Personal Finance Midterm Practice Exam

Question 1

Stock market investors earn 10% in value every year on average. How long before the value of their investments doubles?

Accepted Answer

7 years

Question 2

Which of these is the first step in developing a financial plan?

Accepted Answer

Determine your current financial situation

Question 3

What&#x27;s the range of a credit score?

Accepted Answer

300-850

Question 4

Jon depends on his dad's laptop to run a side business. His dad could take it away if Jon's grades ever drop. That's a:

Accepted Answer

weakness

Question 5

What do you have once you sell everything of value and pay all of your debts?

Accepted Answer

net worth

Question 6

Which of these is generally NOT a good reason to borrow money?

Accepted Answer

rent

Question 7

Abdul will stop buying Caribou coffee twice a week to fund a trip in four months. What's missing from this SMART goal?

Accepted Answer

Specific goal

Question 8

What is the market value of the cabin considered?

Accepted Answer

asset

Question 9

Which of the following is true regarding leasing vs. buying a car?

Accepted Answer

Leasing has lower monthly payments but is more expensive in the long run.

Question 10

You own a cabin that you rent out on Airbnb and Vrbo. What&#x27;s the mortgage on the cabin?

Accepted Answer

liability

Question 11

If I go to practice Tuesday, I'll pay $4 for parking and skip working a 4-hour shift that pays $15 per hour. Opp. cost?

Accepted Answer

$64

Question 12

Which of the following is the best way to think about a need?

Accepted Answer

I need housing.

Question 13

What do you consider the money guests pay you to stay at the cabin?

Accepted Answer

income

Question 14

Which of the following is NOT true about a savings account?

Accepted Answer

You earn a lot in interest.

Question 15

You earn really good grades. In a SWOT analysis, that would be considered a

Accepted Answer

Strength

Question 16

Which of these is a liability?

Accepted Answer

car loan

Question 17

How long should you keep copies of your tax returns?

Accepted Answer

7 years

Question 18

What % of your gross income do experts suggest you save each month?

Accepted Answer

5-10%

Question 19

The "minimum payment trap" is:

Accepted Answer

paying the monthly minimum due on a credit card

Question 20

What&#x27;s the term for the sum of all the fees and interest you pay when you borrow money?

Accepted Answer

finance charge

Question 21

What&#x27;s a key step to take before you negotiate the price of a car?

Accepted Answer

Find the best financing you can from your bank or other lender.

Question 22

What&#x27;s the Current Ratio if liquid assets are $9,000 and current liabilities are $4,500?

Accepted Answer

2

Question 23

If an investment offers a 12% annual rate of return, how long will it take for its value to double?

Accepted Answer

6 years

Question 24

Which of these is a liquid asset?

Accepted Answer

savings

Question 25

What&#x27;s the range of prices in which you can negotiate the price of a new car?

Accepted Answer

sticker price and invoice price

Question 26

What should you look at when you compare the prices of different sizes of a product?

Accepted Answer

unit pricing

Question 27

According to the lecture, how should we view long-term car loans (longer than five years)?

Accepted Answer

They're more expensive, because you end up paying much more in interest.

Question 28

Bao wants to borrow $10,000 for a three-week cruise around South America. This is a good use of credit.

Accepted Answer

False

Question 29

Raj is borrowing $10,000 to buy a car for work and school. This is a generally a good use of credit.

Accepted Answer

True

Question 30

How should you go about saving money in a budget?

Accepted Answer

Put the money into savings before paying bills

Question 31

If inflation is 10% and the rate of return on your investment is 8% a year, then you will end up:

Accepted Answer

losing money

Question 32

What is each mortgage payment on that cabin?

Accepted Answer

expense

Question 33

Which of these ways is the most expensive way to borrow money?

Accepted Answer

paycheck-cashing companies

Question 34

What is the APY for an $8,000 CD with $950 interest?

Accepted Answer

11.9%

Question 35

In general, a long-term loan is less expensive than a short-term loan.

Accepted Answer

False

Question 36

Which ratio shows how much of your take-home pay goes toward paying credit cards, car loans and other loans?

Accepted Answer

debt-payments ratio

Question 37

Getting a copy of your credit report is free

Accepted Answer

True

Question 38

You'll put $100 next month into your savings account. How does a budget categorize that?

Accepted Answer

expense

Question 39

Which of these could hurt your credit rating?

Accepted Answer

Closing down a high-fee credit card

Question 40

True or False: Independent repair shops tend to be the most expensive places to get your car fixed.

Accepted Answer

False

Personal Finance Midterm Practice Exam

Questions 40

Personal Finance Midterm Practice Exam

Questions 40