When interest rates rise:

pay higher rates on borrowing & interest earned in savings is higher

Which is true about homeowners insurance?

typically required by banks as a condition of providing a mortgage

How can budgets help individuals make financial decisions?

Budgets helps you by structuring how you set aside money each month

What is a question individuals should ask when evaluating financial literacy social media influencers?

Are they a certified financial expert?

What is the primary difference between a traditional individual retirement account (IRA) and a Roth IRA?

traditional IRA uses pre-tax dollars, a Roth IRA uses post-tax dollars

What is true about gross wages and net wages?

Gross wages before deductions are taken out. Net are wages are after

For an individual looking to borrow $1,000, which will result in the lowest cost of borrowing?

A personal loan with a 7% interest rate with a vehicle as collateral

Which is true about federal and state taxes?

Federal taxes are progressive state taxes vary by state

Which is true about risk in investing?

riskier investments have the potential for higher return

How can you lower your premium?

Decrease your coverage amount to the state limit

What does it mean to have a balanced budget?

Managing your finances so your expenses do not exceed your income

Which is true about inflation?

Inflation is a increase in prices of goods & services

What is one of the ways a good credit score can help your finances?

You may be eligible for lower interest rates

There are 2 types of credit inquiries: a hard pull & a soft pull. What is the difference between?

Hard pulls have a negative impact on your credit score

Why might someone rent a home when they would prefer to buy one?

Because there is a much higher initial cost to buy a house than rent one

The best time to start saving and investing money is:

The sooner the better, giving more time for your money to grow

Which of the following is the primary thing to consider when deciding whether to make a significant purchase?

Is this something I will still want in six months?

What is a certificate of deposit or CD?

An account with higher interest when you agree to a set period of time

Why is it important to learn how to manage money effectively?

To help you achieve your financial goals

Which is true about insurance premiums?

Premiums are the cost of an insurance policy

What is the most common way most workers obtain health insurance coverage?

Through an employer sponsored plan

Which of the following is a way to reinforce positive spending habits?

Having money-smart friends around that inspire you to save

Which of the following is true about savings accounts?

Each financial institution will have its own rates and fees

What’s the main difference between a Chapter 7 bankruptcy and Chapter 13 bankruptcy?

Chapter 7 erases all of your debts, Chapter 13 gives you a new payment plan

The avalanche method of paying back debt aims to:

Focus on paying off debts with the highest interest rates first

Alex received a credit card statement & sees a balance of $300 & a grace period of 20 days. Which of the is true?

20 days to make a payment & if he pays balance in full there's no interests

What is the difference between an IRS Form W-2 and IRS Form 1099?

W-2: employees with tax withheld; 1099: self-employed, contractors

When buying a home with a 30 year loan the bank is wants a 10% down payment why would you think about a 20% down payment

A larger down payment will mean lower monthly payments

The 50/30/20 budgeting approach allocates spending to:

50% needs, 30% wants, 20% savings and debt payments

studbud

Personal Finance Spring 2025 final exam

44 termsStudBud Administration29 plays

Imported from external platform

Flashcards44 cardsFPractice quizPHost liveL

Questions 44

Answers

1
The responsibility of the at-fault party to pay for damages or bodily injury costs is called:
Risk
Liability
Policy
Deductible
2
When interest rates rise:
pay higher rates on borrowing & interest earned in savings is lower
pay lower rates on borrowing & interest earned in savings is higher
pay higher rates on borrowing & interest earned in savings is higher
pay lower rates on borrowing & interest earned in savings is lower
3
If you sell an investment for a profit, what type of tax will you have to pay on that profit?
Capital gains tax
Property tax
Federal income tax
Sales tax
4
Which of the following would be considered earned income?
A bonus from your employer
Money you receive as a gift
Dividends from a stock you own
Pension Income
5
Which is true about homeowners insurance?
1st time homebuyers must wait 1 month before they can purchase insurance
It is significantly less expensive than renters insurance
typically required by banks as a condition of providing a mortgage
It is required by federal law in high-risk areas
6
Successful goals must be:
Big dreams
Socially conscious
Realistic for you
Given to you
7
How can budgets help individuals make financial decisions?
Budgets helps you by structuring how you set aside money each month
Budgets make your money grow faster than it would in a savings account
A good budget will cancel your student loans.
Budgets help your credit score, making it cheaper to borrow money
8
Which investment is generally considered to be a safer investment, but typically offers lower returns?
Foreign exchange market
Stocks
Bonds
Cryptocurrency
9
What is a question individuals should ask when evaluating financial literacy social media influencers?
How many followers do they have?
Are they a certified financial expert?
How fashionable are they?
Do they speak with confidence?
10
Which type of budget expense saves you from borrowing money to pay for unexpected costs?
Fixed expenses
Long-term expense
Income
Emergency fund
11
Sales tax:
Varies based on location
Never applies to food
Is set at the federal level
Affects all goods equally
12
What is the primary difference between a traditional individual retirement account (IRA) and a Roth IRA?
A Roth IRA allows you to avoid all taxes on your income
Roth IRA is for education, traditional IRA is used for retirement
Your earnings in a Roth IRA are taxed, but your contributions are not
traditional IRA uses pre-tax dollars, a Roth IRA uses post-tax dollars
13
What is true about gross wages and net wages?
Gross wages are after your wages have been garnished.
Gross wages after deductions are taken out. Net are wages are before
Gross wages before deductions are taken out. Net are wages are after
Gross wages are your take-home pay. Net wages are a form of payroll tax.
14
Which of the following is one of the main credit reporting agencies?
Credit Reporting Alliance
Credit Karma
Experian
Accreditation
15
This program is a joint federal & state program that provides coverage for individuals and families with limited income.
Medicaid
Medicare
Disability insurance
Unemployment insurance
16
Who can view a credit report to evaluate an individual's credit risk?
Family members
Former employers
Insurance companies
Pawn shops
17
The teachers at a local public school are most likely being paid for in part by which of these taxes?
Election tax
Payroll tax
Water tax
Property tax
18
For an individual looking to borrow $1,000, which will result in the lowest cost of borrowing?
A credit card with a 15% APR and the individual making minimum payments
A payday loan that charges $15 a week for every $100 borrowed
A personal loan with a 7% interest rate with a vehicle as collateral
A cash advance on a credit card that has a 29% APR and a 3% transaction fee
19
Which is true about federal and state taxes?
federal & state income taxes are progressive
Federal taxes are progressive state taxes vary by state
Individuals only have to pay state or federal income taxes, not both
Federal and state income taxes are the same for individuals in all states
20
Which is true about risk in investing?
riskier investments have the potential for higher return
riskier investments for higher returns could result in a lose
Historically, all individual stocks outperform the overall stock market
past performance of an investment consistently predicts future performance
21
How can you lower your premium?
You can’t lower your premium
Increase your coverage amount by at least 10%
Decrease your deductible to zero
Decrease your coverage amount to the state limit
22
What does it mean to have a balanced budget?
Living a simple life without any luxuries or indulgences
Never relying on credit cards
Checking your budget daily
Managing your finances so your expenses do not exceed your income
23
Which is true about inflation?
An increase in inflation is caused by a low supply of money
Inflation is a increase in prices of goods & services
An increase in inflation increases an individual's purchasing power
Inflation is a decrease in prices of goods & services
24
What is one of the ways a good credit score can help your finances?
It can increase your chance of winning the lottery
A higher score can help you get a promotion
You may be eligible for lower interest rates
Your income will increase
25
There are 2 types of credit inquiries: a hard pull & a soft pull. What is the difference between?
while soft pulls are when you apply for a loan
Hard pulls are credit card company checks your credit with out permission
Hard pulls have a negative impact on your credit score
Soft pulls have a negative impact on your credit score
26
Why might someone rent a home when they would prefer to buy one?
Because they want unrestricted freedom in changing their home
Because they enjoy do-it-yourself home repairs
Because there is a much higher initial cost to buy a house than rent one
Because they want the stability that comes with renting
27
The best time to start saving and investing money is:
Only when it can provide tax advantages
When you're older and earning a lot of money
The sooner the better, giving more time for your money to grow
After you've experienced an emergency, and realize the need for savings
28
Which of the following is the primary thing to consider when deciding whether to make a significant purchase?
Does this item come in the colors I want?
Is this better than what my friend owns?
Does this item have the features I want?
Is this something I will still want in six months?
29
A plan to save money for things in the near future, usually within a year, is the definition of:
A need
A long-term goal
A want
A short-term goal
30
What is a certificate of deposit or CD?
A savings account that offers tax-advantaged savings
A bank account you can access your money for free any time you want
An account that is meant to be used for frequent deposits and withdrawals
An account with higher interest when you agree to a set period of time
31
Why is it important to learn how to manage money effectively?
To help you achieve your financial goals
To avoid paying taxes on your income
To become an expert in investing
To prove to other people that you are financially responsible
32
Which is true about insurance premiums?
Premiums are only due once an insurance claim has been filed
Decreasing a deductible will lower insurance premiums
Premiums are the cost of an insurance policy
Insurance premiums typically go down over time
33
What is the most common way most workers obtain health insurance coverage?
They self-insure
Through an employer sponsored plan
Directly from private insurance companies
Through Medicare
34
Which of the following is a way to reinforce positive spending habits?
Help out your friends by picking up the tab when you eat out
Follow influencers who find deals on luxury goods
Buy high priced products, because high price equals high quality
Having money-smart friends around that inspire you to save
35
Which of the following is true about savings accounts?
You can only have a savings account if you also have a checking account
The interest rate for savings account are set by the Federal Reserve
Each financial institution will have its own rates and fees
You must have a minimum income to have a savings account
36
What’s the main difference between a Chapter 7 bankruptcy and Chapter 13 bankruptcy?
Chapter 7 you to pay back your debts, Chapter 13 gives you a payment plan
Chapter 7 you repay your debts, while Chapter 13 you sell your assets
Chapter 7 erases all of your debts, Chapter 13 gives you a new payment plan
Chapter 7 is only for people with high credit scores
37
The avalanche method of paying back debt aims to:
Focus on the debts that cause the most stress
Pay off debts in order of when the accounts were opened
Pay off debts starting with the smallest balances
Focus on paying off debts with the highest interest rates first
38
If a person does not have health insurance, who is responsible for the cost of their health care?
The uninsured person
Their employer
The nearest emergency room
The federal government
39
Alex received a credit card statement & sees a balance of $300 & a grace period of 20 days. Which of the is true?
Alex can't pay for 20 days; then payment is due & interest rate will change
must make payments now & wait 20 days before using the credit card
Alex can continue to spend for 20 more days until the account is closed
20 days to make a payment & if he pays balance in full there's no interests
40
you make $2,000 a month & decide to put $300 in your savings before your monthly expenses what kind of budgeting is this
Zero based approach
50/30/20
Debt repayment plan
Pay yourself first
41
What is the difference between an IRS Form W-2 and IRS Form 1099?
W-2: employees with tax withheld; 1099: self-employed, contractors
W-2 required for filing taxes; 1099 is a duplicate copy of a W-2
W-2 is for employees; 1099 is filled out by the IRS and sent to individuals
W-2 for employees when they're hired; 1099 for employees to file taxes
42
When buying a home with a 30 year loan the bank is wants a 10% down payment why would you think about a 20% down payment
A larger down payment will mean a higher interest rate
A lower downpayment will mean a lower interest rate
A larger down payment will mean lower monthly payments
A lower down payment will mean lower monthly payments
43
You spent $200 on 10 shares of stock @ $20 per share. A year later, you sell them @ $25. What is your return?
5%
25%
20%
10%
44
The 50/30/20 budgeting approach allocates spending to:
50% needs, 30% wants, 20% savings and debt payments
50% variable, 30% fixed, and 20% discretionary costs
50% fixed, 30% variable, and 20% investments
50% wants, 30% savings and debt payments, 20% needs

Personal Finance Spring 2025 final exam Flashcards | StudBud