A regressive tax would NEGATIVELY impact which of these people most?

a fast food employee who works 40 hours a week making minimum wage

Which statement is FALSE?

Insurance only increases your risk exposure.

Which sentence describes the risks and returns of investing in stocks?

They offer the highest risks and the highest potential returns

Why is buying stock through mutual funds less risky than buying individual company stock?

you diversify your risk by buying small pieces of many companies at a time

What kind of investment COULD return an investment 10 times over?

purchasing $100 worth of stock in a start-up company

Why do loans extended for longer periods of time often involve higher interest rates?

to compensate the lender for greater risk

On which of the following do people pay a regressive tax?

goods purchased for their personal use

Which of these is the BEST definition of a proportional tax?

a tax rate that is fixed for all people

What is the primary purpose of insurance?

To protect you against a financial loss

How might APR affect a consumer's choice of which credit card to choose?

Consumers would look for a card with a lower APR.

What best describes the standard deduction when filing income taxes?

individuals avoid paying taxes on the 1st portion of income each year

Darrell wants to buy a used car for $3000. He doesn't have $3000 in savings. What is the lease expensive credit option?

A 3-year loan with a fixed simple interest rate

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Personal Finance Review

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Questions 34

Answers

1
Which type of insurance is MOST LIKELY classified into categories such as term, whole, and variable?
life insurance
automobile insurance
health insurance
disability insurance
2
Which of the following is NOT one of the steps in creating a financial plan for saving and investing?
Getting a second job.
Evaluating the performance of investments at regular intervals.
Matching investment types with personal financial goals.
Setting realistic, measurable, attainable goals.
3
You are purchasing your first vehicle. These factors will be considered when determining the cost of your policy EXCEPT
your marital status.
your ethnicity.
your age.
your gender
4
Which type of insurance is also an investment plan?
term life insurance
property insurance
disability insurance
whole life insurance
5
A regressive tax would NEGATIVELY impact which of these people most?
a fast food employee who works 40 hours a week making minimum wage
a public school teacher with 25 years experience
a Major League baseball player
a chemical engineer for a major pharmaceutical manufacturer
6
Which of the following is NOT an important factor in determining credit worthiness?
marital status of the borrower
repayment of previous loans
collateral available to back the loan
income capacity to repay the loan
7
Which type of insurance has a cash value that can be used in emergencies?
property
term life
disability
whole life
8
What should you expect if you switched to an insurance policy with a higher deductible?
a lower premium
a higher premium
no coverage limit
a higher coverage limit
9
Which of these is LEAST LIKELY to determine credit worthiness?
length of employment
payment history
personal health history
personal educational background
10
Which statement is FALSE?
Insurance only increases your risk exposure.
One needs insurance to protect against loss and liability
Buying insurance is one way to help reduce risk.
There is absolutely no way to eliminate all risk in your investments.
11
Which sentence describes the risks and returns of investing in stocks?
They offer the highest risks and the highest potential returns
They offer the highest risks, but the lowest potential returns
They offer the lowest risks, but the highest potential returns
They offer the lowest risks and the lowest potential returns
12
Why is buying stock through mutual funds less risky than buying individual company stock?
Individual companies usually go bankrupt
Investments made into mutual funds are insured by the FDIC
you diversify your risk by buying small pieces of many companies at a time
Inflation is less likely to erode your investment
13
Define: The form used to apply for financial aid to pay for college
1040
Net Worth
FAFSA
FICA
14
What kind of investment COULD return an investment 10 times over?
depositing the money in a commercial bank account
purchasing $100 worth of stock in a start-up company
buying-50-worth-of-bond-sand-investing-50-in-a-mutual-fund
placing the money in a savings and loan account
15
Why do loans extended for longer periods of time often involve higher interest rates?
to encourage consumers to buy durable goods for extended periods of time
to encourage savings
to compensate the lender for greater risk
to compensate the buyer for using savings to make a purchase
16
What is the BEST example of a progressive tax in the United States?
personal income taxes
federal excise taxes
sales taxes
Social Security taxes
17
On which of the following do people pay a regressive tax?
interest earned on their savings accounts
stocks purchased for investments
their earned income
goods purchased for their personal use
18
Why do banks and other financial institutions require collateral for loans?
to reduce the risk of lending
banks want profit motives
to raise needed funds
to assess the trustworthiness of the customer
19
Of the following people, which one would probably pay the highest rates for car insurance?
a 50-year-old single man
an 18-year-old girl
an 18-year-old boy
a 30-year-old married woman
20
An insurance policy with a higher premium MOST LIKELY has
a lower deductible.
a higher deductible.
no liability limit.
a lower liability limit.
21
Julio had $20,000 in his bank account when his bank declared bankruptcy. Which of the following is true?
Julio lost all his savings
Julio will get a portion of his money
Julio will get his money back after the bank sells its assets
Julio got all his savings back
22
what is the cost you pay for your insurance coverage?
premium
deductible
coverage limit
policy
23
Which of these is the BEST definition of a proportional tax?
a tax rate that depends upon a person's purchases
a tax amount that is the same amount for everyone
a tax rate that is fixed for all people
a tax that is based on a percentage of a person's income
24
What is the primary purpose of insurance?
To allow you to do things you couldn't do
To take money away from you
To protect you against a financial loss
To pay for your mistakes
25
Which kind of insurance pays a monthly income to people who are unable to work for an extended period?
liability insurance
life insurance
disability insurance
health insurance
26
What is the percentage of FICA tax withheld for Social Security?
7.65%
6.2%
10%
1.45%
27
How might APR affect a consumer's choice of which credit card to choose?
Consumers would look for a card with a higher APR.
Consumers would look for a card with a lower APR.
A consumer would not worry about the card's APR.
APR would determine how much credit the consumer received.
28
What best describes the standard deduction when filing income taxes?
allows an individual to claim a dependent
allows an individual to avoid FICA tax
individuals can avoid having to owe the IRS when filing taxes
individuals avoid paying taxes on the 1st portion of income each year
29
Shanna's mortgage company requires insurance coverage. Which type of insurance would she need?
life
property
disability
automobile
30
Darrell wants to buy a used car for $3000. He doesn't have $3000 in savings. What is the lease expensive credit option?
a 3-year loan with a fixed Compound interest rate from a finance company.
A variable-rate cash advance from his Credit Card
two variable-rate cash advances from two different credit cards
A 3-year loan with a fixed simple interest rate
31
Define: Money withheld from an individual’s paycheck for Social Security and Medicare
FICA
1040
FAFSA
Credit Score
32
What type of information is NOT found on a consumer's credit report?
bankruptcies or tax liens
employment history
current and past addresses
personal medical information
33
Which of the following might lower your credit score?
making late payments
having paid all your bills on time
having worked at the same job for three years
never having “bounced” a check before
34
Define: The total value of an individual’s financial assets minus the total debts
Net Worth
Credit Score
Opportunity Cost
Progressive Taxes

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