Review Quiz 6

A budget can help you reach a financial goal by:

• Showing you how you can earn more income

• Allowing you to see where you can cut back on spending

• Giving you the tools to change more fixed expenses

• All of the above

A deductible is:

• the discount you deduct from your premium.

• The amount of loss you pay before your insurance pays.

• The amount that is deducted when you buy a policy.

• The discount received by the health care provider.

Diversification is good because:

• it focuses investments on a single stock to take advantage of growth potential

• mutual funds have higher fees than individual stocks

• interest rates rise and fall

• it spreads out the risk of the investment

If you get your first credit card while you're a full-time student, what can you expect about the card's APR on outstanding balances?

• It will probably be about the same as the APR on your parents' cards.

• It will probably be low until you graduate, and then it will rise.

• It will probably be low.

• It will probably be high.

If you have a long-term horizon for investing, you should:

• Lean toward high-risk investments, with high-return potential.

• Keep at least 75% cash or money market funds for immediate availability.

• Own only one stock

• Diversify into savings accounts and US Savings Bonds

Improving your credit score will let you get:

• Lower interest rates on loans

• Higher interest rates on savings accounts

• Neither of the above

• Both of the above

Investing in a global stock fund is a good idea to:

• focus all risk on the US economy

• keep your portfolio dependent solely on the US dollar

• Diversify into municipal and corporate bonds

• diversify holdings to spread risk outside of the US

Long term investors:

• sit tight through bull markets and bear markets

• buy and sell on a daily basis

• may adjust their holdings to sell when others are selling and markets are falling

• always lose money in the long run

Tax refunds:

• occur when a taxpayer's income tax withholding exceeds what they owe

• come from extra money the federal government has left over at the end of the year, and are distributed around February 15

• Come to taxpayers regardless of whether they file an income tax return or not

• include interest paid to the taxpayer by the federal government based on holding that money throughout the tax year

A regular paycheck helps your credit score because:

• It can be cashed and spent quickly

• It has taxes pulled out

• It shows you will not pay your bills on time

• It indicates you are likely a good credit risk