GEB 3006 Final Exam |157 Questions and
Answers
If you buy a larger size of a product, the price per unit (such as price per ounce) will always
be lower. - -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. - -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. - -True
-Which of the following would provide the most objective information about a product? - -
A food product ingredient label.
-In most cases, service warranty contracts provide excellent protection and are generally
good deals. - -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? - -5 Years
-It is never a good idea to prepay something for a discount due to the risk involved. - -
False
-When shopping for a car, you should immediately offer your current car as a trade-in to
strengthen your bargaining power - -False
-Zero percent financing is always a great deal since a zero percent interest rate is lower
than any bank would ever offer. - -False
-Is is always advisable to have your auto financing arranged in advanced before you start
negotiating on a car. - -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 - -$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? - -$1,500
-Depreciation on autos tends to be highest in years - -1 to 3
, -Leasing cars is generally much cheaper than buying cars since the payment is so much
lower. - -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. - -5 Years
-What are some of the disadvantages of owning a house? - -All of the above are
disadvantages of owning a house.
-Which of the following statements is TRUE? - -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. - -40%
-PITI stands for principal, interest, taxes and insurance. - -True
-The housing expense ratio of PITI divided by gross monthly income should not exceed a
maximum of ____ - -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 _____. - -36% for conventional loans and 43% for FHA loans.
-Before shopping for a house, buyers should get _______ for their mortgage. - -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? - -When the homeowner's equity in the house reaches 20%.
-In order to get the lowest interest available, your FICO score should be: - -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: - -$107.14
-In comparison to a 15 year fixed rate mortgage, a 30 year fixed rate mortgage will: - -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. - -True
-Which of the following would tend to have the highest interest rate at any given time. - -
Home equity line of credit (HELOC)
Answers
If you buy a larger size of a product, the price per unit (such as price per ounce) will always
be lower. - -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. - -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. - -True
-Which of the following would provide the most objective information about a product? - -
A food product ingredient label.
-In most cases, service warranty contracts provide excellent protection and are generally
good deals. - -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? - -5 Years
-It is never a good idea to prepay something for a discount due to the risk involved. - -
False
-When shopping for a car, you should immediately offer your current car as a trade-in to
strengthen your bargaining power - -False
-Zero percent financing is always a great deal since a zero percent interest rate is lower
than any bank would ever offer. - -False
-Is is always advisable to have your auto financing arranged in advanced before you start
negotiating on a car. - -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 - -$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? - -$1,500
-Depreciation on autos tends to be highest in years - -1 to 3
, -Leasing cars is generally much cheaper than buying cars since the payment is so much
lower. - -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. - -5 Years
-What are some of the disadvantages of owning a house? - -All of the above are
disadvantages of owning a house.
-Which of the following statements is TRUE? - -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. - -40%
-PITI stands for principal, interest, taxes and insurance. - -True
-The housing expense ratio of PITI divided by gross monthly income should not exceed a
maximum of ____ - -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 _____. - -36% for conventional loans and 43% for FHA loans.
-Before shopping for a house, buyers should get _______ for their mortgage. - -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? - -When the homeowner's equity in the house reaches 20%.
-In order to get the lowest interest available, your FICO score should be: - -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: - -$107.14
-In comparison to a 15 year fixed rate mortgage, a 30 year fixed rate mortgage will: - -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. - -True
-Which of the following would tend to have the highest interest rate at any given time. - -
Home equity line of credit (HELOC)
