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UGBA 135 Final Exam Questions
and Answers A+ Graded (2025)
Employers are never allowed to check credit reports when hiring - CORRECT
ANSWER-false
Lenders use credit reports to help them decide whether to loan you money and
what interest rate to charge - CORRECT ANSWER-true
Which of the following is usually the most important type of debt to focus on
paying off quickly: - CORRECT ANSWER-Credit card balances
Which types of debt "steal from your future"? - CORRECT ANSWER-1. paycheck
advances
2. credit card balances
Why is Social Security called a PAYGO system? - CORRECT ANSWER-Because
the payroll taxes paid by current workers are used to pay current retirement
benefits.
Medicare Part A, Hospital Insurance is free; people must pay for Medicare Parts
B, C, and D if they want them. - CORRECT ANSWER-TRUE
If you buy a company's bond - CORRECT ANSWER-you have lent money to the
company
Holding a diversified portfolio of stocks rather than an undiversified portfolio -
CORRECT ANSWER-1. increases the variance (variation in outcomes) of the
portfolio
2. increases the likelihood that you will own at least one stock that performs
poorly
Actively trading common stocks is the best long-term investment strategy for
most investors. - CORRECT ANSWER-False
The potential advantages of index funds are - CORRECT ANSWER-1. many have
low fees
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2. many are well-diversified
When buying a mutual fund, which of the following is most important? -
CORRECT ANSWER-The fees the fund charges
The fees charged by index funds vary with the types of assets the funds invest in.
- CORRECT ANSWER-TRUE
Exchange Traded Funds (ETFs) sometimes charge high fees, but they are always
well diversified. - CORRECT ANSWER-False
Investments with higher risk always have higher expected returns. - CORRECT
ANSWER-False
Common ways for financial advisors to be compensated are: - CORRECT
ANSWER-1. An annual percentage of the client's assets under management.
2. Commissions
3. By the hour or a flat fee for specific services.
Typical annual financial advisor fees when charged as a percentage of assets
under management often exceed what you can earn today in a one year certificate
of deposit. - CORRECT ANSWER-True
Landlords can require tenants to have renters insurance. - CORRECT ANSWER-
True
All risks homeowners policies cover all risks. - CORRECT ANSWER-False
If a policy has guaranteed replacement cost for your home then it will always
have guaranteed replacement cost for your property. - CORRECT ANSWER-False
Suppose your roommate slips on the rug in your apartment, falls, and breaks her
arm. She has medical costs and she losses two weeks wages because she can't
work. What will renters insurance pay for (if you have it)? - CORRECT ANSWER-
Will pay nothing.
Which of the following is an example of adverse selection? - CORRECT ANSWER-
A young man who has does not have health insurance finds out that he needs to
have expensive medically necessary surgery in the next year, therefore he signs
up for health insurance at the next open enrollment period (i.e., the next
opportunity).
Relative to their opportunities, most individual investors are more likely to sell as
stock that has gone down in value since they bought it than a stock that has gone
up. - CORRECT ANSWER-False
Individual investors tend to be on the buy side of the market for stocks that catch
their attention. - CORRECT ANSWER-True
UGBA 135 Final Exam Questions
and Answers A+ Graded (2025)
Employers are never allowed to check credit reports when hiring - CORRECT
ANSWER-false
Lenders use credit reports to help them decide whether to loan you money and
what interest rate to charge - CORRECT ANSWER-true
Which of the following is usually the most important type of debt to focus on
paying off quickly: - CORRECT ANSWER-Credit card balances
Which types of debt "steal from your future"? - CORRECT ANSWER-1. paycheck
advances
2. credit card balances
Why is Social Security called a PAYGO system? - CORRECT ANSWER-Because
the payroll taxes paid by current workers are used to pay current retirement
benefits.
Medicare Part A, Hospital Insurance is free; people must pay for Medicare Parts
B, C, and D if they want them. - CORRECT ANSWER-TRUE
If you buy a company's bond - CORRECT ANSWER-you have lent money to the
company
Holding a diversified portfolio of stocks rather than an undiversified portfolio -
CORRECT ANSWER-1. increases the variance (variation in outcomes) of the
portfolio
2. increases the likelihood that you will own at least one stock that performs
poorly
Actively trading common stocks is the best long-term investment strategy for
most investors. - CORRECT ANSWER-False
The potential advantages of index funds are - CORRECT ANSWER-1. many have
low fees
, mailto:://www.stuvia.com/user/BRAINSCAPE1
2. many are well-diversified
When buying a mutual fund, which of the following is most important? -
CORRECT ANSWER-The fees the fund charges
The fees charged by index funds vary with the types of assets the funds invest in.
- CORRECT ANSWER-TRUE
Exchange Traded Funds (ETFs) sometimes charge high fees, but they are always
well diversified. - CORRECT ANSWER-False
Investments with higher risk always have higher expected returns. - CORRECT
ANSWER-False
Common ways for financial advisors to be compensated are: - CORRECT
ANSWER-1. An annual percentage of the client's assets under management.
2. Commissions
3. By the hour or a flat fee for specific services.
Typical annual financial advisor fees when charged as a percentage of assets
under management often exceed what you can earn today in a one year certificate
of deposit. - CORRECT ANSWER-True
Landlords can require tenants to have renters insurance. - CORRECT ANSWER-
True
All risks homeowners policies cover all risks. - CORRECT ANSWER-False
If a policy has guaranteed replacement cost for your home then it will always
have guaranteed replacement cost for your property. - CORRECT ANSWER-False
Suppose your roommate slips on the rug in your apartment, falls, and breaks her
arm. She has medical costs and she losses two weeks wages because she can't
work. What will renters insurance pay for (if you have it)? - CORRECT ANSWER-
Will pay nothing.
Which of the following is an example of adverse selection? - CORRECT ANSWER-
A young man who has does not have health insurance finds out that he needs to
have expensive medically necessary surgery in the next year, therefore he signs
up for health insurance at the next open enrollment period (i.e., the next
opportunity).
Relative to their opportunities, most individual investors are more likely to sell as
stock that has gone down in value since they bought it than a stock that has gone
up. - CORRECT ANSWER-False
Individual investors tend to be on the buy side of the market for stocks that catch
their attention. - CORRECT ANSWER-True
