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WorksheetsDiagnostic Exam
Total questions: 35
Worksheet time: 26mins
Each of the following is a way to access money in your checking account EXCEPT...
Take out cash using your debit card at an ATM machine
Use your debit card to pay for groceries at a Point-of-Sale (POS) terminal
Write a check to pay the rent on your apartment
Swipe a prepaid card to pay for your fast food purchase
When signing up for a new checking account you answer "No" and opt out of overdraft protection. On this day, you have $10 in your account and go out and use your debit card to buy lunch for $12, a movie ticket for $12 and dinner for $15. What is likely to be the outcome resulting from these transactions?
Your account will be closed
You will likely be charged an overdraft fee for EACH transaction and need to repay the bank the funds overdrawn ($29) + interest
Since you turned down overdraft protection, the bank will not allow you to overdraw your account so your card will be denied in these 3 instances
The bank will provide you with five days to add funds to your account to cover the overdraft but will not charge you any fees
When you review your monthly checking account statement, which statement below would indicate that you deposited more money than you spent?
Your previous balance is higher than your ending balance
Your fees are greater than your starting balance
Your withdrawals are larger than your fees
Your ending balance is higher than your previous balance
Which is an advantage of paying your bills using the online bill pay feature with your checking account?
The company you are paying receives the money on the same day.
There is typically only a small fee to set-up and use this feature.
It saves time and paper.
It eliminates late fees.
Juan saved $1,000 from his summer job cleaning pools. Which of these savings vehicles would work best for him if he doesn't need access to the money for a number of years AND wanted to earn the highest interest rate?
Regular savings account
Money Market account
Checking account
Certificate of Deposit
Your sister Reagan has her paycheck direct deposited into her checking and savings accounts each pay period. She asks you how she should split her paycheck between the two accounts. What is the best advice you could offer her to encourage her savings habit?
Direct deposit the full amount of the check each month into her checking account and then decide later how much to put into savings
Add at least 95% of her paycheck to her checking account and 5% to her savings account because you know that saving is hard for her
Add at least 10-20% of her paycheck to her savings account and the remaining 80-90% to her checking account
Do not have her paycheck direct deposited since it is NOT a secure way to transfer money
When a bank says their savings account earns 1% interest, that typically means you will earn 1% interest over what period of time (Note: this is not referring to the compounding frequency or frequency of interest payment)?
Daily
Monthly
Quarterly
Annually
Which of the following statements is true about this Schumer Box?
Depending on your creditworthiness, the APR for a borrower will always be 8.99%, 10.99% or 12.99%
There is an introductory APR that is valid only for 1 year, but then the permanent APR is lower than that at 8.99%.
You will never be charged an APR higher than 14.99%
You may be charged an APR as high as 28.99% for a late payment
When taking out a loan, the shorter your term length, the _______ your monthly payments, and the _______ the total interest you will pay.
higher, lower
higher, higher
lower, lower
lower, higher
What is an advantage of using a credit card?
It will not affect your credit score or credit history
Since it is tied directly to your checking account, it prevents you from spending money you do not have
If you need to carry a balance, the interest rates are generally quite low (less than 5%)
If you pay off your balances every month in full, it's like getting a short-term interest-free loan
Each of the following financial products will help you build a credit history EXCEPT...
Secured credit card
Debit card
Auto loan
Credit card
Frank and Jasmere are both shopping for a new car. They are looking for a $20,000 loan to pay for the new car that they will pay back over a five year period. Frank has a credit score of 730 and Jasmere has a score of 600. Which of the following statements is TRUE?
Over the five year period, Jasmere and Frank will pay the same amount for the car loan
Frank's monthly payment on the auto loan will be about $100 more than Jasmere's payment
Jasmere's monthly payment on the loan will be about $100 more than Frank's payment
Lenders are not allowed to charge people different interest rates based on their credit scores
Your teacher tells you about the importance of checking your credit report. Which government-run website allows you to download your credit report for free on an annual basis?
Arturo has a student loan of $40,000 that charges 4.6% interest, a credit card bill with a balance of $1200 and a 23.4% interest rate, and an auto loan of $6000 with a 7.2% interest rate. If he's using the High Rate method of debt repayment, where should any extra money in his budget go?
To his savings account for next month
To his student loan
To his credit card bill
To his auto loan
How much does it cost to file the FAFSA?
Nothing; it is free
It is free the first time you file, but costs $9.99/year thereafter
It is 2% of your total loan amount
$50
Why are grants and scholarships considered the most desirable types of financial aid?
They are guaranteed to last all four years of college
They always cover full tuition plus room and board
They do not need to be repaid
They have low interest rates and manageable repayment plans
What is one benefit of selecting an income-based repayment plan for your student loans?
If you take a job that pays a low income, you will never have to pay any of your student loans
Your student loan interest rate will fluctuate based on how much you’ve earned in the previous year
Your monthly loan payment will be based on your income, so that you’re not paying more than 20% of income toward your loans
The total loan amount will be decreased to meet your starting salary at your first post-college job
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
You are putting together your first post-graduation budget. Your take-home pay will be $2,500 per month. You estimate your monthly costs to be rent of $900, car related expenses to be $550, entertainment of $200, food expense of $250, cable bill of $75, mobile phone of $100, student loan payment of $400 and other expense of $150. How would you describe your budget after analyzing all of your income and expenses?
You have a surplus of $125.
You have a deficit of $125.
You have a deficit of $2,625.
You have a surplus of $2,500.
Aaron realizes he has a budget deficit of roughly $175 at the end of two months in a row. Which of these options makes the most sense for him to fix his problem?
Cancel his cable TV subscription and go out to dinner three fewer times each month with friends
Start paying just the minimum monthly payment on his student loan and credit card debt, instead of the extra he's been contributing
Contribute $100 less to savings each month and $75 less to his retirement fund
Sell his current car and get a less expensive vehicle
Why is it important for you to understand YOUR tolerance for risk before you start investing?
Regardless of your tolerance for risk, you should invest 100% in stocks when you are in your 20s.
If you have a high tolerance for risk and are in your 20s, you will want to invest for retirement in bonds
If you have a moderate tolerance for risk, you should never invest in stocks since you will make bad decisions about when to buy and sell
You should create an investment portfolio that matches your tolerance for risk
You bought 10 shares of stock in StreamingVideoCo for $45 per share. Two months later you sold the 10 shares of stock for $80 per share. What was your profit or loss on StreamingVideoCo stock? Assume that StreamingVideoCo didn't pay a dividend and that you didn't incur any trading fees during that period.
Loss of $800
Gain of $350
Loss of $450
Gain of $800
Which of the following investment choices best reflects a diversified portfolio?
Investing in one large-cap restaurant stock
Investing in a mutual fund that invests in 30 to 40 oil and gas companies
Investing in an S&P 500 index fund
Investing in 10 to 20 companies in the technology industry
Heather receives a phone call, in which an automated voice states that her credit card has been used fraudulently and that she must enter her 16-digit credit card number, using the keypad of her phone, to clear up the error. What should Heather do next?
Push 0 or say "operator" to speak with a representative from the credit card company instead
Enter the 16-digit card number, but don't enter her PIN or the 3-digit code from the back of the card
Hang up and wait for the end of her credit card billing cycle to see if there really was a fraudulent charge.
Hang up and call her credit card company using the 1-800 number on the back of her card to inquire about the issue or report the attempted phone fraud
Why do so many people continue to use payday loans despite the financial risk?
Payday loans usually come with much lower interest rates.
Consumers need quick access to money that is not provided by other financial institutions.
People tend to trust payday lenders more because they are FDIC insured.
If paid back on time, payday loans can significantly increase your credit score.
All of the following are consequences of filing for bankruptcy EXCEPT...
Your credit score will stay the same but the bankruptcy will be noted on your credit report.
It will be extremely difficult to get future loans or credit cards.
You may be forced to sell assets you really value, such as your car, family heirlooms, or items to support your hobbies.
You will still be responsible for paying your student loans.
Which of the following would be a suggested action prior to a job interview?
Call the company at least twice to verify the date, time, and location of the interview
Conduct online research to learn more about the person you are having the interview with
Make sure you have scheduled transportation so you arrive 60 minutes early to the interview
Stay up really late going over interview questions
Rosita is a high school student and track team member who has been babysitting her neighbor's daughter since she was 12. In what order should she structure the sections of her resume?
Name/contact info, hobbies, computer skills, work experience, education
Name/contact info, work experience, education, honors & awards, athletic teams
Athletic teams, education, work experience, volunteer experience, name/contact info
Name/contact info, volunteer experience, awards & honors, hobbies
How does your social media behavior influence your ability to get a job?
It has no impact; employers are forbidden by law from looking at your social media accounts
It can have a positive impact as employers like fun-loving employees who know how to have a good time
Unprofessional public profiles on social media sites are generally not viewed by employers so no need to worry about those embarrassing pics
Having a professional LinkedIn profile is critical since almost all recruiters use it to find talent
When do you start paying taxes?
When you turn 18
When you make more than the minimum income requirement
When you get a full-time job (part-time does not count)
When you are notified by the IRS that you are required to pay federal income taxes
You are starting your first job and you are asked to complete some paperwork on your first day. Which form will determine how much money is withheld from your paycheck for federal and state income taxes?
W-2
W-4
I-9
1040
What tax form am I? I am received in January. There is one of me for every employer that you worked for in the previous year. I have information on how much you earned and how much you paid in taxes for the previous calendar year.
1040
I-9
W-2
W-4
The number one reason risk pooling is valuable to the insurance industry is...
It allows companies to charge the same premium to all members of the pool.
It brings together many individuals' premiums so that there is money to cover the select few with losses.
It makes insurance coverage available to everyone, even those who are unable to make their payments.
It is subsidized by the federal government.
All of the following represent a compelling reason to pay a higher insurance premium EXCEPT...
You will receive a higher level of customer service and better care
You will have a lower deductible
You will have a higher coverage limit
You will have a lower out-of-pocket maximum
Which of the following statements is TRUE about auto insurance premiums?
If you have an auto insurance policy and don't get into a car accident or file any claims for a year, you get your premiums back from the insurance company.
If you have an auto insurance policy and get into multiple accidents within one year, your premium amount will decrease.
Auto insurance premiums are a fixed price across all insurance companies.
Auto insurance premiums can vary from company to company, therefore, it is important to comparison shop for the best price and coverage.
