WorksheetsPre- Assessment Budget Challenge
Total questions: 25
Worksheet time: 13mins
Which is true of overdraft protection (ODP)?
It insures that your checks will not bounce
It is required by law for most accounts
It is usually available free for most accounts
It required funds to be available from a linked account
A person has $4000 to put into savings. Assuming all options were offered by the same institution, which account is likely to offer the highest interest rate?
certificate of deposit
checking account
money market account
savings account
In retirement plans, what does vesting refer to?
The need to diversify your investments to avoid major losses in one area
How long you have to work before employer contributions become yours
The ability of your money to grow without having to pay tax on the earnings
Whether the plan is managed by the employer, government or the individual
Which benefit typically costs an employer the most to provide?
comprehensive health insurance
one week paid vacation
$50,000 term life insurance
four paid sick days
Which is a drawback of being a salaried employee?
Pay amounts vary from week to week making budgeting difficult
Fringe benefits such as health insurance are rarely provided
Work weeks might exceed 40 hours without additional pay
Employers may reduce the rate of pay without notice
Which best describes compound interest?
earning interest on your interest
earning interest on tax deffered savings
increasing returns through higher risk
taking advantage of an employer match
Why is saving in a designated retirement account better than in a regular account?
Savings in a retirement account receive a government match
Saving in a retirement account offers significant tax benefits
Savings in a retirement account are guaranteed against loss
Savings in a retirement account do not count toward FICA
Which is the best strategy when considering an employer matching retirement plan?
Check on the returns of individual retirement plan options first
Invest as much as possible in the stock of the company you work for
Contribute enough to get the full employer match since it's free money
Contribute enough to get 10% of the match and increase gradually over time
Which best describes the purpose of insurance for in insured?
A way to profit from an unfortunate circumstance
A way to prevent bad things from happening
A way to save for unexpected events and retirement
A way to manage risk that occurs as part of daily life
What is an insurance deductible?
The total amount the insurance covers
The amount the insured pays before the insurer pays
The monthly payment the insurer makes for the insurance
A percenatge of the cost of the service that the insured pays
Which best describes the main role of the three major credit reporting agencies?
determine whether or not a loan applicant earns eough money to receive a loan
develop government rules and regulations for organizatios that provide loans
compile consumer credit and loan information and provide it to lenders and businesess
offer revolving credit and installment loans to those who have high enough credit scores
What would a FICO score of 700 be considered?
Poor
Fair
Good
Excellent
Which does not use consumer credit scores as part of their process?
insurance companies to set premiums
landlords to evaluate prospective tenants
graduate schools for admissions purposes
employers as part of the hiring process
Which is a drawback of using credit cards?
Interest is charged on all purchases made
Most credit cards have an annual fee
Many consumers find they spend more money if using a credit card
Frequent use of credit cards will result in a lower credit score
Why is it important for a consumer to know their credit utilization on their credit cards?
Higher credit utilization lead to lower incentives on reward cards
Co-branded credit cards place strict limits on the amount of credit that can be utilized
High credit card utilization can lead to a reduction in cardholder's credit score
As credit card utilization increases, annual percentage rates decrease
When should a consumer file a fraud alert with the cerdit bureaus?
Any time they suspect they ahve been victim of identity theft
Only if the identity theft involved credit cards or loan accounts
If a resulting investigation showed the theft actually took place
If the Consumer Financial Protection Bureau recommends it
Moneymaster mutual fund gains 25% in year one and loses 20% in year two. What are its average annual rate of return and its actual annual return?
5% and 2.5%
2.5% and 0%
0% and 5%
2.5% and -2.5%
Why is diversification important in aninvestment portfolio?
It reduces the risk of being invested in a single asset or asset class
The greater the number of investments the greater the return on investment
It results in a greater percentage of tax advantaged investments
It reduces the expense of owning a variety of investments
Which is always necessary in order to receive a tax refund from the federal government?
a filer must have some unearned income
a filer must file a federal tax return
a filer must be eligible for a tax credit
a filer must have taxes withheld fro their paycheck
Which is an example of a revolving loan?
credit card
student loan
mortgage
vehicle loan
Place in order the following loans from lowest interest rate to highest: credit card, mortgage, and personal loan
mortgage, credit card, personal loan
personal loan, mortgage, credit card
mortgage, personal loan, credit card
credit card, mortgage, personal loan
Which is a benefit of a federal student loan grace period?
It allows a borrower to skip one loan payment that would otherwise be due
It allows the borrower to decide the amount they pay on their loan
It establishes a lower monthly payment that rises over time
It postpones any interest charged or payment due on the loan
Which is a requirement for obtaining a Direct Federal Student Loan?
Household income must be at or below the poverty line
Filing a Free Application for Financial Aid before the deadline
Receiving some form of assistance from the college or university
Recipient or parent having a good or better credit score
What is a normal consequence of carrying a balance on a credit card?
The pesron's credit score will decrease
The net cost of the purchase will be higher
The annual fee for the card will be waived
Additional rewards will be earned on the interest
Which is the approximate percentage of total pay that fringe benefits make up?
4%
10%
15%
30%
