Review Game

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Chapter 12 14

• Review Game

2
Question 1

• Examples of car dealer add-ons are ____.
• a. rust proofing
• b. paint sealers
• c. stain resistant upholstery fabric
• d. all of the above

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Answer

• d. all of the above

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Question 2

• A timetable for checking systems and replacing
  parts on a new car is the ____.
• a. tire schedule
• b. fluid gauge
• c. maintenance schedule
• d. none of the above

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Answer

• c. maintenance schedule

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Question 3

• The manufacturer's suggested retail price listed
  on a sticker in a new car's window is the ____.
• a. odometer
• b. option
• c. sticker price
• d. none of the above

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Answer

• c. sticker price

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Question 4

• Used car parts that were repaired or restored to
  working order to be installed as replacements are
  ____.
• a. rebuilt parts
• b. features
• c. options
• d. none of the above

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Answer

• a. rebuilt parts

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Question 5

• The amount the dealer paid to buy the car from
  the manufacturer is the ____.
• a. invoice price
• b. sticker price
• c. leasing price
• d. none of the above

11
Answer

• a. invoice price

12
Question 6

• Franco has been leasing a car from a local
  dealership. At the end of his three-year lease
  agreement, he will pay a fee that will cover the
  cost of getting the car ready to sell or lease to
  someone else. This fee is known as ____.
• a. wear and tear fee
• b. residual fee
• c. disposition fee
• d. acquisition fee

13
Answer

• c. disposition fee

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Question 7

• Six months ago, Regina purchased a new vehicle
  from a local car dealership. After just two
  weeks, she had the car towed to the dealership
  because of electrical problems. In addition the
  cooling system malfunctioned a major computer
  problem kept her car in the dealer's repair shop
  for 35 days. Because all of the problems occurred
  during the car's warranty period, Regina's car is
  defined as ____.
• a. a lemon
• b. rebuilt
• c. reconditioned
• d. none of the above

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Answer

• a. a lemon

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Question 8

• If the invoice price of a vehicle is 22,500,
  approximately what would the sticker price of
  this same vehicle be?
• a. 22,500
• b. 25,425
• c. 23,100
• d. 24,750

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Answer

• d. 24,750

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Question 9

• At the end of the lease period on her car,
  DeShawn will take the vehicle to the dealership.
  Among other things, the dealer will check the
  number of miles she has driven. How will the
  dealership measure the miles she traveled while
  leasing the vehicle?
• a. mileage calculator
• b. odometer
• c. the tread on the car's tires
• d. all of the above

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Answer

• b. odometer

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Question 10

• For an extra 1,000 Yoriko can purchase
  additional repair coverage on her new vehicle.
  This additional coverage is purchased from the
  dealer and is known as ____.
• a. basic warranty
• b. yearly inspection coverage
• c. extended warranty
• d. dealer warranty

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Answer

• c. extended warranty

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Question 11

• When Britney was talking with a car salesperson
  regarding a lease agreement, she learned she
  would have to make an initial payment to cover
  the cost of setting up the lease. This fee also
  included a security deposit that is refundable at
  the end of the lease. This fee is known as a(n)
  ____.
• a. acquisition fee
• b. residual fee
• c. cost reduction fee
• d. capitalization fee

23
Answer

• a. acquisition fee

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Question 12

• Austin noticed that his used car's performance
  had declined slightly over the past week. It does
  not accelerate as quickly and a loud knocking
  noise occurs when he reaches 50 mph. He takes his
  car to a local repair shop and describes the
  symptoms to the mechanic. The mechanic asks
  Austin to leave his car so that it can be
  thoroughly checked. Later that same day the
  repair shop describes in writing the services it
  will perform and the price for the labor and
  parts to fix Austin's car. This document is known
  as a(n) ____.
• a. diagnostic
• b. estimate
• c. guarantee
• d. both B and C

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Answer

• b. estimate

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Question 13

• Because he is in no hurry to buy her new car, in
  what two months will Wyn find car sales are
  typically slow at car dealerships, thereby
  allowing him to negotiate a better price?
• a. December and May
• b. August and January
• c. August and December
• d. none of the above

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Answer

• c. August and December

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Question 14

• The amount an item is currently worth is its
  ____.
• a. market value
• b. quote
• c. insurance
• d. none of the above

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Answer

• a. market value

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Question 15

• An insurance contract is a(n) ____.
• a. invoice
• b. policy
• c. condo
• d. none of the above

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Answer

• b. policy

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Question 16

• A regular payment required to purchase insurance
  is a ____.
• a. bid
• b. premium
• c. bond
• d. none of the above

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Answer

• b. premium

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Question 17

• An expert's determination of the value of a piece
  of property is known as a(n) ____.
• a. premium
• b. claim
• c. appraisal
• d. none of the above

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Answer

• c. appraisal

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Question 18

• A special addition to an insurance policy that
  covers a specific loss not covered in the
  standard policy is a ____.
• a. point
• b. rider
• c. deductible
• d. none of the above

37
Answer

• b. rider

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Question 19

• Insurance that only pays for damage you caused to
  another vehicle is called ____.
• a. a deductible
• b. comprehensive coverage
• c. property damage liability insurance
• d. none of the above

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Answer

• c. property damage liability insurance

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Question 20

• Insurance that pays for damage to your car caused
  by something other than a collision is called
  ____.
• a. collision insurance
• b. points
• c. comprehensive coverage
• d. none of the above

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Answer

• c. comprehensive coverage

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Question 21

• The amount you pay for a loss before the
  insurance company pays anything is known as a
  ____.
• a. deductible
• b. risk
• c. coverage
• d. none of the above

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Answer

• a. deductible

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Question 22

• The insurance that covers your own care when in
  an accident that was your fault is called ____.
• a. liability insurance
• b. collision insurance
• c. comprehensive insurance
• d. none of the above

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Answer

• b. collision insurance

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Question 23

• Each time Guy gets a ticket or causes an
  accident, his state Bureau of Motor Vehicles is
  notified. This information becomes a part of
  Guy's driving record his insurance company can
  then look at his driving record to determine
  whether to increase or decrease his premium. With
  each instance that is reported, what is added to
  his official record that could increase his car
  insurance premium?
• a. points
• b. risk factors
• c. rate
• d. none of the above

47
Answer

• a. points

48
Question 24

• Three years ago, Herschell purchased leather
  furniture for his den at a cost of 4,000. An
  electrical fire in his den destroyed the
  furniture. In order to buy a sofa at today's
  prices similar to the furniture destroyed, what
  type of insurance coverage should Herschell have?
• a. market value
• b. liability value
• c. current value
• d. replacement value

49
Answer

• d. replacement value

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Question 25

• Valora purchased a new car rather than a used car
  so that if the car had mechanical problems, the
  cost of the repairs would be covered for three
  years or 36,000 miles. This repair coverage is
  known as the vehicle's ____________________.

51
Answer

• warranty

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Question 26

• Once Atsuko completes the loan documents for her
  new car and obtains the necessary insurance, she
  can drive it home. The ____________________
  provides her with more information about her car
  including the location of controls and the
  operation of those controls.

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Answer

• owner's manual

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Question 27

• Avelia recently leased a car. The number of miles
  Avelia is allowed to drive her leased vehicle
  without being charged extra per mile is known as
  the ____________________.

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Answer

• mileage allowance

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Question 28

• A formal request made to an insurance company for
  payment of a loss is called a(n)
  ____________________.

57
Answer

• claim

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Question 29

• A regular payment required to purchase insurance
  is called a(n) ____________________.

59
Answer

• premium

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Question 30

• A driver who has been assigned an insurance
  company by the state because of a bad driving
  record is said to be a(n) ____________________
  risk.

61
Answer

• assigned

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Question 31

• Brianna is reviewing her automobile insurance. If
  she is concerned about being involved in an
  accident with another driver who does not have
  automobile insurance, she should purchase
  ____________________.

63
Answer

• uninsured/underinsured motorist coverage

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Question 32

• Liam and Tess are in the market for a new car.
  They have found a vehicle they like with the
  features and options desired. The sticker price
  of the car with their desired options is 22,300
  the invoice price of the car is 18,000. They
  want to pay a fair price for the vehicle and the
  options they desire. How can they calculate a
  fair price for the car in order to begin
  negotiations with the car dealership?

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Answer

• A fair profit for the dealer is about 3 percent
  of the invoice price of the car plus options. In
  Liam and Tess' case, 3 percent of 18,000 would
  give the dealer 540 profit. They would start
  with the invoice price (18,000) and add 540 to
  it for a total of 18,540. From here they should
  add in the cost of any features and options and
  subtract dealer rebates and incentives. The
  result of these calculations is a fair price for
  the vehicle and a good place to begin
  negotiations.

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Question 33

• For two years, Alejandra has used public
  transportation to make the commute from her
  apartment to work. Although this arrangement is
  economical, it is not often convenient for her
  schedule. She has saved money toward the purchase
  of a car, but she is not sure if she can afford a
  car or not. Furthermore, she is undecided on
  whether to buy a used or new car. What can you
  tell her about her ability to afford a car and
  what to consider in purchasing both a used and
  new car?

67
Answer

• As a general rule, Alejandra can afford a car
  loan payment of no more than 20 percent of her
  take-home pay. The most important advantage of
  owning a new car is its reliability. Certainly a
  new vehicle will have a new design and look and
  will technologically be safer and have improved
  gas mileage. Furthermore, new cars come with some
  type of warranty to cover the cost of repairs.
  However, purchasing a used car from an individual
  does not include a warranty. A new car is more
  costly than a used car. Alejandra can check the
  mileage by looking at the used car's odometer.
  Used cars are more likely to have repairs than
  new cars. In evaluating a used car, Alejandra
  will need to examine it carefully for mismatched
  paint or and exterior panels that don't fit.
  These are signs that a used car has been in an
  accident. She should check for rust underneath
  the car check the controls and lights and look
  for fluid leakage. She should examine the exhaust
  for blue smoke, which is an indicator that the
  used car is burning oil. Small amounts of white
  smoke are normal large clouds mean serious
  engine problems.

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Question 34

• Ben has full coverage on his car. He has an
  accident for which he was at fault and his car
  was a total loss. He carries a 500 deductible
  insurance with a current value of his car at
  15,900. How much will he receive from the
  insurance company? How might his insurance be
  affected by the accident?

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Answer

• After Ben's 500 deductible, his insurance will
  pay the remaining 15,400 value of his car.
  Additionally, his rates will increase (increase
  in points) due to the accident.

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Question 35

• Sid and Clarice recently purchased an old
  Victorian style house. They want to make sure
  that they are adequately covered in the event
  disaster strikes and they lose their home. Yet,
  they want to minimize the cost of this insurance
  as much as possible. Can you help them determine
  how much insurance they should be and what they
  can do to reduce the cost of their homeowner's
  insurance?

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Answer

• Sid and Clarice should follow the 80-percent
  rule. That is, insurance companies are not
  required to reimburse them for the total loss of
  their home unless they have at least 80-percent
  coverage. Because homes increase in value, they
  should arrange to have their coverage increased
  automatically to make sure to account for this
  natural increase in value. To reduce insurance
  costs they can install a security system. Because
  their home is older, the electrical system has
  aged and may be more likely to cause a fire. They
  could consider replacing the electrical wiring.
  They could install smoke detectors and make sure
  fire extinguishers are installed in their home.
  They could further upgrade their home by
  replacing the plumbing and pipes to prevent
  breakage and freezing during cold winter months.