WorksheetsPF Ch.11 & 12 Test
Total questions: 50
Worksheet time: 25mins
What is The Fifth Foundation?
Pay cash for your home
Build wealth and give
Save for retirement
Pay cash for college
A security that represents part ownership of a company is called a(n) ____________.
Stock
Bond
Certificate of Deposit
Annuity
When you invest in a mutual fund, you are contributing to a pool of money that will be . . .
Given to hundreds of local charities in your area
Invested in a mix of stocks, bonds and money market accounts
Taxed based on each individual investor's annual salary
Put into a separate savings account for your children to inherit someday
Diversification reduces your ____________ by using a mix of investment types in your portfolio.
Income
Retirement funds
Risk
Mutual funds
______________ is the process of figuring out how much money you'll need in retirement and creating a plan to get there.
Investment banking
Outrageous generosity
Retirement planning
Retirement accounting
__________ is the cure for __________.
Generosity; selfishness
Investing wisely; estate planning
Love; the income gaps in our society
Selfishness; thinking of others first
Investing your money earns you more money because of . . .
Checking accounts
Mortgage payments
Compound growth
Short-term savings
When riding the highs and lows of the stock market, remember . . .
You can't go wrong when investing money into stocks.
The S&P isn't a reliable source when it comes to navigating the growth and decline of stocks.
It's unpredictable and risky. You should pull your money out and steer clear.
It will level out, so stick with it!
Roth IRA, 401(k), 403(b), 457, and Simplified Employee Pension are all examples of __________.
Tax forms
Mutual funds
Retirement plans
Investment bankers
Social Security benefits are meant to __________ your income.
Replace 40% of
Replace 100% of
Decrease
Fully replace
Certificates of deposit and money market accounts are both examples of investments with __________ risk and __________ return.
Low; low
Low; high
High; high
High; low
Live like no one else now, so later you can live and __________ like no one else.
Be selfish
Work hard
Hoard your resources
Give
Mutual funds are less risky and can outperform the stock market because...
They're not diversified.
They guarantee a high rate of return.
They're fully liquid.
They invest in several companies at once.
Never ________ something you don't ________.
Buy; invest in
Finance; think will appreciate in value
Invest in; understand
Diversify; enjoy
The three components of compound growth are money, time, and ________.
A large paycheck
Investments
Retirement
Rate of return
Never invest your money in ________ because it/they are extremely risky.
CDs
Mutual funds
Single stocks
Real estate
________ is key when it comes to compound growth.
Time
Money
Attitude
Roth IRA
When donating money, you should always...
Assume the best and trust the charity will use your donation well.
Identify a cause that matters to you and research the charity thoroughly.
Make short-term commitments to various charities.
Give to as many organizations as possible to share the love.
When using a Roth plan, you invest your money after paying taxes, and the investment grows tax-free.
True
False
Investments in Roth plans are taxed annually
Roth plans do not offer tax-free growth
Why might someone choose to diversify their investments?
To keep them from getting bored with one form of investment
To balance high-risk investments with more steady and predictable ones
There isn't a good enough reason to diversify your investments
To keep the risk as high as possible so the reward is equally high
What are the keys to building wealth through investments?
Spending all your income on luxuries
Investing consistently over time and diversifying your portfolio
Avoiding investments and saving only in a bank account
Taking high-risk investments without research
Give some examples of expenses that don't go away when you retire.
Mortgage payments, healthcare costs, and utilities
Entertainment expenses only
All expenses disappear after retirement
Travel expenses only
What are the first steps of retirement planning?
Spending all your savings on immediate needs
Setting financial goals and creating a budget for retirement
Ignoring retirement planning until later in life
Investing only in high-risk stocks
What are some practical ways you can be generous today, before you're wealthy?
Donating time, skills, or small amounts of money
Waiting until you are wealthy to give back
Spending all your money on personal luxuries
Avoiding generosity altogether
Why is mutual fund investing a good idea for retirement, but not for your emergency fund or short-term savings?
Mutual funds are highly liquid and perfect for emergencies
Mutual funds are designed for long-term growth and may not be immediately accessible
Mutual funds guarantee immediate returns
Mutual funds are only for short-term savings
It's best to develop good _____________ now instead of waiting until you're on your own to figure it all out.
Money habits
Diet and exercise plans
Real estate investments
Friendships
Your rent payment should total no more than ______% of your take-home pay.
50%
15%
75%
25%
When you're ready to buy a house, the best option is a __________.
20-year VA loan
15-year fixed-rate conventional mortgage
30-year equity loan
30-year fixed rate mortgage
What does cost of living refer to?
How much of your monthly income is budgeted specifically for your rent or mortgage
The average cost of the basic goods and services needed to maintain a certain standard of living
The level of wealth, comfort, material goods and necessities available to a group of people
How wealthy or poor you are at the time of purchasing your first home
Making periodic payments to a landlord for the use of their property is called __________.
Down payment
Buying
Renting or leasing
Security deposit
You should rent until you are able to __________.
Buy a home the right way
Become a landlord someday
Invest in stocks
Buy amenities
Buying a house while _________ can put your _________ at risk.
In debt; home purchase
Getting pre-approved; life
Debt-free; renter's insurance
On a budget; social life
Living on campus at college will help you _________ living on your own, while living off campus will require you to _________.
Dive into; live with your parents
Ease into; pay for rent, utilities, and groceries
Get used to; cut half of your college courses
Enjoy; find roommates
Your decision to rent or buy depends on your _________.
Feelings towards renting or buying
Income tax
Financial situation
Friends' opinions
As you shop around and compare rent prices, remember that paying extra for _________ is not worth it if it keeps you from reaching your financial goals.
Amenities
Mortgages
Tax brackets
Security deposits
A house is an asset that typically will _________ value over time.
Stay the same
Decrease in
Depreciate in
Increase in
You need to be completely out of debt, have a fully funded emergency fund, and have saved enough cash for a down payment before you _________.
Buy a house
Lease a house
Rent a house
Sell a house
The only time it’s okay to borrow money if you can’t pay 100% in cash is . . .
Getting a car lease
Buying a home (mortgage)
Renting a home
For home improvement projects
No matter what path you choose to take after high school, the money principles stay the same. What are they?
Live on more than you make and debt dominates all.
Only use a debit card for purchases, rent-to-own loans are king, and don't open a savings account.
Invest before anything else and budget if you have time.
Save, budget, stay out of debt, live on less than you make, and be generous.
If you look at long-term costs, __________ is usually the better deal.
Homeownership
Renting
Leasing
Maintaining
What type of interest rate is locked in and won't change for the life of the loan?
15-year
Fixed-rate
Equity
Adjustable rate
When someone spends so much of their income on the costs of homeownership that they struggle to reach their other financial goals, they are __________.
Wealthy
House poor
Wise homeowners
Rent poor
What information should a lease contain?
The names and numbers of the closest shopping malls
Property address, rental term, security deposit terms, and pet fees
Acknowledgement clause, your name, and the local restaurants available
An agreement that your rent will only be paid on a credit card
What is your mortgage principal?
The largest amount of money you are legally allowed to borrow
The down payment needed to get a mortgage
The amount borrowed (that must be repaid) to purchase a home
The first payment you make on your new home
To make living with a roommate more peaceful while you're saving money . . .
Communicate, be respectful, and be considerate
Require your roommate to pay a larger rent check than you do
Avoid talking to them in order to avoid conflict
Assume that your best friend will make a great roommate
After you hire a real estate agent, the next step in the process is to __________.
Close on your new home
Get a home inspection
Start looking at homes within your budget
Make an offer on a home
What are some of the costs of living on your own?
Rent, utilities, groceries, and transportation
Only rent and groceries
Entertainment and luxury expenses only
None of the above
What are some ways that someone can save money on their rent?
Renting a larger apartment
Living with roommates or negotiating rent
Paying rent late every month
Renting in the most expensive area of the city
What are some good questions you could ask an adult to help you prepare to be financially independent someday?
How do I spend all my money on entertainment?
What are the best ways to save, budget, and invest?
How can I avoid paying bills?
How do I get rich quickly without working?
Why is a 15-year fixed-rate mortgage better than a 30-year?
It has a lower interest rate and is paid off faster
It has a higher interest rate but is more flexible
It allows you to pay less each month forever
It is better because it is more expensive
