GEB 3006 FINAL EXAM QUESTIONS & ANSWERS
If you buy a larger size of a product, the price per unit (such as price per ounce) will
always be lower. - 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. - 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. - Answer -
True
Which of the following would provide the most objective information about a product? -
Answer -A food product ingredient label.
In most cases, service warranty contracts provide excellent protection and are generally
good deals. - 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? - Answer -5 Years
It is never a good idea to prepay something for a discount due to the risk involved. -
Answer -False
When shopping for a car, you should immediately offer your current car as a trade-in to
strengthen your bargaining power - Answer -False
Zero percent financing is always a great deal since a zero percent interest rate is lower
than any bank would ever offer. - Answer -False
Is is always advisable to have your auto financing arranged in advanced before you
start negotiating on a car. - 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 - 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? - Answer -$1,500
Depreciation on autos tends to be highest in years - Answer -1 to 3
, Leasing cars is generally much cheaper than buying cars since the payment is so much
lower. - 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. - Answer -5 Years
What are some of the disadvantages of owning a house? - Answer -All of the above are
disadvantages of owning a house.
Which of the following statements is TRUE? - 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. - Answer -40%
PITI stands for principal, interest, taxes and insurance. - Answer -True
The housing expense ratio of PITI divided by gross monthly income should not exceed
a maximum of ____ - 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 _____. - Answer -36% for conventional loans and 43% for
FHA loans.
Before shopping for a house, buyers should get _______ for their mortgage. - 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? - Answer -When the homeowner's equity in the house reaches 20%.
In order to get the lowest interest available, your FICO score should be: - 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: -
Answer -$107.14
In comparison to a 15 year fixed rate mortgage, a 30 year fixed rate mortgage will: -
Answer -Pay more in total interest over the life of the loan
A homeowner decides to get a second mortgage at 7% to pay down credit card debt
with an interest rate of 20%. While this appears to be a good move, the primary risk is
that the homeowner could lose his/her home if they fail to make payments on the new
second mortgage. - Answer -True
If you buy a larger size of a product, the price per unit (such as price per ounce) will
always be lower. - 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. - 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. - Answer -
True
Which of the following would provide the most objective information about a product? -
Answer -A food product ingredient label.
In most cases, service warranty contracts provide excellent protection and are generally
good deals. - 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? - Answer -5 Years
It is never a good idea to prepay something for a discount due to the risk involved. -
Answer -False
When shopping for a car, you should immediately offer your current car as a trade-in to
strengthen your bargaining power - Answer -False
Zero percent financing is always a great deal since a zero percent interest rate is lower
than any bank would ever offer. - Answer -False
Is is always advisable to have your auto financing arranged in advanced before you
start negotiating on a car. - 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 - 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? - Answer -$1,500
Depreciation on autos tends to be highest in years - Answer -1 to 3
, Leasing cars is generally much cheaper than buying cars since the payment is so much
lower. - 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. - Answer -5 Years
What are some of the disadvantages of owning a house? - Answer -All of the above are
disadvantages of owning a house.
Which of the following statements is TRUE? - 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. - Answer -40%
PITI stands for principal, interest, taxes and insurance. - Answer -True
The housing expense ratio of PITI divided by gross monthly income should not exceed
a maximum of ____ - 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 _____. - Answer -36% for conventional loans and 43% for
FHA loans.
Before shopping for a house, buyers should get _______ for their mortgage. - 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? - Answer -When the homeowner's equity in the house reaches 20%.
In order to get the lowest interest available, your FICO score should be: - 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: -
Answer -$107.14
In comparison to a 15 year fixed rate mortgage, a 30 year fixed rate mortgage will: -
Answer -Pay more in total interest over the life of the loan
A homeowner decides to get a second mortgage at 7% to pay down credit card debt
with an interest rate of 20%. While this appears to be a good move, the primary risk is
that the homeowner could lose his/her home if they fail to make payments on the new
second mortgage. - Answer -True
