BUSI 1307 Chapter 5 Quiz

27 June 2024
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question
The loss in the value of an automobile over time is called: ‚Äčmaintenance. ‚Äčthe loan payment. ‚Äčthe sales price. ‚Äč the purchase commission. ‚Äčdepreciation.
answer
depreciation.
question
Which of the following is true of buying a used car as compared to a new car? ‚ÄčA used car will be in a better mechanical condition compared to a new car. A used car will depreciate at a lower rate compared to a new car. ‚ÄčThe accessories in a new car will be better updated compared to those fitted in a new car. ‚ÄčPurchasing a used car will be less expensive as compared to purchasing a new car. ‚ÄčThe fuel efficiency in a used car is always higher compared to that of a new car.
answer
‚ÄčPurchasing a used car will be less expensive as compared to purchasing a new car.
question
When shopping for a lease, you want: ‚Äča high capitalized cost ‚Äča low capitalized cost. ‚Äča high money factor. ‚Äča low residual value. ‚Äčhigh lease payments
answer
‚Äča low capitalized cost.
question
Phil and Christina are recently married and are unsure of where they will be relocated after Christina finishes her residency in 9 months. Based on this information, which of the following housing recommendations would be most appropriate for them? ‚ÄčRenting a home ‚ÄčBuying a condominium ‚ÄčBuying a single-family dwelling ‚ÄčBuying a cooperative apartment ‚ÄčPurchasing a trailer
answer
‚ÄčRenting a home
question
_____ is a situation where homeowners owe more to lenders than what their properties are worth. ‚ÄčA negative equity ‚ÄčA foreclosure ‚ÄčAn adverse rent ratio ‚ÄčInflation ‚ÄčA real estate short sale
answer
‚ÄčA negative equity
question
As home prices have fallen in recent years, the rent ratio: ‚Äčand rent affordability have increased. and rent affordability have decreased. ‚Äčhas increased and rent affordability has decreased ‚Äčhas decreased and rent affordability has increased. has increased and rent affordability has stabilized.
answer
and rent affordability have decreased.
question
If you made a down payment of $11,000 on a house worth $110,000, the lenders will require _____ as a result of the size of the down payment. ‚Äčclosing points ‚Äča bond ‚Äčmortgage insurance ‚Äčapplication fees ‚Äčhomeowner's insurance
answer
mortgage insurance
question
An escrow account is used to collect _____ from one's monthly mortgage payment. interest‚Äč ‚Äčprincipal real estate taxes‚Äč ‚Äčclosing costs ‚Äčoperating expenses
answer
real estate taxes
question
The majority of each monthly payment at the beginning of the loan goes to pay the: ‚Äčprincipal. ‚Äčinterest ‚Äčreal estate taxes. homeowner's insurance. ‚Äčprivate mortgage insurance.
answer
‚Äčinterest
question
Which of the following are tax deductible if one itemizes deductions? Principal, interest, real estate taxes, and insurance ‚ÄčPrincipal, interest, and real estate taxes ‚ÄčPrincipal and interest ‚ÄčInterest, real estate taxes, and insurance ‚ÄčInterest, insurance, and real estate taxes
answer
‚ÄčInterest, insurance, and real estate taxes
question
For most homeowners, the most important financial benefit from owning a home is that it is: ‚Äča security for loans. ‚Äčan inflation hedge ‚Äča tax shelter. ‚Äča cash flow item. ‚Äča psychic income.
answer
a tax shelter.
question
_____ are the up-front, one-time costs of home ownership. ‚ÄčPoints ‚ÄčClosing costs ‚ÄčProperty taxes ‚ÄčInsurance costs ‚ÄčMortgage interests
answer
‚ÄčClosing costs
question
A lender will usually require a loan-to-value ratio of _____ or less for you to avoid having to pay private mortgage insurance (PMI). ‚Äč75% ‚Äč80% ‚Äč85% ‚Äč90% ‚Äč95%
answer
80%
question
A real estate sales contract will include: ‚Äčthe amount you have paid as an earnest money deposit. ‚Äčthe terms of a mortgage loan taken from a third party. ‚Äčdeed restrictions. ‚Äčthe market value of the property. ‚Äčthe current value of the cost of repairs on the house.
answer
the amount you have paid as an earnest money deposit.
question
Barb and Bob want to purchase a new home but don't know how much mortgage they can qualify for. The lender requires that the total installment loan payments do not exceed 35% of the monthly income. Based on Barb and Bob's financial data given below, what is the maximum monthly mortgage payment for which they can qualify? Monthly Gross Income $4,000 Car payment $350 Student loan payment $200 ‚Äč$1,400 ‚Äč$1,208 ‚Äč$1,208 ‚Äč$850 ‚Äč$500
answer
‚Äč$850