OCS Economics and Personal Finance Module Two Review

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 him 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%

If you are spending more money than you earn, what economic situation exists for you?

• deficit

• surplus

• negative credit

• foreclosure

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

• variable expenses

• fixed expenses

• assets

• debt

Which of the following is a component that would MOST likely be found in a budget for a 65 year old but not for an 25 year old?

• long term care insurance

• mortgage

• student loans

• car insurance

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

If interest rates are currently at 3.5% and the bank offers you a loan that is guaranteed at 2.5% for the first 5 years that cannot go higher than 8%, what type of mortgage have you taken?

• adjustable rate mortgage

• fixed mortgage

• lease

• reverse mortgage

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

Which of the following is a service provided by banks?

• make car loans

• Make personal schedules

• sell health insurance

• sell groceries

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