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END OF PAGE A company that keeps files and records on people who apply for and use credit is called a A. credit union. B. commercial bank. C. finance company. D. credit reporting agency. - ANSWERS-D What type of financial aid needs to be repaid? A. Loan. B. Grant. C. Scholarship. D. Work-study. - ANSWERS-A A computer scam that uses spam or pop-up messages to deceive consumers into disclosing their card numbers, bank account information, Social Security numbers, passwords, or other personal information is called A. soliciting.
END OF PAGE B. phishing. C. scamming. D. consuming. - ANSWERS-B The maximum amount of money a person can borrow is called a credit A. history. B. rating. C. report. D. line. - ANSWERS-D Which of the following can help a person lower her personal risk of loss? A. Insurance. B. A will. C. Mutual funds. D. Home ownership. - ANSWERS-A If a car was damaged in a flood, which type of car insurance would typically cover the damage to the car?
END OF PAGE D. female teenagers frequently own their cars. - ANSWERS-A A person had an Apple computer that was destroyed in a fire. She was able to buy a new Apple computer because her insurance policy had the following benefit A. actual cash value. B. replacement value. C. limited risk. D. unlimited claim. - ANSWERS-B If a driver receives several traffic tickets, the cost of the car insurance will probably A. increase. B. decrease. C. stay the same. D. be billed monthly. - ANSWERS-A Money that a person pays to an insurance company for a policy is called a A. debt.
END OF PAGE B. premium. C. deductible. D. liability. - ANSWERS-B Before a person can receive money to cover the damage from a car accident, he must A. file a claim with his insurance company. B. increase his insurance coverage. C. have a witness who will testify for him. D. notify the lender who gave him a car loan. - ANSWERS-A What is the key word for insurance companies when establishing the cost for a policy? A. Diversify. B. Deductible. C. Risk. D. Credit. - ANSWERS-C Two types of life insurance policies are A. general and fixed-rate.
END OF PAGE A. a person can stop saving at age 40. B. of the power of compounding and appreciation. C. there are fewer bills to pay when a person is young. D. a person will not need insurance. - ANSWERS-B An important feature of a good financial goal is that the goal A. has a specific time frame. B. is appropriate for the person's age. C. can last throughout the person's life. D. will take at least ten years for the person to achieve. - ANSWERS-A Purchasing power decreases and it costs more money to buy goods when there is A. a bear market. B. inflation. C. deflation. D. a bull market. - ANSWERS-B What strategy can help a person achieve her goal to buy a house?
END OF PAGE A. Using credit cards to pay for expenses. B. Paying for large purchases in cash. C. Following a budget that allows for savings. D. Applying for more credit cards to increase her credit score. - ANSWERS-C A college student has to live on a tight budget. Before making a decision to buy the newest cell phone, which question should he ask himself first? A. Is the new cell phone cheaper than the one being used? B. Is the new cell phone on sale? C. Is the new cell phone a need or a want? D. Will my friends like the new cell phone? - ANSWERS-C Which of the following quotes is sound financial advice? A. "He who hesitates is lost." B. "A penny saved is a penny earned." C. "Don't put off today what can be done tomorrow." D. "The window of opportunity may only open once." - ANSWERS-B
END OF PAGE Which of the following is the source of income for most people aged 20 - 35? A. Dividends. B. Wages/salary. C. Rent. D. Mortgage payments. - ANSWERS-B The U.S. government agency responsible for the collection and enforcement of federal taxes is known as A. Federal Reserve System (Fed). B. Securities and Exchange Commission (SEC). C. U.S. Internal Revenue Service (IRS). D. Consumer Financial Protection Bureau (CFPB). - ANSWERS-C When a person has a balanced budget that includes savings then A. net income = discretionary income. B. total expenses = savings. C. total income = total expenses - savings. D. total expenses + savings = total income. - ANSWERS-D
Why do financial advisors recommend that a person save at least 10% of each paycheck? A. To have more money for wants not needs. B. To build wealth. C. To be able to pay bills on time. D. To be able to support worthwhile charities. - ANSWERS-B The "time value of money" means that A. money paid out today has less value than if the money is paid out in the future. B. money received today is worth more than the same amount of money received in the future. C. the more time a person has to save, the lower the return on the money. D. the longer money is held, the less likely it will be spent. - ANSWERS-B When a person receives a book store gift card, she can use it to A. buy a book at any store. END OF PAGE
salary. Bill spends his free time taking work-related classes to improve his computer skills. Don spends his free time socializing with friends or watching TV. After five years, what is most likely to be true? A. Don will make more because he is more physically fit. B. Don will make more because Bill is likely to become over qualified. C. Bill will likely make more money because he is more valuable to his company. D. Don and Bill will continue to make the same amount of money. - ANSWERS-C Which of the following is an example of a long-term debt? A. A student loan. B. A debit card purchase. C. A term life insurance policy. D. A stock portfolio. - ANSWERS-A A person earned a salary of $70,000 last year. Additionally, he had $1,000 in interest income and $2,000 in dividend income. His total income for this year is END OF PAGE
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A. $70,000.
B. $71,000.
C. $72,000.
D. $73,000. - ANSWERS-D
An example of an opportunity cost is A. buying a dress at a sale price instead of paying the original price. B. using coupons when food shopping. C. buying concert tickets instead of buying a textbook for a course. D. using a credit card when making a large purchase. - ANSWERS-C A person strongly feels that going into debt is wrong. This is an example of the influence of A. values on decisions. B. age and stage in life. C. marketing and advertising. D. general economic conditions. - ANSWERS-A Which of the following describes what happens during a depression?
A person decided to have six months of income in an emergency savings account. Is this a good decision? A. No, because he should place the money in a diversified portfolio. B. No, because emergency accounts are no longer advisable. C. Yes, because the money can be used as a down payment when buying a used car. D. Yes, because the money in the emergency account can be used if he loses his job. - ANSWERS-D Students applying for financial aid to attend college usually need to A. complete a Free Application for Federal Student Aid (FAFSA) form. B. obtain a transcript. C. write an essay. D. send a credit report from one of the three credit reporting agencies. - ANSWERS-A A person choosing a mortgage usually selects a fixed-rate loan because she knows that A. the interest rate remains the same for the life of the mortgage. B. her income will increase within the next three years. END OF PAGE
END OF PAGE C. the interest rates are going down. D. her homeowners insurance premiums will be lower. - ANSWERS-A Why does a bank pay interest to a depositor? A. The bank is able to use deposits to earn profits. B. It is a requirement of the Federal Deposit Insurance Corporation (FDIC). C. It helps the bank invest in the local community. D. It is a benefit of having a bank credit card. - ANSWERS-B It is generally better for a person to buy a home that she can afford than to rent an apartment because she will A. build equity. B. have fixed insurance needs. C. have a lower debt to credit ratio. D. avoid bankruptcy. - ANSWERS-a Which of the following would be considered an asset? A. Credit card account.
END OF PAGE her senior trip in three years. It is best for her to save the money during the three years in a A. checking account, because it is easy to withdraw funds. B. drawer at home, because it would be safe. C. savings account, because it would earn interest. D. certificate of deposit (CD), because it generally earns higher interest.
- ANSWERS-d John needs $3,000. He is withdrawing the money today from a $3, certificate of deposit (CD) which will reach maturity in six months. It is likely that he will have to A. pay the Internal Revenue Service (IRS) a penalty. B. pay the bank a penalty for early withdrawal. C. pay both the IRS and the bank a penalty. D. wait for the CD to mature. - ANSWERS-b When a check is returned due to insufficient funds, the check is said to have A. been postdated. B. been voided.
END OF PAGE C. bounced. D. cleared. - ANSWERS-c A form of payment that is guaranteed to be as good as cash is a A. personal check. B. bank check. C. credit card charge. D. promissory note. - ANSWERS-b Deposits in bank savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to A. $ 50,000. B. $100,000. C. $150,000. D. $250,000. - ANSWERS-d Which one of the following statements is the most accurate about the use of ATM cards?
