C214 Financial Management
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Free C214 Financial Management Questions
What is the primary role of the Consumer Finance Protection Bureau (CFPB) in relation to financial products and services?
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To provide loans directly to consumers
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To regulate and enforce consumer protection laws in the financial sector
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To offer investment advice to individuals
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To manage the federal budget for financial institutions
Explanation
Explanation:
The Consumer Finance Protection Bureau (CFPB) is a regulatory agency tasked with protecting consumers in the financial sector. Its primary role is to enforce laws that ensure transparency, fairness, and accountability in financial products and services, such as mortgages, credit cards, and loans. The CFPB establishes regulations, monitors compliance, and addresses consumer complaints to safeguard individuals from unfair or deceptive financial practices.
Correct Answer:
To regulate and enforce consumer protection laws in the financial sector
Why Other Options Are Wrong:
To provide loans directly to consumers
The CFPB does not issue loans; it is a regulatory agency focused on oversight and enforcement.
To offer investment advice to individuals
Providing personal investment advice is not within the CFPB’s mandate; its role is regulatory.
To manage the federal budget for financial institutions
The CFPB does not manage federal budgets; it focuses on consumer protection and financial oversight.
If you need to dispute an error in your credit report, which of the following steps is appropriate to apply?
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Send a letter by certified mail to the credit reporting agency with your full name, address, and the disputed items clearly identified.
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Ignore the errors as they are likely to be automatically corrected over time.
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Ignore the errors as they are likely to be automatically corrected over time
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Directly update the information online on the credit reporting agency's website.
Explanation
Explanation:
When disputing an error on a credit report, the correct procedure is to formally notify the credit reporting agency in writing. Sending a letter by certified mail ensures there is a documented record of the dispute, clearly identifies the items in question, and provides your contact information. This formal process triggers the credit reporting agency’s obligation to investigate and respond, helping protect your rights under the Fair Credit Reporting Act.
Correct Answer:
Send a letter by certified mail to the credit reporting agency with your full name, address, and the disputed items clearly identified
Why Other Options Are Wrong:
Ignore the errors as they are likely to be automatically corrected over time
Errors do not automatically correct themselves; ignoring them can negatively impact your credit and future financial opportunities.
Call the credit reporting agency and verbally inform them about the errors
Verbal disputes are not sufficient under law because they provide no documented record, which is necessary for formal investigation.
Directly update the information online on the credit reporting agency's website
Consumers cannot unilaterally change credit report information; updates must be verified and corrected through the agency’s formal dispute process.
What is the name of the document that outlines a retirement plan's investment goals and strategies, and serves as a guide for which types of investments are appropriate, as well as a means of assessing how well the fiduciary has met the policy's investment goals?
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Retirement plan contract
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Investment policy statement
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Employee benefit brochure
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Employee benefit brochure
Explanation
Explanation:
The Investment Policy Statement (IPS) is a formal document used by retirement plans to outline investment objectives, strategies, and guidelines. It serves as a framework for fiduciaries to select appropriate investments, monitor performance, and evaluate whether the plan is meeting its financial and investment goals. The IPS ensures that investment decisions are made consistently and in the best interest of plan participants.
Correct Answer:
Investment policy statement
Why Other Options Are Wrong:
Retirement plan contract
This outlines the terms and participation rules of the retirement plan but does not provide detailed guidance on investment strategy or monitoring.
Employee benefit brochure
Brochures provide general information to employees but are not formal documents for guiding investment decisions or assessing fiduciary performance.
ERISA statement of benefits
This statement informs participants of their benefits under ERISA but does not establish investment goals or strategies for fiduciaries to follow.
The credit utilization ratio for someone with $1,000 charged on three credit cards that have a total available credit limit of $5,000 is:
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10%
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20%
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35%
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50%
Explanation
Explanation:
The credit utilization ratio measures the percentage of total available credit that is currently being used. It is calculated by dividing total credit used by total credit available and multiplying by 100. In this case, $1,000 in charges divided by $5,000 in total credit equals 0.20, or 20%. Maintaining a lower utilization ratio generally supports a healthier credit score, as high utilization can indicate financial strain or overextension of credit.
Correct Answer:
20%
Why Other Options Are Wrong:
10%
This would imply only $500 of credit is used on a $5,000 limit, which is incorrect.
35%
This would correspond to using $1,750 of credit, which exceeds the actual $1,000 used.
50%
This would correspond to using $2,500 of credit, which is much higher than the $1,000 reported.
What is an example of administrative metadata for a digital file?
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File size
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File name
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File contents
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File permission
Explanation
Explanation:
Administrative metadata provides information about how a digital file is managed, including permissions, creation details, and usage rights. File permission specifically indicates who can read, write, or execute the file, making it a classic example of administrative metadata.
Correct Answer:
File permission
Why Other Options Are Wrong:
File size
This describes the amount of storage space the file occupies, which falls under technical or structural metadata rather than administrative metadata about access or management.
File name
The file name is descriptive or structural metadata used to identify the file, but it is not specifically about management or administrative control.
File contents
The actual data within the file is not metadata at all—it is the primary data that the metadata describes.
Which of the following best describes the concept of 'Character' in the context of creditworthiness?
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The amount of debt an individual currently holds
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An individual's history of making timely payments and managing credit responsibly
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The total value of an individual's assets and savings
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The legal protections available to consumers regarding their credit information
Explanation
Explanation:
In credit evaluation, 'Character' refers to the borrower’s demonstrated reliability in repaying debts. It includes their credit history, payment behavior, and responsible management of credit over time. Lenders use this assessment to predict the likelihood that the individual will meet future financial obligations.
Correct Answer:
An individual's history of making timely payments and managing credit responsibly
Why Other Options Are Wrong:
The amount of debt an individual currently holds
This pertains more to the capacity or leverage aspect of creditworthiness, not character.
The total value of an individual's assets and savings
Assets relate to capital, not character, which is focused on behavior and repayment history.
The legal protections available to consumers regarding their credit information
Legal protections, such as those under FCRA, are unrelated to assessing the individual’s creditworthiness or character.
Which data ethics principle gives an individual the right to know why their data is collected and how long it will be stored?
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Consent
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Anonymization
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Credibility
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Privacy
Explanation
Explanation:
The principle is consent. Informed consent ensures individuals are aware of how and why their data is collected, how it will be used, and how long it will be stored before they agree to provide it. This transparency allows people to make knowledgeable decisions about sharing their personal information. Without consent, data collection would violate ethical standards of autonomy and privacy.
Correct Answer:
Consent
Why Other Options Are Wrong:
Anonymization
Anonymization is the process of removing personally identifiable information to protect privacy. While important for safeguarding data, it does not involve informing individuals about collection or storage practices.
Credibility
Credibility refers to the trustworthiness of the data source. It is unrelated to an individual’s right to understand or approve how their own data is collected or stored.
Privacy
Privacy ensures that personal information is protected from unauthorized access or misuse. While closely related, privacy focuses on safeguarding data after collection, whereas consent specifically involves giving individuals the right to know and approve data practices before and during collection.
A data analyst is performing analysis on data stored in a big data platform with state-of-the-art analysis tools. Insufficient sample size is rendering the current analysis ineffective. What is the primary challenge of a larger sample size?
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Collecting a larger sample size is more expensive.
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Analyzing a larger sample size is complex.
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Storing a larger sample size is difficult.
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Cleansing a larger sample size is complicated.
Explanation
Explanation:
The biggest challenge in increasing sample size is the cost and effort required to collect additional data. Gathering more observations typically requires more time, resources, and money, regardless of the sophistication of the analytical platform. While analysis and cleaning can become more involved, the primary barrier is usually the expense and logistics of obtaining the extra data points needed for a valid sample.
Correct Answer:
Collecting a larger sample size is more expensive.
Why Other Options Are Wrong:
Analyzing a larger sample size is complex
Modern big data platforms and advanced analysis tools are designed to handle large datasets. The complexity of analysis scales but is not the main challenge compared to the initial difficulty and cost of collecting the data itself.
Storing a larger sample size is difficult
While larger datasets do require more storage, big data systems are built to manage significant volumes efficiently. With current technology, storage is rarely the limiting factor when compared to the expense of gathering more data.
Cleansing a larger sample size is complicated
Data cleaning may take more time with bigger datasets, but the major hurdle is still acquiring enough representative data in the first place. Without data to clean, cleansing challenges are secondary.
The Consumer Information Statement must be provided to a member of the public before:
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Written documents are executed
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Properties are shown
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Discussion of the personís motivation or financial situation
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Offers are created or presented
Explanation
Explanation:
The Consumer Information Statement (CIS) is intended to inform potential clients about the services provided, duties, and obligations of real estate professionals. It must be provided early in the interaction, before substantive discussions regarding the consumer’s motivation or financial situation take place, to ensure transparency and informed consent. Providing it prior to discussions allows consumers to understand the role of the professional and their rights before any financial or transactional information is shared.
Correct Answer:
Discussion of the personís motivation or financial situation
Why Other Options Are Wrong:
Written documents are executed
Providing the CIS at the document execution stage is too late, as the consumer should be informed before engaging in substantive financial discussions.
Properties are shown
While property showings are part of the process, the CIS must be provided before discussing personal motivations or finances, not just before property tours.
Offers are created or presented
The CIS must precede offer discussions to ensure the consumer understands the professional relationship; waiting until offers are prepared is too late.
Identity theft is the taking of another person's personal identifying information for use in an ___________ manner or the _____________ use of personal identifying information to obtain credit, goods, services or medical information in the name of another person
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unlawful - unauthorized
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unlawful - authorized
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lawful - authorized
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lawful - unauthorized
Explanation
Explanation:
Identity theft involves the illegal acquisition and use of another individual’s personal information, such as Social Security numbers or financial account details, to commit fraud. The correct terms to describe this are “unlawful” and “unauthorized,” reflecting that the act is both against the law and conducted without the individual’s consent. This can include using someone else’s information to obtain credit, goods, services, or medical benefits under their name.
Correct Answer:
unlawful - unauthorized
Why Other Options Are Wrong:
unlawful - authorized
This is incorrect because identity theft is not authorized by the individual whose information is stolen; the use must be unauthorized.
lawful - authorized
This option is wrong because identity theft is neither lawful nor authorized; it is illegal and performed without permission.
lawful - unauthorized
While unauthorized use is correct, the act is not lawful. Identity theft is an illegal activity, making this option inaccurate.
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