PFL Diagnostic Exam

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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. Which should you use when creating a budget - your NET PAY or GROSS PAY?

• Net pay, because it’s what is reported to the government by your employer for tax purposes
• Gross pay, because it’s the total amount you’ve earned that month
• Net pay, because it’s the total amount you’ve earned minus taxes and other deductions
• Gross pay, because it’s the total amount you’ve earned minus any recurring bills you owe for the month

3. Which of the following is a recommended way of following up with a personal connection after a job interview?

• Returning to the office the next day to express your continued interest in the job
• Buying the interviewer(s) a gift
• Sending a friend request to the interviewer(s) on social media
• Sending a personalized thank you letter or email

4. 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

5. 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

6. 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
• Insert your debit card at a store and sign the electronic machine or paper receipt
• Take money from the ATM using your credit card

7 . Your little sister wants to know how renters insurance works. Which description should you give her?

• When something goes wrong at your apartment, you pay one premium to open a renters insurance policy and ask the insurance company to cover your losses
• Your rent payments go to the building’s owner, and that person covers your losses if anything goes wrong at your apartment
• You pay monthly premiums into a savings account, and if something goes wrong, you can withdraw the money to pay your claims
• You pay monthly premiums to buy a policy, and then you file a claim to have the insurance company cover your losses if something goes wrong