EPF - Competition 1

What would a lender look for when considering an individual's application for a home mortgage loan?

• Total assets

• Net worth

• Debt-to-income ratio less than 50%

• Cash-flow liabilities

Odette has $50,000 in cash, two U.S. Treasury

Bonds with a combined face value of $500, a home worth $100,000, and asset-related liabilities in the amount of $75,000. What is her current net worth?

• 75,500

• 75,000

• 150,000

• -24,500

Which of the following assets offers the MOST liquidity?

• U.S. savings bonds

• A velvet painting of Elvis Presley

• A rare coin collection

• A diamond jewelry set

_____ refers to the difference between the market value of an asset and the amount you owe on that asset.

• Liquidity

• Asset-related liability

• Equity

• Negative net worth

Jeff receives a paycheck of $2,100 twice per month. His monthly expenses include: $1,500 on rent, $400 on a car payment, $120 for his cellphone, $450 for utilities, $250 for groceries, and $200 for entertainment. After calculating Jeff's cash flow, how much does he have left over for the month?

• $1,480

• $640

• -$820

• $1,280

What is the difference between gross income and net income?

• Gross income is earned on your own; net income is earned from your full-time job

• Gross income is exempt from personal income taxes; net income is taxable income

• Gross income is already committed to future expenditures; net income is discretionary

• Gross income is before tax deductions; net income is the amount you actually bring home

Which of the following statements about credit is TRUE?

• Credit is bad and is a large reason the economy continues to struggle.

• Credit is a good way to pay for all your bills, so you can spread the cost of things over a longer period and thus afford more things.

• Credit can be an important financial tool, but only if used responsibly.

• Everyone receives access to credit; it is only taken away when used irresponsibly.

Which of the following is NOT a factor banks take into account when deciding to give you credit?

• Your education and gender

• How much credit you use compared to how much you have available to use

• How long you have had credit lines open

• Whether you have made late payments

_____ refers to planning your future income and expenses to ensure they balance.

• Cash Flow

• Debt

• Budgeting

• Investing

Why is it important to start saving money early in life?

• The earlier you start saving, the easier it will be to save over time

• The earlier you start saving, the longer you will have to work

• The earlier you start saving, the more your money will grow over time

• The earlier you start saving, the more money you will have to earn early in your life