Unit 3 Personal Finance Guided Notes

Multiple Choice

Why is making smart financial choices important for your future?

• It helps you manage risk, build wealth, and keep more options open.

• It guarantees you will never lose money.

• It means you will always be rich.

• It prevents you from ever having financial problems.

Multiple Choice

How do liquidity, risk, and return influence your decision when choosing a financial account?

• They help you compare access, uncertainty, and potential earnings.

• They show which account always has the highest interest rate.

• They determine how much money you are allowed to deposit.

• They tell you which account has no fees or restrictions.

Multiple Choice

Which type of account is best suited for everyday spending and paying bills?

• Savings Account

• Checking Account

• Money Market Account

• Certificate of Deposit

Multiple Choice

Compare the risk and return characteristics of Money Market Accounts and Certificates of Deposit.

• MMAs usually offer less access and higher returns, while CDs offer more access and lower returns.

• MMAs usually offer more access and lower returns, while CDs offer less access and higher returns.

• MMAs and CDs usually have the same access and return because both are savings accounts.

• MMAs have stock-market risk, while CDs change value based on daily market prices.

Multiple Select

Which actions are important for maintaining a checking account?

• Record every deposit, withdrawal, purchase, and payment

• Track your balance

• Diversify your investments

• Watch automatic payments and account fees

Multiple Choice

Which statement best describes a savings account?

• It is used mainly for daily purchases and usually earns no interest.

• It is used for short-term goals and emergencies and usually earns interest.

• It locks your money away for a fixed period with early-withdrawal penalties.

• It is designed for buying stocks and other high-risk investments.

Multiple Select

Which of the following statements about investing and retirement accounts are correct?

• Diversification increases risk

• Long-term investing gives investments more time to recover from losses

• Stocks represent ownership in a company

• Retirement plans are for short-term goals

Multiple Choice

How can your credit score impact your borrowing power and financial decisions?

• A credit score only matters when applying for credit cards.

• A higher score guarantees approval for every loan.

• A higher score can make borrowing easier and less expensive.

• A lower score usually leads to lower interest rates.

Multiple Choice

Which factor has the largest impact on your credit score?

• Payment history

• Credit utilization

• Length of credit history

• Credit mix

Multiple Choice

What is the difference between a secured loan and an unsecured loan?

• A secured loan requires collateral; an unsecured loan does not.

• A secured loan has no interest; an unsecured loan always does.

• A secured loan is only for homes; an unsecured loan is only for cars.

• A secured loan requires no credit check; an unsecured loan does.

Multiple Select

Select all features that apply to debit cards.

• Are borrowed money

• Do not build credit history

• Cost: none

• Risk: overdrafts/fees

Fill in the Blanks

Renting a home usually offers more

than buying a home.

Multiple Select

What are some important costs to consider when buying a home, besides the purchase price? Select all that apply.

• No monthly expenses after purchase

• Property taxes

• Repairs and maintenance

• Guaranteed investment returns

• Homeowners insurance

• Down payment

• Closing costs

Multiple Choice

Which of the following is a possible benefit of declaring bankruptcy?

• Debt relief

• Credit damage

• Future borrowing becomes harder

• Court-ordered requirements

Multiple Choice

Which choice best shows responsible financial planning for both insurance and charitable giving?

• Skip insurance so more money can be donated each month.

• Pay for insurance coverage and plan charitable giving within the budget.

• Borrow money for donations and use savings for emergencies.

• Donate first and worry about insurance costs later.

Multiple Choice

What are the key factors to consider when comparing different types of financial accounts?

• Liquidity, risk, return, fees/costs, and benefits

• Interest rate, account color, customer service, and location

• Account number, online access, and ATM availability

• Minimum balance, number of transactions, and branch hours