FIN LIT Final Exam Part VI: Savings & Investments

126. Experts recommend you save money in an "emergency fund." Which of these represents an expense where the emergency fund would be particularly useful?

• Monthly Rent
• $150 Speeding Ticket
• Occasional fancy dinner or vacations
• Car Insurance

127. What three words can be an effective mantra to encourage personal savings?

• Pay expenses first
• Save later on
• Just spend it
• Pay yourself first

128. Fill in each blank with one of the following words: ASSETS, DEBT, MONEY, SAVING, WEALTH. ____________ is calculated by subtracting your total ____________ from your total _____________.

• WEALTH, DEBT, ASSETS
• DEBT, WEALTH, ASSETS
• WEALTH, ASSETS, MONEY
• SAVING, MONEY, WEALTH

129. Which of these does NOT represent a reason you should contribute regularly to a savings account?

• Ensure you have enough rent money for next month
• Work toward saving enough for a car or home down payment
• Avoid borrowing money or paying credit card interest by having enough savings to pay cash for new smartphone
• Reduce amount of student loans needed by saving in advance for college

130. Use numerals to fill in the blank correctly. Though you can never save TOO much, experts recommend you save ______% of your paycheck.

• 30
• 10
• 15
• 20

131. True or False: The majority of Americans have an emergency fund and sufficient amounts of money saved for retirement.

• True
• False

132. Why is investing a better option than saving when it comes to planning for retirement?

• Investing usually has lower interest rates, so it offers a better deal
• Investing is guaranteed to produce the large sum of money needed for a happy retirement
• Investing begins as soon as you open a bank account, so you can start early in life
• The stock market historically has returns higher than the rate of inflation, so your money can actually grow

133. The highest yielding savings accounts are paying historically low interest rates, so Maria is only able to get a 1% annual interest rate for her savings account. Assuming interest rates do not change, use the Rule of 72 to approximate how many years it will take for her to DOUBLE her money in this account?

• 1 year
• 5 years
• 10 years
• 72 years

134. Juan saved $1000 from his summer job cleaning pools. Which of these savings vehicles would work best for him if he doesn't need access to the money for a number of years AND wanted to earn the highest interest rate?

• Regular Savings account
• Money Market account
• Checking account
• Certificate of Deposit

135. To successfully open a savings account, which of the following is NOT required?

• Evidence of a job
• Minimum deposit (if applicable)
• A legal form of identification
• If under 18, a guardian's signature