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PF Unit 5 - 6 Exam Review

Total questions: 90

Worksheet time: 1hrs 22mins

Name
Class
Date
1.
"Pay yourself first" is an essential component of personal financial management to ensure that you always save.
a)
true
b)
false
2.
Why do experts suggest that your emergency savings be in a very liquid savings tool?
a)
all of these
b)
so it is accessible if it is needed quickly
c)
so you can save as much as possible
d)
so you can earn interest on your money
3.
Earning interest on interest is?
a)
pay yourself first
b)
trade-off
c)
saving
d)
compounding interest
4.
How quickly and easily assets can be accessed and converted into cash.
a)
Interest
b)
liquidity
c)
goal
d)
savings
5.
The portion of current income not spent on consumption.
a)
Interest
b)
liquidity
c)
goal
d)
savings
6.
A measurement of how much a person or household owns once all debts have been paid.
a)
wealth
b)
assets
c)
principal
d)
interest rate
7.

Kylee’s Personal Finance class When has been discussing the importance of understanding

liquidity and she is trying to explain the term to another student. Which statement is most

correct description of liquidity?

a)

how quickly and easily an asset can be converted into cash

b)

the amount of savings available

c)

the amount of money needed to pay for the necessities and comforts currently enjoyed

8.

When taking advantage of the time value of money, which of the following is most likely to

result in the largest return?

a)

Invest a large principal amount of money and then make no additional investments.

b)

Invest as long as possible and at the highest interest rate possible.

c)

Invest at a high interest rate because interest is the only factor that affects return.

9.

In relation to the other options, how liquid is a savings account?

a)

More liquid than cash

b)

More liquid than a Certificate of Deposit

c)

More liquid than a checking account

10.

Hannah needs a savings tool to help her manage her everyday purchases. The savings tool

needs to be very liquid and accessible. Which of the following savings tools should Hannah

choose?

a)

Certificate of deposit

b)

Checking account

c)

Money market deposit account

11.

Which of the following is a feature of a certificate of deposit (CD)?

a)

Funds deposited in a CD are held for a certain length of time.

b)

Funds deposited in a CD are very liquid.

c)

Funds deposited in a CD can be accessed via check or debit card.

12.

Which of the following is true in regards to investing in stock?

a)

A stockholder owns a part of a company.

b)

A stockholder will definitely receive a dividend.

c)

A stockholder will always receive a profit when the stock is sold.

13.

A bond is:

a)

A loan to a company.

b)

A share of ownership in a company.

c)

Is only offered by banks.

14.
What is a way that people can find money to save?
a)
all of these
b)
do your own laundry
c)
use public WIFI to watch Netflix
d)
do chores to earn money
15.
The amount of interest earned depends on the account balance
a)
Tiered Interest Rate
b)
Certificate of Deposit
16.
Businesses that provide financial services
a)
Depository Institution
b)
Savings Tool
c)
Savings Account
d)
Time Value of Money
17.
Savings Account
a)
An account that allows quick access to funds for transactions
b)
An account that is designed to hold money not spent on current consumption
18.
Accounts that usually has minimum balance requirements and tiered interest rates
a)
Money Market Account
b)
Checking Account
19.
A bond is:
a)
a share of ownership in a company
b)
a type of debt that a company issues to investors for a specified period of time
c)
a type of investment tha  is only offere by depository institututions
d)
a type of investment that has the potentioal for significant fluctuations over a short period of time.
20.
Which statement is true of mutual funds?
a)
Mutual funds are diversified investments
b)
Mutual funds are speculative investments
c)
Mutual funds are superior purchasing to single stock
d)
Mutual funds are a form of real estate investmenet.
21.
Which statement is true of mutual funds?
a)
Mutual funds are diversified investments
b)
Mutual funds are speculative investments
c)
Mutual funds are superior purchasing to single stock
d)
Mutual funds are a form of real estate investmenet.
22.
Joshua wants to purchase stocks with the money he received from this tax return. Who would he contact to make the transaction?
a)
A real estate agent
b)
A brokerage firm
c)
The New York Stock Exchange
d)
Joshua should complete this transaction on his own 
23.
A diversified portfolio is desirable because it:
a)
limits investor choices to only one or two investment tools
b)
increases the risk/return ratio
c)
decreases risk by investing money in a variety of investment tools
d)
indicates an investor is a good predictor of the return an investment will have 
24.

The relationship between risk and return in investing.... is?

a)

higher risk means lower return

b)

higher the risk, the higher return / loss

c)

lower risk means a higher return

d)

No relationship exists between risk and return

25.

Which statement describes inflation?

a)

The uncertainty about the return on an investment

b)

The rise in the general level of prices

c)

The number of times something happens to money

d)

The projected values of something at end of a time frame

26.

Which of the following is not true about investing in stock?

a)

A stockholder owns a part of a company.

b)

A stockholder will always receive a profit

c)

stockholders may pay different prices for the same stock

d)

A stockholder may or may not receive a dividend.

27.
The chance of loss from an event that cannot be entirely controlled
a)
Risk
b)
Return
28.
Unearned income received from the sale of an asset above its purchase price
a)
Capital Loss
b)
Capital Gain
29.
An individual’s general approach to investment risk
a)
Inflation Risk
b)
Investment Philosophy
30.

Ownership of residential or commercial property or land

a)

Bonds

b)

Stocks

c)

Real Estate

d)

Speculative Investments

31.

High risk investment that has the potential for significant fluctuations in return

a)

Bonds

b)

Stocks

c)

Real Estate

d)

Speculative Investments

32.

A mutual fund that reduces fees by investing in the stocks and bonds that make up an index.

a)

Mutual Fund

b)

Index Fund

33.
Goods, services and/or money received in exchange for a promise to pay back  at a future date.
a)
Promise
b)
Credit
c)
Credit Card
d)
Worthiness
34.
Credit established in advance so that a borrower does not have to apply each time new credit is desired.
Also known as revolving credit
a)
Open End Credit
b)
Closed End Credit
35.
When a borrower fails to keep up with mortgage payments and the lender takes possession of the property
a)
Forclosure
b)
Tax Lien
36.
Businesses hired by lenders to pursue payments on debts that borrowers have not paid back
a)
Credit Reporting Agency
b)
Collection Agency
37.

A person who is equally responsible for paying back debt under the credit terms

a)

Parent

b)

Guardian

c)

Co-Signer

d)

Creditor

38.
When may a person view his/her credit report for free?
a)
At any time and an unlimited number of times
b)
Once a year, from each of the three main credit reporting agencies
c)
A person may not review his/her credit report
d)
If a person has sufficient financial resources
39.
When Bryce attempted to borrow money at the bank, he learned that his credit score is low. Which statement best describes what this is likely to mean for Bryce?
a)
The interest rates on his loan will be lower, since his credit score is low.
b)
The purchase price of the item he needs the loan for will be higher due to his low credit score.
c)
The monthly loan payments will be lower due to his lower credit score.
d)
The interest rates on his loan will be higher, since his credit score is low.
40.
Which is NOT an example of a data furnisher?
a)
Landlord
b)
Credit card company
c)
Utility company
d)
Medical provider
41.
Becky no longer wants to use her Clothes_R_Us store credit card. What is the best thing she could do with the credit card?
a)
File the credit card away for use at a later time.
b)
Let a family member take over the credit account so her credit score will not be affected.
c)
Keep the credit card in her wallet in case she needs proof of identification.
d)
Close the account by phone and in writing, then destroy the card.
42.
Jenny is 18_years_old and has applied for credit for the first time. Her credit application was declined because she has no credit history. What would you recommend Jenny do to being to build a positive credit history?
a)
Jenny should acquire several credit cards to establish that she can manage them responsibly.
b)
Jenny should obtain a secured credit card.
c)
Jenny should re_apply for the same credit but include a letter of recommendation from someone who knows her well and can vouch for her character.
d)
Jenny should apply for a different type of credit. Since she was applying for a bank loan, she should apply for a credit card.
43.
Which of the following is NOT included in an individual’s credit report?
a)
Current and past addresses
b)
Account balances
c)
Bankruptcies and foreclosures
d)
Medical information
44.
Edward wants to develop a positive credit history. How should he do this?
a)
maintain reasonable amounts of available credit
b)
have one type of credit account
c)
pay cash for the majority of purchases
d)
open credit accounts in their parents’ names
45.
David earns $5000 per month at his accounting job. He has a student loan payment of $120, a car loan of $300. Which statement is true?
a)
David’s total credit payments are higher than the recommended amount for someone earning his income.
b)
David’s student loan payment must be subtracted from his car loan payment to determine whether his overall credit payments are is within the safe range.
c)
David’s student loan payment is within the safe range but his car loan is not.
d)
David’s credit payments are within the safe range for someone with his income.
46.
To answer the essay test question about the meaning of open_end credit, Ryan should include which statement?
a)
A down payment must be made before receiving a loan.
b)
Individual are allowed to borrow an unlimited amount of money as long as they pay it back
c)
Credit is extended in advance so the borrower does not have to apply for credit each time credit is desired.
d)
Payments are equal and required to be paid on a regular basis.
47.
Leah is trying to explain the difference between open_end and closed_end credit to her roommate. Which statement should she include in her description of closed_end credit?
a)
It is a continuous loan the borrower must repay with a revolving balance.
b)
Equal payments are required on a regular basis until the loan is repaid.
c)
Credit limits vary depending on the loan balance.
d)
Interest rates vary depending on the repayment history.
48.
Evan is writing a scholarship essay about the importance of responsible money management. He wants to explain the meaning of borrowing. Which statement below would explain the importance of understanding the process of borrowing money?
a)
When you are borrowing, you are spending future income.
b)
Borrowing builds a strong credit history because it requires individuals to file a credit report.
c)
Borrowing is an important part of a responsible financial plan.
d)
Borrowing strongly affects the present self but has less impact on the future self.
49.
Paying the minimum payment on a credit card every month will:
a)
Pay a large % of the total balance owed every month
b)
Make the final amount paid substantially higher than the amount initially charged to the card
c)
Help the cardholder create a plan for paying of credit in a decent amount of time
d)
Allow the cardholder to avoid paying any interest charges
50.
How can someone LEGALLY avoid paying interest when use a credit card?
a)
Pay the minimum balance every month before the due date
b)
Pay the balance in full every month before the due date
c)
Limit the use of a credit card to balance transfers only
d)
There is no legal way to avoid paying interest charges
51.
Which strategy would be the most effective to decrease the risk of fraudulent use of her credit cards?
a)
Carrying all cards in her wallet so they don't get lost
b)
Signing the back of her card with her signature and "Please see picture ID"
c)
Giving the account numbers over the internet rather than over the phone
d)
Using credit cards for all her purchases so she only needs to pay one bill each month
52.
What is a safety tip to follow when you are shopping online?
a)
Shred all sales receipts as soon as the item purchased is received
b)
Use a debit card
c)
Use a credit card
d)
Black out the bank account numbers on the credit card bill before returning it with payment
53.
A source of credit that may combine elements of open and closed‐end credit
a)
Credit
b)
Alternative Credit
c)
Credit Limit
d)
Borrowed Credit
54.
A loan based on the value of personal property
a)
Pawn Loan
b)
Payday Loan
c)
Refund Anticipation
d)
Rent to Own 
55.
Which is not an example of a data furnisher?
a)
Credit card company
b)
Utility company
c)
Landlord
56.
Which would explain the importance of understanding the process of borrowing money?
a)
When you are borrowing, you are spending future income
b)
Don't do it.  It's always a terrible practice.
c)
Borrowing is an important part of a responsible financial plan.
57.

To increase his net worth, Jackson could

a)

increase his liabilities.

b)

decrease his assets.

c)

increase his assets.

58.
Terms and fees of a credit card in an easy to read box on all credit card applications and solicitations
a)
Information Box
b)
Schumer Box
59.
When someone has passed an initial credit history check, it is called
a)
Good to Go
b)
Pre Approved
60.
The APR charged during the credit card's introductory period after a credit card account is opened
a)
Schumer Box
b)
Introductory rate
61.
The maximum dollar amount that can be borrowed
a)
Credit Balance
b)
Credit Limit
62.
The act of transferring debt from one credit card account to another
a)
Variable Rate ARP
b)
Balance transfers
63.
All transactions that have occurred since the last statement are listed here.
a)
Year to Date Totals
b)
Transactions
64.
The total amount paid in fees andinterest charges are displayed forthe current year.
a)
Interest Charge Calculation
b)
Year to Date Tools
65.
The fees and interest charges are listed separately.
a)
Other changes to Your Account Terms
b)
Fees and Interest Charged
66.

Kyler learned her identity had been used during an arrest, but she hadn't been arrested. Which type of fraud is this?

a)

Tax

b)

Investment

c)

Identity Theft

d)

Communications

e)

Credit

67.

Zander received an email asking him to pay money to rescue

individuals in a foreign country. After further research, he

discovered this organization did not exist. Which type of fraud is this?

a)

Tax

b)

Investment

c)

Identity Theft

d)

Communications

e)

Credit

68.

Derek has been approached by a company making claims that he does not owe taxes this year even though he has been working for pay. Which type of fraud is this?

a)

Tax

b)

Investment

c)

Identity Theft

d)

Communications

e)

Credit

69.

Jada is considering re‐financing her home and received an ad from a company offering staggeringly low interest rates. Which type of fraud is this?

a)

Tax

b)

Investment

c)

Identity Theft

d)

Communications

e)

Credit

70.

Brielle is researching tools to invest her money into and has found one with guaranteed returns. Which type of fraud is this?

a)

Tax

b)

Investment

c)

Identity Theft

d)

Communications

e)

Credit

71.

Xavier is considering purchasing a new tablet online; what are three steps he should take to protect

himself from fraud? Check all that apply.

a)

Look for https

b)

picture of a lock

c)

use an easy password

d)

use a debit card

72.

Neema has joined several social networking websites. What should she do to protect herself from fraud? Check all that apply.

a)

post personal information about herself

b)

use privacy settings to restrict who may view her information

c)

use simple passwords that are easy to remember

d)

never post social security numbers, phone number, address, and financial information

73.

If you were to advise someone about the warning signs of fraud, what advice you would provide to them? Check all that apply.

a)

A business that has taken your money won't return your calls.

b)

You find unfamiliar or unrecognizable charges on your credit card statement.

c)

You are denied credit.

d)

Your mail is missing.

e)

There are errors in your credit report.

74.

(True or False). The federal government provides a "Stop Fraud" website that includes a list of where each fraud should be reported.

a)

True

b)

False

75.

A scammer uses information that was carelessly discarded in the trash. Which term applies to this?

a)

Computer

b)

Skimming

c)

Phishing

d)

Stealing

e)

Diverting mail

76.

A scammer is using email to pretend to be your depository

institution. Which applies to this?

a)

Computer

b)

Skimming

c)

Phishing

d)

Stealing

e)

Diverting mail

77.

A scammer has attached a device to a gas pump to access credit card information. Which term applies to this?

a)

Computer

b)

Skimming

c)

Phishing

d)

Stealing

e)

Diverting mail

78.

A scammer has completed a change of address form for an

individual’s financial statements. Which term applies to this?

a)

Computer

b)

Skimming

c)

Phishing

d)

Stealing

e)

Diverting mail

79.

A scammer has hacked into a computer to access their

information. Which term applies to this?

a)

Computer

b)

Skimming

c)

Phishing

d)

Stealing

e)

Diverting mail

80.

The three credit reporting agencies are:

Check all that apply.

a)

Esperian

b)

Intax

c)

Equifax

d)

Trains Union

e)

Transunion

81.

Government agency responsible for investigating violations of federal law.

a)

FTC

b)

SEC

c)

FBI

d)

CFPB

82.

The branch of the U.S. Treasury Department in charge of collecting taxes and enforcing tax laws.

a)

FBI

b)

FTC

c)

IRS

d)

SEC

83.

Liability can be $0, $50 (with 2 days), $500 (within 60 days), or unlimited (after 60 days)

a)

Credit card fraud liability

b)

Debit Card Fraud Liability

c)

Computer Fraud

d)

Credit Fraud

84.

Maximum liability for unauthorized use of a credit card is $50

a)

Credit card fraud liability

b)

Debit Card Fraud Liability

c)

Computer Fraud

d)

Credit Fraud

85.

An intentional effort to deceive another individual for personal gain

a)

Communications Fraud

b)

Phishing

c)

Computer Fraud

d)

Fraud

86.
Maggie will need to pay $120 per month in order to purchase a health insurance policy. This monthly payment is known as the:
a)
deductible
b)
co‐insurance
c)
premium
d)
moral hazard
87.

Occurs when your personal and financial information is used without your permission

a)

Credit Fraud

b)

Identity Theft

c)

Computer Fraud

d)

Fraud

88.
Tiffany was recently involved in a vehicle accident. In order to get her car fixed, her insurance company is requiring her to pay the first $500 of the repair bill because:
a)
she did not call her agent and report the accident quickly enough
b)
her policy's deductible is $500
c)
she will be reimbursed by the insurance company later
d)
the cost of the repairs is higher than her policy covers
89.
What is the difference between property and liability insurance?
a)
Property insurance pays for loss to the insured person whereas liability insurance pays for loss to other people
b)
Property insurance pays for loss to other people whereas liability insurance pays for loss to the insured person
c)
The difference between property and liability insurance depends on the specific insurance policy purchased
d)
The difference between property and liability insurance depends on whether automobile,homeowners, or renters insurance is purchased
90.
The equity that you build by making mortgage payments is:
a)
the value of the home after the mortgage debt is subtracted
b)
purchasing a housing unit as rental property
c)
a home loan where the real estate is collateral
d)
the amount of money paid on the home at the time of purchase

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