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WorksheetsPF F18 Exam review
Total questions: 82
Worksheet time: 41mins
Which of these statements is true about the cost of living index?
The cost of living index ranks states 1-50 on how expensive it is to live there
The cost of living index compares cost of living comparisons between two locations
The cost of living index will tell you if an employer will help cover your relocation expenses
The cost of living index is the only factor you should consider if you want to leave your current job
Reducing investment risk by spreading money among a wide variety of investments is known as
Portfolio diversification
Investment philosophy
Index funds
Capital gains
Which is best suited for building retirement savings?
Checking account
Money market account
401k account
Escrow account
The oldest and most widely used indicator of how the stock market is doing is the:
Better business bureau
New York stock exchange
Nasdaq 100 market index
Dow Jones industrial average index
Which government program provides medical care to low income families?
SNAP
TANF
Earned income credit
Medicaid
Personal property items such as a home, an automobile, electronic items, and furniture are examples of what type of asset?
Monetary
Investment
Market
Tangible
Larry and Frieda are expecting their first child. On their to do list are purchasing life insurance and increasing the balance in their emergency savings account. Which principle best illustrated their story?
You are personally responsible for yourself
Your present self impacts your future self
You are better of in a community than by yourself
Investing helps you cope with risk and uncertainty
How can saving and investing be considered both income and an expense?
When money is used from savings or investments it is considered an expense. When it is placed into a savings account it is considered income
When money is used from a savings or investment account, it is considered income. When money is placed in a savings or investment account it is considered an expense
Placing money into savings and investment accounts is considered to be income but taxes assessed on these accounts are considered to be an expense
It is not possible for savings and investing to be classified as both an income source and an expense
Larry owns an apartment building. Jimmy rents an apartment from Larry. In the event that the building catches fire and is determined to be a total loss, which type of insurance will Jimmy need to replace his belongings?
Fire
Renter’s
Property
Liability
Which document provides the answer to how have I managed my money in the past?
Statement of financial position
Income and expense statement
Spending plan
Net gain and net loss statement
Sara is entering her liabilities on her statement of financial position. Which would be examples of liabilities she might be entering?
The market value of her jewelry and her savings account balance
The market value of her home and auto
The savings account and checking account balances
The home mortgage and student loan balances
Larry just bought a new stereo for his car however he no longer has extra money to buy his girlfriend a birthday gift and is no regretting is decision. What is Larry experiencing?
Opportunity costs
Trade-off
Financial planning
Buyer’s remorse
The realistic amount you could sell an asset for today is known as the
Liability
Market value
Tangible value
Investment value
Net worth is calculated by which formula?
Assets – liabilities = net worth
Liabilities – assets = net worth
Monetary assets + tangible assets + investment assets = net worth
Assets + liabilities = net worth
Strategies that can help you successfully reach a goal include:
Sharing the goal with others
Sticking to the goal without modifications
Setting challenging and difficult goals
Keep the goal a secret then rewarding yourself
Choosing a vehicle with a full warranty over one with a sun roof is an example of:
Opportunity costs
A trade-off
Financial planning
SMART goals
In reviewing his bank statement Larry sees a charge from writing a check for more that the balance available in his account. What type of fee has the bank charged?
ATM fee
Minimum balance free
Overdraft fee
Debit card fee
Sherry was in an automobile accident last year that left her unable to work for several weeks. Friends and family helped her with household tasks, trips to physical therapy, and brought food in as worked through the recovery process and eventually returned to work. Which principle is best illustrated by Sherry’s story
You are responsible for yourself
Your present self impacts your future self
You are always better of in a community than by yourself
Investing helps you cope with risk and uncertainty
The amount for federal income tax paid depends on the:
Amount of income earned
Geographical state in which a person lives
Amount of property owned
Sales tax percentage charged by local agencies
Both the federal deposit insurance corporation (FDIC) and the national credit union administration (NCUA) insure depository institutions accounts. What is the standard insurance amount?
200,000
250,000
300,000
350,000
Bob wants to set a goal to only spend $10 a week eating out. His goal is most likely to be accomplished if:
He discusses the goal with his parents
He writes a SMART goal
He thinks about his goals weekly
He has his friends set the goal
Mary has completed her career training program and has accepted a position with a large company in a major city. She enjoys her work and has received positive evaluations from her supervisors. When she received her first paycheck, she noticed several deductions on the paycheck stub. Which of these deductions are required by law?
Social security and life insurance
Retirement benefits and health insurance
Social security and federal income tax
State income tax and retirement benefits
Questions consumers should ask themselves in order to get the best price for an item include:
Is there an option to purchase the item used rather than new?
Can I pay someone to do this for me, rather than to do it myself?
Can I purchase it immediately rather than waiting?
Can I buy this locally rather than over the internet?
The fee paid to license a car is considered a(n):
Payroll tax
Property tax
Sales tax
Excise tax
A business that is customer owned, operates as a nonprofit, and has members who share a common bond describes what type of depository institution?
Credit union
Commercial bank
Savings and loan
Brokerage firm
Amy wants to buy a new car. Which will help her best manage her finances to reach her goal?
She would have a parent cosign for a loan
She would save 30% of her paycheck each week for a year to help with the down payment
She would buy her aunts car because it is priced low
She would choose a new vehicle instead of a sued one
Sam is saving $1000 for a new computer by saving $100 each month for 10 months. She has begun taking her lunch instead of eating lunch at restaurants each day in order to save money towards her goal. The portion of her goal which meets the “specific” requirement is:
Saving for a computer
Saving $100 each month
Saving $1000
Taking lunch instead of eating at restaurants
Dave owns a home valued at $210,000 and owes $130,000 on it. The difference of $80,000 is considered the:
Mortgage
Equity
Depreciation
Appraisal
Taxes that are paid on both earned and unearned income, that generally increase as a person’s income increases, and that are used to find many different operations and programs of the federal government, are known as what kind of tax?
Sales tax
Property tax
Payroll tax
Income tax
Which government program, provides medical care to the elderly and dome individuals with disabilities?
Medical
Medicare
Unemployment insurance
TANF
All of these expenses are likely to occur when purchasing a house except:
Homeowner’s insurance
Renter’s insurance
Closing costs
Property tax
Joe is starting anew jo. In order for his company to know how much federal income tax to withhold from his paycheck, Joe has to fill out which form?
W-2
I-9
W-4
1040EZ
Which are examples of earned income?
Salary, interest, academic scholarship
Investment earnings, commissions, tax refunds
Wages, tips, refunds
Bonuses, interest, wages
Which of these activities is not likely provided by an attorney who is helping you set up a will?
Giving you advice on how to calculate your current year tax liability
The writing of your will
The recording of your will
Setting up a power of attorney
Each year the value of an automobile you own will:
Increase in value
Decrease in value
Remain the same as the day you bought it
Both increase and decrease in value
Lara’s job has been eliminated and she needs help in providing for her family as she trains for a new career. Which government program could provide temporary help with money to keep her family fed and housed and offer the job training she needs?
SNAP
TANF
Unemployment insurance
Medicaid
All of these are examples of unhealthy giving except:
John bought many Christmas gifts for his friends using only his credit cards
Harry could not make his daughter’s softball game so he bought her new shoes and a new dress to make up for his absence
Kary’s aunt June helped persuade Kary’s mom to let Kary get a car hoping Kary would offer to drive her to bingo two times a week
Larry pledged to donate money for books to the library rebuilding fund at his former high school
Many people find satisfaction and greater well-being after directing part of their income to which type of spending?
Alternative loan payments
Buying items on credit
Paying taxes
Giving to others
Investing in human capital is important for career development because:
A person becomes less marketable based upon continued learning
An investment in one’s human capital lasts a lifetime
Only a few people can afford to spend the cash to buy a job
It allows a person to have lower estimated lifetime earnings
Who is charged with carrying out the settlement of an estate?
A beneficiary
A testator
A decedent
An executor
The rule of 72 is helpful in calculating how many years it will take to double an investment. What is the formula used to calculate the rule of 72?
72 times interest rate
72 divided by the interest rate
Interest rate times principal
Principal plus tax rate
Savings is to financial security as investing is to:
Speculation
Net worth
Risk
Liquidity
Manny has been saving half of his paycheck for the past year to help with college expenses and he also plans for gifts for his family members in his spending plan. What is Manny demonstrating?
Values
Education and family
Needs
Wants
Financial need is calculated with which formula?
Cost of attendance minus expected family contribution
Expected family contribution minus need based aid
Cost of attendance minus need based aid
Expected family contribution minus cost of attendance
What must a person remember to be held in the highest regard as a potential and current employees?
Maintain proper grammar, spelling, and writing and always make appropriate postings on social media
A person’s personal life is separate from and therefore cannot impact a persons professional life and employment
Updating skills and knowledge are only necessary if a person hopes to switch positions
A person’s financial well-being is most important. The more money a person makes, the happier that person will be.
Larry is concerned after he lost his wallet, so he should:
Shred all credit card offers he gets in the mail
Notify his bank immediately
Update his privacy settings on all his social media accounts
Install anti-virus software on his laptop
A specific type of credit which may require lower credit scores than others but typically results in a higher APR and increased fees, describes which type of credit?
Closed ended
Open ended
Alternative
Installment
To help protect personal information:
Write down all passwords and place them in a wallet or purse
Carry a social security card at all times
Verify sources requesting information about any accounts
Include name, driver’s license number, address, email address and phone number on printed checks
How much money to experts suggest holding in a savings account for unexpected emergencies?
500
$1,000
2 months salary
3-6 months of expenses
Closed end credit is to installment credit as open-end credit is to:
Variable credit
Payday loans
Mortgage credit
Revolving credit
Potential employers, landlords, insurance companies, and creditors are all legally able to review your:
Credit history
Rental application
Workplace references
Insurance polices
Which statement best describes the “minimum payment warning” included on all credit card statements?
This warning lists any additional fees or higher interest rates that may be charges when the minimum payment is late or unpaid
This warning includes an estimate of how long it can take to pay off the credit card balance if only the minimum payment is made each month, along with the total amount paid including interest, if the bill is paid in 3 years
The warning states fees and interest charges associated with minimum payments
The minimum payment warning is not something that is included on a credit card statement. It is included on a credit card application.
The numeric grade of a person’s creditworthiness is known as their credit:
History
Report
Score
Value
Items such as food, fuel, and cosmetics that are used up within a short period of time are known as which type if goods?
Durable
Consumable
Disposable
Renewable
Lara is going into her sophomore year in college and wants to move out of the dorms. While looking for an alternative housing situation, what amount of rent should she shop for to ensure she does not overspend in the housing category?
No more than 50% of her income should be spent on housing
She can spend whatever she wants to because she has a scholarship and receives financial aid
She should keep her housing expenses under 30% of her income
She can spend $1500 a month on housing
When taking advantage of the time value of money, which is not part of the recommended strategy?
Save at the highest interest rate possible
Save for as long as possible
Save at a local depository institution
Save as much as possible, as often as possible
Jane has a part time job while taking classes to complete her degree. She also makes an effort to choose healthy foods to eat and drink lots of water. She saves 8% of her paycheck for emergencies and volunteers at the local public library two afternoons a month. What could Jane do to improve her social well-being?
Schedule time to spend with family and friends
Sign up for a free online dating service
Take a class about financial management
Begin exercising more regularly
Jane and her parents and two brothers were affected by a hurricane. They lost their home to high winds and their family lost their jobs. An example of a non-profit that Janes family could seek help from during this time period is:
The Red Cross
The Federal Reserve Bank
FEMA (Federal Emergency Management Agency)
The Consumer Finance Protection Agency
Interest rates are often tiered with a:
Checking account
Savings account
Money market account
Certificate of deposit account
Which type of investment has a very high level of risk due to the possibility of significant changes in return over a short period of time?
Bonds
Mutual funds
Index funds
Speculative investments
Credit report information is divided into four categories. Which is not one of these categories?
Personal consumer information
Credit account information
Public record information
Previous credit scores
Larry volunteers each week for an organization that benefits others in helping low income families secure affordable housing. Which term best describes the organization where he volunteers?
Social capital
Rescue mission
Volunteer network
Non-profit
Which is true if you default on your student loan?
The term of your loan is reduced so that you must pay the entire loan back within one year from the time of your most recent payment
You will receive a deferment form to extent your grace period until payments can resume
Your wages cannot be garnished
Collection fees can be added to your outstanding balance
Mary learned in her financial literacy class that it is wise to pay yourself first. Which strategy would not be recommended?
Automatic transfers
Payroll deduction
Putting money aside before paying her regular monthly bills and any discretionary spending
Putting money aside after paying her regular monthly bills but before discretionary spending
In the event that Larry dies, his niece Betty will receive the payment for his insurance policy. What is Betty in this scenario?
Cosigner
Beneficiary
Deductible
Coborrower
Larry and Mary are newlyweds. They currently have separate bank accounts to manage daily expenses. They are considering opening joint accounts a local bank. Which type of account will have a high level of liquidity to access money in case of an emergency?
Checking account
Savings account
Money market account
Certificate of deposit
Which statement would not help a person to develop a positive credit history?
Become an authorized user on a credit card
Obtain a cosigner on your loan
Register with one of the credit reporting agencies
Obtain a small closed end loan from a depository institution
Government programs are funded exclusively by which source?
Nonprofit corporations
Earned income tax credits
Taxpayers
Federal insurance programs
The principle amount of money is often referred to as:
The portion of income not spend on consumption
The original amount of money invested
Cash set aside to cover the cost of unexpected expenses
The percentage rate used to calculate interest
An example of a durable good would be:
A washing machine
Monthly grocery costs
Monthly fuel costs
Health and beauty products
What kind of loan is based on the value of personal property which is held until the borrower repays the loan plus any fees?
Title loan
Payday loan
Mortgage loan
Pawn loan
Larry and Mary are married with 5 kids. Which statement best describes their life insurance needs?
Their policies are probably out of date
The need to purchase several different policies
They should focus more on health insurance than life insurance
They have several dependents therefore they should have life insurance
Larry has chosen to be paid by direct deposit. This means his check will be deposited directly
In the mail each pay period
Onto his payroll card
Into his bank account
Into the company mail
Larry has just graduated from college and has his first full time job. He will need to purchase a vehicle to commute to his job. If his monthly net income is $4000 and Larry wants to maintain what would be considered a typical amount of his income towards transportation, which amount best represents what his transportation expenses should be? (hint 20%)
$500
$1,000
$1,200
$800
Social security is funded through:
Income tax
Payroll tax
Sales tax
excise tax
In reviewing his bank statement, Larry sees a charge for writing a check for more than the balance available in his account. What type of fee has his bank charged?
ATM fee
Minimum balance fee
Overdraft fee
Debit card fee
In order to protect one’s identity from fraud, which is a wise habit?
Checking a credit report annually for errors
Opening multiple accounts at multiple depository institutions
Writing return to sender on a pre-approved credit offers
Obtaining a cosigner on all accounts
A credit contract for 24 payments of $200 each month is an example of which type of credit?
Closed ended
Open ended
Alternative
Revolving
A group of people working together for the common good is known as
A community
A nonprofit
A family
A friendship group
Credit cards are a form of:
Sustained credit
Closed-ended credit
Open-ended credit
Installment credit
Social capital is defined as:
A group of people working together for the common good
Related or unrelated individuals sharing various resources
The access a person has to social relationships that can provide resources
An organization that exists to benefit others through human service
When related to higher education, the debt to income ratio calculates:
Whether a borrower will have difficulty meeting their loan repayment obligations
The projected annual income of a person is capable of earning divided by the amount of money borrowed toward their education
The amount of wages a person is foregoing while pursuing their education
The median wage a person is likely to earn after completing their education compared to the median wage they would likely earn without pursuing further education.
