WorksheetsPersonal Finance Pre-Test 1
Total questions: 15
Worksheet time: 8mins
Keisha is trying to determine whether her desired career has future earnings potential. She should look at each of the following EXCEPT…
Starting and median salaries of those currently in the field
Opportunities for advancement with additional education or experience
What the top 1% in her field earn annually
Projected job growth rate in the industry
Lin works part time after school at a grocery store. When he looks at his paystubs, he sees his net income is lower than his gross income. Why?
Net income is the hourly rate, while gross income is how much he made for the week
Net income has taxes removed, while gross income is the total amount he earned
Net income is the amount he pays in taxes, and gross income is the amount he can deposit to his bank account
Net income is his specific pay, while gross income is how much all the store’s employees made
Which IRS form do most Americans complete in order to file their annual taxes?
1040
1099
W-2
W-4
At the federal level, people pay taxes…
At a flat rate of $25,000 per household
Only if they earn more than $100,000 per year
Equivalent to 20% of their income
According to tax brackets based on income
Matt has his first full-time job after graduation, and he wants to use a zero-based budget as part of his financial plan. What should he do?
Save zero dollars every month until all of his long-term debt is paid off
Create a budget where every expense is rounded to the nearest whole dollar, so the costs all end in zero
Budget carefully so that all income is assigned a role to be spent, saved, or invested, so there’s zero money left unaccounted for
Spend his bank account down to zero every month
The main purpose of a budget is…
To restrict your spending until you have at least $1000 saved in the bank
To allow you to achieve your short- and long-term financial goals
To make sure you are paying the correct amount of taxes each year
To check whether all the transactions appearing on your bank statement are accurate
Marti and Kat both want to save money for retirement in 40 years, and they each save $200 per month. Kat puts her money into a Roth IRA investment account holding a diversified stock mutual fund and Marti puts her money into a savings account compounding quarterly. Which statement is most accurate?
Kate is guaranteed to retire with more money
Kat’s strategy is riskier but will possibly lead to more money at retirement
Marti is guaranteed to retire with more money
Marti’s savings will match the rate of inflation
Sammi uses the saving strategy of “pay yourself first.” What does that mean?
a. She deposits her paychecks into a bank account in her own name
b. She is self-employed so she doesn’t need to spend money commuting
c. She puts money from each paycheck into her savings before she starts spending
d. She doesn’t pay any bills until she’s treated herself to something nice
e. I don’t know
Two important features to look for when opening your first savings account are the bank being FDIC insured and…
a. Having low or no fees
b. Having low interest rates
c. Offering reward perks for qualified purchases
d. Providing investing services at all their locations
If an investor wants to minimize their risk, a common strategy is to…
a. Invest in only one company
b. Diversify across asset classes
c. Use an online trading app
d. Buy shares only when a stock’s value is rising
e. I don’t know
Which of the following statements is true about investments in a diversified stock index fund such as the S&P 500?
a. It will never lose money because it is so well diversified
b. It has average long-term return that is less than a savings account
c. It has average long-term return of 7-8%, but it is volatile and has some years with negative returns
d. It guarantees a return of 7% annually
e. I don’t know
Sheryl is trying to put together an investment plan to use for the next 5-10 years. Each of these might be a part of the plan EXCEPT…
a. Investing in a diversified stock index fund
b. Buying a house to live in
c. Contributing to a retirement account
d. Building an emergency fund
e. I don’t know
Mason received a financial aid offer from his first choice college, and it included each of the following types of aid. Which represents the best option, that he should accept first?
$600 work study job
$1,200 private student loan
$4,000 grant
$9,000 federal student loan
I don’t know
Omari is taking out an auto loan for a car that costs $12,000. Which of the following actions will help reduce the total amount he ends up paying?
Make a large down payment
Get a loan at a high interest rate
Choose a loan with a long term, such as 72-months
Pay the lowest amount required every month
I don’t know
There are many types of auto insurance. Which type of coverage will pay for damages to your car even if you cause the accident?
Bodily injury
Collision
Comprehensive
Property damage
I don’t know
