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FinLit Study guide
FinLit Study guide
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Questions
30
Answers
1
A cosigner is someone who signs a loan document and agrees to ___________.
pay the interest on the loan
pay the loan if the other signed borrower stops making payments
provide collateral for the loan
default on the loan
2
1 rule of thumb when buying a home is that the price should be no more than __ times a person's annual household income.
2.5
3
4
3.5
3
Which of the following provides traditional checking and savings accounts for individuals and businesses?
Nondepository institutions (NDI)
Federal Reserve System (FRS)
Federal Deposit Insurance Corporation (FDIC)
Depository Institutions (DI)
4
$ spent on a vacation or a birthday is an example of a(n) ___ expense that will not show up in a typical month's budget.
unexpected but predictable
unpredictable
expected but irregular
regular
5
The term for money that a lender makes available to a borrower with the understanding that the borrower will repay
credit
collateral
interest
investment
6
Planning your spending, borrowing and savings are all aspects of
personal financial planning
credit management
asset management
financial advising
7
An unconditional promise to pay a certain amount of money to a party or the holder of the note or deposit that money
application
promissory note
credit check
contract
8
The process of taking a personal loan begins with a(n) ___________.
credit check
down payment
application
contract
9
Which of the following is the best description of a financial plan?
A good financial plan is like a to-do list for a busy student.
A good financial plan is like a blueprint for a builder.
A good financial plan is like a registration guide for college classes.
A good financial plan is like an user's manual for a cell phone.
10
The total amount of money a worker earns in a pay period is his or her ______________.
gross pay
net pay
capital gain
adjusted gross income
11
Medicare is a government _________ program
life insurance
retirement
health insurance
investment
12
A(n) ______________ includes food, water, clothing and shelter.
luxury
want
expense
need
13
The Federal Reserve targets an inflation level of about _____ per year.
3%
2%
1.5%
1%
14
Which of the following is the best way to start the process of identifying a career path that you will find satisfying?
Choosing a career in a growing field
Listing your interests and activities you enjoy
Deciding what level of education you want to pursue
Asking your guidance counselor what type of personality you have
15
Which of the following questions would you be most likely to ask when creating a plan for investing?
Should I use a credit card for cash shortfalls?
How much money should I keep in my savings account?
How much risk can I tolerate?
What expenses should I anticipate?
16
The total amount of money a worker takes home in a pay period is his or her_________________.
gross pay
net pay
capital gain
adjusted gross income
17
FICA refers to payroll taxes withheld for ____________.
state income tax
estimated tax
federal income tax
Social Security and Medicare
18
When most people buy a home, they pay upfront that is typically what percentage of the purchase price of the home?
Less than 10%
10% to 20%
40% to 50%
25% to 30%
19
A good budget will force you to ________to take advantage of unexpected opportunities.
increase your income
rely on credit cards
set aside money
reject long-term financing
20
Which of the following provides the most accurate definition of personal finance?
All of the financial issues involved in borrowing money.
All of the financial issues involved in spending within a budget
All of the financial issues that can affect an individual
All of the financial issues involved in saving money
21
Economics is often defined as the study of __________.
commercialization
policies
interactions
choices
22
Cost of living is the amount of money needed to afford the basics to live in a particular city.
False
True
23
This tax form is used to determine the amount of taxes you will pay.
1099-DIV
1099-INT
w-4
w-2
24
The amount of money you have left over each month is most directly related to your plans to manage __________.
cash
investments
liquidity
long-term savings
25
The primary cash
inflow
for most adults is their ________.
salary
rent
insurance
interest earned from savings accounts
26
IPO stands for _______________.
intial principal order
initial price offer
initial private ordering
initial public offering
27
A stock is a certificate that represents a _________a company.
promissory note for
piece of ownership in
loan made to
liquid investment in
28
The money from a personal loan makes up the difference between the ___________ and the total purchase price of an asset.
interest
collateral
down payment
principal
29
The amount that you borrow from a lender is the ________.
principal
interest
credit limit
collateral
30
___________ are anything you own, such as a car or a home.
Assets
Equities
Liquidities
Liabilities
