If a markup is based on selling price, then the __________ is the base and represents 100%.

a. cost

b. markup

c. margin

d. selling price

e. none of the above

Q2. To find the selling price of an item, the following formula can be used:

a. selling price equals cost minus margin

b. margin equals selling price minus cost

c. cost equals selling price minus margin

d. selling price equals cost plus margin

Q3. The amount a business gets to keep, after paying for all costs and expenses, is termed:

a. net loss

b. gross profit

c. gross margin

d. net profit

Q4. In arriving at a markup on merchandise for sale, most __________ use the selling price as the base because the keep their records in terms of selling price.

a. retailers

b. wholesalers

c. consumers

d. manufacturers

e. all of the above

Q5. A furniture store sells baby furniture for $260.00 per set. If the markup is 150% on cost, the cost of the furniture is:

a. $156.00

b. $104.00

c. $180.00

d. $173.33

Q6. A bottle of vitamins cost $2.25 and is marked up 90% of the selling price. What is the selling price?

a. $22.50

b. $18.60

c. $20.25

d. $25.00

e. none of the above

Q7. The Tough and Tender Beef Restaurant marks up all dinners 32% on selling price. If the markup on barbecue ribs is $3.48, how much is the menu price?

a. $10.88

b. $9.88

c. $20.42

d. $3.20

Q8. Calculators cost $60.00 and sell for $98.00. What is the percent markup based on selling price?

a. 200%

b. 60%

c. 38.78%

d. 29%

Q9. When calculating a markup on cost, __________ is always equal to 100%.

a. selling price

b. margin

c. markup

d. cost

Q10. The price paid by the retailer, for the product being sold, is known as:

a. the cost

b. the markup

c. the reduced price

d. the markdown

Q11. FUTA tax must be deposited____, if the amount exceeds $100:

a. at least once a year

b. six times per year

c. semiannually

d. quarterly

e. none of the above

Q12. People whose entire salary is based on a percent of sales are said to be working on:

a. differential scale

b. piecework

c. straight commission

d. salary plus commission

Q13. A withholding allowance is also known as a(n):

a. exemption

b. withholding tax

c. FUTA tax

d. deduction

Q14. When your payday falls every two weeks, your payroll frequently is said to be:

a. biweekly

b. weekly

c. semimonthly

d. monthly

Q15. The amount earned before deductions is called:

a. withholdings

b. take-home pay

c. net earnings

d. gross earnings

Q16. A stated amount of money paid each year to an employee for services performed is called a:

a. wage

b. commission

c. piecework

d. salary

Q17. Greg earns $850.00 per week plus 4% of net sales over $15,000.00. Greg’s sales were $19,950.00 and his returns were $875.00. How much did Greg earn?

a. $1,518.33

b. $1,048.00

c. $850.00

d. $1,013.00

e. none of the above

Q18. If you receive paychecks 12 times a year at fixed intervals, you are probably being paid:

a. biweekly

b. weekly

c. bimonthly

d. monthly

Q19. If employees are paid weekly, they will receive:

a. 12 paychecks a year

b. the number of paychecks vary each year

c. 26 paychecks a year

d. 52 paychecks a year

Q20. Assuming that Karen earns a salary of $54,580.00 per year and is paid semimonthly, the gross amount of her paycheck would be:

a. $2,274.17

b. $4,548.33

c. $2,099.23

d. $2,828.08

Q21. In a leap year, February has __________ days.

a. 30

b. 29

c. 28

d. 31

e. none of the above

Q22. The maturity value of a loan is:

a. principal plus interest

b. principal minus interest

c. proceeds minus interest

d. face value plus proceeds

Q23. The amount of money borrowed is called:

a. principal

b. proceeds

c. discount amount

d. maturity value

Q24. The number of days, months, or years for which money is borrowed is known as:

a. principal

b. time

c. discount

d. rate

Q25. The price paid for using money is called:

a. interest

b. maturity value

c. proceeds

d. discount

Q26. __________ is the formula to find time.

a.

b.

c.

d.

e. none of the above

Q27. __________ is the percent of interest charged on a loan.

a. Ordinary

b. Time

c. Rate

d. Principal

e. none of the above

Q28. __________ __________ is used when a loan is repaid in a lump sum.

a. Simple discount

b. Maturity discount

c. Compound interest

d. Simple interest

Q29. The simple interest rate on a 90-day, 8% loan can be restated as __________.

a. 0.02

b. 0.002

c. 0.2

d. 2.0

e. none of the above

Q30. The formula for ordinary interest using exact time is:

a. exact days divided by 365

b. 30 divided by 365

c. interest rate per year divided by 360

d. 30 divided by 360

e. interest amount divided by 12

Q31. The __________ __________ is the sum of the number of months remaining on a loan divided by the sum of the total number of months of the loan.

a. refund fraction

b. Rule of 78

c. constant ratio

d. finance charge

Q32. Which of the following statements is not correct?

a. There is more than one formula to approximate a loan’s APR.

b. APR is the true effective annual interest rate charged by lenders.

c. The Truth in Lending Act regulates interest rates.

d. The Truth in Lending Act was passed in 1969.

e. None of the above

Q33. The refund amount is equal to the refund fraction:

a. multiplied by the total interest

b. divided by the total interest

c. divided by the number of weeks of the loan

d. multiplied by the number of months of a loan

e. none of the above

Q34. The amount of a loan is:

a. installment price – interest – down payment

b. installment price – interest + down payment

c. the installment price + interest – down payment

d. installment price – payments + purchases

Q35. John purchased a new boat for $24,600.00. He put a $5,400.00 down payment on it. The bank’s loan was for 60 months. Finance charges totaled $6,400.00. His monthly payment was:

a. $250.00

b. $410.00

c. $106.67

d. $426.67

Q36. To find the total cost of a purchase, multiply the amount of each payment by the number of payments in the loan and then add the:

a. installment payment

b. finance charge

c. amount financed

d. down payment

Q37. The cost of an item if the full amount had been paid at the time of sale is called the:

a. total price

b. installment price

c. down payment price

d. cash price

Q38. A fraction that shows what portion of the total finance charge has not been paid at the time a loan is paid off is called the:

a. refund fraction

b. constant ratio

c. pay-off ratio

d. finance rebate

Q39. The finance charge on a loan is equal to the total of the monthly payments:

a. plus the amount financed

b. multiplied by the amount financed

c. divided by the amount financed

d. less the amount financed

Q40. The installment price minus the down payment equals the:

a. carrying charge

b. total of installment payments

c. cash price

d. net price

e. none of the above

Q41. How much should be invested today to provide $1,800.00 in one year? Assume 10% interest compounded annually.

a. $1,636.36

b. $1,782.00

c. $1,620.00

d. $493.15

e. $1,647.42

Q42. Your company needs to have $40,465.00 five years from now. If the interest rate at your bank is 6% compounded quarterly, how much will you need to deposit into your account today in order to have the desired amount in 5 years?

a. $29,999.26

b. $29,666.92

c. $30,044.05

d. $30,000.00

e. $20,044.05

Q43. $15,000.00 for 10 years compounded at 10% quarterly results in how many periods?

a. 20

b. 10

c. 120

d. 40

e. none of the above

Q44. Sunfresh Markets made a $13,000.00 investment in a compound interest account paying 8% compounded monthly. What was the value of its investment at the end of 8 months? (Choose the closest answer)

a. 12710.00

b. 13710.00

c. 13860.00

d. 14710.00

e. 24062.00

Q45. The effective rate is:

a. the stated rate

b. the true semiannual rate

c. the annual percentage yield rate

d. the nominal rate

e. the beginning rate

Q46. If you borrow $1000 at an APR of 12% and pay it back in one year making the same payment amount each month, what principal (P) and interest (I) have you paid when the load is paid off?

a. P=$1200, I=$120

b. P=$1000, I=$120

c. P=$1000, I=$66.19

d. P=$1200, I=$65.50

e. P=$1000, I=$60.00

Q47. In a loan of 8% compounded quarterly, what is the periodic interest rate?

a. 4%

b. 6%

c. 2.5%

d. 2%

Q48. The compound interest on a $3,000.00 loan at 7% for 3 years compounded annually is:

a. $3,675.13

b. $630.00

c. $3,630.00

d. $675.13

e. none of the above

Q49. If interest is compounded, the total amount at the end of the loan or investment term is called the:

a. future value

b. compound amount

c. present value

d. both A and B

e. none of the above

Q50. A(n) __________ __________ is an annuity with payments made at the end of each period.

a. annuity certain

b. term annuity

c. annuity due

d. annual annuity

e. none of the above

Q51. A __________ __________ is used to accumulate a required amount of money by the end of a certain period of time to pay off a financial obligation.

a. sinking fund

b. compound interest

c. present value

d. checking account

e. none of the above

Q52. When a series of equal periodic payments is put into an interest bearing account for a specific number of periods, this is known as a(n):

a. annuity

b. discounting procedure

c. compound interest plan

d. high risk investment

Q53. Payments into a sinking fund are always made when?

a. when the funds are available

b. at the end of each period

c. lump sum at the beginning of the sinking fund

d. at the beginning of each period

e. none of the above

Q54. The sum of the payments of an annuity plus the interest is called the:

a. economic sum

b. payoff amount

c. financial total

d. amount of the annuity

Q55. What is the value of an annuity due at the end of 15 years of quarterly deposits of $2,000.00 with terms of 8% compounded quarterly?

a. $228,102.00

b. $232,665.14

c. $232,666.08

d. $228,120.00

e. none of the above

Q56. An annuity without a specific number of payment periods is termed a(n):

a. non-standard annuity

b. annual annuity

c. contingent annuity

d. annuity certain

Q57. __________ is the amount of a $3,000.00 annuity due at 12% compounded semiannually for 3 years.

a. $41,814.50

b. $43,068.93

c. $22,180.50

d. $334,321.00

e. none of the above

Q58. Points represent:

a. monthly payments

b. a 3 percent up front payment

c. an additional cost of financing

d. 2 percent of the amount borrowed

Q59. Derek purchased a home for $225,000.00 with a down payment of $30,000.00 at 8.75% for 25 years. Since then the rate has fallen to 5.25%. How much less would his monthly payment be if he purchased the house with the mortgage at 5.25%?

a. $443.85

b. $434.58

c. $423.58

d. $434.85

e. $419.85

Q60. The difference between the monthly payments on a $95,000.00 mortgage at 5% versus 6% for 25 years is:

a. $65.05

b. $56.05

c. $56.50

d. $56.60

Q61. Bill took out a $125,000.00 mortgage on a lake house. The bank charged 2 points at the closing. The points amounted to:

a. $750.00

b. $7,500.00

c. $2,500.00

d. $5,000.00

Q62. All payments on a mortgage are required to be paid on a __________ basis.

a. semiannually

b. biweekly

c. monthly

d. weekly

e. agreed

Q63. A variable rate mortgage means:

a. payments will be larger than on a fixed rate mortgage

b. the interest rate cannot change

c. the interest rate is fixed for the first five years

d. the interest rate can change

Q64. Jayne purchased a home for $240,000.00 with a down payment of $48,000.00. The rate of interest was 5-3/4 for 30 years. What was her monthly mortgage payment?

a. $962.70

b. $2,146.85

c. $1,121.28

d. $1,850.46

e. $1000.00

Q65. Land or anything permanently attached to the land is termed:

a. real property

b. FNMA

c. collateral

d. personal property