Font size
WorksheetsAdvanced Finance Semester Review
Total questions: 50
Worksheet time: 2hrs 40mins
Why is compound interest more beneficial than simple interest? (hint: choose 2 correct answers)
Your money grows faster when it is compounded
You earn interest on your interest
Fees for compound interest are greater than simple interest
Compound interest is hard to calculate, so fewer use it
The relationship between risk and return can be stated as
Higher risk indicates higher return
Higher risk indicates lower return
Lower risk indicates higher return
No relationship exists between risk and return
Your money remains tax-deferred in this account until you withdraw (taxed as income)
Roth IRA
Traditional IRA
Select the 3 largest industries in the S&P 500.
Technology
Financial
Communication Services
Healthcare
Consumer Cyclical
Which type of account fits this description?
An account that allows you to buy different investments such as stocks and bonds.
Checking Account
Savings Account
Stock Account
Brokerage Account
Which is NOT a difference between a brokerage account and a retirement account?
Brokerage accounts do not usually offer tax advantages while retirement accounts usually have tax advantages.
Brokerage accounts have fewer restrictions on them while retirement accounts will have more restrictions
Brokerage accounts are only for short term while retirement accounts are only long term
Which of the following is NOT a type of retirement account?
Brokerage Account
Pension
Traditional 401(k)
Traditional IRA
Roth IRA
What is the main different between a Traditional IRA and a Roth IRA?
The way you get a tax break
The maximum amount of money you can contribute each year
The way it is affected by your job
The amount of choice you have in how your contributions are invested
What is a robo-advisor?
An app on your phone that alerts you each time the market is up.
Artificial intelligence that accurately predicts investments that will yield positive return.
A weekly report that summarizes your investment strategies and results.
Software platforms that manage your investments for you based on your investing goals.
Why are more younger people using robo-advisors instead of human advisors?
Human financial advisors are not advertising their services enough on social media.
Young people lost trust in human financial advisors after the Great Recession and younger people are more comfortable with solutions involving technology.
Human advisors prefer to work with older people since they might have more wealth and can generate more money in fees.
Robo-advisors have outperformed human financial advisors every year since 2010.
What may NOT impact the interest rate on your loans?
Your relationship with the financial institution
Your credit score
The loan amount
Your level of education
Why does the amount of INTEREST you owe on a loan decrease over time?
The institution trusts you more, so they lower the interest
With each payment, principal increases; so interest lowers
Banks are legally required to lower interest rates over time
With each payment, principal decreases, so interest lowers
Which is TRUE about Payday loans?
You can pay them back in installments
You are charged a 1-time fee for the loan
Most people successfully pay these loans back
You need a credit card account to get one
A shorter auto loan term means ____ monthly payments & ____ total interest you'll pay.
higher, less
lower, more
higher, more
lower, less
Which of the following is TRUE about an auto LOAN and a LEASE? (hint: choose 2 correct answers)
You must give the car back when a lease has expired
Only a loan requires some kind of upfront payment
You make monthly payments on both
Monthly payments tend to be lower with a lease
How do federal student loans differ from private student loans?
Fed loans have fewer and less flexible repayment options
Fed loans generally have higher interest rates
Private loan repayment may start while you're in school
Private loans don't require a cosigner, fed loans do
When loan payments are amortized, the total amount you owe every month _____.
is the same
increases
decreases
What is a benefit of taking a longer time to pay back your loan?
You will have to pay less interest
Smaller monthly payments
Lower interest rate
You can borrow more money (principal)
Select the loans types that are amortized. (Select 3)
Mortgage
Student loan
Auto loan
Credit card
What would happen to the monthly payment of an auto loan if the term is extended?
Nothing, it will stay the same
It will increase
It will decrease
You get to choose what you want your payment to be
How does increasing the size of your down payment impact your auto loan? (choose 2)
Your principal will be lower, so you will pay less total interest
You will get a lower interest rate
Your monthly payment will be lower
The term of your loan will increase
Which Federal Student Loan repayment plan will allow you to pay off your loans in 10 years? (select 2)
Standard Repayment Plan
Graduated Repayment Plan
Income Based Repayment Plan
Extended Repayment Plan
The W-4 form lets...
the government know how much you paid in taxes last year
your employer know how much to withhold from your paycheck
the 3 major credit bureaus know how many dependents you have
you know how much you paid in taxes last year
By claiming "exempt" on the W-4 form...
You are paying all income taxes upfront at the START of the year.
You are requesting an extension to file your taxes
You will NOT have income taxes withheld from your paycheck.
You are paying all income taxes at the END of the calendar year.
Which of the following is FALSE about the W-2 form? (hint: choose 2 correct answers)
The W-2 is sent out in April of every year
It lets you know how much you earned last year
It lets you know how much was withheld from your paychecks
You get 1 W-2 form every year, even if you had multiple jobs
Jason is 15 and earned $1450 at his job last summer. Should he file a tax return?
No, because he didn't earn enough.
No, because you have to be 16 and older to file taxes.
Yes, because he may get a refund.
Yes. You must file taxes even if you didn't earn enough.
Which of the following is NOT a way you can file your taxes?
Through a tax professional
Mailing in a paper tax return to the Federal government
Using tax software like TurboTax
Through your employer's HR department
If a teen files a tax return, can the parent still claim him/her as a dependent?
Yes. All teens are dependents until they are 18 years old
No. If a teen files a tax return, he/she cannot be claimed
Yes, as long as the teen meets the dependency requirements
Yes, but the parent has to add the teen's income to theirs
What is the difference between gross pay and net pay?
Gross pay is before taxes and deductions are subtracted; Net pay is your take-home pay.
Net pay is before taxes and deductions are subtracted; Gross pay is your take-home pay.
There is no difference between gross and net pay.
The amount of money you take home after taxes and other expenses are taken out.
Rate
Net Pay
Deduction
Gross pay
Which is NOT important information on a pay stub?
Deductions
Net and Gross Pay
Pay Period
Hourly rate and hours worked
Your credit score
What is the tax filing requirements if you are a dependent, under the age of 65, and single? (select 3)
Your earned income was more than $14,600
Your unearned income was more than $1,300
Your gross income (total of your earned and unearned income) was more than the larger of:
-$1,300 or
-Your earned income (up to $14,600) plus $450
You don't have to file taxes if you are dependent
What should teens do on their W-4 if they do not want any taxes taken out of their paycheck?
They need to complete section 1 (personal information) and section 5 (sign and date)
They need to complete section 1 (personal information), and write exempt under line 4c in section 4, and section 5 (sign and date)
They don't have to fill out the W-4 at all since they are dependents
They ask their employer to fill out the form for them
Complete the following sentence: How much you pay in taxes depends on ____.
your income
your age
if you are a dependent
where you live
where you work
I am received whenever you start a job
You list information about yourself and your family on me
I determine how much money gets taken out of each paycheck
W-2
1099
1040
W-4
I-9
I am received in January
There is one of me for every job I work
You can tell how much you earned and how much you paid in taxes by reading me
W-2
1099
1040
W-4
I-9
Which of the following does NOT contribute to your credit score?
Your payment history
Which banks issued your credit cards
Your debt-to-credit ratio
Length of credit history
All of the following are benefits of having a good credit score EXCEPT...(hint: choose 2 correct answers)
You can get a higher return on your Retirement fund
Higher interest rate on credit cards and loans
Easier approval for rental apartments and houses
Better car insurance rates Better car insurance rates
Aisha wants to improve her credit utilization rate. Which of the following can she do? (hint: choose 2 correct answers)
Make several payments in the month instead of a large one
Spread her spending among her 3 credit cards
Keep her credit utilization rate to 55%
Keep her spending all to 1 card; don't use the other 2
How are a credit score and credit report related?
A credit report is determined by the factors in your score
A credit score is determined by the factors in your report
Credit reports are less important than your credit score
They're not related at all
Using the debt snowball method, you make...
minimum payments on all of your loans
one large payment on one loan
minimum payments on small loans; pay extra on large loans
minimum payments on large loans; pay extra on small loans
Using the High Rate Method, you...
pay off all your loans in the least amount of time
put extra money towards loans with the lowest interest rate
put extra money towards loans with the highest interest rate
make one large payment on the loan with the highest rate
What information can you find on a credit report?
Your medical insurance information
Your parents' and siblings' contact information
Your education level
Inquiries you've made on new lines of credit
To take out a payday loan you have to pay a small ___?
loan
fee
interest rate
tax rate
The out of pocket cost to the insured when a loss occurs is called...
Premium
Deductible
Your health insurance copay is
Amount paid out of pocket before your insurance coverage
Paid by the insurer
Applied on an annual basis
A fixed amount of money you pay each time you use your plan
Why is it important for insurance companies to have a large pool of people paying premiums?
If a large pool of people pay premiums, insurance company employees will get more bonuses included in their next paycheck.
The premium payments of all the insured clients will cover the costs for the emergencies of the few who need it.
The more people that pay premiums, the less likely each insured client will experience an emergency.
A large pool of people paying premiums yields insurance companies to have a larger social media following.
If your car was damaged in an accident, I’ve got your back. It doesn’t matter who was at fault while driving. However, if the damage came from something besides a crash, I won’t be around to help you.
I am...
COLLISION COVERAGE
UNINSURED/UNDERINSURED COVERAGE
PERSONAL INJURY PROTECTION
COMPREHENSIVE COVERAGE
LIABILITY COVERAGE
A government program that takes in taxpayer dollars and pays out benefits to older Americans, the disabled, and in some cases survivors and dependents.
Long Term Diability
Medicare
Medicade
Social Security
