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Worksheets24/25 FA S1 Study Guide
Total questions: 74
Worksheet time: 37mins
What is a secured loan?
A loan backed by collateral
A loan without collateral
A loan with no interest
A loan that never needs to be paid back
Which of the following can lower your monthly car payment?
Larger down payment
Shorter loan term
Low credit score
Higher interest rate
What should you do first if you can’t afford a loan payment?
Ignore it
Call your lender
File bankruptcy
Pay a friend
Why are auto loans usually easier to get than mortgages?
Shorter term
Higher interest
Secured by car
Require less extensive credit check
What is the difference between saving and investing?
Investing carries risk and potential growth
Saving has no interest
Investing is safer
Saving is riskier
Saving is better for ________. Investing is better for long-term goals.
Emergency funds
Retirement
Long-term goals
Travel
Which account is used for education expenses?
529 plan
HSA
IRA
Which account is used for medical expenses?
HSA
529 plan
IRA
Savings
Which account is used for retirement?
IRA
HSA
529 plan
Savings
Money in a 529 plan grows ________.
Tax free
Taxable
Only with interest
Depends on state
Money in a 529 plan can be withdrawn ________ for qualifying expenses.
Tax free
With penalty
Taxed
Only after age 18
Which is a benefit of an HSA?
Tax advantages
No contribution limit
Guaranteed growth
Government matching
A Roth IRA allows contributions that are ________.
After-tax
Pre-tax
Tax deductible
Tax deferred
What is the penalty for withdrawing from an IRA early?
10% plus taxes
5% plus taxes
No penalty
50% plus taxes
Starting early for retirement is advantageous because?
Compounding has more time to grow
You can contribute less
Interest rates are higher
Taxes are lower
If you start investing at age 15 instead of 35, your money will?
Grow substantially more
Be the same
Grow slightly less
Be less because of risk
What is gross pay?
Income before taxes and deductions
Income after taxes
Take-home pay
Net salary
What is net pay?
Income after taxes and deductions
Gross pay
Salary before deductions
Total annual income
Pre-tax contributions are?
Taken out before taxes
After taxes
Deducted voluntarily
Not deducted from paycheck
Which is an example of employer contribution?
401k match
Student loan
Rent
HSA contribution
Which is the main difference between salary and wage?
Salary is fixed, wage is hourly
Salary is hourly, wage is fixed
Salary is paid weekly, wage is paid monthly
Salary is paid monthly, wage is paid weekly
Name one way to earn income without working.
Investments
Gross pay
Salary
W-4
What information is shown on a pay stub?
Gross pay, deductions, net pay
Hours worked only
Gross pay only
None of the above
Why is it important to read your pay stub?
To understand taxes and deductions
To compare jobs
To spend more money
To avoid work
What is a W-4 used for?
Calculate federal tax withholdings
Retirement contributions
Apply for loans
Calculate net pay
Which payroll deductions are required?
Federal and state taxes
Health insurance
401k contributions
Vacation days
Why might someone have voluntary deductions?
To save or invest
To pay taxes
To increase gross pay
Which type of insurance is typically included in employer contributions?
Health insurance
Car insurance
Life insurance
Renters insurance
Which type of loan has a longer term?
Mortgage
Auto loan
Personal loan
Payday loan
The larger your down payment on a car loan, the ________.
Lower your monthly payments
Higher your monthly payments
No change
Total interest increases
The higher your credit score, the ________.
Lower your APR
Higher APR
No effect on APR
Loan denied
Shorter loan term results in ________ monthly payments and ________ total interest.
Higher; lower
Lower; higher
Lower; lower
Higher; higher
Why might someone choose to lease a car?
Lower monthly payments
Ownership
No mileage limits
No insurance needed
Mortgage down payment is calculated as?
Home price minus loan amount
Loan amount only
Total interest
Monthly payment
Why pay off a mortgage before 30 years?
To reduce interest paid
To increase principal
To extend term
To reduce down payment
Which requires a more extensive credit check?
Mortgage
Auto loan
Personal loan
Payday loan
Which has shorter terms?
Auto loan
Mortgage
IRA
HSA
Which is more likely approved with poor credit?
Auto loan
Mortgage
IRA
529 plan
How can lenders adjust loan terms for high-risk borrowers?
Increase interest
Decrease loan amount
Extend term
All of the above
First step if struggling with secured debt?
Contact lender
Ignore bills
File bankruptcy
Call friends
Consequences of not paying secured debt?
Repossession and legal action
Nothing
Lower income
Pay less taxes
SWOT stands for?
Strengths, Weaknesses, Opportunities, Threats
Savings, Work, Options, Taxes
Stocks, Wages, Operations, Trading
Skills, Wealth, Output, Time
What is a mission statement?
A statement describing a company's purpose
A list of employees
A tax form
A loan document
Which payment type is for independent contractors?
1099
W-2
401k
IRA
Which payment type is for employees?
W-2
1099
401k
IRA
PPO insurance allows?
Choice of any provider
Restricted provider network
No coverage
Only emergency care
HMO insurance requires?
Care from network only
Choice of any provider
No insurance
Employer-paid
Variable expenses change each month. Fixed expenses?
Remain constant
Also vary
Are taxes
Break-even point is?
Revenue equals expenses
Revenue > expenses
Profit minus expenses
Total revenue
Which is a fixed expense?
Rent
Groceries
Gas
Entertainment
Which is a variable expense?
Gas
Rent
Car insurance
Loan
Why track spending in a budget?
Plan
Save
Prepare for emergencies
All of the above
Which is a key step in budgeting?
Calculate income
List expenses
Adjust spending
All of the above
Why is 20% savings recommended?
Emergency fund
Future goals
Unexpected expenses
All of the above
What is gross income?
Income before taxes
Income after taxes
Take-home pay
Net pay
Net income is calculated by?
Gross income minus taxes
Gross income plus taxes
Gross income only
Taxes only
Which is a liability?
Car loan
Checking account
Savings account
401k
Which is an asset?
Savings account
Car loan
Loan
Taxes
Why is location important in housing?
A) Affects commute and cost
B) Changes interest rate
C) Changes mortgage type
D) Impacts taxes
How much should rent/mortgage ideally be of monthly income?
About 1/3
About 1/2
About 1/4
About 2/3
What is an emergency fund?
Savings for unexpected expenses
Money for vacations
Investment fund
Retirement savings
What is a budget?
A plan for spending and saving money
A tax document
A credit card statement
A loan agreement
What is compound interest?
Interest earned on principal and previous interest
Interest earned only on principal
A type of loan fee
A tax deduction
What is diversification in investing?
Spreading investments across different assets
Putting all money in one stock
Avoiding taxes
Saving in cash only
Which is an example of a variable expense?
Groceries
Rent
Mortgage
Car loan
Which is an example of a fixed expense?
Rent/Mortgage
Food
Entertainment
Utilities
What is net worth?
Assets minus liabilities
Total income
Total expenses
Savings balance
What is a liability?
Something you owe
Something you own
Investment
Savings
What is an asset?
Something you own
Something you owe
Loan
Why is credit score important?
Determines loan eligibility
Determines taxes
Determines income
Determines savings
What is the purpose of insurance?
Protect against financial loss
Increase income
Pay taxes
Invest money
Which insurance is mandatory for drivers?
Auto insurance
Health insurance
Life insurance
Home insurance
What is the main goal of investing?
Grow wealth over time
Avoid paying taxes
Save for short-term goals
Pay off loans
What is the purpose of a financial plan?
Set goals and manage money
Track taxes only
Only invest in stocks
Borrow money
