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WorksheetsPersonal Finance Final Exam
Total questions: 110
Worksheet time: 1hrs 1mins
What is the only way to pay no interest on credit card purchases?
Pay minimum payment on time every month.
Pay the full balance on time every month.
Staying under 50% of your maximum balance.
Not making any new purchases if you have a balance.
If you cannot pay the full balance on a credit card you should ..
Use another card to pay off the balance.
Pay the minimum payment
Pay as much as you can over the minimum
Credit card companies would prefer you pay off your balance (a)
A loan that is secured with collateral will generally have a (a) rate than an unsecured loan.
In general, as your credit score increases, the interest rate you will be charged for a new loan .....
Increases
Decreases
Stays the same
Put in order from least risky to most risky.
Bank Account
Mutual Fund or ETF
Individual stocks
When it comes to investing, any risk is bad.
True
False
Why is it best to start investing when you are young?
Because you don't have a lot of money yet
Your money has a long time to grow, so even a smaller amount can get big.
The government doesn't tax you as much when you are under 30.
What does the federal government do to encourage you to invest for your retirement?
Gives you tax breaks.
Gives you a good interest rate.
puts extra money in your account.
Texts you a reminder every 6 months
You can tell how a company's stock will perform in the future if you study how they have done in the past and lately.
False
True
The easiest way to diversify your investments is to (a)
If I put all of my money in Apple stock, what is wrong with that?
My investments are not diversified, so it is really risky
I will have to pay lots of taxes
If you make too much money, you have to sell it.
This type of retirement fund has you put in money that has already been taxed but lets it grow and get taken out tax free when you retire?
Roth IRA
401 K
HMO
PPO
Which type of health insurance is the most restrictive in terms of which doctors you can see?
HMO
PPO
IRA
Which type of insurance has you pay a deductible only once per year?
Health
Automobile
Life
Homeowners
Which type of insurance never has a deductible?
Health
Automobile
Life
Homeowners
If you wait until you are 70 to start collecting social security, what happens?
Your monthly payments will go down
Your monthly payments will be higher
You won't be able to work
The current social security system will be able to function for the next 77 years without any changes.
True
False
If you wait until your official retirement age to collect social security, you will be able to work and collect social security payments at the same time.
True
False
If you want to claim social security at age 62, you will be able to work and collect social security payments at the same time.
True
False
The best place to save for your retirement is in a bank account because you know it will be safe.
True
False
If an investment promises very high returns, it is most likely to be very risky.
True
False
Your credit score is used only for loans.
False
True
What is a reasonable average yearly rate of return to use to predict the value of investments in the future?
1-2%
4-5%
7-8%
12-15%
If you want a good price on your homeowners insurance, you should make sure they don't know about the valuable collectibles you have in your house.
True
False
If you live in an apartment and someone breaks in and steals your stuff, who will pay for your loss.
The thief's liability insurance
The landlord's homeowners insurance
Your renters insurance
Social Security
Moe got in a car accident that caused $3000 of damage to his car. He has collision coverage with a $750 deductible. Who will pay what?
Moe: $750
Insurance: $2250
Moe: $2250
Insurance: $750
Moe: 0
Insurance: $3000
Moe: $750
Insurance: $3000
Soren hit a tree with his car, causing $2600 of damage to his car. Soren has the minimum insurance required by the state of Michigan without collision and comprehensive. Who will pay to repair Soren's car?
Soren: $2600
Insurance: $0
Soren: $0
Insurance: $2600
Soren: $1300
Insurance: $1300
Soren: $1300
Tree: $1300
Abby's car was stolen last week. The current value of her car is $15,000. If she has collision and comprehensive coverage with a deductible of $500, how much will the insurance company give Abby?
$15,000
$15,500
$14,500
nothing because her insurance policy does not cover theft
Karen's health insurance has a family deductible of $3000. If she has paid $2100 in medical bills so far this year, how much more does she need to spend on medical care in order for her insurance to start paying?
$900
$5100
$3000
$2100
What is a benefit of using a mutual fund or ETF to invest?
You can be instantly diversified
You will never lose money
You can make a lot of money quickly
Which type of retirement account saves you money on your taxes right now?
Roth IRA
401 K
Which type of retirement account saves you money on your taxes in the far future?
Roth IRA
401 K
Which type of retirement account can you open on your own?
Roth IRA
401 K
Which type of retirement account needs to be started and maintained by your employer?
Roth IRA
401 K
What is the hidden risk when you are investing for the long term in very safe investments?
Inflation
Taxes
Black Swan events
An effective way to make sure you are investing for the future is
pay yourself first
after you have paid bills and spent what you need, put the leftover in investments
Automating your saving or investing means...
You have told your bank or workplace to take out regular payments.
You set a calendar reminder to make sure you do it.
You don't do anything at all, it just happens automatically.
The price you will pay if you rent to own an item is..
About the same as you would pay anywhere else.
A bit more than you would pay at other places, but worth it for the convenience.
WAY more than you would pay pretty much everywhere else.
A bargain compared to other places.
Are you required to have homeowners insurance?
Always
Never
If you have a loan with your home as collateral.
If you have a big dog
Which one of these does not affect the cost of your homeowners insurance?
How many dogs you have and what breeds
Your income
The size of your home.
How many homeowners claims you have made in the past 5 years
Which of these does not affect the cost of your life insurance?
Your age
Your gender
Your income
Your health history
You may be able to get a discount on your car insurance if you have good grades
True
False
If you are 25 years old, married, with a kid, and own a house and two cars, what kind of insurance should you have?
Life, homeowners, health and car
homeowners and car
life only
health and life
If you are 21, single with no kids, rent an apartment and do not drive, what kind of insurance should you have?
life, health, renters and car
health and renters
life, health and renters
none
Insurance is something you buy because..
it is required (only reason)
you want to make money
You want to make sure you don't lose the things you have
Car and Homeowners insurance is meant for..
Small damages that happen all the time
Small damages that only happen rarely
Big damages that happen rarely
investing
The best choice for life insurance is..
A whole life policy so you can use it to invest
A term life policy for the time when you will need insurance and then invest your own money for the future
No insurance because you don't need money when you are dead.
The bad thing about whole life insurance is..
It is super expensive and the investment part does not perform that well.
It runs out after 20 years
You can't get it if you are too young
Term life insurance is best because..
It is cheap and gives you protection AND enough money left over to take care of your own investments.
It pays more than whole life
It is easier to find than a whole life policy
What happens if you are older (70's) and want to get life insurance.
No problem, it is for all ages of people
You are likely to be turned down or charged a great deal per month
They will only sell you terms of 5 years at a time
They charge you less since you won't be using it for as long
If you are 70 and need health insurance, then...
You qualify for free government health insurance: Medicare
You need to have a job that will provide it
You are out of luck because insurance companies will charge you too much
If your family of 3 people with a household income of $25,000 needs health insurance, then...
Your income qualifies you to get free health insurance through the government: Medicaid
You probably can't afford it
You will need to get a job that provides insurance
Where do most people in the US get their health insurance?
Pay for it from a private company
Get it through their job
Get it from the government
Credit utilization rate is used to determine your credit score. What is it?
The percent of available credit you are using
How much you owe on your credit cards
How much you owe on your car loan
How often you use your credit card
When you are making a budget, it really helps to have a list of what you are currently spending each month.
True
False
In a 50-30-20 budget, what category is the biggest?
Needs
Wants
Saving
Taxes
What is the most important factor of a credit score?
Types of credit
Payment History
Amount of debt
Inquires
Which is an exceptional credit score?
672
555
713
813
Which of the following probably has the highest credit score? Assume that all of them have made regular monthly payments on time.
An 18 year old college freshman
A 20 year old waitress with two active credit cards
A 40 year old business owner with two cars, a house, and four active credit cards
A 50 year old with five credit cards who rents his house.
Having a low credit score usually means that -
a person has a low income or net worth
it will be easier for a person to get a credit card with a low interest rate
a person has a poor credit history
it will be easier for a person to get a low interest rate when borrowing money
If you only make the minimum payment on your credit card balance, the amount of time needed to pay it off completely is shorter than if you paid more.
True
False
The longer your credit history, the better your Credit Score
True
False
Which of the following statements best describes the relationship between credit scores and credit riskiness of borrowers?
Higher credit scores are associated with higher credit risk
Higher credit scores are associated with lower credit risk
Lower credit scores are associated with lower credit risk
Credit scores and credit risk are unrelated
Raul has had a credit card since college. Overall, he has managed his credit history well, although he has occasionally made a late payment on his credit card. Given this information, which of the following FICO scores is Raul likely to recieve?
350
825
640
790
Which of these things will NOT appear on a credit report?
The time I made a late payment on my credit card 3 years ago
The fact that I have paid my phone bill and electric bill on time for 5 years.
The $28 electric bill that I forgot when I moved and got sent to collections.
The Old Navy credit card that I opened to get a 20% discount on my clothes that day, but I never used.
The best time to start saving and investing for retirement is...
When you are in your 50's and you are ready to start planning it
When you are in your 40's and are finally making a lot of money
When you are in your 30s and have a family
When you are in your 20's and have a lot of time for your money to grow
If you tend to spend a lot of money, having a credit card is a good idea.
False. I'm likely to spend way more than I can afford and ruin my credit
True, this will teach me responsibility
True, this will help me build credit
Having a cosigner on a loan is a way to get approved or get a lower interest rate.
True
False
If you invest monthly over a long period of time and get a reasonable return (7%ish), then the amount in your account at the end of many years will be...
Mostly gain on your investments
Mostly what you put in to the account
About half what you put in and half gain
Which of the following would not help the upcoming social security shortage?
Taxing payroll at a higher rate
Raising the retirement age
Raising or removing the cap on the amount of yearly income that is FICA taxed
Letting people start to collect social security at age 60
When it comes to picking a mutual fund or EFT, research has shown that the best strategy is to choose...
A low cost, well diversified index fund
A high cost fund, because it will perform better
The fund that did the best over the last 3 years
The fee for investing in a mutual fund or ETF is called the..
expense ratio
tax
rate of negative return
credit utilization rate
The longer you take to pay off a credit card, the (a) you will pay in interest.
The longer you take to pay off a credit card, the (a) you will pay in monthly payments.
If you owe more than $5000 on your credit card and are making the minimum payment and not charging more, it will probably take you how long to pay off the card?
7 months
between 1 and 2 years
between 10 and 20 years
around 50 years
If you keep making late payments on a credit card debt, all of these can happen EXCEPT...
You are charged a late fee
Your interest rate goes up
Your credit score goes up
Your credit score goes down
Social Security is intended to..
Make old people poor
Make old people rich
Help give older folks an extra source of income in retirement
An emergency fund should contain...
A years work of income
3-6 months of necessary expenses
6 months of usual spending
$100
What is the most common factor that will qualify you for government aid?
low household income
high bills
lots of debt
low bank balance
If you have a high deductible on your car insurance...
you will pay more for the insurance but less if you make a claim
you will pay less for the insurance but more if you make a claim
Age is not a factor in the cost of which insurance?
Life
Car
Renters
Paying extra for more liability coverage is a really good idea if..
Don't have any money to pay if you are sued
Have a lot of assets that you could lose if you are sued
If your renters insurance has a deductible of $500 and someone steals your $350 bike, who will pay what to replace it?
You : $350
Insurance : $0
You : $350
Insurance : $150
You : 0
Insurance : $350
You : $150
Insurance $350
If your renters insurance has a cash value reimbursement policy with no deductible, and your bike is stolen, what will they pay?
The cost of replacing the bike
The price you paid for the bike when you bought it 8 years ago
The price you could expect to get for your bike if you tried to sell it today.
If your renters insurance has a replacement cost reimbursement policy with no deductible, and your bike is stolen, what will they pay?
The cost of replacing the bike
The price you paid for the bike when you bought it 8 years ago
The price you could expect to get for your bike if you tried to sell it today.
The beneficiary of a life insurance policy is..
The person who gets the money in case of a death
The person whose life is insured
The company that runs the insurance
The salesperson who sells the insurance
Insurance is all about ...
Making money
Protecting the things that you own or care for
paying less in taxes
Which loan has no collateral?
Mortgage
Automobile
Credit Card
For a loan, a lower interest rate is better.
True
False
When it comes to investments, a lower rate of return is better.
True
False
When you buy and sell stocks, you are guaranteed to make a profit if you are careful.
True
False
There are experts who always know which stock is the best buy.
False
True
Having anti-theft devices in your car and home can lower the cost of insurance for those things.
True
False
It is possible to become a millionaire in your lifetime by investing less than $50 per week into an investment if you start young enough.
True
False
Actions of the government can have a big effect on how your life will be in your older years.
False
True and so there is no point in you doing anything, what happens happens.
True, but you can control your savings and investing and how well prepared you are.
Even without a high income, you can save and invest enough to have a comfortable retirement if you start young.
True
False
When you decide that you need to have life insurance, what is the best type of policy?
Term life
Whole life
It is possible to own stock in every company on the stock exchange.
Yes, but it would cost a lot
Yes, but it would take a lot of time to keep track of
No way
Yes, you can buy shares in a total market index mutual fund
Your health insurance will pay money to your beneficiary if you die.
True
False
Anybody can buy life insurance.
True
False
If you pay for your health insurance, you probably won't have to pay for any other health care costs.
True
False
If you have a high deductible health insurance policy, the government will allow you to put money in a fund that is not taxed at all. This fund is called a
401 K
Health Savings Account
Roth IRA
HMO
What is the big benefit of a health savings account?
BIG tax savings
Your doctor will charge you less
High rate of return
All of the following are benefits of a 401K EXCEPT
Tax savings when you put money in
Possibility of your job matching your contribution
Tax savings when you take it out
Automatic contributions from your paycheck
A car dealership deciding whether to give you a loan to buy a car would probably look at..
Your credit report
Your credit score
Your driving record
Your high school transcript
What percent of your budget should go toward paying off debt and saving?
50%
20%
5%
An emergency fund can help you avoid big financial problems.
True
False
Kids do not have to pay federal income tax
True
False
When you are doing your investing for retirement, it is important to check how you are doing every day and make adjustments.
True
False
