Personal Finance 5

Which of the following is the best use of credit?

• You can't buy everything you want on your current income.
• You have a credit card with a low interest rate.
• You want to purchase something now instead of having to wait to use it.
• You can take advantage of a sale price that is lower than the normal cost of the item plus your cost of credit.

Which of the following is NOT an advantage of credit?

• acquire valuable assets
• allows consumers to take advantage of sales
• interest increases the costs of purchases
• useful in an emergency

What is credit?

• the ability to borrow money
• a type of card used to get money from a checking account
• a useful tool for borrowing more money that you can afford to repay
• a way to borrow money that is only used by businesses and the government

Which is an example of a "real" investment?

• a new house
• piggy bank
• savings account
• stock mutual fund

Which statement explains what these items have in common: stocks, bonds, mutual funds, and certificates of deposit?

• They are things that wealthy people purchase.
• Banks sell them as a way to improve their profits.
• They are ways to invest extra money.
• They are bought by people as a way to save money.

What does "Pay Yourself First" mean?

• a person spends money on goods and services and saves whatever is left over at the end of the month
• a person decides to invest their money and then put their profit into savings
• a person borrows money from the bank in order to start a savings account
• a person saves before spending money on goods and services

What is a plan for saving and spending?

• a budget
• a checking account
• a savings account
• a will

When an individual invests money in bank accounts, certificates of deposit, or mutual funds, it is called 

• a checking account.
• a financial investment.
• a real investment.
• risking one's savings.

When firms invest money in equipment, factories, or real estate, that is called

• a checking account.
• a financial investment.
• a real investment.
• risking one's savings.

Credit becomes a problem when ________________.

• banks begin to issue their own credit cards
• credit is used to pay for things like college tuition
• credit card companies offer people additional credit cards
• a person cannot find the money to pay thei monthly bills