DECA - Personal Financial Literacy Exam // Practice 2

A formal legal agreement between a lender and a borrower usually includes a

• A. tax code listing.

• B. repayment schedule.

• C. proposal for disbursement.

• D. guarantee of eminent domain.

Annie took out a loan for $6,000 to purchase some new display cases for her store. She agreed to pay $283.27 per month for 24 months. The bank did not require collateral for the loan. What is the approximate annual percentage rate (APR) for Annie's loan?

• A. 12.8%

• B. 4.7%

• C. 21.2%

• D. 16.5%

Financial planning is important because it can help you

• A. meet needs and wants.

• B. increase your income.

• C. understand economics and finance.

• D. predict the future.

Sophia's father just bought her a car for $6,390. One of Sophia's financial goals is to pay her father back for the car in three years. She usually receives about $400 cash for her birthday each year. If she saves all of her birthday money to help pay for the car, how much additional money should Sophia set aside monthly to pay her dad back in full in three years?

• A. $177.50

• B. $155.28

• C. $166.39

• D. $144.17

If you want to save enough money to buy a new phone, which of the following options can best help you work toward achieving that goal:

• A. Open a credit card account.

• B. Dip into your emergency fund.

• C. Borrow money from a family member or friend.

• D. Plan how much you'll need to set aside each month.

Why is it important to have an emergency fund as part of a personal financial plan?

• A. To pay for unexpected expenses

• B. To save for a vacation

• C. To save for college

• D. To pay for large expenses like rent

Which of the following is an obstacle to meeting a financial goal of paying off credit card debt:

• A. Budgets

• B. Insurance copayments

• C. Deductibles

• D. Interest on balances

Which of the following is a source of income that a person should consider when developing a personal budget:

• A. Clothing

• B. Utilities

• C. Salary

• D. Insurance

Which of the following is categorized as a fixed expense in a personal budget:

• A. Groceries

• B. Home repairs

• C. Car payment

• D. Clothing

Logan plans to buy a used car from Tompkins Super Auto Mart. The base price of the car is $6,375, and the sales tax rate is 6.25%. How much sales tax will Logan need to pay?

• A. $407.22

• B. $376.98

• C. $398.44

• D. $425.16