UNIT 2 - Personal Finance

Front

Which shoes the correct order of investments going from LEAST risky to MOST risky? Options: Savings Accounts, Certificate of Deposits, Bonds, Stocks

Back

Savings Accounts, Certificate of Deposits, Bonds, Stocks

Answer explanation

The correct order from least risky to most risky is Savings Accounts, Certificate of Deposits, Bonds, and Stocks. Savings accounts are insured and stable, while stocks are subject to market volatility, making them the riskiest.

Front

Which of the following effects Jamie’s credit score the MOST? His education level, Being married, How much he charges his customers, His payments always being on time

Back

His payments always being on time

Answer explanation

His payments always being on time has the most significant impact on credit scores, as payment history accounts for a large portion of the score calculation, influencing lenders' trust in his creditworthiness.

Front

Mr. and Mrs. Jacobs obtained a $20,000 bank loan to make improvements on their house. Which of the following was the bank’s MOST important consideration in giving them the loan? the total value of their house and other assets they own., the estimate of how much the improvements would cost., the reliability of the company they hired to make the improvements., the type of improvements they were planning to make.

Back

the total value of their house and other assets they own.

Answer explanation

The bank's most important consideration is the total value of the Jacobs' house and other assets. This determines their ability to repay the loan, making it a key factor in the lending decision.

Front

The Federal Deposit Insurance Company (FDIC) is a government agency that protects the savings of people who deposit their money in banks.

Back

protects the savings of people who deposit their money in banks

Answer explanation

The FDIC is a government agency that protects the savings of people who deposit their money in banks, ensuring that deposits are insured up to a certain limit, which helps maintain public confidence in the banking system.

Front

Net pay is ...

Back

income after deductions

Answer explanation

Net pay refers to the amount of income an employee takes home after all deductions, such as taxes and benefits, have been subtracted from their gross income. Therefore, the correct answer is 'income after deductions'.

Front

Which statement BEST describes why title pawn loans should be avoided if possible? Options: A person is unable to apply for a new car title for up to three years after paying back the total balance of a title pawn loan. A vehicle title must be provided in exchange for a loan, and people can potentially lose their vehicles if loans are not paid back. A person applying for a title loan must be approved by his or her employer, which is information some may want to keep private. After receiving a title loan, people are not allowed to open savings or checking accounts at any banks for up to six months.

Back

A vehicle title must be provided in exchange for a loan, and people can potentially lose their vehicles if loans are not paid back.

Answer explanation

The correct choice highlights that title pawn loans require a vehicle title as collateral, risking vehicle loss if the loan is not repaid, making them a risky financial option.

Front

What is the primary purpose of insurance?

Back

To protect you against a financial loss

Answer explanation

The primary purpose of insurance is to protect you against a financial loss. It provides a safety net, ensuring that unexpected events do not lead to significant financial hardship.

Front

Which type of insurance does a person need if they wish to continue to receive a paycheck if they are out of work due to an injury or accident?

Back

disability

Answer explanation

Disability insurance provides income replacement if you are unable to work due to an injury or accident. This type of insurance ensures you continue to receive a paycheck during your recovery.

Front

Which of the following IS NOT one of the "Three C's" of credit? Compensation, Collateral, Capacity, Character

Back

Compensation

Answer explanation

The "Three C's" of credit are Capacity, Character, and Collateral. Compensation is not one of them, making it the correct answer to the question.

Front

Bill is choosing between two different savings accounts. One has simple interest and the other has compound interest. If Bill is planning on saving money for a long period of time, and he wants the most return on his money, he should choose the account with

Back

Compound interest because it will pay interest on the original deposit plus interest that has been earned over time

Answer explanation

Compound interest is advantageous for long-term savings because it earns interest on both the initial deposit and the accumulated interest over time, leading to greater returns compared to simple interest.