WorksheetsPFMM - Final Review
Total questions: 70
Worksheet time: 18hrs 30mins
Which of the following best describes what a cognitive bias is?
A rational decision that is based on research and facts
The belief that we are right until someone provides information that contradicts our belief
An error in the way we think that can influence our decisions
The belief that a person should change their opinions when new facts arise
Unlike traditional economics, behavioral economics believes that…
People do not always behave in a rational way when making economic decisions
People will always update their viewpoints based on new information
There is no way to predict how people will make economic decisions
People behave in a rational way when making economic decisions
People who experience FOMO may...
Save a percentage of their paycheck each month
Go into debt to keep up with everyone else
Donate money to a cause they care about
Create and stick to a monthly budget
When using social media, it's important to remember that...
Marketers have your best interests in mind and want you to be financially responsible
The more likes a post has, the more trustworthy and accurate the information is likely to be
People typically only post about the best parts of their lives on social media
Social media ads are trying to get you to buy stuff you NEED, not want
The pain of losing a $20 bill is felt more than the joy of finding it.
This is a result of...
Loss aversion
Overconfidence
Sunk cost
Endowment effect
Overconfidence bias may lead the majority of Americans to think that they are…
Below average drivers
Extremely poor drivers
Average drivers
Above average drivers
Investments of time, effort, and money that cannot be recovered are...
Opportunity costs
Avoidable costs
Sunk costs
Relevant costs
Putting more value on an object you own for more than its actually worth is an example of...
Overconfidence
Endowment effect
Confirmation bias
The Fear of Missing Out (FOMO)
A website tells you, "Only one left!" while shopping online. Which loss aversion strategy is this website using?
Coupons
Buy now, get free shipping
Free trials and samples
Scarcity and urgency
You are doing research on a new electric car that you are interested in buying. You only visit the car company’s website and an online message board of electric car enthusiasts to do your research. This strategy may lead to …
Confirmation bias
Herd mentality
The endowment effect
Loss aversion
Which of the following is an effective strategy for personal saving?
Wait until the end of the month and save whatever is left in your checking account
Save a certain percentage of each paycheck and deposit it directly into a savings account
Cover all of your wants and needs and save whatever is left over
Take out a payday loan so you can save before you receive your paycheck
All of the following statements about bank accounts are true EXCEPT…
If the bank account is FDIC-insured, your money is safe if the bank fails
Many banks pay interest on the money you keep in your savings account
You can write a check with the money deposited into your Savings Account
Money in a checking account is usually easy to access via ATM, debit card or check
Which represents the BEST time to start saving for your retirement?
As soon as you have your first full-time job
Right after you pay off your student loans
Once you are debt-free, including paying off all credit cards, auto loans, and your mortgage
At age 45, so you have exactly 20 years until retirement
Experts recommend that you accumulate enough to cover 3 to 6 __________________ of expenses in your emergency fund.
Days
Weeks
Months
Years
Three of these statements best describe a checking account. Which statement best describes a savings account?
This account offers a convenient way to pay bills and access cash from an ATM
This account pays you interest on money you have put away for later to help your money grow
This account is automatically debited when you use a debit card
This account typically allows an unlimited number of transactions per month
Fill in the blanks: If inflation is _____________ your savings account interest rate then you will be ______________ purchasing power.
Higher than, losing
Higher than, gaining
Equal to, gaining
Lower than, losing
Jocelyn gets a text alert from the bank that her account balance has dropped below $100 after a series of $20 ATM withdrawals. She has not used her ATM in over a week and wonders what she should do. What would you recommend?
Wait a week as it is fairly common for the bank to catch mistakes like this
Wait until her monthly statement arrives so she can check to see if those withdrawals are still there
Check her wallet to be sure her debit card has not been stolen. If she still has it, then she should not worry.
Contact her bank immediately as it appears that her account may have been hacked
Which of the following transactions will REDUCE your checking account balance immediately?
Writing your monthly rent check which you will mail tomorrow
Using your debit card to pay for groceries at the supermarket
Using your credit card to pay for your school books
Depositing a check at a local bank branch
FDIC Insurance is...
Optional coverage consumers can purchase so that their bank deposits remain safe
Insurance bank branches can buy to protect their business against fraud and scams
Required if you want to do online or mobile banking
Protection for bank customers’ deposits up to $250,000, guaranteeing their money is still available if the bank goes out of business
How often do customers typically receive a bank statement for their checking account?
Daily
Weekly
Monthly
Annually
Fill in the blanks: Direct deposit typically refers to your ______ sending your ______ electronically to your bank account.
employer, bills
employer, paycheck
parents, allowance
state government, taxes
All of the following are downsides of being unbanked EXCEPT:
Lack of access to credit
Lost time paying bills
Lack of fees associated with banks
Difficulty making cashless purchases
What information goes in the highlighted area?
Bank Address and Checking Account Number
Name and Address of the Issuer
Dollar Amount of the Check
Name and Address of the payee
What goes in the highlighted area?
Signature
Memo
Dollar Amount Spelled Alphabetically
Address and Name of the Check Issuer
What is being represented in the highlighted area?
Checking Account Number
Bank Routing Number
Check Number
Dollar Amount of Check
What goes in the highlighted area?
The Checking Account Number
Signature
Dollar Amount spelled Alphabetically
Address and Name of the Check Payee
What kinds of behaviors can PREVENT people from making smart investing decisions?
Staying calm when the market is experiencing a downturn
Buying stocks when prices are low and selling them when they’re high
Exiting the market because that’s what everyone else is doing
Investing in a diversified portfolio instead of trying to beat the market
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?
Loss of $800
Profit of $350
Loss of $450
Profit of $800
Which of the statements below BEST describes the relationship between risk and return when considering an investment?
Investors expect to earn a lower return when they invest in a high risk asset
Investors expect to earn a higher return when they invest in a low risk asset
Investors expect to earn a higher return when they invest in a high risk asset
Investors expect to earn zero return when investing in a low risk asset
Why is diversification a recommended investment strategy?
Investing in a diversified portfolio guarantees that you won’t lose money with your investments
If you tell your fund manager to use diversification, they’ll charge you lower fees
Diversifying your portfolio helps reduce risk
If you diversify your portfolio, you will definitely earn a high return
How is a bond different from a stock?
A bond is a loan you give to an organization while a stock is partial ownership in a company
Bonds are typically riskier than stocks but have the potential to earn higher returns
Bonds are usually issued by smaller startup companies while stocks are issued by well established organizations
Bonds are best for earning high returns while stocks are best for providing a stable source of income
How can someone make money from investing in a stock?
They sell the stock for a lower price than what they bought it for
They receive dividends or they sell the stock at a higher price than what they bought it for
The stock loses value but the overall market experiences a positive return
They sell the stock for the same price they bought it for
What is a brokerage account used for?
It’s an online portal that allows you to set up appointments with a fund manager
It’s the account you use to pay any taxes you owe on money you earned on your investments
It’s a type of account used to buy and sell stocks, bonds, and funds
It’s a special type of 401(k) plan that only some employers offer
What is one question an investor should ask when deciding whether or not they would like to open a Roth IRA or a Traditional IRA?
Do I want to make a guaranteed return of 6% or 8%?
Do I want to pay taxes now or later?
Do I want to take advantage of my employer’s matching contribution?
Do I want to take on more or less risk?
Which of the following statements is TRUE about compound interest?
Compound interest is difficult to calculate, so those who use it earn higher profits for their efforts
Compound interest means you have a fund manager who is compounding your returns without charging a fee
Compound interest allows you to earn interest not only on the amount you have saved, but also on the interest you've already earned
Compound interest directly impacts how much you will be charged in fees
Money from the profits of a company that is paid out to its shareholders, typically on a quarterly basis
Bond
Pension
Mutual Fund
Dividend
A security in which the investor loans money to a company or government, which then pays regular interest to the holder and returns the principal on its maturity date
Bond
Stock
Fund
IRA
A market where shares in corporations are bought and sold in a financial market
Treasury
Bull Market
Stock Exchange
Bear Market
A market in which prices are falling, encouraging selling
Individual Retirement Account
Bear Market
Social Security
Bull Market
A market in which there is increased stock trading and rising stock prices
Bull Market
Super Market
401(k)
Bear Market
The degree of uncertainty on how likely the investor is to make money on an investment
Bond Rating
Capital Gain
Risk
Rate of Return
What is the Stock Ticker /Symbol of this quote?
116.18
AMZN
(+2.10%)
1D
What is the current price of this stock quote?
116.18
2.39
113.79
119.06
What was the day's opening price for this stock?
116.18
113.79
1.183T
119.06
The amount you owe as the cost to borrowing money
Lease
Loan
Collateral
Interest
The average APR for a payday loan is closest to …
40%
400%
14%
4%
The smallest amount of a credit card bill that a credit card holder must pay during a billing cycle to remain in good standing with the lender
Minimum Payment
Overdraft Protection
Peer-to-Peer Lending
Annual Fee
Which of these statements best explains why it's often a good idea to pay more than the monthly amount due on an amortized loan?
Amortized loans typically have much higher interest rates than credit cards, so they're the best place to put your extra cash
The extra payment will be applied to the interest you owe, which will reduce the overall cost of your loan
The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly
Every time you pay extra, the lender will reduce the interest rate they're charging by a small amount
Long term failure to repay a loan according to the terms agreed to, which has a substantial negative impact on the borrower's credit score
Default
Grace Period
Late Payment Fee
Revolving Credit
Reading through a credit card’s Schumer Box, you see the APR for a specific card is set at 9.99% - 23.99%. Which statement is true?
In this case, you want the highest APR in the range because you’ll earn more
When given a range of APRs like this, you can assume most cardholders pay the lowest rate listed
The APR on credit cards is usually fixed, so it won't be adjusted as long as you are a cardholder
Your APR will be within that range, depending on the strength of your credit history
What is an advantage of using a credit card?
If you need to carry a balance, the interest rates are generally quite low (less than 5%)
You can make an emergency purchase that you otherwise don’t have the money to pay for right now
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
A loan taken by individuals and businesses to make real estate purchases without paying the entire value of the purchase up front
Home-Equity Loan
Direct Plus Loan
Mortgage
Consolidation Loan
Something valuable that the lender can take as payment if you can't or don't repay your secured loan
Balance Transfer
Amortization
Interest
Collateral
Which of the following statements is CORRECT about secured loans?
They usually have higher interest rates as compared with unsecured loans
They are a good choice to use for student loans
If the borrower make payments, the lender can still repossess the item
If the borrower does not make payments, the lender can repossess the item
The number of days between a borrower's statement date and when payment is due, often without accruing interest
Credit Limit
Lease
Grace Period
Statement
An excellent credit score will help with which aspect of car financing?
Qualifying for a low interest rate
Having a wide selection of term lengths
Receiving a large down payment
Bargaining for a great sales price
As a young adult, all of the following are good strategies for building credit, EXCEPT:
Open and use a secured credit card
Open a credit card, with your parent or guardian as a cosigner
Take out a payday loan
Become an authorized user on a credit card used by your parent or guardian
Why are payday loans so much easier to qualify for than traditional bank loans?
Payday loans require proof of employment or other regular income but not a credit check
Payday loans are typically for such small dollar amounts that no one cares if you repay them or not
Payday loans are only used by affluent households, and the banks know they have enough money to cover them
Payday loans are just another word for direct deposit, and almost all employers offer their employees direct deposit instead of a paper paycheck
A small loan, offered through a business, lent at a high interest rate, and meant to be paid as soon as you receive your next paycheck
Small Business Loan
Payday Loan
Fixed-Rate Loan
Installment Loan
Shira is trying to decide between getting a debit card, a prepaid debit card, and a credit card. Which statement is true?
All 3 cards are completely the same
Debit cards and prepaid debit cards are the same
Debit cards and credit cards are the same
All 3 cards are completely different
Duc has a credit card with a $1000 credit limit. His outstanding balance is currently $800. What is the maximum amount he can now spend on this credit card?
$800
$200
$1000
$1800
Why would credit card companies prefer that their cardholders make the minimum monthly payment every month rather than paying their total balance in full?
This enables the credit card company to make more money
This helps cardholders develop financial independence
This is required by federal law for tax purposes
This allows the card holder to pay their bill quickly and close the card when they’re ready
Someone who legally agrees to take responsibility for a person's debt if they cannot repay it
Authorized User
Cosigner
Credit Union
Principal
Which of the following statements is true about this Schumer Box?
Depending on your creditworthiness, the APR for a borrower will always either 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%
A 28.99% APR may be applied to your account for late payment
What is an insurance premium?
Your monthly payment to your insurer, regardless of whether you use any services
A list of the procedures covered by your insurance carrier
An added cost you pay in order to receive higher-quality services
The amount you pay out-of-pocket for a specific procedure or service
Frank has an auto policy with a coverage limit of $30,000 and a deductible of $1,000. He gets into an accident and the damages to his car total $6,200. Fortunately, he has collision coverage. How much will Frank need to pay out-of-pocket?
$0
$6,200
$1,000
$30,000
What does the term "withholding" mean in reference to your paycheck?
How much you earn and includes salary, bonus and commissions
How much is being taken out of your paycheck for things like taxes, employer sponsored health insurance, and retirement
The amount of your paycheck that you are NOT being taxed on
How much you are going to owe the government when you file your annual tax return
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 taxes?
W-2
I-9
1040
W-4
Which of the following statements about the W-2 form is TRUE?
You need a separate W-2 form from EACH of your employers in order to file your taxes
A W-2 lists all the money you earned in cash over the last year
The total wages you earned from ALL jobs you worked in the previous year appear on ONE W-2 form
The W-2 includes information about the interest you earned from your investments
You overhear your cousin talking about the importance of creating and sticking to a budget. All of the following are good reasons to create and stick to a budget EXCEPT:
Having a budget can help you create an emergency fund
A budget can help you identify any bad spending habits
Having a budget is a requirement for obtaining a mortgage
Using a budget can allow you to work towards your financial goals
