Anna's first paycheck is less than the rate she was offered when hired. Which would explain this problem?

Taxes, social security, and Medicare are being deducted from her pay

Which of the following statements about car insurance is TRUE?

you cause accident, other driver injured, your ins. pay part of their bills

Which statement accurately describes how the 50/20/30 Rule would break down your take-home pay?

50% needs, 20% on saving, and 30% on wants

Sylvester is taking out a loan and is confused by the jargon. Which of the following explanations might help him?

INTEREST RATE is how much charged/ year for loan, PRINCIPAL is initial loan

Savings at 2% interest, Student loan $40,000 at 4.6%, Credit card $1500 at 23.4%, Where to put $300 budget surplus?

Pay toward his credit card bill, because it has the highest interest rate

When making a decision about a financial product (loan, savings account) which advice is LEAST valuable

Simply choose the option that your parents use

When it comes to paying for college, your best option is

a grant or scholarship, because you don't repay them

What action corresponds to the advice "Pay yourself first?"

Set aside a fraction of paycheck into savings before you start spending

Which of the following describes what a "dependent" is for tax purposes?

A child or adult that you support financially

What is an insurance premium?

Your monthly payment to insurer, regardless if you use any services

Isaiah is paid $3,000. After taxes his take-home pay is $2,500. Which statement is true?

Gross pay is $3,000, Net pay is $2,500

Tahira wants to put a small portion of every paycheck into a low-risk investment. Which would be her best option?

Invest in an S&P 500 index fund

Which of the statements below BEST describes the relationship between risk and return when considering an investment?

Investors expect to earn higher return when they invest in high risk asset

Which description is most accurate for a Zero-Based Budget?

You put every dollar of your net pay into a budget category each month

What should be factored in to the cost of car ownership?

loan payment, gas, insurance, maintenance, emergency repairs, etc.

When discussing credit scores, your friends make the following statements. Which one of them is WRONG?

Once you turn 18, it will be really easy to get approved for a credit card

Why is diversification a recommended investment strategy?

Diversifying your portfolio helps reduce risk

Which should you use when creating a budget - your NET PAY or GROSS PAY?

Net pay, it’s the total amount you’ve earned minus taxes & other deductions

How is a bond different from a stock?

bond - loan you give to organization, stock- partial ownership in a company

Nancy is new to investing and is eager to get started. All of the following are things she should do EXCEPT...

Pick individual stocks to see if she can beat the market

Which description of the difference between saving and investing is MOST accurate?

Savings accts are less risky. investing is more risky.

Which of the following will result in your paying the LARGEST amount of interest to the credit card company?

Making the minimum payment every month

Which description of the difference between saving and investing is MOST accurate?

Savings accts are less risky. investing is more risky.

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PF Final Review

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Questions 30

Answers

1
Which of the following should be your first step in making sure you're paying the correct amount of taxes?
Complete an I-9 form
Buy a copy of TurboTax and file her taxes
Complete a W-4 form
Complete a 1040 form
2
How can you improve your credit score?
Pay off and then close all of your credit cards
Pay all of your bills on time
When merchants ask, "Credit or debit?" always choose credit
Spend more money on each of your credit cards
3
Anna's first paycheck is less than the rate she was offered when hired. Which would explain this problem?
Most employers charge a "payroll fee," the company collects
Taxes, social security, and Medicare are being deducted from her pay
Her company is downsizing and has decided to pay her less without notice
businesses typically pay high school students less than min wage
4
Which of the following statements about car insurance is TRUE?
If in an accident, the other driver cannot sue if you have car insurance
you cause accident, other driver injured, your ins. pay part of their bills
get speeding ticket with insurance, you won't get "points" on your license
pay your premium every month, you don't pay extra if you are in accident
5
Which statement accurately describes how the 50/20/30 Rule would break down your take-home pay?
50% on wants, 20% on saving, and 30% on needs
50% on saving, 20% on wants, and 30% on needs
50% needs, 20% on saving, and 30% on wants
50% on saving, 20% on needs, and 30% on wants
6
Sylvester is taking out a loan and is confused by the jargon. Which of the following explanations might help him?
TERM is length of the loan, INTEREST RATE is total money he will pay
PRINCIPAL is how much he owes a month, and TERM is how much he owes overall
INTEREST RATE is how much charged/ year for loan, PRINCIPAL is initial loan
MONTHLY PAYMENT is interest costs a month, TERM is the name of his lender
7
Savings at 2% interest, Student loan $40,000 at 4.6%, Credit card $1500 at 23.4%, Where to put $300 budget surplus?
Just leave it in his checking account in case he needs it next month
savings acct so if he does the same next month, he'll have enough to pay CC
Pay toward his credit card bill, because it has the highest interest rate
Pay the student loan, b/c he owes far more there than on the credit card
8
When making a decision about a financial product (loan, savings account) which advice is LEAST valuable
Do research to learn more about each of the options
Compare products based on the factors you personally find most important
Simply choose the option that your parents use
Read the fine print so you understand the fees and terms of your account
9
When it comes to paying for college, your best option is
work-study, because it comes with low, fixed interest rates
a private loan, because they are tailored specifically for you
a Federal student loan, because they offer low, fixed interest rates
a grant or scholarship, because you don't repay them
10
What action corresponds to the advice "Pay yourself first?"
Spend your paycheck on needs and wants but funnel extra money into saving
Be self-employed so you pay yourself instead of being paid by an employer
Wait until end of the month to determine how much you have leftover to save
Set aside a fraction of paycheck into savings before you start spending
11
Which of the following describes what a "dependent" is for tax purposes?
An adult who financially supports you
Someone who is temporarily disabled
Someone who is a full-time student under the age of 30
A child or adult that you support financially
12
What is an insurance premium?
An added cost you pay in order to receive higher-quality services
Your monthly payment to insurer, regardless if you use any services
The amount you pay out-of-pocket for a specific procedure or service
A list of the procedures covered by your insurance carrier
13
Isaiah is paid $3,000. After taxes his take-home pay is $2,500. Which statement is true?
Gross pay is $2,500, Net pay is $3,000
Gross pay is $3,000, Net pay is $2,500
Gross and Net are $2,500
Gross and Net pay are $3,000
14
Tahira wants to put a small portion of every paycheck into a low-risk investment. Which would be her best option?
Invest in an S&P 500 index fund
Pick 2 individual stocks at random and invest half of her money in each
Put money in a checking account
Buy shares of a super profitable tech company
15
Which of the statements below BEST describes the relationship between risk and return when considering an investment?
Investors expect to earn zero return when investing in a low risk asset
Investors expect to earn lower return when they invest in a high risk asset
Investors expect to earn higher return when they invest in a low risk asset
Investors expect to earn higher return when they invest in high risk asset
16
Which description is most accurate for a Zero-Based Budget?
You spend your saving account balance down to $0 every month
You spend your checking account balance down to $0 every month
You put every dollar of your net pay into a budget category each month
You pay every one of your debts down to $0 every month
17
What should be factored in to the cost of car ownership?
loan payment, gas, insurance are the three costs
Gas is covered under auto insurance
loan payment, gas, insurance, maintenance, emergency repairs, etc.
loan paymen, gas. Insurance is included in loan payment
18
When trying to decide which college has the lowest cost of attendance, which is most important to consider?
Sticker price
FAFSA
Room & board
Net price
19
When discussing credit scores, your friends make the following statements. Which one of them is WRONG?
Once you turn 18, it will be really easy to get approved for a credit card
if you close a credit card, the record of that card stays on your report
It's best to establish credit early, long credit history helps get loans
Using a credit card & paying off the balance each time boosts credit
20
Amount of money you'll have if you put $1000 in a CD earning 2% annual compound interest for 10 years
Slightly more than $1200
$2000
The same $1000 you started with
Exactly $1200
21
Why is diversification a recommended investment strategy?
If you diversify your portfolio, you will definitely earn a high return
Diversifying your portfolio helps reduce risk
diversified portfolio guarantees you won’t lose money with your investments
If your fund manager use diversification, they’ll charge you lower fees
22
Which should you use when creating a budget - your NET PAY or GROSS PAY?
Gross pay, because it’s the total amount you’ve earned that month
Net pay, it’s the total amount you’ve earned minus taxes & other deductions
Gross pay, it’s the total amount you earned minus any recurring bills owed
Net pay, it’s what is reported to the government for tax purposes
23
How is a bond different from a stock?
bond - loan you give to organization, stock- partial ownership in a company
Bonds typically riskier than stocks but have potential for higher returns
Bonds earn high returns, Stocks providing a stable source of income
Bonds issued by startup companies, Stocks issued by established companies
24
Sam has $2500 a month. Costs: $800 rent, $650 car, $200 utilities, $350 insurance, $200 food, $100 other. Result?
A budget deficit of $200
A budget surplus of $200
A budget deficit of $4800
A budget surplus of $4800
25
Nancy is new to investing and is eager to get started. All of the following are things she should do EXCEPT...
Invest in a low cost index fund
Estimate need for retirement to see how much she to invest each month
Pick individual stocks to see if she can beat the market
Invest in a diversified portfolio
26
In order to qualify for financial aid, prospective college students must file their _____________.
PSAT, SAT, or ACT scores
Financial aid letter
FAFSA
Parent's credit score
27
Which description of the difference between saving and investing is MOST accurate?
Savings accts are less risky. investing is more risky.
Investing best for short-term & emergencies, saving best for long-term
Saving and investing are the exact same thing
Less than $10,000 in an account is saving, More is investing.
28
Which of the following will result in your paying the LARGEST amount of interest to the credit card company?
Paying off your balance every month
Paying 20% of your credit card balance every month
Saying "credit" every time the cashier asks "Debit or credit?"
Making the minimum payment every month
29
Which description of the difference between saving and investing is MOST accurate?
Investing best for short-term & emergencies, saving best for long-term
Less than $10,000 in an account is saving, More is investing.
Savings accts are less risky. investing is more risky.
Saving and investing are the exact same thing
30
When setting your premium, your car insurance company may consider each of the following EXCEPT...
Your age
How many miles you drive per year
Your driving record
Your height

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