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WorksheetsReview Quiz 6
Total questions: 60
Worksheet time: 38mins
A budget can help you reach a financial goal by:
Showing you how you can earn more income
Allowing you to see where you can cut back on spending
Giving you the tools to change more fixed expenses
All of the above
A deductible is:
the discount you deduct from your premium.
The amount of loss you pay before your insurance pays.
The amount that is deducted when you buy a policy.
The discount received by the health care provider.
Diversification is good because:
it focuses investments on a single stock to take advantage of growth potential
mutual funds have higher fees than individual stocks
interest rates rise and fall
it spreads out the risk of the investment
If you get your first credit card while you're a full-time student, what can you expect about the card's APR on outstanding balances?
It will probably be about the same as the APR on your parents' cards.
It will probably be low until you graduate, and then it will rise.
It will probably be low.
It will probably be high.
If you have a long-term horizon for investing, you should:
Lean toward high-risk investments, with high-return potential.
Keep at least 75% cash or money market funds for immediate availability.
Own only one stock
Diversify into savings accounts and US Savings Bonds
Improving your credit score will let you get:
Lower interest rates on loans
Higher interest rates on savings accounts
Neither of the above
Both of the above
Investing in a global stock fund is a good idea to:
focus all risk on the US economy
keep your portfolio dependent solely on the US dollar
Diversify into municipal and corporate bonds
diversify holdings to spread risk outside of the US
Long term investors:
sit tight through bull markets and bear markets
buy and sell on a daily basis
may adjust their holdings to sell when others are selling and markets are falling
always lose money in the long run
Tax refunds:
occur when a taxpayer's income tax withholding exceeds what they owe
come from extra money the federal government has left over at the end of the year, and are distributed around February 15
Come to taxpayers regardless of whether they file an income tax return or not
include interest paid to the taxpayer by the federal government based on holding that money throughout the tax year
A regular paycheck helps your credit score because:
It can be cashed and spent quickly
It has taxes pulled out
It shows you will not pay your bills on time
It indicates you are likely a good credit risk
The W4 form:
lists the number of people who claim the worker as a dependent on their tax returns.
is filled out by each employee, stating the number of withholding allowances claimed.
is a report sent from the employer to both the IRS and the employee showing gross wages.
should be attached to the tax return with a staple when filing.
Which factor is most important in securing well-paying jobs throughout your career?
Having a car
Having a good education
Have a clean driving record
Having established credit
Which of the following utilities may be billed separately from your rent?
Water
Electricity
Phone/Internet Service
All of the above
Why is it not a good idea to make early withdrawals from your 401(k)?
You usually have to pay a strict penalty
You cannot put the money back in once you take it out
You will lose your tax-deferred status on the entire account
Which of the following is a benefit of an employer-sponsored retirement plan?
Contributions are not taxed
Employers often match contributions
All of the above
None of the above
If you have caused an accident, which type of automobile insurance would cover damage to your own car?
Term
Collision
Comprehensive
Liability
If you went to college and earned a 4-year degree, how much more money could you expect to earn than if you only had a high school diploma?
A little more; about 20% more
A lot more; about 70% more
About 10 times as much
No more; I would make about the same either way
If each of the following persons had the same amount of take home pay, who would need the greatest amount of life insurance?
A young single woman with two young children
A young single woman w/o children
An elderly retired man, with a wife who is also retired
A young married man w/o children
Which of the following instruments is NOT typically associated with spending?
Cash
Credit card
Debit card
Certificate of deposit
Which of the following credit card users is likely to pay the GREATEST dollar amount in finance charges per year, if they all charge the same amount per year on their cards?
Vera, who always pays off her credit card bill in full shortly after she receives it.
Jessica, who only pays the minimum amount each month.
Megan, who pays at least the minimum amount each month and more, when she has the money.
Erin, who generally pays off her credit card in full but, occasionally, will pay the minimum when she is short of cash.
Which of the following statements is true?
Your bad loan payment record with one bank will not be considered if you apply to another bank for a loan.
Banks and other lenders share the credit history of their borrowers with each other and are likely to know of any loan payments that you have missed.
if you missed a payment more than 2 years ago, it cannot be considered in a loan decision.
People have so many loans it is very unlikely that one bank will know your history with another bank.
If you had a savings account at a bank, which of the following would be correct concerning the interest that you would earn on this account?
Sales tax may be charged on the interest that you earn.
You cannot earn interest until you pass your 18th birthday.
Earnings from savings account interest may not be taxed.
Income tax may be charged on the interest if your income is high enough
Inflation can cause difficulty in many ways. Which group would have the greatest problem during periods of high inflation that last several years?
Young couples with no children who both work.
Young working couple with children.
Older, working couples saving for retirement.
Older people living on fixed retirement income.
Which of the following is true about sales taxes?
You don't have to pay the tax if your income is very low.
It makes things more expensive for you to buy.
The national sales tax percentage rate is 6%.
The federal government will deduct it from your paycheck.
Lindsay has saved $12,000 for her college expenses by working part time. Her plan is to start college next year and she needs all of the money she saved. Which of the following is the safest place for her college money?
Coporate bonds
A bank savings account
Locked in her closet at home
Stocks
Which of the following types of investment would best protect the purchasing power of a family's savings in the event of a sudden increase in inflation?
A twenty five year corporate bond
A house financed with a fixed rate mortgage
A 10 year bond issued by a corporation
A certificate of deposit at a bank
Under which of the following circumstances would it be financially beneficial to you to borrow money to buy something now and repay it with future income?
When some clothes you like go on sale.
When the interest on the loan is greater than the interest you get on your savings.
When you need to buy a car to get a much better paying job.
When you really need a week vacation.
Which of the following statements best describes your right to check your credit history for accuracy?
All credit records are the property of the U.S. Government and access is only available to the FBI and Lenders.
You can only check your record for free if you are turned down for credit based on a credit report.
Your credit record can be checked once a year for free.
You cannot see your credit record.
Your take home pay from your job is less than the total amount you earn. Which of the following best describes what is taken out of your total pay?
Federal income tax, social security and Medicare contributions.
Federal income tax, sales tax, and social security contribution.
Social security and Medicare contributions.
Federal income tax, property tax, and Medicare and social security contributions.
Which of the following best describes the primary sources of income for most people age 20-35?
Profits from business
Rents
Dividends and interest
Salaries, wages, tips
If you are behind on your debt payments and go to a responsible credit counseling service such as the Consumer Credit Counseling Services, what help can they give you?
They can work with those who loaned you money to set up a payment schedule that you can meet.
They can force those who loaned you money to forgive all your debts.
They can cancel and cup up all of your credit cards without your permission.
They can get the federal government to apply your income taxes to payoff your debts.
Kelly and Pete just had a baby. They received money as baby gifts and want to put it away for the baby's education. Which of the following tends to have the highest growth over periods of time as long as 18 years?
A U.S. Government Savings Bond
A Savings Account
A Checking Account
Stocks
If your credit card is stolen and the thief runs up a total debt of $1,000, but you notify the issuer of the card as soon as you discover it is missing, what is the maximum amount that you can be forced to pay according to Federal law?
nothing
$50
$500
$1,000
Justin just found a job with a take home pay of $2,000 per month. He must pay $800 for rent and $200 for groceries each month. He also spends $200 per month on transportation. If he budgets $100 each month for clothing, $150 for restaurants and $250 for everything else, how long will it take him to accumulate savings of $900.
1 month
2 months
3 months
4 months
Which of the following is true about sales taxes?
You don't have to pay the tax if your income is very low.
It makes things more expensive for you to buy.
The national sales tax percentage rate is 6%.
The federal government will deduct it from your paycheck.
What should you NOT use a loan to purchase?
A house
Tuition for higher education
Airline tickets to your dream vacation
A car
Buying a home security system is an example of protecting your home against________.
deductibles
risk
warranties
insurance
Something people buy to protect themselves from losing a lot of money in the event something happens to them or their property is known as...
risk management.
liability.
warranty.
insurance.
When filing an insurance claim, the policyholder must pay a ________________, which is the amount you owe before insurance will cover the rest of the bill.
premium
deductible
commission
contract fee
An insurance premium is paid by...
the insurance company.
the policyholder.
the claims adjuster.
the government.
What does liability insurance not cover in the event of an accident?
Damage to someone else’s property
Damage to someone else’s car
Injury to yourself
Injury to the other driver
Collision insurance is...
insurance that will pay for injury to another driver and/or damage to their car if you are in an accident.
insurance that will pay to get your car fixed in the event of an accident.
insurance that will pay for damage to your car by someone who doesn’t have insurance.
insurance that will cover injuries to yourself in the event of an accident.
Which of the following is not an advantage of having health insurance?
Health insurance lowers your risk of acquiring medical debt.
People with health insurance can skip lines in emergency rooms.
Health insurance protects you financially from medical emergencies.
Health insurance allows some medical procedures to be covered by a low cost co-pay.
Which item is important to consider when selecting a credit card?
Annual Percentage Rate (APR)
Fees
The look of the credit card
Both APR and fees
Annual Percentage Rate (APR), credit limit, and penalties and fees are important to consider when _____.
Choosing a financial advisor
Choosing a credit card
Looking at your credit score
Selecting a financial institution
What is a benefit of having a good credit score?
Loan sharks will be less likely to bother you.
You'll get accepted to better education institutions.
You'll get more job offers.
When you need a loan, you'll have more loan offers to pick from.
The cost of a secured loan is typically lower than the cost of an unsecured loan because _______.
it requires collateral.
the loan takes longer to get.
it has high interest rates.
your parents will make sure you pay it back.
