WorksheetsEPF All Vocab Review
Total questions: 64
Worksheet time: 32mins
What has the biggest impact on whether a 4-year university is affordable?
The amount of financial aid that the university offers
The location of the university
The number of students enrolled in the university
The reputation of the university
Why can a 529 plan help you save more money than a traditional savings account?
It has higher interest rates
It is tax-free
It offers government subsidies
It requires no minimum deposit
Cutting down costs by earning an associate’s degree first and then transferring to a four-year college or university can be done by going to what type of higher education institution?
A private university
A local community college
A vocational school
An online university
Earning a degree can be expensive, but which example shows why it might be worth it?
Individuals with a bachelor’s degree typically earn a higher annual salary than those without one
Individuals with a bachelor’s degree have fewer student loans
Individuals with a bachelor’s degree pay lower taxes
Individuals with a bachelor’s degree receive more scholarships
What type of federal funding is free money and is based on financial need only?
Federal Grants
Subsidized Loans
Scholarships
Work-Study Programs
Living at home could save you money while enrolled in post-secondary school or training because:
It reduces costs of tuition
It reduces costs of room and board
It increases access to scholarships
It eliminates transportation costs
What is one thing that everyone must have deducted from their paycheck?
Health insurance premiums
Federal taxes
Retirement savings
Union dues
What is discretionary income?
The amount of money left after taxes and personal necessities have been paid
The amount of money left after all expenses have been accounted for
The amount of money spent on fixed expenses
The amount of money saved for retirement
What is zero-based budgeting?
A method where all expenses must be justified for each new period, starting from a 'zero base'
A method where expenses are calculated based on previous spending habits
A method where only fixed expenses are considered
A method where budgeting is done without considering income
What is the difference between fixed expenses and variable expenses?
Fixed expenses do not change, while variable expenses can change
Fixed expenses are optional, while variable expenses are mandatory
Fixed expenses are paid annually, while variable expenses are paid monthly
Fixed expenses are related to taxes, while variable expenses are related to savings
What is the definition of Incremental Budgeting?
A budgeting method where cash for different spending categories is kept in separate envelopes.
A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents.
Creating a budget where you start with the previous year’s budget and make small adjustments.
The loss of potential gain from other alternatives when one alternative is chosen.
Which budgeting method involves keeping cash for different spending categories in separate envelopes?
Incremental Budgeting
Envelope Method
Cash Flow Statement
Opportunity Cost
What does a Cash Flow Statement show?
The loss of potential gain from other alternatives when one alternative is chosen.
How changes in balance sheet accounts and income affect cash and cash equivalents.
A budgeting method where cash for different spending categories is kept in separate envelopes.
The process of paying off a debt over time through regular payments.
What is the term for the loss of potential gain from other alternatives when one alternative is chosen?
Opportunity Cost
Endowment Effect
Sunk Cost Fallacy
Loss Aversion
What is the Endowment Effect?
Making decisions about a current situation based on what resources you have already invested in the situation.
Putting more value on things you already own than the same item/thing in the store.
Searching for information that supports our preconceptions and ignoring contradictory evidence.
Conforming to the behaviors and beliefs of the people around you.
What is the Sunk Cost Fallacy?
Making decisions about a current situation based on what resources you have already invested in the situation.
Regarding losses as considerably more important than gains of comparable magnitude.
Searching for information that supports our preconceptions and ignoring contradictory evidence.
Putting more value on things you already own than the same item/thing in the store.
What does not go away even after you file for bankruptcy?
Credit card debt
Taxes, student loans, and child support
Payday loans
Secured loans
What decreases on a loan every month?
The interest rate
The principal
The credit score
The debt-to-income ratio
How long does bankruptcy stay on your credit report?
5 years
7 years
10 years
15 years
What type of loans should you avoid?
Payday loans and pawn shops
Secured loans
Unsecured loans
Fixed-rate loans
What is Chapter 7 bankruptcy also known as?
Reorganization bankruptcy
Liquidation bankruptcy
Debt consolidation bankruptcy
Credit counseling bankruptcy
What is an insurance premium?
The amount you pay monthly for the insurance
The amount you receive from the insurance company after a claim
The total cost of all your insurance policies combined
The deductible amount you must pay before the insurance company pays on a claim
Why is it important to have insurance?
It increases your financial risk
It lowers your risk of a financial loss
It guarantees you will never face financial problems
It eliminates the need for savings
Who is the most expensive to insure for car insurance?
Elderly drivers
Teenage boys
Middle-aged women
Experienced drivers with clean records
What is a way you can get a lower rate for car insurance?
Having a higher credit score and a clean driving record
Driving without insurance
Filing multiple claims
Ignoring traffic rules
What does life insurance do?
Covers the cost of car repairs
Pays money to your beneficiary when you die
Provides financial protection against healthcare costs
Covers the cost of home repairs
What is a deductible in insurance terms?
The amount an insured person must pay before the insurance company pays on a claim
The monthly premium paid for the insurance
The total amount covered by the insurance policy
The amount paid by the insurance company for a claim
What is a floater in insurance?
A policy designed to cover property that floats or moves from location to location
A type of life insurance policy
A term used for the deductible amount
A claim filed for a car accident
How can you lower your homeowners insurance?
By having an alarm system
By filing multiple claims
By ignoring home maintenance
By not insuring your home
What is the process by which insurers assess the risk of insuring a home, car, driver, or individual's health or life?
Underwriting
Claim filing
Premium calculation
Deductible adjustment
Which of the following is NOT one of the four types of insurance mentioned in the text?
Health Insurance
Vision Insurance
Travel Insurance
Pet Insurance
What does Health Maintenance Organization (HMO) focus on?
Preventative care and coordinated care through a network of providers
High-deductible health plans
Tax-advantaged savings accounts
Pet insurance for veterinary treatment
What does long-term disability insurance provide?
Financial support for a short period due to an illness or injury
Financial support when an individual is unable to work for an extended period due to an illness or injury
Group health insurance coverage during FMLA leave
Payment for medical expenses not covered by insurance
What is the Family and Medical Leave Act (FMLA) designed to do?
Provide financial support for short-term disabilities
Require employers to maintain employees' group health insurance coverage during FMLA leave
Pay for medical expenses not covered by insurance
Offer a high-yield savings account
What is the basic rule of a risk-to-return relationship in investing?
The lower the risk, the higher the return
The higher the risk, the higher the return
The higher the risk, the lower the return
Risk and return are unrelated
What is the purpose of diversification in investing?
To invest all your money in one asset
To mix a wide variety of investments within a portfolio
To focus only on high-risk investments
To avoid investing in stocks
What is a Certificate of Deposit (CD)?
A deposit account that pays interest based on current money market rates
A formal agreement where the federal government borrows money from investors
A very safe investment where you agree to leave the money for a determined amount of time
A high-yield savings account offering higher interest rates
What is the difference between compound interest and simple interest?
Compound interest is calculated only on the principal amount, while simple interest includes interest on interest
Simple interest is calculated only on the principal amount, while compound interest includes interest on interest
Compound interest does not earn interest on the principal amount
Simple interest earns more over time than compound interest
What is a Blue Chip Stock?
A stock with a market valuation of less than $1 billion
A share of a well-established, financially stable company with a market valuation of $10 billion or more
A high-risk investment with unpredictable returns
A stock that only pays dividends occasionally
What is a Mutual Fund?
A deposit account that pays interest based on current money market rates
An investment vehicle made up of a pool of money collected from many investors to invest in securities
A high-yield savings account offering higher interest rates
A formal agreement where the federal government borrows money from investors
What is an Index Fund designed to do?
Replicate the performance of a specific market index
Maximize short-term profits
Minimize tax liabilities
Provide guaranteed returns
What does 'Capital Gains' refer to?
The profit from the sale of an asset such as stocks, bonds, or real estate
The interest earned on a savings account
The amount of money withheld for taxes
The total income earned in a year
Which of the following best defines 'Liquidity'?
The ability of an asset to be converted into cash without affecting its market price
The total value of assets owned by an individual
The interest rate applied to a loan
The process of saving money for future use
Where is the New York Stock Exchange located?
Manhattan, NY
Los Angeles, CA
Chicago, IL
Boston, MA
What is the purpose of tax withholding?
To pay income tax as you earn your income
To save money for retirement
To calculate the total amount of taxes owed at the end of the year
To reduce taxable income
Who qualifies as a dependent for tax purposes?
Someone under age 19 or a student until age 24
Anyone earning less than $10,000 annually
A person who owns a business
An individual who pays taxes on time
What is the purpose of Form W-4?
To tell employers how much to withhold in income tax
To report how much federal tax was withheld for the year
To file annual income tax returns
To detail non-employee compensation
What does Form 1099 detail?
Non-employee compensation
Federal tax withholding
Annual income tax returns
Tax credits and deductions
What is an excise tax?
A tax paid on purchases of specific goods like gasoline or cigarettes
A tax applied uniformly to all income levels
A tax on the total income earned in a year
A tax that increases as taxable income increases
What is the safest form of investment according to the text?
Savings Account
Stock Market
Real Estate
Mutual Funds
What must be signed in order to cash or deposit a check?
Endorsement line
Deposit slip
Tax form
Withdrawal form
What is the term for money that goes directly into your account, making it safer and faster than being paid in cash?
Credit Union
Direct Deposit
Overdraft Protection
Mobile Banking
Which organization insures bank accounts up to $250,000?
FDIC
NCUA
Credit Union
ATM Card
What is the purpose of an ATM card?
To insure bank accounts
To make deposits or withdrawals only
To prevent overdrafts
To manage bank accounts via smartphone
What does the Annual Percentage Yield (APY) take into account?
The effect of compounding interest
The amount of money owed to others
The rate of inflation
The balance of assets and liabilities
What is the process of matching balances in an entity's accounting records to the corresponding information on a bank statement called?
Bank Reconciliation
Online Bill Pay
Overdraft Protection
Check Register
What is a Roth IRA designed for?
Allowing a person to set aside after-tax income to a specified amount each year
Insuring bank accounts up to $250,000
Managing bank accounts via smartphone
Preventing checks from causing an account to go below zero
What is the Rule of 72 used for?
Calculating how long it takes to double your money
Distributing investments among various asset categories
Planning for retirement
Preventing financial depression
What does 'Asset Allocation' refer to?
Distributing investments among various asset categories to balance risk and reward
A service that allows customers to pay bills electronically
A basic personal financial document used to track income and expenses
A severe and prolonged downturn in economic activity
What is the term for debts or obligations owed to others?
Liabilities
Net Worth
Financial Goals
Inflation
What is the difference between inflation and deflation?
Inflation refers to rising prices, while deflation refers to falling prices
Inflation refers to falling prices, while deflation refers to rising prices
Inflation refers to a severe economic downturn, while deflation refers to a mild one
Inflation refers to debts owed, while deflation refers to assets owned
What is the purpose of an emergency fund?
To provide regular payments for retirement income
To manage an individual's asset base in case of death
To save money for unexpected expenses or financial emergencies
To invest in long-term financial products
Which financial product is typically used to provide regular payments for retirement income?
Emergency Fund
Annuity
Estate Planning
Savings Account
What does estate planning involve?
Saving money for emergencies
Preparing tasks to manage an individual's asset base in the event of incapacitation or death
Providing regular payments for retirement income
Investing in short-term financial products
