔ All of the above
are disadvantages of owning a house.
Which of the following statements is TRUE? - correct answer ✔✔ Real estate commissions are
usually 6% and paid by the seller.
, Monthly escrow for property taxes and insurance can add up to ____ more to the mortgage
payment. - correct answer ✔✔ 40%
PITI stands for principal, interest, taxes and insurance. - correct answer ✔✔ True
The housing expense ratio of PITI divided by gross monthly income should not exceed a
maximum of ____ - correct answer ✔✔ 28% for conventional loans and 29% for FHA loans
The total debt ratio of (PITI + long term debt obligations) divided by gross monthly income
should not exceed _____. - correct answer ✔✔ 36% for conventional loans and 43% for FHA
loans.
Before shopping for a house, buyers should get _______ for their mortgage. - correct answer
✔✔ Preapproved
Assume a homeowner is paying Private Mortgage Insurance (PMI).
At what point should the homeowner contact the mortgage company and request that PMI be
stopped? - correct answer ✔✔ When the homeowner's equity in the house reaches 20%.
In order to get the lowest interest available, your FICO score should be: - correct answer ✔✔
760 and above
Assume that a house is sold for $300,000. The square footage is as follows:
Area under air conditioning and heating 2,800 Garage 400 Patio 200 Total 3,400
The cost per square foot as traditionally calculated in the real estate industry is: - correct answer
✔✔ $107.14
verified correct solutions
If you buy a larger size of a product, the price per unit (such as price per ounce) will always be
lower. - correct answer ✔✔ False
The price per unit of items bought in a warehouse club such as Sams or Costco will always be
lower than a regular retail store. - correct answer ✔✔ False
Retailers commonly offer new items at significantly higher prices, then plan to market the goods
down later to ultimately achieve the desired gross margin goal. - correct answer ✔✔ True
Which of the following would provide the most objective information about a product? - correct
answer ✔✔ A food product ingredient label.
In most cases, service warranty contracts provide excellent protection and are generally good
deals. - correct answer ✔✔ False
Assume you spent $250 for a pressure washer that will save you $50 a year in rental costs.
Using simple payback, how long will it take to get your money back? - correct answer ✔✔ 5
Years
It is never a good idea to prepay something for a discount due to the risk involved. - correct
answer ✔✔ False
When shopping for a car, you should immediately offer your current car as a trade-in to
strengthen your bargaining power - correct answer ✔✔ False
,Zero percent financing is always a great deal since a zero percent interest rate is lower than any
bank would ever offer. - correct answer ✔✔ False
Is is always advisable to have your auto financing arranged in advanced before you start
negotiating on a car. - correct answer ✔✔ True
Assume that a dealer has offered you $10,000 for your car as a trade-in which will save you 7%
sales tax on your new car's tax value.
If you decide to sell the car to a third party, you need to get more than - correct answer ✔✔
$10,700
Assume you drive 10,000 miles per year and get 20 miles to the gallon.
If your car requires premium gas, how much more will this cost you over a 5 year period
assuming that premium gas costs $0.60/gallon more than regular? - correct answer ✔✔ $1,500
Depreciation on autos tends to be highest in years - correct answer ✔✔ 1 to 3
Leasing cars is generally much cheaper than buying cars since the payment is so much lower. -
correct answer ✔✔ False
Generally, you need to plan to stay in a house for about ______ years to reduce the risk of losing
money on the house when you resell it. - correct answer ✔✔ 5 Years
What are some of the disadvantages of owning a house? - correct answer ✔✔ All of the above
are disadvantages of owning a house.
Which of the following statements is TRUE? - correct answer ✔✔ Real estate commissions are
usually 6% and paid by the seller.
, Monthly escrow for property taxes and insurance can add up to ____ more to the mortgage
payment. - correct answer ✔✔ 40%
PITI stands for principal, interest, taxes and insurance. - correct answer ✔✔ True
The housing expense ratio of PITI divided by gross monthly income should not exceed a
maximum of ____ - correct answer ✔✔ 28% for conventional loans and 29% for FHA loans
The total debt ratio of (PITI + long term debt obligations) divided by gross monthly income
should not exceed _____. - correct answer ✔✔ 36% for conventional loans and 43% for FHA
loans.
Before shopping for a house, buyers should get _______ for their mortgage. - correct answer
✔✔ Preapproved
Assume a homeowner is paying Private Mortgage Insurance (PMI).
At what point should the homeowner contact the mortgage company and request that PMI be
stopped? - correct answer ✔✔ When the homeowner's equity in the house reaches 20%.
In order to get the lowest interest available, your FICO score should be: - correct answer ✔✔
760 and above
Assume that a house is sold for $300,000. The square footage is as follows:
Area under air conditioning and heating 2,800 Garage 400 Patio 200 Total 3,400
The cost per square foot as traditionally calculated in the real estate industry is: - correct answer
✔✔ $107.14
