WorksheetsSemester 2 PERSONAL FINANCE: FINAL EXAM
Total questions: 44
Worksheet time: 25mins
What is Behavioral Economics?
When the economy crashes.
Panic trading on the stock exchange.
Combination of psychology and economics to study people's money behavior.
How car dealerships buy and sell cars.
What is the Prospect Theory?
The pain of losing money is greater than the joy of winning money.
A banking theory that relates to profits and losses.
A theory how to balance your checkbook.
How to negotiate the best car deal.
What is Conscientiousness?
Conscientiousness reflects the tendency to be responsible, organized, hard-working, goal-directed, and to adhere to norms and rules.
Conscientiousness is the process of constant thought and evaluation.
Conscientiousness is the science of the conscious.
Conscientiousness is a behavioral trait that possesses easy-goingness, open mindedness and spontaneity.
What is an example of Confirmation Bias?
Open to information that's different from what you currently believe in.
You believe in something because the rest of the group believe in it, too.
Favoring information that supports an existing belief.
You trying to confirm existing facts.
What is Money?
Green paper
An agreed upon measure of value
A CD
A bank account
What is the cost of money?
The interest rate.
The cost of printing it.
The cost of carrying it.
The cost of losing it.
What is the time value of money?
The amount of time it takes to transfer it.
The time to print it.
Compounding interest.
Par value.
What is the “Dual Mandate” of the Federal Reserve?
To print money.
To achieve maximum employment and stable prices.
To protect people’s money from bank’s bankruptcy.
To invest in stocks and bonds.
What is an investment?
An expense that needs to be paid.
An asset that generates income and/or appreciates.
A type of health insurance.
A special type of checking account.
What are securities?
Vaults at a bank that keeps money secure and safe?
Armed guards who safely transport investments from one bank to another?
Financial instruments used to raise capital and that are tradable.
Private loans between a lender and a borrower.
Name four general types of securities.
Checking, savings, investment and retirement accounts.
Assets, liabilities, equity, cash.
Mortgage, auto loan, credit card, debit card.
Bonds, stocks, funds, derivatives. (think Batman, Superman, Falcon, Daredevil)
What is an exchange traded fund (ETF)?
Is a basket of securities that trades like a stock.
A collection of money for charity events.
Securitized mortgages sold to investors.
Funds used by investment banks for mergers and acquisitions.
What is risk?
A war board game.
The fear of taking a chance.
The uncertainty of expected returns.
Fear of losing money is greater than the joy of winning money.
What are investment returns?
An asset given back to you.
The car loan that you finally paid off.
When assets turn into liabilities.
Profits through appreciation and/or yield.
What is the risk-return trade off?
The greater the risk, the greater the expected return.
Risk isn’t worth taking.
No dividend paid means a very risky stock investment.
A-rated bonds are more risky than stocks.
What is an investment portfolio?
A photo of all your investment holdings.
A collection of financial instruments, such as stocks, bonds, cash and funds.
A balance sheet of assets and liabilities.
Daily deposits into checking account.
What is diversification?
Different investors interested in different investments.
An investment risk strategy that creates a mixed collection of financial instruments.
Buying and selling stocks frequently.
Keeping only technology stocks in a portfolio.
What is active investing compared to passive investing?
Active investors trade on stock exchanges while passive investors trade online.
Active investors buy and sell investments frequently, while passive investors buy and hold investments over a long period.
Active investors trade in regular investment accounts while passive investors use IRAs.
Active investors take high beta stocks, which passive investors invest in low beta stocks.
Name three retirement accounts.
Savings, checking, expense accounts.
Accounts payable, cash on hand, retirement receivable.
Regular Individual Retirement Account (IRA), Roth IRA and 401(k). (think RR4)
Asset account, liability account and equity account.
What are the 3 main parts of any loan?
The principal, the interest rate, and the loan term. (think PIL)
The money you pay, the money the lender pays, and the principal.
The mortgage, the auto loan, and the small business loan.
The loan amount, the credit card payment, and the statement.
What’s the difference between a secured and unsecured loan?
An unsecured loan isn’t safe and should be avoided, whereas a secured loan is safe.
An unsecured loan is more risky to the borrower whereas a secured loan is less risky.
A secured load is backed by collateral, like a car; an unsecured loan has no backing, like a credit card, and is generally associated with a higher risk and higher interest rate.
A secured loan is guaranteed regardless of your credit score.
What benefits do you receive by taking out a loan with a Co-signer?
A good credit score, making a larger down payment, and having a cosigner with good credit are all ways to:
Decrease your interest rate.
Increase your term.
Increase your total payments.
Lower your credit score.
What should you do if you find errors in your credit report?
Close the affected credit accounts.
Contact the credit reporting agency or the credit card lender that provided the information.
Call the police to notify them of potential fraud.
Shift to using debit cards from credit cards.
What do local, state and federal governments generally tax to generate revenue?
Property, Sales and Income
Mortgages, credit card debt, auto loans
Schools, fire departments, and police departments
Insurance, expenses and costs
What is a W2 Form?
An expense report that shows what businesses have spent on all employees.
A form that lists all assets held by a business.
A form an employer sends to employees that shows income earned and the amount of taxes withheld from their paychecks.
A report that helps credit cards companies track outstanding credit card debt.
What does the term "withholding" mean in reference to your paycheck and W2?
The amount of your paycheck that you are NOT being taxed on
How much you are going to owe the government when you file your tax return
How much you earn and includes salary, bonus and commissions
How much is being taken out of your paycheck for things like taxes, employer sponsored health insurance, and retirement
What is Form 1099?
Employees who work directly for an employer receive an annual Form 1099.
Is solely used for payments to independent contractors.
Is used to report all individual debts and loans.
Reports all personal assets households have.
What are examples of income reported on the W2 and 1040 Form?
Assets, Liabilities and Equity
Wages, Tips and Salaries (think WTS)
Auto Loans, Mortgages, Credit Card debts
Insurance, capital gains and lease agreements.
What is Form 1040?
An income statement used by businesses that lists all its expenses.
A form you fill out that lists all properties for insurance purposes.
A contract between independent contractors and business owners.
Is the Individual Tax Return form to the Internal Revenue Service (IRS) that individual taxpayers use to file their annual income tax returns.
What is the difference between a College and University?
Colleges offer undergraduate degrees and specific fields of study while Universities also have master and doctorate degrees as well as many colleges.
A college has one sports program while universities have many sports programs.
Colleges are located only in cities while Universities are located on campuses.
Colleges and Universities offer the same programs, but Universities are smaller than Colleges.
How many semesters and credit hours is the typical college class?
2 semesters, 6 credit hours.
1 semester, 5 credit hours.
1 semester, 3 credit hours. (think 13)
2 semesters, 3 credit hours.
Which degree is typically 4 years long and 120 credit hours?
Associates
Bachelors
Masters
Doctorates
What is the Cost of Attendance?
The total yearly cost of college.
The cost of attendance is the same as the tuition cost.
The cost of meals and entertainment.
The total cost of student loans.
In order to qualify for financial aid, which application must you submit?
FAFSA (think F is for financial)
PLUS
SAVE
IRA
What is the relationship between your Student Aid Index (SAI) and your likelihood of qualifying for financial aid?
A. A lower SAI means you’ll likely qualify for MORE financial aid.
B. A higher SAI means you’ll likely qualify for LESS financial aid.
C. Your SAI is equal to the amount of financial aid you’re eligible to receive.
D. Your SAI has no effect on how much financial aid you’ll qualify for.
What is a budget?
A method to increase gross pay
A financial expense plan that is goal oriented
A way to get the best interest rate
Student loan consolidation
Why is it important to create a budget?
A. A budget is a necessary to qualify for loans and credit cards
B. A budget makes filing your taxes faster and simpler
C. A budget will help you save money and prioritize your spending
D. A budget will guarantee you have enough money saved for college so you won't need loans
When creating a budget, which list below of expense categories is the most responsible?
All of your needs, high priority wants, low priority wants, savings
All of your needs, high priority wants, savings, low priority wants
Savings, high priority wants, low priority wants, all of your needs
All of your needs, savings, high priority wants, low priority wants (the last two are high, low)
All these reasons are why to budget EXCEPT?
Save for the future
Pay down debt
Relieve stress
Mortgage amortization
What are examples of comparison shopping?
Recurring, fixed, and variable expenses
Pay Yourself, Zero-Based, and 50/20/30 Budgets
Gross pay, net pay, and withholdings
Quality, performance, and convenience (think QPC)
“Be Like Mike” and buying what sports heroes wear is called ____________
Authority
Liking
Scarcity
Social Proof
What selling influence is generally used to target teens?
Social Proof (“Everybody does it”)
Usage of subscriptions
Online reviews
Fixed and variables expenses
What is the term for a fraudulent scheme that involves artificially inflating the price of a stock in order to sell it at a profit, often leaving other investors with losses?
Pump-and-Dump
Short Selling
Insider Trading
Front Running
