WorksheetsUnit 6 Review
Total questions: 54
Worksheet time: 25mins
What is the penalty if you withdraw money from your retirement account early?
you will have to repay it
the money you withdraw will be taxed as income at whatever your current tax rate is
you lose eligibility for that account
the IRS garnishes your wages
Who contributes to IRA’s?
employees and employers
employees/individuals only
employers and the government
employers only
What's an IRA?
One way to earn more interest from a bank is to
take out a loan
buy a certificate of deposit (CD)
buy stock in the bank
start a savings account
When should you start planning for retirement?
As soon as you turn 25
The sooner, the better; NOW would be best
in your 30s
in your 40s
Which of these financial options involves the most risk?
savings account
stocks
mutual funds
bonds
Who owns commercial banks?
the government
depositors
stockholders
the bank employees
What is a guarantee of repayment required by lenders?
deductible
down payment
warrantee
collateral
How many credit cards should the average person have?
as many as they want
0-2
10
5-8
The federal income tax is ________ and generally impacts higher incomes because it taxes them at a higher rate.
bilateral
proportional
progressive
regressive
__________ is a formal legal declaration that you are unable to pay your debts.
insolvency
bankruptcy
litigation
impeachment
________ is the amount you have to pay on a claim before an insurance company will begin payments.
premium
deductible
annual
benefit
Who most likely pays the highest price for automobile insurance?
your 60 year old grandmother
a 40 year old father
an 18 year old girl
an 18 year old boy
a 35 year old mother of 3 kids
How do you make yourself more employable?
showing up for work tardy on a habitual basis
having chronic absenteeism
having many marketable skills
being rude to coworkers and customers
not having adequate education
All of the following are ways to build and improve your credit EXCEPT
Establish & maintain a long positive credit history
Applying for and using credit as often as possible
Pay bills on time
Keeping your debt to credit ratio low
What is the term for the yearly cost of credit?
Annual Percentage Rate
ATM
Premium
Downpayment
A ______________ is financial institution that is non-profit and requires membership.
payday loan
national bank
commercial bank
credit union
title pawn
What type of financial institution offers small, high interest loans?
commercial bank
credit unions
payday loan
national banks
A prolonged period of rising stock prices is known as
Bull Market
Bear Market
Commodities Market
Contractionary phase
A prolonged period of falling stock prices is known as
Bull Market
Bear Market
Commodities Market
Expansionary phase
When applying for credit from a bank, a borrower must be
debt-free
poor
rich
creditworthy
The most important investment you can make in your life is
a car
a house
an education
a wardrobe
Before you are ready to save or invest you should satisfy your
parents' expectations
Needs
Wants
Curiosity
Economically speaking, the potential for loss is known as _________.
opportunity
trade offs
liability
risk
Term for the monthly payment you make when you purchase insurance:
deductible
premium
maturity value
par value
During an economic recession, people tend to save/invest _________.
more
often
like they always do
less
When the economy is in a period of growth or expansion, people tend to save or invest
less
more
occassionally
never
Banks charge interest on loans because
the government requires that they charge a specific amount as interest on loans
because they know they can charge a fee
it is the fee for using their $ and how they make a profit
because they can't give away cash for free
Like an IRA, a 401 k is a type of retirement investment account. Unlike an IRA, a 401k _____________.
is an employer-sponsored retirement plan.
allows the investor to remove the money at any time without penalty
doesn't go with you if you change jobs
is a totally tax-free investment
__________ and __________ are the 2 most common types of life insurance.
universal and whole
term and disability
major medical and liability
term and whole
Three types of tax:
regressive, offensive, progressive
proportional, discretionalry, excise
regressive, proportional, progressive
regressive progressive, proponent
What are stocks?
sharing something
An ownership share in a company
A graph with pointy arrows that are red and green
What is income?
The amount you spend
The amount you don't save
Money taken in
What is a budget?
A plan for how money will not be used
A plan for how money will be used
The amount you spend
The amount you save
Reduces the need to carry large amounts of cash.
Certificate of Deposit
Checking Account
Money Market Deposit Account
Savings Account
What is investment?
money spent on something with the goal of making more money
money spent on other things
money spent on saved products
Your money remains tax-deferred in this account until you withdraw (taxed as income)
Roth IRA
Traditional IRA
A diversified portfolio is desirable because
It limits investment choice
It's a good predictor on rate of return
It increases risk and return
It decreases risk
Why is compound interest more beneficial than simple interest?
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 card you use to both access funds in your bank account and pay for goods and services is:
a credit card
a birthday card
a gift card
a debit card
If you decide to pawn an item of yours, which of the following is TRUE?
You will not pay extra charges besides the APR
The loan amount is usually = to the value of your item
You cannot sell an item to a pawnshop
If you don't come back for you item, the pawnshop keeps it
What is a risk of co-signing a loan for a family or friend?
You are likely to get a higher APR
You have a shorter loan term
You become the primary borrower on the loan
You may be held responsible for the debt
Why is it important to start investing as soon as possible?
You take less risk when you are young, so money will be safe
You have more time for your money to compound
Investing is an easy way to make quick money
Fees on investments are cheaper when you are younger
Which type of tax hurts low income earners?
progressive tax
proportional tax
regressive tax
none of the above
Which type of tax is based on the ability to pay and hurts high income earners?
progressive tax
proportional tax
regressive tax
none of the above
A sales tax of seven cents is added to every gallon of gasoline sold. What type of tax would this be?
progressive tax
proportional tax
regressive tax
None of the above
A formal request to an insurance company asking for a payment when the policyholder has an accident, illness or injury is called:
claim
deductible
risk
co-insurance
Who should get Disability Insurance?
Anyone with people relying on their income
Only people who are injured
No one until they are disabled
Anyone who has a job
