Review
Colleen has kept $10,000 in an account all year. Her bank has paid her $1,000 in dividends on this account. What is her rate of return on this investment? A. 10 percent B. 5 percent C. 20 percent D. 25 percent
A. 10 percent
Sofia bought a couch that required a $60 down payment and $60 per month for the next eight months. Which type of liability does this describe? A. a long-term liability B. a non-liquid liability C. a consumer liability D. a current liability
D. a current liability
Daven, age 20, visits his 80-year-old grandma, Vivian. Daven warns Vivian that he worries she could fall victim to “phishing.” Vivian has no idea what this means. How can Daven BEST explain this to Vivian? A. This is when someone changes the address on your bills and has them sent to a new address so they can steal your information. B. This is when someone follows you so they can easily take your wallet or purse and use whatever they have stolen to make purchases. C. This is when someone calls or emails you and asks you for personal information that can help them steal your identity. D. This is when someone goes through your trash to find old statements and bills that they can use to gather information about you.
C. This is when someone calls or emails you and asks you for personal information that can help them steal your identity.
A bank line of credit is a prearranged loan amount that you can access by writing specific checks.
True or False
True
What is term for when someone invests in a variety of places to reduce the overall risk of investing? A. asset classes B. asset speculation C. asset allocation D. asset bonds
C. asset allocation
Jerome does not pay his balances off on his credit cards each month. He often has to pay interest and finance charges. What is Jerome in this scenario? A. a cosigner B. a credit counselor C. a convenience user D. a borrower
D. a borrower
Dante is making his first purchase using a credit. He asks his friend Tay to educate him about using credit. What is the BEST advice Tay can give him? A. Be prepared to pay back the original amount and additional interest. B. Make all of your purchases using credit once you have it. C. You have as much time as you need to pay back your debts. D. Credit purchases always cost less than paying with cash.
A. Be prepared to pay back the original amount and additional interest.
What is true about open-end credit? A. It is not typically used for a single purchase but for many purchases over a period of time. B. This type of credit is sometimes referred to as a consumer loan. C. This type of credit is commonly used for big ticket things like mortgages or car loans. D. Payments typically stay the same amount from month to month.
A. It is not typically used for a single purchase but for many purchases over a period of time.
Erica recently bought a homeowner’s policy that will cover the loss of jewelry, but only up to $20,000. What is this known as? A. an exclusion B. a deductible C. a rider D. a consideration
A. an exclusion
Sebastian buys his coffee every month for $25 at a local coffee shop. At a local warehouse store with a $60 annual fee, he can purchase the same coffee for $15. What is the BEST financial advice for Sebastian when it comes to purchasing his coffee? A. He should buy coffee at the warehouse store because at the end of the year he will have saved money. B. He should buy coffee at the coffee shop because at the end of the year he will have saved money. C. It doesn’t matter where he buys the coffee; the price is exactly the same after 12 months. D. If he buys coffee for only five months, he should just buy it at the coffee shop because it will be cheaper.
A. He should buy coffee at the warehouse store because at the end of the year he will have saved money.
Ira budgeted $1000 for his expenses this month, but he spent $1500. In order to be fiscally responsible, what does Ira need to do now? A. Nothing; he managed to have a surplus this month. B. Re-examine his budget; he had a $500 deficit this month. C. Apply for more credit because he has more expenses than he realized. D. Invest his extra $500 in stocks, so he can earn something from his surplus.
B. Re-examine his budget; he had a $500 deficit this month.
Cheng is making a trip to her safe deposit box. What is she MOST likely planning to do? A. Pay a monthly credit card bill at a bank. B. Put her marriage license in a secure location. C. Register for an updated driver’s license. D. Ask for help with her recent tax return.
B. Put her marriage license in a secure location.
When creating their will, Steph and Freida had a difficult time deciding who would carry out its instructions. What person were they struggling to designate? A. a guardian B. an executor C. a power of attorney D. an insurer
B. an executor
Terrance has to make home mortgage payments. What can you MOST likely conclude about Terrance based on this fact? A. He has a long-term liability. B. He doesn’t have quarterly tax bills. C. He has a low credit score. D. He has no current liabilities.
A. He has a long-term liability.
Before you begin investing, what do experts recommend you do? A. Withdraw money from all savings accounts, so you can invest everything. B. Cancel your insurance policies, so you can use that money to invest. C. Borrow money from friends and relatives to maximize your investment cash. D. Set aside an emergency fund to cover any surprise expenses.
D. Set aside an emergency fund to cover any surprise expenses.
Last month, a gallon of milk cost $2 and a gallon of gas cost $4. This month, milk is $4 per gallon and gas is $6 per gallon. Matthias is not sure what is going on with the economy. How would an economist BEST describe what is happening? A. The rate of return has increased significantly. B. There has been a lot of inflation in the market. C. Prices for goods are experiencing compounding interest. D. Asset allocation is on the rise in the economy.
B. There has been a lot of inflation in the market.
Individuals have to choose whether to save or invest, since it is not recommended to do both.
True or False
FALSE
Which of the main components of money management provides the basis of money management? A. financial records B. personal financial statements C. budgeting D. personal net worth
A. financial records
A contract is valid only if it is agreed on in written form.
True or False
False
Jeannine has recently purchased a home. She purchased an insurance policy that protects it against fire, flood, and hurricane damage. Jeannine is protecting herself from which type of risk? A. property risk B. liability risk C. inheritance risk D. personal risk
A. property risk
Derrick recently got married and has a small child. For the first time in his life, he worries about what will happen to his home and his other property after he dies. He also wants to make sure his child is taken care of if he dies. What should Derrick prepare? A. a will B. a power of attorney C. a health insurance policy D. a consideration
A. a will
Devon would like to invest in bonds but he is only familiar with investing in stocks. What is the biggest difference between the two? A. Bonds are generally high risk. B. Bonds are generally short-term investments. C. Bonds have fixed maturity dates. D. Bonds provide constant access to your investment money.
C. Bonds have fixed maturity dates.
Geronimo Cars tells its advertising firm that it doesn’t just want to use endorsements; it wants to use testimonials. What is the BEST slogan for the advertising firm to offer Geronimo Cars? A. 100 percent of Geronimo Cars can run on electricity or use gasoline. B. Celebrities love their Geronimo Car and think you will love it, too! C. The US Hockey Team is officially sponsored by Geronimo Cars. D. Driving a Geronimo Car will bring you good fortune and happiness.
B. Celebrities love their Geronimo Car and think you will love it, too!
Priscilla took out a loan for a new car. What is MOST likely to be TRUE about this process? A. Her credit score is going to decrease dramatically. B. She will not be able to drive the car until she makes all of her payments. C. Her payments will change in amount from month to month. D. The bank will hold the title of the car until her loan is paid off.
D. The bank will hold the title of the car until her loan is paid off.
Emily’s grandmother bought her a treasury bond in 2020. When will it reach its maturity date? A. 2030 B. 2040 C. 2045 D. 2050
D. 2050