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WorksheetsACHS Semester 1 PFE Exam
Total questions: 74
Worksheet time: 37mins
If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the:
U.S. Treasury Department
Federal Deposit Insurance Corporation (FDIC)
State Banking Commission
Federal Reserve Bank
When a person brings an item to a pawnshop to obtain cash, the transaction is considered:
A custodial payment
An unsecured loan
A collateralized loan
A sales agreement
A person has three credit cards with very large outstanding balances and is unable to make payments on any of them. Which action should the person take?
Notify the credit report agency on order to avoid a late fee
Notify the credit card companies in order to negotiate a new payment plan
File for bankruptcy on order to maintain ones current credit score
Contact the Internal Revenue Services in order to avoid paying income tax this year
How can you avoid becoming a victim of identity theft?
Avoid giving your security number on a phone call you did not initiate
Leave your wallet containing personal information where it can be stolen
Keep your PIN on your ATM card
Avoid using your credit card to charge purchases on the phone
Consumer Credit Counseling Services (CCCS) offer:
Retirement Plans
Stocks and Bonds
Insurance Policies
Debt Repayment Plans
Which of the following does the Federal Reserve use to regulate the nation's money supply?
Fiscal Policy
Proposing Legislation
Monetary Policy
Regulations
Mrs. Knott gives Mrs. Moore her ABC Credit Union debit card and personal identification number (PIN) so Mrs. Moore could get $25 from Mrs. Knott's bank account. Mrs. Moore withdrew $100 instead if the agreed $25. How can Mrs. Knott get the $75 back?
Demand the ABC Credit Union reimburse her for Mrs. Moore's unauthorized transaction
File a complaint with the Federal Reserve Board to reimburse her for Mrs. Moore's transaction
Demand that the bank where Mrs. Moore has her checking account reimburse her for her Mrs. Moore's unauthorized transaction
No bank or government agency is obligated to reimburse Mrs. Knott because she authorized Mrs. Moore to use her ATM card and PIN
Electricity and food expenditures are
Variable expense that change from one month to another
Discreet expenses that do not have to be paid monthly
Fixed expenses that remain the same from one period to another
Personal expenses for an individual or family
In creating her budget, Ann realizes that her expenses exceed her income. Ann should immediately try to:
Apply for a loan
Reduce or eliminate some expenses
Ignore her budget until she has more income
Open an IRA account
Buying a treasury bill (T-bill) is best for investors who are looking for:
a place to invest between $100-$500
a secure, low risk investment
a higher yield on their investment than corporate bonds offer
an investment that matures in 10-30 years
The amount a lender charges to borrow money is called the:
Principal
Annual percentage rate (APR)
Loan balance
Interest rate
Purchases made with your debit card are usually:
Deducted immediately from your checking account
Deducted from your credit card balance
Added to your credit card balance
Put on your credit card bill as a cash advance
Identify the background color of a U.S. $5.00 bill:
Orange
Blue
Green
Yellow
"The Fed" is short for:
Congress
Police Officers
FDIC
The Federal Reserve
The term used for putting money into a savings account is:
Verifying the account
Balancing the account
Making a deposit
Making a withdrawal
Financial institutions and products generally offered by banks and credit unions include:
Real estate listings
Checking, savings, and loans
Will find answers
Business plans
Before a person borrows money from a bank to make a major purchase, which question is considered most important for the person to answer?
Will I ever have to borrow money again from this bank?
Will this item ever go on sale or will it increase in value?
Can I just pay for the item on a credit card and pay off the amount due each month?
Do the benefits of making the purchase outweigh the costs of borrowing the money?
When James received his paycheck, he planned to cash it at a check cashing store. You advise him to cash it at his own bank if possible. Why?
They typically require a two-day waiting period before giving cash.
They typically charge high fees.
There is likely to be a ceiling on the size of the check he can cash.
They generally require a co-signer.
Which of the following is an accurate description of take-home pay?
Total income
Income which is not deposited into a checking account
Total income plus any monetary gifts received
After-tax income available for living expenses
Which of the following is NOT considered a living expense when determining expenses?
Taxes
Insurance
Food
Transportation
Which of the following defines opportunity cost?
A) A good whose consumption decreases when income increases
B) What you are giving up or sacrificing by turning down one opportunity in order to take advantage of another opportunity
C) As the price of any good falls, the quantity demanded will increase
D) Measure of the general responsiveness of quantity to change in price
What is meant by an uncollateralized loan?
A loan not backed by a co-signer who agrees to cover the amount of the loan.
A personal loan without assets to cover the loan amount.
A home equity loan.
A loan taken on a life insurance policy.
A department store charge card is considered to be an open-end credit?
True
False
Which of the following is an example of a new banking technology?
Checking accounts
Savings accounts
Mobile banking accounts
Teller lines
Which of the following refers to personal belongings which have value?
Assets
Liabilities
Net worth
Net profit
Which of the following is an example of a personal asset?
Credit card balance
Mortgage payment
Cash
Rent
An individual has total assets of $200,000 and total liabilities of $90,000. What is his net worth?
$40,000
$60,000
$50,000
$110,000
Which of the following is considered to be a short-term goal?
Saving for a college education
Saving for a retirement fund
Starting a new career
Saving for a family vacation
The primary sources of income for most people between the ages 20-35 who are not living on a pension or social security are:
Profits from business
Dividends and interest
Rents
Salaries, wages, and tips
Which of the following is considered to be a long-term financial goal?
Paying for a specific amount on a credit card
Saving for a retirement fund
Buying a new car
Saving for a family vacation
Which of the following is NOT classified as a spending need?
Rent for a home
Movie tickets
Grocery bill
Electricity bill
Which of the following is an itemized summary of the expected income and expenses for a defined period of time?
Net worth
Balance sheet
Budget
Equity
Which of the following is an expense which stays relatively the same from month to month, such as a car payment or rent?
Fixed expenses
Variable expense
Estimated expense
Equity expense
Which of the following is a variable expense?
Rent
Car payment
Entertainment
Electricity
A man budgeted $200 a month for clothing. This month the man spent $150 on clothing, therefore that budget item is considered to have:
An outflow deficit
An income average
A budget variance
A budget deficit
Interest earned on interest is known as compound interest.
True
False
This is the issue of money, goods or services to an individual or business with the expectation of future payments.
Revolving credit
Interest
Credit
Debit
Valuable asset the borrower offers to a lender for securement of the loan provided.
Credit card
Collateral
Character
Paycheck
Which of the following is NOT considered a bad borrowing habit?
Spending more than can be earned
Ignoring credit reports
Failing to budget
Reviewing debt periodically
Which of the following is an example of revolving credit?
Credit card
Auto loan
Mortgage
Student loan
You can obtain a free credit report once a year
True
False
Which of the following is considered a good credit score?
Below 600
630-689
690-719
Above 720
An example of closed-end credit is a:
Major credit card
Debit card
Mortgage
Cash card
Which of the following is the federal law that requires the cost of credit be disclosed to consumers in bold print on loan agreement?
Fair Credit Reporting Act
Truth in Lending Act
Equal Credit Opportunity Act
Fair Debt Collection Practices Act
Which of the following involves a lending institution allowing a consumer to borrow money and then pay back some or all of it each month?
Credit card
Payday loan
Income statement
Interest
In order to assess an individual's credit worthiness, five factors are reviewed. Which of the following factors evaluates a person's income and household expenses?
Character
Capacity
Collateral
Condition
Which of the following is a short-term, high-interest loan designed to bridge the gap from one paycheck to the next?
Personal loan
Student loan
Mortgage
Payday loan
Which of the following is the annual or yearly rate charged for borrowing or earning through an investment?
Fixed interest rate
Interest rate
Variable interest rate
APR
Which of the following types of interest changes over time as the market interest rates change?
Fixed
Annual
Variable
Irregular
What is the "golden rule" of personal finance?
Net worth
Opportunity cost
Pay your bills
Pay yourself first
Financial institutions are monitored through which of the following?
Federal Reserve System
National Banking Union Administration
Federal Deposit Insurance Company (FDIC)
National Financial Institution Agency
An individual who holds legal control of assets in a trust account is known as which of the following?
Controller
Dependent
Claimer
Beneficiary
Which financial institution protects individuals by insuring bank deposits?
FDIC
FSA
FIS
LPM
Deposits are insured by the Federal Deposit Insurance Corporation up to ___________ per depositor.
$100,000
$150,000
$200,000
$250,000
Credit unions are (a) owned and are (b) financial institutions.
cooperative
Financial Services and products generally offered by banks and credit unions include:
Real estate listings
Savings and loans
Will find answers
Business plans
What is the definition of inflation?
Prices of goods and services go down, Pay goes up (giving you more purchasing power)
Prices of goods and services go up, pay stays the same (giving you less purchasing power)
No change in prices
No change in pay
Which budget category is correctly matched with its explanation?
Fixed expense: $50 pair of shoes to go with a new outfit
Variable expense: $60 automatically deposited monthly into a savings account
Fixed expense: $120 monthly car insurance bill
Variable expense: $450 monthly rent payment
Why would a person put a stop payment on a check?
The payee does not have a checking account
To prevent anyone from cashing a check that was lost or stolen
To avoid paying a fee for a lost check
To close the checking account
A person finds an error when reviewing her credit report. What can she do?
Wait one year to see if the error appears on the next report
Report the errors to her creditors
Contact the credit reporting immediately about the error
Why does a corporation issue bonds?
It wants to borrow money for growth and expansion
It wants to lend money to help consumers
It wants to decrease the price of its stock
it wants to increase the of its stock
The line of credit on a person's credit card has been increased from $5,000 to $7,500. What does the increase mean?
The credit card company can sue the owner up to $7,500
the credit card company charges a higher APR on the additional $2,500 of credit
The credit card owner can charge purchased up to $7,500
the credit card owner will be required to pay interest only on the first 6% of charges
The benefit of using a debit card is that it provides a way to
earn additional income
improve a person's credit rating
earn interest on purchases
limit the amount of cash a person needs to carry
A person should consider paying her monthly bills automatically from her checking account because it
eliminates the need for maintaining a monthly budget
makes more money available for her to spend
ensures that her account will never be overdrawn
makes it easier to pay the bills on time each month
A person who pays the minimum balance on a credit card bill will
be charged interest on the unpaid balance (pay more money, for a longer period of time)
be charged a fixed fee for having an unpaid balance
get an increase in the annual fee for using the card
have interest charges on all of his credit card accounts
Bank A offers interest compounded monthly on savings accounts, while Bank B offers 3% interest compounded quarterly on its savings accounts. Which bank offers the best deal?
Bank B, because the less frequently the balance is compounded the better the return on the money
Bank B, because the less frequently the balance is compounded the more frequently the interest rates will rise
Bank A, because the more frequently the balance is compounded the better the return on the money
Bank A, because the more frequently the balance is compounded the more frequently the interest rates will rise
Which action is considered an unauthorized use of an individual's credit card?
Signing the back of the credit card
Making purchases with a credit card found in the street
Destroying credit card receipts before items are billed
Purchasing items on the internet using the credit card
Bank Customers can use an ATM to
Transfer money from checking to savings accounts
Apply for a car loan
Change their credit history
Buy mutual funds, stocks, T-Notes and T-Bonds
Susan co-signs for Dana's $10,000 personal loan. Dana pays $8,000 of the loan, loses her job, and refuses to pay the rest of the loan. Because it was a co-sign loan, who will pay the remaining $2,000?
Dana since she is the person who applied for the loan
Dana, since she has been paying up to this time
Susan, since she co-signed for the loan
No one, since Dana lost her job and Susan was only the co-signer
A person usually spends $100 a month on groceries. If this year's inflation rate is 5%, the person can expect to
See grocery items decline in price
Spend more for the same amount of groceries
Find many supermarkets going out of business
See the stock of grocery companies trading at higher prices
When a financial advisor says that everyone should follow the principle of "Pay yourself first", the advisor means that a person should
Pay credit card bills before going on vacation
Borrow money to buy personal items
Put aside money for saving and investing from each paycheck before spending
Help family members reduce their credit card debt before saving for retirement
How much does the FDIC insure a person's accounts at a financial institution
$250
$2,500
$200,000
$250,000
A person receives an email from his bank requesting his Social Security Number. The first action a person should take is to
Make an appointment with the State Banking Department
Respond by email with the information requested
Check with his bank by calling the number on his bank statement
Give the information requested by calling the phone number given in the email
The bank foreclosed on a person's home which mean that the homeowner
paid the mortgage loan in full
failed to make mortgage loan payments and the bank repossessed the home
paid the auto loan before the last payment was due
needs a cosigner on the mortgage loan and has to increase the insurance on the home
