Download UGBA 135 Midterm Exam Questions And Answers and more Exams Entrepreneurship in PDF only on Docsity!
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FICO Score - correct answer ✅measure of consumer credit risk Highest FICO Score - correct answer ✅ 850 Factors determining FICO Score - correct answer ✅Credit report is based on: -35% paying your bills on time over time -30% your debt-to-credit ratio ( borrowing money/ credit limit) -15% length of credit history -10% mix of credit cards and loans (like to see things other than credit card; Rent, any loan (e.g. leasing car)) -10% new accounts and recent applications for credit How many FICO scores does a person have? - correct answer ✅ 3
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How do you establish good credit? - correct answer ✅borrow $ and pay it back on time according to its terms How much is taken out of your paycheck for SS and Medicare? - correct answer ✅-12.4% of earned income to SS -2.9% of earned income to Medicare Debt-to-credit ratio - correct answer ✅how to calculate: -$3000 debt, $6000 in credit :: 3000/6000 = 50% D/C ratio -try to be below 50% || 30% is the best Identity Theft: if you're a victim - correct answer ✅-close and replace all accounts that have been tampered with or didn't open -file a police report If you are carrying a balance and you pay more than the minimum payment, where does the excess go? -
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Three credit scoring agencies - correct answer ✅Transunion (tuc.com) -- Empirica score Equifax (equifax.com) -- Beacan score Experian (experian.com) -- Experian model Best time to establish credit - correct answer ✅when you don't need it aka younger i thinks When are your credit payments due? - correct answer ✅generally about 21-25 days after your billing cycle ends Secure vs unsecure line of credit - correct answer ✅Debit is secure Credit is unsecure (nothing to back it up other than credit history) How does cancelling inactive credit cards affect your credit score? - correct answer ✅-can lower because it will increase your d/c ratio -if you cancel, cancel newest card first
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Prepaid cards - correct answer ✅-offered by banks and nonbanks -not linked to bank accounts -fees: activation, inactivity, to load money onto cards, if you don't load money each month, check balance info, to use an ATM for cash, for using a check to close an account Cash advance - correct answer ✅-using your credit card to withdraw cash -higher interest rates, no grace period (incur interest rates right off the bat) grace period - correct answer ✅set length of time after the due date during which payment may be made without penalty What is a retail charge card? - correct answer ✅-a credit card issued by a retailer allowing you to charge purchases made only with their store -higher interest rate 20-30% on unpaid balances
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How often should you balance and review your credit card statement? - correct answer ✅Monthly If you are charged penalties and fees, do they charge interest on them? - correct answer ✅the next month you start paying a higher interest on balances and fees overdraft fee - correct answer ✅applies when you charge more than your credit limit Do all credit cards offer unconditional warranty on products? - correct answer ✅ Do credit card statements have to show the # of months needed to pay the minimum payment? - correct answer ✅
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Proprietorship - correct answer ✅-business owned by one person -business dies when owner dies -unlimited liability Does a proprietor file a separate tax return for the business? - correct answer ✅Yes, along with the 1040 form for themselves. -profits are taxed at ordinary income tax rates -losses can be used to reduce taxable income Partnership - correct answer ✅-owned by 2 or more entities -death of partner->continue business -limited liability to the amount of their investment -does not pay federal income taxes -share profit/loss proportionally Types of Partners - correct answer ✅unlimited and limited
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-shareholders use the information on the K-1 to report the same thing on their separate tax returns W-2 Form - correct answer ✅-shows how much employer paid and what they took out -shows net income that you took in If you have $100k earned income, how much monthly would be taken out of your SS and Medicare combined? - correct answer ✅ 7650 If you are healthy, how long should you wait to claim SS? (age) - correct answer ✅ Do high income earners pay more for Medicare and receive higher benefits? - correct answer ✅ Who pays Part A of Medicare? - correct answer ✅Employers
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Are SS benefits adjusted to cost of living? - correct answer ✅ Are SS benefits tax free income? - correct answer ✅ Are there surcharges for Medicare for high income earners? - correct answer ✅ Are SS and Medicare contributions tax deductible? - correct answer ✅No What is the 20% pass-through deduction? - correct answer ✅a special business structure that is used to reduce the effects of double taxation -a taxpayer other than a corporation is entitled to a deduction equal to 20% of the taxpayer's "qualified business income" earned in a "qualified trade or business." -available to any taxpayer "other than a corporation" -- proprietorships, S corporations, partnerships
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Unearned Income - correct answer ✅taxable interest, ordinary and qualified dividends, business profits or losses, capital gain or losses, investment, interest on savings accounts, stocks, benefits Total Income - correct answer ✅Earned + Unearned Income AGI - correct answer ✅Total income - contribution to charity, retirement plan, student loan interest (tax deductible) Capital Gains Tax - correct answer ✅short term capital gains: for assets owned 12mnths or less, profit is added to income and taxed at maximum of 37% long term capital gains: for assets owned >12mnths, profit is subject to max 20% for singles (taxable income in excess of $425.8k), for married above $479k. below these income amounts, max 15%. even lower, may be eligible for 0%.
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When do you have to file quarterly estimates of additional taxes? - correct answer ✅ What is a standard deduction? - correct answer ✅a dollar amount you subtract from income before it is taxed Do you need proof/records to substantiate the standard deduction?
correct answer ✅ Can you and your parents both claim you for a tax credit? - correct answer ✅idts Stock options - correct answer ✅-the right to purchase shares or stocks (but not obligated) -price of the shares is set by the board of directors of company - set price never changes -within a specified period of time (if still employed - usually lasts for 10 years)
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market order - correct answer ✅best available price at that moment in time for an immediate purchase or sale of a stock market order to buy - correct answer ✅expect to buy at the ASK price market order to sell - correct answer ✅expect to sell at the BID price limit order - correct answer ✅specific price you set at which you are willing to either buy or sell a stock limit order to buy - correct answer ✅you set your TOP price you are willing to pay limit order to sell - correct answer ✅you set your LOWEST price you are willing to pay
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of disciplines -
correct answer ✅ 11 NEVER borrow money to buy stocks. Market timing. It is best to invest in stocks with money you won't need for 5 years. Identify trends. Dollar-cost averaging is investing a set amount of money in shares of stock on a regular time schedule, regardless of the price. Diversify. Stage and stagger your purchases. Allocation of assets or rebalancing: Review the allocation of assets in your portfolio at least once a year. In attempting to forecast sales and earnings attributable to an individual share of stock, look ahead 6-18 months. Do your homework! Keep it simple and stay informed. good dividend - correct answer ✅provides a current yield greater than interest than on a 10 year treasury bond
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Successful stock investors look ahead _____ months - correct answer ✅6 - 18 months What is single most important factor to pay more for stocks in future? - correct answer ✅Earnings--specifically, prospect of future earnings P/E Ratio - correct answer ✅-price of a share divided by earnings per share -tells you what the market is currently paying for each dollar of earnings PEG Rate - correct answer ✅-compares how much investors are currently willing to pay for each $ of earnings to the expected growth of future earnings -Used for trying to decide if a stock is in a "buy" or "sell" range -When PEG rate<1, BUY. when PEG rate>2, SELL/DON'T BUY
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-compares P/E ratio and Growth rate of earnings Dollar cost averaging - correct answer ✅-investing a set amount of money in the shares of a business on a regular time schedule regardless of the price of the shares at the time -mathematically, doing this will allow you to buy more shares at lower prices than at higher prices close end fund - correct answer ✅-pooled investment portfolios which raise money by issuing and selling a set number of shares in an IPO -management fees are lower than open-end funds financial advisor acting as fiduciary - correct answer ✅ Do you make more money owning low price or high price stocks? - correct answer ✅neither; depends
