Final Exam Review

Gina is getting an auto loan for her car. Which statement is correct?

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

• Her interest rate is the total cost she’ll pay after all payments

• A shorter term means it takes longer to repay the loan

• Her monthly payment will likely be 4-5% of the car’s cost

What does it mean to “pay yourself first” when budgeting?

• Keep all savings in a checking account

• Automate monthly transfers to a savings account

• Take more risk in investments for higher returns

• Pay only the minimum due on credit card bills

Which of the following is NOT a feature of a secured credit card?

• Your credit limit depends on your security deposit

• They reduce banks' risk for users with no credit history

• They help build your credit history and score

• They have no spending limit, so you must watch your purchases

Which payment method would reduce the amount of money in Angie's checking account?

• Pays with a prepaid card

• Uses her credit card and says, "Credit"

• Uses her debit card and says, "Credit"

• Pays with cash

Mitch’s renters insurance premium is $15/month with a $500 deductible. In April, $2200 worth of his possessions are stolen. How much does Mitch pay and how much does the insurance pay?

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

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

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

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

Which of the following is NOT included in your credit report?

• Your credit payment history

• Your checking account balance history

• The average age of your credit accounts

• Your total number of active credit accounts

Which strategy is likely to lead to the WORST long-term outcome when choosing a bank or credit card?

• Look for sign-up bonuses or introductory offers

• Read online reviews that match your values

• Spend time comparison shopping

• Review the fine print for fees and interest rates

Four students each bought $1500 of items for college using a credit card with similar terms.

Who will pay the least interest?

• Dwayne pays $1000 upfront, then $250 per month until paid off.

• Clifford pays the full $1500 when the bill arrives.

• Calvin makes only the minimum monthly payment until paid off.

• Shawn pays $300 per month until paid off.

With liability coverage in your auto insurance policy…

• Your insurance pays for a broken windshield if your car is broken into

• You can't be found liable for causing an accident

• Your insurance pays for your neighbor's fence if you crash into it

• Your medical bills are covered if you're in an accident, even if at fault

Who is saving rather than investing?

• LaTavia, who puts money into her bank account earning 1% interest

• Michelle, who contributes to her company's 401(k) plan

• Kelly, who buys Treasury bonds

• Beyonce, who buys shares in an S&P 500 index fund