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WorksheetsPersonal Finance Semester Exam Review
Total questions: 55
Worksheet time: 18mins
Harper is planning to apply for college and wants to qualify for federal financial aid. What document must she file?
ASVAB
SAT
Form 1040EZ
FAFSA
Who receives and uses the information submitted in your FAFSA?
Your employer to see if you'll still be able to work while attending college
Your parents to keep track of your progress at college
The federal government for tax purposes
The schools you’ve applied to and the government to determine your eligibility for financial aid
Which of the following sources does not typically provide scholarships to college students?
private foundations
state governments
local businesses
credit card companies
Which of the following is NOT typically considered a component of personal finance?
Budgeting your expenses
Saving for retirement
Understanding tax laws
Memorizing currency exchange rates
When deciding on a career path after high school, what should Ethan do?
Flip a coin and hope for the best!
Collect data and use a rational decision-making model to weigh the alternatives.
Make a list, ask the advice of his best friends and parents, go with whatever the vibe is that week.
Refuse to make a decision until the last minute, and then do whatever he has to do
Which of the following is a key advantage of using a rational decision-making process?
It ensures decisions are made quickly without much thought.
It allows for decisions to be made based on gut feelings.
It provides a structured approach to evaluate all possible options.
It relies solely on past experiences to make decisions.
After graduating high school, Jackson decided to enter the workforce immediately. What is a benefit of his decision?
Gain valuable work experience
Cannot become financially independent
There are no benefits to working right after high school.
No access to employer-sponsored healthcare benefits
What are the benefits of pursuing a two-year degree or certificate program at a community college?
Shorter degree completion timeline
More affordable tuition and fees
Career fields that are in demand
All of the above
Whenever Alex scrolls through his social media feed, he often feels uneasy and dissatisfied with his own life after seeing his peers enjoying exciting experiences. What cognitive bias is Alex experiencing?
Confirmation Bias
Overconfidence Effect
Fear of Missing Out (FOMO)
Bandwagon Effect
During a holiday sale, Emma noticed a handbag originally priced at $500 was now marked down to $200. She felt compelled to buy it because it seemed like a significant discount. Emma is influenced by (a) .
Anchor Bias
Sunk Cost Fallacy
Fear of Missing Out (FOMO)
Sarah is reviewing her pay stub and wants to see the total amount deposited in her checking account from the pay period. Which section will provide Sarah with this amount?
net pay
gross pay
pay rate
deductions
Anika is trying to manage her finances better. She decides to allocate her budget based on percentages: the largest portion for her needs, a smaller portion for her wants, and the smallest portion for savings. What budgeting system is Anika using?
Zero-based budgeting
Pay Yourself First
50/30/20
Envelope System
David is trying to manage his monthly expenses. He wants to allocate money into categories so that no money is left without a purpose at the end of the month. Which budgeting system should he use?
Zero-based budgeting
Pay Yourself First
50/30/20
Envelope System
Dahlia has decided to manage her finances by dividing all her money into categories, and then putting the cash for each category into a different envelope. What budgeting system is she using?
Zero-based budgeting
Pay Yourself First
50/30/20
Envelope System
Grace has decided to adopt a budgeting system where her primary goal is to save money before paying any other bills. Which budgeting system is she using?
Zero-based budgeting
Pay Yourself First
50/30/20
Envelope System
How do gross pay and net pay differ in terms of deductions?
Gross pay includes all earnings before any deductions; net pay is the amount after all deductions are made.
Gross pay is the amount after deductions; net pay is the amount before deductions.
Net pay is the total salary offered; gross pay is the amount you take home.
Net pay is the amount before taxes; gross pay is the amount after taxes.
Select the item that is NOT an example of a paycheck deduction.
State taxes
Health Insurance
Holiday Pay
Medicare and Social Security Taxes
Which example describes a traditional pension plan?
Caroline invested in her retirement account, and her employer matched her contribution. When she retires, she will have access to that account that will pay her regular payments.
Fred worked for 30 years at the same company, where both he and his employer contributed to a retirement fund. When Fred retires, he will make a high percentage (maybe as much as 75%) of his highest monthly pay as a payment every month.
Amelia worked for her entire adult life, and contributed to Social Security with every paycheck. When she reaches the government's retirement age, she will receive monthly payments from the Social Security Administration.
Traditional pension plans no longer exist.
Which of the following is NOT commonly considered a standard employee benefit provided by employers?
Retirement savings plans like 401(k)
Flexible working hours
Company-sponsored gym memberships
Dental and vision insurance
How does a living wage differ from the minimum wage in terms of economic impact?
A living wage is set by the government to control inflation, while the minimum wage is determined by individual employers.
A living wage is designed to meet basic living costs, whereas the minimum wage is the lowest legal pay rate for workers.
Both living wage and minimum wage are the same, as they are both set to ensure fair compensation for all workers.
The living wage is only applicable to part-time workers, while the minimum wage applies to full-time employees.
Abigail is filling out her federal individual income tax form 1040 and is instructed to "Attach Form(s) W-2." What necessary information is included on a Form W-2?
Income earned by the tax filer from sources other than their employer
Interest the tax filer paid on a mortgage over the course of the year
Ordinary and necessary expenses that the tax filer paid as part of their job
Wages paid to the tax filer from their employer and taxes withheld from them
What is the main function of the IRS Form 1040?
To calculate the amount of tax owed or refund due for the taxpayer
To allow taxpayers to allocate their tax payments to specific government programs
To let taxpayers apply for a reduced tax rate
To determine the amount of tax to be withheld from a taxpayer's paycheck
In a progressive tax system, if Benjamin earns more than Robin, Benjamin will pay
A flat rate rather than a share of their income
The same share of their income as those lower incomes
Larger share of their income than do those with low incomes.
Smaller share of their income than do those with low incomes.
Lily and Mason are discussing different tax systems. What is always true about regressive tax?
Low-income individuals pay a higher overall amount than high-income individuals.
High-income individuals are taxed at a lower rate than low-income individuals.
Low-income individuals are taxed at a lower rate than high-income individuals.
High-income individuals pay a higher overall amount than low-income individuals.
What type of tax is sales tax?
It is a regressive tax because it requires low-income earners to spend a greater proportion of their income to pay the tax than high-income earners.
It is a regressive tax because it requires high-income earners to spend a greater proportion of their income to pay the tax than low-income earners.
It is a progressive tax because it requires high-income earners to spend a greater proportion of their income to pay the tax than low-income earners.
It is a progressive tax because it requires low-income earners to spend a greater proportion of their income to pay the tax than high-income earners.
Charlotte is considering how to pay for her daily expenses. In which of the following situations might it be best for her to use a debit card?
When renting a car or purchasing airline tickets.
When making everyday purchases at the grocery store or coffee shop.
When paying for a service, such as lawn service, a haircut, or leaving a tip at a restaurant.
When making a purchase at a yard sale.
Darlene is deciding how to pay for her morning coffee. In which of the following situations might it be best for her to pay with cash?
In a small transaction, such as purchasing a coffee from a café.
When making a large purchase for an expensive item.
When purchasing an item online.
When paying a recurring monthly bill.
Which of the following statements about prepaid cards is INCORRECT?
Prepaid cards can be used to manage spending effectively.
Prepaid cards often come with various fees and charges.
Prepaid cards are an excellent tool for establishing a credit history.
Prepaid cards can be used for online shopping by those without a bank account.
Which of the following is NOT one of the three basic functions of money?
a store of value
a unit of account
a form of investment
a medium of exchange
When Carlos bought a cup of coffee for $3.00 at the local café, what function did the money serve in this transaction?
It was a unit of account.
It was a medium of exchange.
It was a standard of value.
It was a store of value.
What is the MAIN advantage of depositing money in a certificate of deposit (CD)?
The money in a CD is less accessible.
The money in a CD is not subject to fees.
CDs earn a higher interest rate than other savings accounts.
Banks offer CDs with a variety of maturity dates and interest rates.
Why are banks willing to pay people for keeping money in savings accounts?
because it forces depositors to assume all of the financial risks
because banks can invest that money and create profits for the bank
because banks are rewarded by the federal government for having the greatest number of depositors
because banks are able to inspect the money for counterfeits and maintain the value of real money
What is a key difference between investing in stocks and saving money in a bank account?
Investing guarantees a fixed return, while saving does not.
Investing is generally riskier but can lead to higher returns over time, whereas saving is safer and suitable for short-term needs.
Investing is only for short-term goals, while saving is for long-term wealth accumulation.
Investing typically involves no risk, while saving always involves high risk.
What is the Rule of 72?
It is a way to calculate how long it will take you to pay off your credit card.
It is a way to calculate how long it will take for an investment to double given a fixed annual rate of interest.
It is the way that banks determine which fees to charge your account.
It is a way to determine the risk associated with an investment.
What is a significant risk associated with borrowing from payday or title loan companies?
They offer loans with flexible repayment terms.
They often result in a debt trap due to exorbitant interest rates and fees.
They require a high credit score for loan approval.
They provide loans without any collateral requirements.
Which form of borrowing tends to carry the highest interest rate?
payday loans
direct bank loans
credit card balances
home mortgage loans
Mia wants to check her credit score to plan for a future loan. What would most likely provide her with credible information?
a credit calculator promoted in the results of an internet search
a same-day loan service advertised on local television
a credit report provider approved by the federal government
a new website popular on social media pages and advertisements
Which factor increases a consumer’s credit worthiness?
high loan balances
long borrowing history
low personal income
significant financial need
How will a loan applicant’s credit rating affect the interest rate on the loan he or she receives? Why?
A low credit rating will result in a higher interest rate because the risk of default on the loan is greater.
A low credit rating will result in a lower interest rate because the applicant is in greater need.
A high credit rating will result in a lower interest rate because the risk of default on the loan is greater.
A high credit rating will result in a higher interest rate because the applicant is in greater need.
Trent is considering financing options for a new car purchase. Which option would be most advantageous if he expects interest rates to rise in the near future?
choosing a variable rate loan with a low initial rate
choosing a variable rate loan with a high initial rate
choosing a fixed rate loan with a low initial rate
choosing a fixed rate loan with a high initial rate
What are the potential benefits of filing for bankruptcy?
It allows individuals to eliminate or repay debts under the protection of the bankruptcy court, providing a chance to start over financially.
It guarantees that all debts will be completely forgiven without any impact on future financial opportunities.
It is a quick and easy method to avoid paying any debts, with no long-term consequences.
Who is most likely to consider bankruptcy as a solution to their financial difficulties?
Linda, who is overwhelmed by credit card debt after losing her job unexpectedly
Mark, who is planning to buy a new car and is comparing loan options
Susan, who is saving up for a vacation and has a stable income
Tom, who forgot to pay his phone bill on time and incurred a small late fee
Which factor reduces the credit worthiness of a consumer?
high loan balances
significant savings
significant collateral
high annual income
Caroline is going to buy a car at the local car dealership. During the loan approval process, what information about her finances will the financing bank require?
a statement from all closed bank accounts
a waiver for automobile insurance coverage
a detailed portfolio of retirement investments
a comprehensive credit history report
Logan earns compound interest on his savings. Based on this, which of the following statements is true?
Logan's money grows faster and faster as the years go on.
Logan needs to make very large deposits in order to expect much of a return.
The longer Logan can postpone saving money, the better off he will be.
The more years Logan has to save, the less effective it is.
Who is most likely to detect unauthorized transactions on their financial accounts?
Emily, who never checks her bank statements and assumes everything is fine
Michael, who reviews his financial accounts weekly and sets up alerts for unusual activity
Sarah, who shares her account passwords with friends and family for convenience
David, who only checks his financial accounts once a year during tax season
Stanley has an automobile insurance policy for which he is billed $220 four times per year. Which term is used to refer to that cost?
premium
surcharge
deductible
co-payment
In order to protect against a risk of accidental property damage, a consumer would MOST LIKELY purchase which of the following?
an annuity
a mortgage
an insurance policy
a security agreement
Which of the statements is TRUE about car insurance premiums?
If you have a car insurance policy and don't get into a car accident or file any claims for the year, you get your premiums back from the insurance company.
If you have a car insurance policy and get into multiple accidents within one year, your car insurance premium will decrease.
Car insurance premiums are a fixed price across all insurance companies.
If you have a car insurance policy and get into multiple accidents within one year, your car insurance premium amount will increase.
Anne's renter's insurance policy costs $20/month and has a $1,000 deductible. A thief breaks into her apartment and steals her $800 TV set. How much would her insurance company pay?
$200
$0
$800
$1,000
Someone broke into Sam's car by smashing the passenger window. Which type of car insurance coverage will help Sam cover the cost to get the window replaced?
Collision
Liability
Comprehensive
Renter's insurance
Which of the following is a legitimate way the IRS might contact you about taxes you owe?
The IRS sends an email asking for your personal information to verify your account.
The IRS sends a formal letter through the postal service regarding your tax debt.
The IRS contacts you via social media to discuss your tax situation.
The IRS sends a message through a messaging app demanding immediate payment.
The two major signs of a scam are a request for personal information and…
A free 30 day trial of a product or service.
A coupon code offered for a current sale.
A request to like and subscribe to an account on social media.
An urgent need for money.
Sean received a notification that his information was compromised and he is likely a victim of identity theft. Sean should take all of the following steps EXCEPT...
Place a fraud alert or security freeze on his credit.
File an identity theft report with the Federal Trade Commission.
Enable two-factor authentication on his accounts for added security.
Wait for 90 days before contacting the Federal Trade Commission to see if they catch the fraudulent behavior without his report.
After a disappointing visit to a local cafe where the staff was rude, the food was cold, and the bill was incorrect, the manager dismisses Alex's concerns by saying, "This isn't a five-star restaurant." What is the most appropriate action Alex should take?
Alex should write a detailed review online to inform other potential customers.
Alex should demand a refund from the manager immediately.
Alex should report the cafe to the local health department.
Alex should call the police to report the cafe's poor service.
