In order to get spending under control, a person should first
create a budget of current income and expenses.
Comparison shopping for a car is necessary because
the price for the car can vary a great deal.
Financial planners generally stress the importance of starting to save and invest early because
of the power of compounding and appreciation.
An important feature of good financial goal is that the goal
has a specific time frame.
Purchasing power decreases and it costs more money to buy goods when there is
inflation.
What strategy can help a person achieve her goal to buy a house?
Following a budget that allows for savings.
A college student has to live on a tight budget. Before making a decision to buy the newest cell phone, which question should he ask himself first?
Is the new cell phone a need or a want?
Which of the following quotes is sound financial advice?
A penny saved is a penny earned.
Fixed expenses include
rent.
Mandatory deductions from a person's paycheck include
federal withholding tax and FICA.
When should a person begin contributing to a retirement plan?
as soon as possible.
Which of the following is the source of income for most people aged 20-35?
wages/salary.
The U.S. government agency responsible for the collection and enforcement of federal taxes is known as
U.S. Internal Revenue Service (IRS.)
When a person has a balanced budget that includes savings then
total savings + savings = total income
Why do financial advisers recommend that a person save at least 10% of each paycheck?
to build wealth.
The "time value of money" means that
money received today is worth more than the same amount of money received in the future.
When a person receives a book store gift card, she can use it to
buy a book from that store.
A person who dies will have his assets distributed as he wanted as long as he has
a will.
A person has assets worth $15,000 and loans totaling $5,000. Her net worth is
$10,000
Don and Bill work together in the finance department of the same company and earn the same salary. Bill spends his free time taking work-related classes to improve his computer skills. Don spends his free time socializing with friends or watching TV. After five years, what is most likely to be true?
Bill will likely make more money because he is more valuable to his company.
Which of the following is an example of long-term debt?
a student loan
A person earned a salary of $70,000 last year. Additionally, he had $1,000 in interest income and $2,000 in dividend income. His total income for this year is
$73,000
An example of an opportunity cost is
buying concert tickets instead of buying a textbook for a course.
A person strongly feels that going into debt is wrong. This is an example of the influence of
values and decisions.
Which of the following describes what happens during a depression?
Unemployment is extremely high.
When the amount of income on a budget is greater than the amount actually spent on expenses, the person has aCorrect!
surplus.
When interest is computed once on a dollar amount (the principal), it is
simple interest.
A person decided to have six months of income in an emergency savings account. Is this a good decision?
Yes, because the money in the emergency account can be used if he loses his job.
Students applying for financial aid to attend college usually need to
complete a Free Application for Federal Student Aid (FAFSA) form.
A person choosing a mortgage usually selects a fixed-rate loan because she knows that
the interest rate remains the same for the life of the mortgage.
Why does a bank pay interest to a depositor?
The bank is able to use deposits to earn profits.
It is generally better for a person to buy a home that she can afford than to rent an apartment because she will...
bad equity
Which of the following would be considered an asset?
checking account.
Paying yourself first" is a strategy to
build savings.
What kind of income can a person earn from savings accounts at a commercial bank?
interest
Sally won a $200 cash prize at the school science competition. she wants to save the money for her senior trip in three years. It is best for her to save the money during the three years in a
certificate of deposit (CD), because it generally earns higher interest.
John needs $3,000. He is withdrawing the money today from a $3,000 certificate of deposit (CD) which will reach maturity in six months. It is likely that he will have to
pay the bank a penalty for early withdraw.
When a check is returned due to insufficient funds, the check is said to have
bounced
A form of payment that is guaranteed to be as good as cash is a
bank check
Deposits in bank savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to
$250,000
Which of the following statements is the most accurate about the use of ATM cards?
A person must have a bank account to have an ATM card.
Which of the following financial products is good to have so that a person can cover cash needs today?
Regular checking account.
A person writes a check for more money than he has in his checking account. In order for the check to be paid by the bank, he needs to have
Overdraft protection.
Many companies offer a service to electronically deposit an employee's net pay into his designated bank account. This service is known as
direct deposit.
When a person cashes a $300 check and only receives $285, she most likely went to a/ an
check cashing store.
A debit card allows a person to
pay for purchases directly from a checking or savings account
The highest interest rate on a loan is charged by a/an
pawn shop
Electronic Banking allows customers to
perform transactions 24 hours a day
When a person asks her bank not to honor a specific check, it is called
a stop-payment order.
What can a person expect as a customer of a credit union?
Lower account fees and lower interest rates on loans than a commercial bank offers.
What type of information is not found on a consumer's credit report?
Personal medical information
Hillary and Stephanie have both borrowed $15,000 from the same bank to buy the same model of a new car. Hillary's credit score is 732 and Stephanie's credit score is 588. Who is likely to pay a lower finance charge?
Hillary
Choose the best suggestion for building and maintaining a good credit score.
Keep debt low and pay bills on time.
What is true about loans?
The larger the down payment, the lower the principal.