Final Exam Review

Magda is going to finance her car purchase using an auto loan. Which statement below is accurate?

• Her principal is the cost of the car, minus any down payment she makes

• Her interest rate is the total cost she'll pay after making all of her principal and interest payments

• Choosing a shorter term means it will take her longer to repay the loan

• It's likely that her monthly payment will be between 4-5% of the cost of the car

Jamie is creating a budget for the first time and doesn't know which to use-NET PAY or GROSS PAY. What do you tell him?

• Use net pay, because it's the total amount you've earned minus taxes and other deductions

• Use gross pay, because it's the total amount you've earned minus any recurring bills you own for the month

• Use net pay, because it's the total amount you've earned for the month

• Use gross pay, because that is the amount that is reported to the government for taxes

Cognitive bias can explain why...

• Most people make decisions based purely on logic and reason

• Emotions usually play a very small role in most peoples' decision making process

• People can make decisions that are not always in their best interest

• Making wise financial decisions, such as to save more, is very easy for the majority of people

What do you need to subtract from a college's cost of attendance in order to find the net prince?

• Expected Family Contribution

• Application Fees

• Personal Expenses

• Your Grants & Scholarships

All of the following are characteristics of a secured credit card EXCEPT...

• Your credit limit is dependent on the amount of your security deposit

• They lower the risk of banks when issuing credit to users with no credit history

• They help you build a credit history and improve your credit score

• They don't have a spending limit, so you have to be very mindful of how much you buy with them

Zoe buys three new lipsticks from a store at the mall. Which payment method would reduce the amount of money in her checking account?

• Pays with a prepaid card she loaded earlier this month

• Uses her credit card and says, "Credit" when the cashier asks, "credit or debit"?

• Users her debit card and says, "debit" when the cashier asks "credit or debit"?

• Pays with cash she had in her purse

The monthly premium for Kevin's renters insurance is $15 and his deductible is $500. During the month of April, someone breaks into his apartment and steals or destroys $2200 worth of his possessions. How much will Kevin pay and how much will the insurance pay to replace his items?

• Kevin pays $0 // insurance company pays $2200

• Kevin pays $15 // insurance company pays $2200

• Kevin pays $500 // insurance company pays $2200

• Kevin pays $500 // insurance company pays $1700

Which definition best describes the FAFSA?

• The amount of money the federal government offers you in student loans

• The paperwork your bank has you complete in order to take out a personal student loan

• The paperwork you complete in order to have part of or all of your student loan debt forgiven

• The application you submit in order to determine eligibility for federal student aid

All of the following can be found in your credit report EXCEPT...

• Your credit payment history

• Your checking account balance history

• The average age of your credit accounts

• Your total number of active credit accounts

Suppose you are trying to switch banks or open a brand new credit card. Which strategy will likely lead to the WORST long-term outcome?

• Look for sign-up bonuses or introductory offers that will make the product a good deal

• Read online reviews carefully and consider those that align most closely to what you value

• Spend some time comparison shopping before finalizing your decision

• Review the fine print closely, paying close attention to fee structures and interest rates