WorksheetsFinancial Skills for Smart Living: Pre-Test
Total questions: 82
Worksheet time: 44mins
Noah is planning his monthly budget for fuel expenses. He considers three factors to calculate the cost. Which of the following factors doesn’t make a difference?
Miles driven
Size of gas tank
Miles per gallon (MPG)
Cost of fuel
Repairs and upkeep on a home can usually range from (a) per year in costs.
Low
Moderate
High
Grace is planning to buy a new house. If her income is 7,000/moandshecurrentlyhas 900/mo in other debt payments, how much monthly payment towards a home loan would the bank likely be willing to issue as a mortgage for a home purchase?
$1,060
$1,620
$2,520
$2,160
Isla, a former military member, is looking to buy a home and wants to receive a low interest rate and minimal down payment requirement. What type of mortgage might she use?
Reverse mortgage
VA mortgage
ARM mortgage
Balloon mortgage
(a) is the material basis of well-being, which is reflected in a person’s consumption level.
Goods
Services
Wealth
Income
Abigail is focusing on getting plenty of rest, maintaining her relationships with friends and family, and enjoying her freedom. These aspects are all examples of
A person’s standard of living.
A person’s average propensity to consume.
A person’s well-being.
A person’s utility.
David spends a certain percentage of his income on daily expenses and leisure activities, rather than saving it. This percentage is known as _______.
propensity to consume
marginal utility
opportunity cost
inflation rate
Mason is a young professional who finds himself living paycheck to paycheck. Which statement best describes his situation?
Needing his full paycheck to meet his minimum monthly living expenses, so that there's no extra money if a problem arises.
A successful budgeting strategy where he allocates every penny of his paycheck to a perfectly constructed budget, so he never goes over.
Adding one paycheck to the next paycheck, so that his savings account balance is always increasing.
Using the money from his paychecks to meet some of his monthly expenses, while allowing investment income to cover the rest of his bills.
Henry is setting his goals for the upcoming project. He wants to ensure that each goal is meaningful and aligns with the overall objectives. In the context of SMART Goals, what does the "R" stand for?
Relevant
Rational
Remember
Round
Mia is setting her personal development goals for the year. She wants to ensure her goals are well-defined and effective. The SMART GOALS is an acronym for setting quality goals. The S ________ stands for:
Smart
Successful
Standard
Specific
Ethan is considering different types of investments. Which of the following is an example of a "real asset"?
Checking account
House
Stocks
Jewelry
Charlotte wants to buy a vehicle and take 9,000fromhersavingsaccountandpurchasea 30,000 vehicle (financing the difference), how will her assets on her net worth statement change?
Decrease $9,000
No change
Increase $21,000
Increase $30,000
Anika has a net worth of $50,000. If she pays off her student loan from her savings account, how will her net worth statement be affected?
Your assets and liabilities will go down. Your net worth won’t change.
Your assets and liabilities will go down. Your net worth will increase.
Your assets will go up and your liabilities will go down. Your net worth will increase.
Your assets, liabilities, and overall net worth won’t change.
An Income and Expense statement would do which of the following.
Ethan is reviewing his personal finances to understand how much money he earned and spent over the last year. Which financial statement should he look at to see the money coming in and going out?
Income and Expense Statement
Net Worth Statement
Budget
Balance sheet
Arjun is reviewing his sources of income for the year. Which of the following is not an example of unearned income?
Child support
Unemployment
Dividends
Bonuses
Priya is considering buying a new car. She wants to know what the largest cost of owning a new car is.
Loan interest
Depreciation
Maintenance and repairs
Fuel
Sarah's monthly gross income is 4,000andhermonthlynetincomeis 3,327. She pays 650/mo.forrent,hasacarpaymentof 450/mo., and has $200 in other monthly expenses. What is her debt-to-income ratio?
16%
21%
33%
42%
Ava is reviewing her paycheck and notices several deductions. Which of the following is not a mandatory pay deduction?
Federal Income Tax
Social Security
Medicare
Workers Compensation
Abigail noticed that most state taxes are deducted from her paycheck to help pay for health and _________.
law enforcement
public assistance
state roads
education
If Noah has an individual account for 200,000atbankABCand 400,000 in another individual account at a different bank (bank XYZ), how much is covered under FDIC protection?
$250,000
$450,000
$500,000
$600,000
Avery is planning her finances and wants to know: How much should she save for her emergency fund?
3 to 6 months rent
3 to 6 months of income
3 to 6 months of living expenses
2 months of living expenses
James is considering different savings products to park his money. Which of the following options is the least liquid?
Savings account
Money market account
Certificate of Deposit (CD)
High yield checking account
You should always pay yourself (a) .
Savings
Investments
Expenses
Income
Nora has $2,000 in her savings account and earns 10% compound interest annually. How much will she have in her account after two years?
$2,220
$2,420
$2,400
$2,200
If you have stable employment with a fixed salary and excellent insurance coverage, you likely should have (a) of fixed expenses saved in your emergency fund
3 to 6 months
1 to 2 months
6 to 12 months
1 month
Faith was trying to categorize her different types of credit and was unsure which of the following would be classified as revolving credit. You tell her that a (a) is revolving credit.
Credit Card
Personal Loan
Mortgage
Line of Credit
James is considering different types of credit options. Which of the following types of credit would be considered “open-ended” or “revolving?”
Home loan
Auto loan
Retail credit card
Personal loan
Abigail took an amortized loan of $10,000 with an interest rate of 4.00%. What would happen if her payment schedule was 10 years instead of 5 years?
Her payments would be lower, she’d pay more interest over the life of the loan.
Her payments would be lower, she’d pay less interest over the life of the loan.
Her payments would be higher, she’d pay more interest over the life of the loan.
Her payments would be higher, she’d pay less interest over the life of the loan.
Harper is planning her monthly budget and wants to ensure her loan payments (excluding her home mortgage) do not exceed a certain percentage of her net monthly income. What percentage should she aim for?
10%
16%
20%
36%
Ava needs some quick cash to cover an unexpected expense. Which of the following loans typically has extremely high interest and is a short term loan?
Personal loan
Payday loan
Home equity loan
Business loan
Liam is planning to take a loan to buy a new car. He wants a loan where the principal payments are “built in” so at the end of the loan term there is nothing further owed. Which type of loan should Liam choose?
Open-ended line of credit
Deferred loan
Amortized loan
Interest-only loan
Hannah recently filed for Chapter 7 bankruptcy. How long will this bankruptcy stay on her credit report?
7 years
10 years
5 years
1 year
Priya is trying to improve her credit score. Which of the following factors should she focus on the most to have the largest impact?
Utilization
Credit mix
Length of history
Payment history
Emma bought a new car for $40,000. It depreciates 25% the first year and 17.5% the second year. What is Emma's car worth at the end of the second year?
$23,000
$24,750
$26,250
$30,000
Mia drives 600 miles per month, her car gets 24 miles per gallon (MPG), and fuel costs $2.80 per gallon; how much will she spend PER YEAR on fuel?
$70
$740.20
$840
$5,142.86
Elijah, a senior, is looking for a way to supplement his retirement income while staying in his home. What type of mortgage might he consider?
Reverse mortgage
VA mortgage
ARM mortgage
Balloon mortgage
Ava has several loans and wants to reduce her debt using the debt avalanche approach. What should she do?
Pay off the smallest of her loans first, then the next smallest loan.
Pay extra on her highest interest loans first.
Pay the minimum amount on each loan.
Obtain a lower interest rate credit card to pay off a higher interest rate card.
Isla is planning her college expenses and is advised to focus on (a) .
Tuition
Books
Housing
Food
While Samuel is in school full-time, the interest on his unsubsidized loan is
paid by him when in school.
paid by him but he can let it accrue until after graduation.
paid by the federal government.
paid by his parents.
Anika is planning to attend college and is exploring different types of financial aid. If she qualifies, which of the following types of aid provides direct funds towards reducing college cost, is needs based (not merit based), and doesn’t need to be repaid?
Grants
Scholarships
Subsidized loans
Unsubsidized loans
Elijah is applying for college and is considering different ways to fund his education. Scholarships are
Needs based
Merit based
Loans that need to be repaid
Both A and/or B
Which of the following loans would be likely to have the best terms and lowest interest?
Subsidized student loans
Parent PLUS loans
Grad loans
Private loans
Charlotte is reviewing her finances and wants to know how much of her student loan interest she can deduct yearly as an adjustment to her income. How much can she deduct?
$2,000
$2,500
$5,000
$1,000
The (a) repayment plan has fixed or graduated payments over 25 years.
Fixed Payment
Graduated Payment
Interest Only
Deferred Payment
When William graduates, he is able to consolidate his federal student loans. What is one advantage of consolidating his loans?
He has one monthly payment instead of multiple monthly payments.
His credit score will increase.
His payments are lower over a shorter period of time.
The interest rate used is the lowest interest rate from all federal loans.
Benjamin was involved in a car accident and submitted an insurance claim. After receiving a settlement and payment from the insurance company, he realized he couldn't personally sue the other driver involved in the accident. This illustrates what principle of insurance?
Indemnity
Exclusion
Exemption
Subrogation
Abigail is managing a project and is trying to reduce the frequency and severity of potential risks involved. What risk management technique is she using?
Avoidance
Transfer
Mitigation
Retention
Evan is a small business owner who is evaluating his insurance risk strategy. He is unsure when to transfer the risk to insurance.
Low Severity / Low Frequency
Low Severity / High Frequency
High Severity / Low Frequency
High Severity / High Frequency
Aria has a 1,000deductibleand 3,000 out of pocket maximum with 20% co-insurance, how much would she pay if she received $5,000 of medical care?
$1,000
$1,800
$2,000
$2,600
How much life insurance should Tyson have if he earns $60,000 a year and his spouse also works?
120,000− 180,000
240,000− 600,000
180,000− 240,000
More than $600,000
If a disability policy pays out $3,000/mo maximum, has a 5 yr benefit period, and a 90 day elimination period; how much would be paid out if a person was injured and stopped working for 7 months? (and then returned to work)?
$0
$6,000
$12,000
$21,000
A standard homeowners insurance policy covers all of these perils except?
Vandalism
Floods
Damage caused by vehicles
Lightning
If you caused damage to someone else’s property, what would be the maximum payment for property damage for a 100/300/200 policy?
$100,000
$300,000
$200,000
$600,000
In home insurance, which detail prevents a consumer from under-insuring their property (and expecting the insurance company to fully cover a smaller claim)?
Co-insurance clause
Subrogation
Deductible
Indemnity
Jonah has a $1,000 initial amount. He has secured an account that will pay a compound interest rate of 10%. The interest will be compounded yearly. What will his investment be after 3 years?
$1,331.00
$1464.10
$1,300.00
$1,210.00
If a stock you buy is 30pershareandpays 3 per year in total dividends; what is the dividend yield of the stock?
3%
9%
10%
Can’t determine
Which of the following is not a characteristic of a bond?
No appreciation
Ownership = Equity
Debt/Lender = Fixed Income
Receives fixed payments and principal back at end of term.
Two investments that may produce a similar rate of return over time but perform “opposite” of one another would be said to be (a) ? (Another way of saying this is that when Inv A is up, Inv B is down; when Inv A is down, Inv B is up…)
Positively correlated
Negatively correlated
Diverse
No correlation
When comparing two similar investments and their rates of return, what might be something to consider when judging the risk of the investments?
Dividends
Risk-free rate of return
Standard Deviation
Geographic Region of the Company
The best strategy for reducing market timing risk is to
Dollar cost average your contributions
Diversify your portfolio within the market
Have positively correlated assets
Increase the equities in your overall asset allocation
Which of these are traded in dollar amount, not shares?
Mutual funds
EFT's
Stocks
Both A & B
John estimates that he will need $40,000/yr in extra income at retirement. Based on the 4% rule, what will his retirement/investment portfolio balance need to be?
$400,000
$2,000,000
$160,000
$1,000,000
Which of the following is NOT a retirement income source?
Social security
Pension
IRA
529 account
Other than IRA's, other sources of income during retirement might come from?
Asset distributions
Working a part-time job
Pensions
All of the above
This type of retirement account has after-tax contributions, tax-free withdrawals, penalty for early withdrawal, and has income limitations.
Traditional IRA
Roth IRA
401(k)
403(b)
Early retirement can reduce your Social Security benefits by about 27.5%. According to the Social Security Administration, at what age is early retirement?
55 years
62 years
65 years
67 years
What percentage of your wages do you pay for social security?
12.4%
10.0%
6.2%
3.1%
Which of the following statements are true about property tax?
Property tax is paid by the occupants of the property.
Property tax is based on the value of the property.
Property tax is based on the amount of property.
Property tax is paid by every taxpayer.
Cryptocurrency
Can be used to purchase any stock
Continues to increase in value
Is maintained by a decentralized system
Is considered a safe investment
The U.S. federal income tax is a
Regressive tax
Progressive tax
Excise tax
Equal tax
Financial planners recommend that you save ________ of your income if you start saving in your 20s.
1 - 5%
5 - 7%
10 - 15%
25 - 30%
What is the biggest difference between a bank and a credit union?
Credit unions are owned by their members.
Banks are managed by its members.
Banks offer loans and credit unions do not.
Credit unions offer loans and banks do not.
Which of the following is NOT true about a soft inquiry regarding your credit report?
Does not impact your credit score
Stays on credit report for 2+ years
Occurs when you check your own credit.
Used by lenders or insurance for pre-approval
The most common format for a resume is
Functional
Numerical
Chronological
Hierarchy
What order should your work experience be listed?
Chronological Order (oldest to newest)
Reverse Chronological Order (newest to oldest)
It doesn't really matter.
None of the above.
The purpose of a cover letter is to?
Inform
Differentiate
Establish confidence
Persuade
What are appropriate actions to take AFTER an interview?
Negotiate your salary with the hiring manager.
Send a thank you email or note to the people who interviewed you.
Call the person who interviewed you the next day to see if you got the job
None of the above.
Juan received two job offers - one in Kansas City for 45,000with50 55,000 with full health insurance paid by the company. Which statement is TRUE?
The San Diego offer is a better deal because he will receive health insurance.
The Kansas City offer is better because the cost of living is lower and he will receive 50% health insurance paid by the company.
The San Diego offer is better because the cost of living is lower and he will receive full health insurance paid by the company.
The San Diego offer is better because the cost of living is higher.
Olivia is planning to invest in a retirement account. Which of the following accounts offers tax-free withdrawals after retirement?
Roth IRA
SEP IRA
Traditional IRA
401(k)
Lucas wants to improve his financial literacy. Which of the following is a key component of a personal financial plan?
Travel itinerary
Shopping list
Credit card offers
Investment strategy
Emma is considering different insurance policies. Which type of insurance is specifically designed to cover medical expenses?
Life insurance
Health insurance
Auto insurance
Home insurance
