Personal Finance: Final Exam REVIEW

1. Sylvester is taking out a loan and is confused by the jargon. Which of the following explanations might help him?

• TERM is the length of the loan, and INTEREST RATE is how much total money he will pay
• PRINCIPAL is how much he owes per month, and TERM is how much he owes overall
• INTEREST RATE is how much the lender charges per year for the loan, and PRINCIPAL is the initial amount Sylvester borrows
• MONTHLY PAYMENT is how much interest costs him each month, and TERM is the name of his lender

2. In budgeting, what does it mean to “pay yourself first”?

• Conduct a thorough review of your expenses at the beginning of each month
• Set aside money for savings before spending on other expenses
• Make all of your minimum payments before spending on wants
• Enroll in direct deposit so you receive your paycheck sooner

3. Which amount is found when you subtract your grants and scholarships from a college’s cost of attendance?

• Sticker price
• Net price
• Student Aid Index
• Room & board

4. All of the following are benefits of taking out a loan with a cosigner EXCEPT…

• There are no penalties for late payments
• You gain access to loans you might not have been approved for on your own
• Your interest rate might be lower
• Your credit score will be positively impacted by making timely payments

5. Which of the following is a method of accessing the money in your checking account?

• Buy a prepaid card using cash
• Deposit a paycheck from your job
• Use your debit card at a store
• Take money from the ATM using your credit card

6. In order to qualify for financial aid, prospective college students must submit their _____________.

• Financial aid letter
• FAFSA
• PSAT, SAT, or ACT scores
• Parent's credit score

7. Which of the following best describes the amount of money you'll have if you put $1000 into a CD earning 2% annual compound interest for 10 years? You can ignore the impact of inflation in this question.

• The same $1000 you started with
• Exactly $1200
• Slightly more than $1200
• $2000

8. Which of the following can be found in your credit report?

• Your checking and savings account balances
• How long you’ve been a member of a bank or credit union
• Your credit payment history
• A list of items you’ve purchased using credit

9. When making a decision about a financial product (loan, savings account, credit card, etc.), which of these pieces of advice is LEAST valuable?

• Compare products based on the factors you personally find most important
• Do research to learn more about each of the options
• Read the fine print of any disclosures so you understand the fees and terms of your account
• Simply choose the option that your parents use

10. Which of the following will result in your paying the LARGEST amount of interest to the credit card company?

• Paying 20% of your credit card balance every month
• Making the minimum payment every month
• Paying off your balance every month
• Saying "credit" every time the cashier asks "Debit or credit?"