WorksheetsPersonal Finance Exam Review
Total questions: 47
Worksheet time: 24mins
You will find each of the following pieces of information on your FAFSA Submission Summary EXCEPT…
a record of all scholarships you have applied for
your eligibility for federal student aid
your Student Aid Index (SAI)
a record of the answers you submitted on your FAFSA
Which of the following statements is CORRECT about secured loans?
In the event of default, the borrower loses nothing except for the down payment
If the borrower does not make payments, the lender can repossess the item
They are a good choice to use for student loans
They usually have higher interest rates as compared with unsecured loans
Frank and Jasmere are each shopping for a new car for themselves. Each will need a $20,000 loan that they will pay back over a five year period. Frank has a credit score of 730 and Jasmere has a score of 600. Which of the following statements is TRUE?
Frank is likely to get a higher interest rate than Jasmere
Jasmere is likely to get a lower interest rate than Frank
Frank is likely to get a lower interest rate than Jasmere
Both will get the same interest rate
What is the APR for a FICO score range of 620-659?
3.255%
4.612%
9.468%
13.6%
If you opt out of overdraft coverage and have $10 in your account, what happens if you try to make a purchase for $12?
The bank will provide you five days to add funds.
You will be charged an overdraft fee.
Your debit card will be denied.
Your account will be closed.
Which of the following is the default federal student loan repayment plan college graduates are entered into, requires the same minimum payment for the life of the loan, and ensures the borrower will pay the loan in full in ten years?
Graduated repayment plan
Extended repayment plan
Standard repayment plan
Income-driven repayment plan
FDIC Insurance is...
Insurance bank branches can buy to protect their business against fraud and scams
Required if you want to do online or mobile banking
Optional coverage consumers can purchase so that their bank deposits remain safe
Protection for bank customers’ deposits up to $250,000, guaranteeing their money is still available if the bank goes out of business
You are at the checkout counter at the local supermarket and use your debit card to pay for your groceries. Where does the money for this purchase come from?
Your credit card company covers the cost
It is deducted directly from your savings account
It is deducted directly from your checking account
Your credit card company provides you with a cash advance to cover the cost
Select the statement below that accurately describes a characteristic of a credit card.
You must have money deposited into a checking account to use the credit card for purchases
They do not charge interest
Making full payments on-time every month is the only way to avoid interest charges
You owe the same payment every month
Which of the following could have a NEGATIVE impact on your credit score if done in a short period of time?
Paying down balances on your credit card accounts
Applying for multiple credit cards
Decreasing your utilization of credit
Paying your bills on-time
Which of the following is an effective strategy for personal saving?
Spending more than you earn
Not tracking your expenses
Setting a budget and sticking to it
Ignoring financial goals
Heather realized she has taken out too much debt and it has started to negatively impact her ability to budget. She has decided to pay off this debt in full as soon as possible. All of the following would be beneficial strategies, EXCEPT…
Making more than the minimum required payment on her debt
Taking extra shifts at work to increase her income
Reducing spending by canceling some of her streaming subscriptions
Applying for another credit card to use in case she runs out of cash paying off her debt
You buy a bond with a fixed coupon rate of 5%. A year later, similar bonds that are issued have a coupon rate of 3%. Which of the following is TRUE?
The price of your bond will stay the same
The price of your bond will increase
The interest rate for your bond will fall to 3%
The demand for your bond will decrease
Who tracks all of your credit information?
Federal government
Lenders
Credit reporting agencies (Equifax, Experian and TransUnion)
Consumer Financial Protection Board (CFPB)
Which of the following is a reason to use a savings account rather than a checking account?
Easy access to funds for daily transactions
Higher interest rates on deposits
Lower minimum balance requirements
Unlimited check writing privileges
How is a bond different from a stock?
A bond is a loan you give to an organization while a stock is partial ownership in a company
Bonds are usually issued by smaller startup companies while stocks are issued by well established organizations
Bonds are best for earning high returns while stocks are best for providing a stable source of income
Which of the following statements about Exchange Traded Funds (ETFs) is TRUE?
An ETF is a single stock that you can buy in the stock market
ETFs are traded once a day after the market closes
ETF prices can change throughout the day as they are exchanged on the market
Actively managed ETFs have very low fees
Which best describes the Debt Snowball method for paying off debt?
Only make payments on your smallest debt first, then move on to your second smallest debt, and so on
Make the monthly minimum payments on all your debts, and then put any extra cash toward the debt with the highest balance
Make the monthly minimum payments on all your debts, and then put any extra cash toward the debt with the lowest balance
Once your debt "snowballs" out of control, hire a certified credit counselor to help get your finances back on track
Which of the following statements is an advantage of online banking?
Once you set up online banking, your bank will waive overdraft, ATM, and monthly fees
Using online banking, you can request transfers, pay bills and automate your savings without visiting the bank branch
You can only shop online if your bank account has online banking features
Using online banking allows you to earn a higher interest rate
Which of the statements below BEST describes the relationship between risk and return when considering an investment?
Investors expect to earn a higher return when they invest in a high risk asset
Investors expect to earn a higher return when they invest in a low risk asset
Investors expect to earn zero return when investing in a low risk asset
Investors expect to earn a lower return when they invest in a high risk asset
When loans are amortized, monthly payments are _______ , while the amount of your monthly payment applied to interest _______ and the amount of your monthly payment applied to the principal _______ over time.
Constant, Decreases, Increases
Variable, Decreases, Decreases
Variable, Decreases, Increases
Constant, Increases, Decreases
Which statement best describes a savings account?
This account pays you interest on money you have put away for later to help your money grow
This account typically allows an unlimited number of transactions per month
This account offers a convenient way to pay bills and access cash from an ATM
This account is automatically debited when you use a debit card
How can your credit score impact your financial well-being?
Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be
Only consumers with high scores are approved for credit
It generally has no impact on your financial situation
Consumers with low scores get lower interest rates on loans than those with high scores
Review this partial credit report, and then choose the response below that accurately depicts the information on the report.
The borrower paid a $30 fee in February 2015
This borrower was never late with any of their credit payments
This borrower's most recent payment was $30
This borrower was 30 days late on their May 2015 payment
Which of the following is most likely to represent a fixed rate, secured debt?
A credit card
An auto loan
A student loan
A prepaid debit card
The amount you can charge to a secured credit card is limited by…
Your credit score
The amount of money you deposit into an account as collateral
How long you’ve had an account with the bank
The total amount of money across all your bank accounts
Who is eligible to receive Direct Subsidized loans?
Undergraduate students
Students enrolled less than half-time
Professional students
Graduate students
Which repayment option does not accrue interest while your required payments are paused?
Forbearance
Refinancing
Consolidation
Deferment
All of the following statements about bank accounts are true, EXCEPT…
If the bank is FDIC-insured, your money, up to the FDIC limit, is safe even if the bank fails
Historically, savings accounts earn higher returns than investments in the stock market
Many banks pay interest on the money you deposit into your savings account
Money in a checking account is usually easy to access via ATM, debit card or check
An excellent credit score will help with which aspect of car financing?
Securing a lower interest rate
Increasing the car's resale value
Reducing the car's insurance premium
Extending the car's warranty
What benefits do you receive by taking out a loan with a cosigner?
You get a discount on future loans after this one is paid off
You have a better chance of getting approved and getting a lower interest rate if the cosigner has good credit
You automatically get the same credit score as the cosigner once the loan is paid off
You don’t get penalized for late payments
A loan with a shorter term length will have __________ monthly payments, and you will pay __________ in total interest.
higher, less
lower, more
higher, more
lower, less
When signing up for a new checking account, you answer "Yes" to receive overdraft coverage. On this day, you have $10 in your account and go out and use your debit card to buy lunch for $12, a movie ticket for $12 and dinner for $15. What is likely to be the outcome resulting from these transactions?
You will likely be charged an overdraft fee for one or more of the transactions and also will need to repay the bank for the amount overdrawn
Your account will be closed
The bank will provide you five days to add funds to your account to cover the overdraft and no fees will be assessed
Since you requested overdraft coverage, the bank will not allow you to overdraw your account so your debit card will be denied
What types of money are used in paying for college and in what order should you use them?
Free money, your money, borrowed money
Your money, free money, borrowed money
Borrowed money, your money, free money
Your money, borrowed money, free money
Which response best completes the sentence "It's best to begin establishing credit when you're young because ________"?
Negative marks on your credit report go away faster for younger borrowers
Accessing credit only becomes more expensive as you get older
Credit scores are free for anyone under the age of 25
You will likely need a credit history to rent your first apartment, finance your first car, or open an unsecured credit card
Which of these represents a potential consequence of neglecting to pay your federal student loans?
Wages or tax refunds can be garnished
Passport revocation
Termination from your job
Driver’s license suspension
Credit card disclosure: "Your due date is at least 25 days after the end of the billing cycle. We will not charge you interest on new purchases provided that you have paid your previous balance in full by the due date each month." Identify the true statement.
The 25 days after the end of the billing cycle is referred to as the grace period
25 days is an exceptionally long period without paying a credit card bill
If you make the minimum payment on your card within the 25 day period, the credit card company will not charge you interest
If you pay your previous balance in full after the due date, the credit card company will not charge you interest
Which of these credit payback strategies would lead to the HIGHEST overall cost?
Paying off your credit card bill in full every month
Paying 20% of your credit card balance every month on time
Making the minimum payment (3% of your credit card balance) every month with an occasional late payment
Making the minimum payment (3% of your credit card balance) every month on time
How much does it cost to file the FAFSA?
It is 2% of your total loan amount
$50
$0
$100
What is a brokerage account used for?
It’s a special type of 401(k) plan that only some employers offer
It’s an online portal that allows you to set up appointments with a fund manager
It’s the account you use to pay any taxes you owe on money you earned on your investments
It’s a type of account used to buy and sell stocks, bonds, and funds
Typically, when should you first file the FAFSA?
Once you are ready to start repaying your student loans
After you receive your Student Aid Index
After you finish freshman year of high school
October or November of your last year of high school
Which of the following statements is true about this Schumer Box?
Depending on your creditworthiness, the APR for a borrower will always either be 8.99%, 10.99% or 12.99%
A 28.99% APR may be applied to your account for late payment
There is an introductory APR that is valid only for 1 year, but then the permanent APR is lower than that at 8.99%
You will never be charged an APR higher than 14.99%
Which of the following accurately describes a difference between an individual bond compared to a bond fund?
A bond is issued by a company while bond funds only invest in government bonds
A bond is considered to be a less diversified investment than a bond fund
A bond pays you dividends while a bond fund pays you regular interest
A bond guarantees you a higher rate of return than a bond fund
Janelle's family earns about $60,000 per year. She has been accepted to College A and College B and is comparing their financial aid packages. College A has a sticker price of $28,000 and net price of $12,000. College B has a sticker price of $60,000 and net price of $9,000. Which statement below is FALSE?
It will cost less to attend College B
College A has a lower sticker price than College B
College B is providing Janelle more grants and scholarships
It will cost less to attend College A
You are developing a savings plan and using short-, medium-, and long-term goals to motivate you. Which represents possible goals from short-term to long-term? Save for…
A new cell phone, college tuition, a house down payment
Retirement, college tuition, a vacation
A new cell phone, dinner with friends this weekend, a new bike
Retirement, a house down payment, college tuition
If you are having trouble making auto loan payments and are really following a tight budget, which recommendation below represents the WORST advice?
Continue making all payments and call your lenders and see if you can negotiate lower monthly payments, lower interest rates, or longer terms
Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control
Find an extra source of income by taking a second job, working longer hours, or borrowing from family if they can afford to help
Explore whether a free or non-profit credit counseling service could help
Which of the following statements comparing credit and debit cards is TRUE?
Far more businesses accept credit cards than debit cards
With debit cards, you're spending your own money at point of sale, but with credit cards, you're getting a loan that you need to pay back later
Credit card companies provide you with a monthly statement, while debit cards do not
Credit cards pull money directly from your bank account, while debit cards get their money from Visa or Mastercard
