WorksheetsFinance Unit Test
Total questions: 60
Worksheet time: 5hrs 0mins
A______ is a person who guarantees a loan for the original borrower. This person responsible for the debt if the borrower defaults.
lender
apr
cosigner
bank or credit union
Liquidity is ?
Turning assets quickly into cash.
Investing interest earning in mutual funds.
Spending freely
Buying stocks.
If your employer withheld $687 and your tax liability is $478 you:
Apply the difference to your taxes next year.
File your taxes and wait to hear back
Will get a refund for the difference.
Will need to pay the difference.
Which investment has low risk, a low rate of return, and is long-term?
money market
real estate
stocks
saving bonds
Take-home pay is also called:
Disposable income
Fixed income
Net income
Gross income
If an investor can earn 9% interest on an investment, approximately how long will it take to double in value?
8 years
72 months
12 years
9 years
which of the following will help you establish a good credit hisitory?
Get a bank credit card with small limit: use it occasionally & pay it off monthly.
Get a cosigner for a small loan: pay on time & pay it off quickly.
Pay off any student loans quickly & consistently.
All of the other options would help.
Paying more than the Minimum Due on a credit card, auto loan, or mortgage payment.
is illegal
will allow you to minimize interest charges by paying off your debt as soon as possible.
What is a 401(k) plan?
A portion of salary deducted from net pay and placed in a special account.
Money set aside to pay medical expenses not covered by insurance.
A portion of salary deducted from gross pay and placed in a special account.
A plan that specifies benefits to be received at retirement age, based on total earnings and years of work.
The time value of money can best be explaining using which of the following concepts?
the risk-to-return relationship
the rule of 72
the "pay yourself first" philosophy
the dynamic of compounding interest.
The rule of 72 is useful in calculating the
time required to double an investment.
age of money.
fluctuation of the stock market.
interest an investor needs to earn to reach goal.
Which is a factor in developing a monthly financial budget?
all of these
insurance
entertainment
transportation
The term budget means:
A financial tool that helps you manage income and expenses.
A frugal spending loan.
A spending plan that meets the needs of everyone.
Developing an attitude about spending money.
what percent of your month come is the recommended amount to be set aside for housing?
20-25
25-30
10
15-20
The phrase "pay yourself first " means that you:
Buy something for yourself before paying bills.
Donate money to a charity before paying bills.
Put money in your saving account before paying bills.
Put all money in your checking account before paying bills.
The ___ the Down Payment on an Auto Loan, the ____ the Total Cost of the Loan. This also means the Total Purchasing Cost of the Automobile ( which the loan is for) will be____.
Smaller, bigger, less
Bigger, smaller, less
Smaller, smaller, less
Bigger, bigger, more
Balancing your checkbook...
Allows you to compare your record of deposits and expenditures with the bank's records.
is not necessary or helpful
is best done only once per year
An example of a fixed expense is:
A house payment
entertainment
gas for a car
magazines
What does risk mean in regard to investments?
uncertain outcome
certain outcome
high rate of return
low rate of return
The basic rule of a risk-to-return relationship is that the
higher the risk, the lower the return rate.
higher the risk, the higher the return rate.
lower the risk, the higher the return rate.
two are not related.
which of the following is a good reason to use a credit card?
expensive way to barrow due to high interest rates
less to spend in the future due to paying off purchases from the past
responsible use can help establish good credit history
higher risk for impulsive buying and overspending
Sam earns $550 per month in income. He shares living expenses with other students as roommates. His expenses are: food $160 per month; rent $130 per month; utilities $25 per month; and transportation $20 per month. How much does Sam have left each month to save for other items, based on his monthly income?
$300
$170
$245
$215
When depositing a check you've received into your account, it is best to:
sign the back of the check immediately to save time in line at the bank.
use a small portable safe t lock up the check as you travel in the car.
use a restrictive endorsement with your signature, account number, and 'for deposit only'
use an open endorsement and sign only your name on the back
The term budget means:
A financial tool that helps you manage income and expenses.
A frugal spending loan.
A spending plan that meets the needs of everyone.
Developing an attitude about spending money.
The process of earning interest on interest is
rate of return
diversification
compounding
Which of these does NOT have a physical location, but is only an electronic exchange?
Regional Exhanges
AMEX
NYSE
NASDAQ
An example of a bank's service charge is:
Amounts of income that are not taxed
a check processing fee
Collateral for a loan
an interest payment
Which one of the following types of investments has the highest risk and the highest potential rate of return?
Stocks
Money market mutual fund
government bonds
savings bonds
Which statement below is true about mutual funds?
mutual funds offer guaranteed returns
you can choose which stock to include in your mutual funds
all mutual funds buy stocks
mutual funds are convenient and professionally managed
If you only pay the Minimum Due on a credit card each month
you may end up paying 50-100 more for the items your purchased on credit
you will pay off your balance faster
you will minimize interest charges
A common mistaken belief about retirement is:
your retirement could last a long time
you will spend more money when your retire
saving just a little bit will help
you will have plenty of time to start saving for retirement
Utah has very low bankruptcy rates.
False
True
The first step in becoming financially independent is:
Using credit so you can spend more than you have
spending less money than you earn
spending ALL the money you earn
Saving ALL the money you earn
A practical reason to make an expensive purchase would be:
Peer pressure
Need
Impulse
Emotions
Which is a factor in developing a monthly financial budget?
transportation
All of these
insurance
entertainment
Fixed expenses are:
Expenses that do not vary in amount and must be paid on a regular basis
Expenses that can be varied or eliminated for a budget
Expense amount over which one has control
Expenses which are paid in advance
What percent of your monthly income is the recommended amount to be set aside for food?
20-25
25-30
10
15-20
when evaluating investment alternatives you should remember:
It is better to find a company that can invest for you
It is wise to diversify
To put all your eggs in one basket
Bank and credit unions are the best choice
What two factors will influence your investment choice?
safety and risk
growth and income
growth and risk
safety and income
Due to the effects of inflation, in the future a dollar will be worth...
The same as a dollar today
More than a dollar today
Less than dollar today
Which of the following are true about the amount of credit you should use?
The total should not exceed 20 of one year's net income
Both of the other options are true
Monthly payments should total no more than 1/3 of net income left after food, clothes, and fixed expenses.
____ is when good, services, or money is received in exchange for a promise to pay a definite sum of money at a future date.
Default
Credit
Annual Percentage account
Garnishment
What approximate interest rate would an investor need to earn in order to double the value of a investment in six years?
10
12
6
72
What is the primary factor that will affect how much is earned in a savings account?
minimum balance
passbook savings account
hours the bank is open
interest rate
Which of these is NOT a consequence of declaring bankruptcy?
increased sense of self-confidence
family disruption & instability
not able to obtain loans/credit for 5-10 years
inflation of prices for other consumers
How much would you have to invest if you saved 12% of your $500 monthly income?
$50
$65
$55
$60
What percent of your monthly income is the recommended amount to to be set aside for housing?
15-20
20-25
25-30
10-15
The rule of 72 is useful in calculating the:
Age of money
Interest one needs to earn.
Fluctuations in the stock market.
Time required to double an investment.
The purpose of this class is to help you become a happy and independent person.
false
true
Which is NOT an investment service?
stocks, bonds, and mutual funds
financial planning and management of investments
a retirement account
checking accounts
Which of these in NOT a major INDEX of how well the stock market is doing?
DOW
NASDAQ
S&P 500
KOA
What is included in the Fair Credit Reporting Act?
Credit report protection
Maintenance of all out-of-date information
Only the company can correct misinformation
Limiting consumer's access to their files
What is the primary factor that will affect how much is earned in a saving account?
hours the bank is open
passbook saving account
minimum balance
interest rate
what percent of your monthly income is recommended amount to be set aside for savings?
25-25
5-10
15-20
20-25
The most effective saving strategy would be:
putting money in a safe hiding place
having a trusted person hold your money for you
direct deposit into saving account
using cash for all transactions
What is usually the largest major purchase in a person's lifetime?
transportation
housing
insurance
food
Which of the following types of investments has the lowest rate return?
real estate
collectibles
stocks
savings bonds
Spreading your money among different types of savings and investments is called....
Diversification
compounding
Time Value of Money
Monica adds $500 to her mutual funds every year for the next 10 years. Mason decides to wait 10 years when he knows he will have a lump sum of $5,000 to invest in a mutual fund. If both Monica and Mason earn interest rate (7% on average), who will have more money in their mutual fund in 20 years?
They will have the same balance because they each invested the same amount at the same interest rate
Mason
Monica
When shopping for an auto loan, the amount of the loan after subtracting the down payment &/or trade-in from the negotiated price is called....(before interest and fees)
Annual percentage rate
Principle loan amount
Total cost of the loan
