Nora is planning to buy a new car and will use an auto loan to finance it. Which statement below is accurate?

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

• Her interest rate is the total cost she’ll pay after making all of her principal and interest payments

• Choosing a shorter term means it will take her longer to repay the loan

• It’s likely that her monthly payment will be between 4-5% of the cost of the car

Answer explanation

The principal of an auto loan is indeed the cost of the car minus any down payment. This means the amount borrowed is the car's price after subtracting what Nora pays upfront.

Nora is creating a budget for the first time and doesn’t know which to use - NET PAY or GROSS PAY. What do you tell her? EPF.MCM.1

• “Use net pay, because it’s the total amount you’ve earned minus taxes and other deductions.”

• “Use gross pay, because it’s the total amount you’ve earned minus any recurring bills you owe for the month.”

• “Use net pay, because it’s the total amount you’ve earned for the month.”

• “Use gross pay, because that is the amount that is reported to the government for taxes.”

Answer explanation

Use net pay, as it reflects the actual amount available for budgeting after taxes and deductions, making it more accurate for planning expenses.

After attending a job interview at a tech company, Daniel decides to send a personalized thank you note. Why is this important?

• It shows that you want the job even if you don’t really like the company

• You can apologize for any mistakes you made in the interview

• It gives you the opportunity to leave a good impression by expanding on an answer you gave or a topic you discussed

• It allows you to boast about your accomplishments one last time

Answer explanation

Sending a thank you note allows Daniel to reinforce a positive impression by elaborating on his responses or discussing topics from the interview, showcasing his interest and thoughtfulness.

Ava is trying to calculate the net price of her college education. What does she need to subtract from the college’s cost of attendance?

• Student Aid Index

• Application fees

• Personal expenses

• Your grants and scholarships

Answer explanation

To calculate the net price of her college education, Ava needs to subtract her grants and scholarships from the college's cost of attendance, as these reduce the total amount she has to pay.

Abigail is considering getting a secured credit card to help build her credit history. All of the following are characteristics of a secured credit card EXCEPT…

• Your credit limit is dependent on the amount of your security deposit

• They lower the risk of banks when issuing credit to users with no credit history

• They help you build a credit history and improve your credit score

• They don’t have a spending limit, so you have to be very mindful of how much you buy with them

Answer explanation

The correct choice is that secured credit cards do have a spending limit, which is based on the security deposit. They are designed to help build credit while minimizing risk for banks.

6. Ava buys three new lipsticks from a store at the mall. Which payment method would reduce the amount of money in her checking account? EPF.MCM.2

• Pays with a prepaid card she loaded earlier in the month

• Uses her credit card and says, "Credit" when the cashier asks, "Credit or debit?"

• Uses her debit card and says, "Credit" when the cashier asks, "Credit or debit?"

• Pays with cash she had in her purse

Answer explanation

Using her debit card reduces the amount in Ava's checking account immediately, as it directly withdraws funds. Saying 'Credit' does not change this; it still processes as a debit transaction.

7. The monthly premium for Kevin’s renters insurance is $15, and his deductible is $500. During the month of April, someone breaks into his apartment and steals or destroys $2200 worth of his possessions. How much will Kevin pay and how much will the insurance pay to replace his items? EPF.MCM.3

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

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

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

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

Answer explanation

Kevin's deductible is $500, so he pays that amount. The total loss is $2200, and after the deductible, the insurance pays $1700. Thus, the correct choice is: Kevin pays $500 // insurance company pays $1700.

Zoe is planning to attend college next year and wants to know which definition best describes the FAFSA.

• The amount of money the federal government offers you in student loans

• The paperwork your bank has you complete in order to take out a personal student loan

• The paperwork you complete in order to have part of or all of your student loan debt forgiven

• The application you submit in order to determine eligibility for federal student aid

Answer explanation

The FAFSA, or Free Application for Federal Student Aid, is the application you submit to determine your eligibility for federal student aid, making it essential for college funding.

Luna decides to put $1000 into a savings account that earns 1% annual compound interest for 10 years. Which of the following best describes the amount of money Luna will have at the end of this period? You can ignore the impact of inflation in this question.

• Exactly $1100

• Slightly more than $1100

• $2000

• Exactly $11,000

Answer explanation

Luna's investment grows with compound interest. The formula is A = P(1 + r)^t. Here, P = 1000, r = 0.01, and t = 10. Calculating gives A = 1000(1.01)^10, which is slightly more than $1100.

Rohan is reviewing his credit report to understand his financial standing. All of the following can be found in his credit report EXCEPT… EPFMCM.3

• Your credit payment history

• Your checking account balance history

• The average age of your credit accounts

• Your total number of active credit accounts

Answer explanation

Rohan's credit report includes details like payment history, average age of accounts, and total active accounts. However, it does not contain checking account balance history, which is separate from credit information.