E and PF Module 2 Study Guide

Eric recently graduated from college and has a goal of owning his own home by the time he is 30 years old. What tool should he be using to help him plan how to spend his money?

• Credit card

• Budget

• Mutual fund

• Amortization calculator

What is the recommended percentage of your monthly income that should be devoted to housing?

• 20%

• 40%

• 30%

• 50%

What category would your electricity bill that varies each month fit in?

• Variable expenses

• Fixed expenses

• Assets

• Debt

Which of the following would you need if you decided to rent a place to live rather than purchase it?

• Renter's insurance

• Mortgage

• Bank loan

• Homeowner's insurance

What is an advantage of taking a 30-year fixed mortgage compared to other options?

• Higher amount of principal paid each month

• Less interest paid to the bank

• Lower homeowner's insurance costs

• Lower monthly payment

Yashiro has been hired by a local fast food restaurant. His new boss tells him to bring a voided check with him to sign paperwork so that he can be paid. What bank product will he be signing up for?

• direct deposit

• credit check

• savings account

• certificate of deposit

What is the best reason to avoid using overdraft protection offered by a bank?

• There are high fees associated with the use of overdraft protection.

• Overdraft protection only covers savings accounts.

• Overdraft protection is only needed if you are writing checks.

• Most banks don't offer overdraft protection.

What tool helps protect individuals from financially devastating events?

• credit card

• insurance

• money market account

• certificate of deposit

Who should be consulted to help with estate planning and writing wills?

• insurance agent

• banker

• estate lawyer

• real estate agent

If you make all of your homeowner's insurance premium payments and a tornado hits your home during a bad thunderstorm, what will you need to do next to repair the damage?

• take out a new insurance policy

• pay the deductible

• file a claim with your insurance company

• prepare to pay for it with your own money because insurance won't pay