Financial Fitness Review

Describe the main reason for widespread financial insecurity of Americans.

• A. The saving rate of Americans is low and many borrow in order to spend more than they earn.

• B. Most Americans save a high proportion of their income.

• C. Government programs are unavailable to help people when they are disabled or experience unemployment.

• D. Unemployment rates are high and incomes of Americans are low

Which of the following is the best reason to save money?

• A. emergency fund

• B. large purchases

• C. Lend money to friends

• D. Build Wealth

This principle suggests that a certain amount of money today has different buying power than the same amount of money in the future, thereby changing the “value” of the money.

• A. time value of money.

• B. inflation

• C. opportunity Cost

• D. interest Rate

Decide which of the following account records would have the most current balance.

• A. your monthly bank statement

• B. your own account register

• C. account balance statement from ATM

• D. checkbook

Distinguish what a credit score is intended to measure.

• A. your financial success

• B. your income level

• C. the risk of not repaying debt

• D. the amount of money you have in the bank

Which of the following things can be done with a credit card but can’t be done with a debit card?

• A. reserve a hotel room

• B. go into debt

• C. purchase tickets

• D. purchase something online

What happens when a company places an ad and offers no interest on your purchase for three years?

• A. they are not interested in making a profit

• B. they are showing their appreciation to you by giving you free money

• C. the cost of financing is built into the price of the item

• D. the ad is free

Describe liquidity.

• A. the less liquid the investment, less return

• B. the more liquid the investment, less return

• C. the more liquid the investment, more return

______ When buying and selling investments, the first thing you should do is:

• A. set your investment goals and consider a time frame

• B. learn the different types of investments

• C. understand basic investment strategies and identify ones that will help you reach your goals

• D. switch your investment strategy often based on market condition

______13) What is the main purpose of insurance?

• A. develop a savings plan

• B. transfer financial risk

• C. provide investment opportunity

• D. make a lot of money