Final Exam - Finance

Starting a college savings fund when your child is a baby is an example of what reason to save money?

• saving for an emergency

• saving to earn interest

• saving to keep money safe

• saving for a long-term goal

What is a general rule of thumb for how much of your paycheck you should save each month?

• 5%

• 50%

• 20%

• 10%

How does a credit card work?

• You load the card with your own money.

• It is unlimited and you don't have to pay it back.

• It is loaned/borrowed money you pay in one large bill at the end of each month.

What does the bank do with the money you put in your savings account?

• Use it to create a sculpture in the bank

• Let you take it out whenever you want with your debit card

• Automatically transfer it to your checking account each month

• Use it to give out loans to other customers (and pay you interest)

When you choose to put only small amounts of expenses on your credit card and pay the balance off each month, you can improve your credit score.

• True

• False

What does it mean when a savings account has a minimum balance requirement?

• You will have to pay 10% interest if you drop below a certain amount in your account.

• If you put too much money in your savings account it will not be protected.

• Your account will automatically be closed if it drops below a certain amount.

• You have to keep a certain amount of money in your account to avoid fees and earn interest.

Which option is the BEST credit score?

• 100

• A number below 200

• A number over 700

• A number between 0 and 100

Which of the following is an advantage of saving money each month?

• Savings gives you a better interest rate on credit card purchases.

• Savings increase your monthly work income.

• Savings allow individual to pay for an unexpected expense without going into debt.

• Savings create the opportunity to build your credit score.

Use the information to answer the question.

Scott wants to buy a Surface Pro 8 and is considering buying the computer on credit instead of paying with cash. Based on the table, why is it a good idea for Scott to pay cash for the purchase?

• The minimum payment of $40 is too high for Johnny’s budget.

• The total cost of the iPhone is much higher if he pays using credit.

• The original cost of the computer would be lower if he paid in cash

• The interest rate would be lower if Johnny paid cash for the computer.

Which individual would be BEST prepared for an unexpected expense?

• Kim is most prepared because she has the highest income.

• Scott is most prepared because he has the lowest monthly expenses.

• Nikki is most prepared because she is saving more money each month.

• Kim is most prepared because she has the highest monthly expenses.