Financial Planning Final Exam Review

Front

Which financial plan best supports someone aiming to purchase a used car within six months?

Back

Saving a fixed amount from each paycheck in a high-yield savings account

Front

What does APR tell a borrower?

Back

The yearly interest rate on borrowed funds

Front

Saving versus investing primarily differs in:

• The level of risk and potential return
• The interest rate offered by banks
• How soon you access your money
• The requirement to use credit

Back

The level of risk and potential return

Front

What document do new employees typically complete to indicate their tax withholding preferences?

Back

W-4 form

Front

A zero-based budget means:

Back

Every dollar is assigned a job, leaving no extra funds unallocated

Front

Why is having a good credit score important?

Back

It influences the interest rate you get on a loan

Front

A healthy emergency fund typically contains: Enough to pay off a car loan, 2 years of income, 3–6 months of essential expenses, A few hundred dollars

Back

3–6 months of essential expenses

Front

A down payment refers to:

Back

An initial cash payment toward a large purchase

Front

Why is paying just the minimum on a credit card risky?

Back

It extends your debt and increases total interest

Front

"Pay yourself first" means:

Back

Automatically deposit a set amount into savings before other expenses