Business Finance Mid-Term Study Guide:

Which is a tax-free savings account that can only used for educational expenses?

A 529 plan.

To maintain a good credit score you must ______________.

Manage your debt wisely.

Which of the following statements about check cashing companies is TRUE?

They charge high fees.

Earning a degree can be expensive but which example shows why it might be worth it?

You are more likely to earn more money over your lifetime than if you did not have a degree.

What option will NOT be available if you are behind on loan payments?

You can ask to get out of your loan.

Which is NOT a positive reason for using a credit card to finance purchases?

You will get charged high interest.

Which type of bank account is best for everyday transactions?

Checking account.

Federally-funded grants require the student to...

Have financial need only.

Which of the following statements about savings accounts is FALSE?

Savings accounts allow an unlimited amount of withdrawals each month.

Which of the following statements about savings accounts is FALSE?

Savings accounts don't usually pay interest on the money you deposit.

Which of the following statements about savings accounts is FALSE?

Savings accounts don't usually require a minimum balance.

What do taxes pay for?

Schools, government departments, roads, and emergency services.

A ___________ is a share of ownership in a company.

Stock.

What can affect whether a public or private university is affordable?

The amount of financial aid that they offer.

When are loans a good option to use?

When paying for higher education.

Which of the following is NOT a benefit or using a budget?

A budget can help you purchase anything you want.

Not managing your debt wisely can result in ________________.

A decrease in your credit score.

What could be a good option available to you if are behind on a loan payment?

A financial institution may offer for you to pay a little now and pay the rest after your next pay day.

What is the gig economy?

A flexible market that allows you to work short-term, independent jobs.

Which of the following is NOT a feature that makes a secured loan less costly than an unsecured loan?

A high interest rate.

Using a loan could help with the purchase of which of the following?

A house.

An emergency fund should NOT be used for...

A last-minute school trip.

Cutting down on costs by earning an Associate´s degree first and then transferring to a four-year college or university can be done by going to what type of higher education institution?

A local community college.

A stock is _____________.

A share of ownership in a company.

Which of the following statements about stocks is TRUE?

A stock is a share of ownership in a company.

A mutual fund is ___________.

A type of investment that invests in a mix of different types of investments.

Which is NOT considered an additional cost beyond tuition for higher education?

Academic counseling.

Which of the following is NOT a common feature of a financial institution?

Access to investment advice.

Which of the following is NOT a common feature of a financial institution?

Access to investment products.

Textbooks, transportation and room and board are all...

Additional costs for attending a college or university.

What should you NOT use a loan to purchase?

Airline tickets to your dream vacation.

Which choice or choices describes the purpose of an emergency fund?

All of the above are good reasons to have an emergency fund) An emergency fund prepares you for unexpected expenses, an emergency fund keeps you from borrowing money from friends and family, and an emergency fund removes the worry about expenses not in the budget.

Unexpected expenses...

All of the above) Can make it hard to stick to your budget, may cause you to be unable to pay necessary bills, and should be planned for.

Which of the following is a possible tax or deduction that they may show up on your paycheck?

All of the above) Federal income tax, contributions to retirement savings, and FICA.

When setting a budget, you can choose to make room for:

All of the above) Financial goals, entertainment expenses, and charitable donations.

Which of the following is a benefit of using a budget?

All of the above) Helps to keep track of the money you receive, helps to prioritize your spending, and helps reach short-term and long-term financial goals.

Why is using a budget beneficial?

All of the above) Helps to keep track of the money you receive, helps to prioritize your spending, and helps reach short-term and long-term financial goals.

What are the benefits of attending a local community college?

All of the above) It is cheaper to earn an Associate´s degree at a community college and then transfer to a four-year college to finish, you can live at home ad save dorm fees while earning an Associate´s degree, and choosing a local community college within closer driving range saves on transportation costs.

Which of the following will help you protect yourself from identity theft and fraud?

All of the above) Regularly monitor your credit report, contact lenders and credit bureaus to address incorrect information, and freeze your credit.

Which of the following is a way to track your spending?

All of the above) Spreadsheet budget, envelope method, and an app.

Which of the following statements is true about taxes?

All of the above) Taxes pay for schools and government departments, taxes pay for roads and emergency services, and taxes are often used at the federal, state, and local levels.

Which of the following is true about the Free Application for Federal Student Aid (FAFSA)?

All of the above) The earliest you can submit your FAFSA is October 1st of each year, the form is available online or on paper, and states may have different deadlines for applying for state aid.

Why is it so important to reconcile your bank statements?

All of the above) To avoid spending more than what is in your account, to detect any errors in your account, and to determine if you were charged any fees.

What do you need in order to fill out your 1040?

All of the above) Your W-2, your routing and bank account number, and a record of any other supplemental income.

Which of the following should you consider when setting a budget?

All of the above) Your financial goals, needs and wants, and savings.

Secured loans are less costly than unsecured loans because _________________.

All of these are true) They usually have a lower interest rate, they require collateral, and they are less risky for the financial institution.

There is no relationship between the level of education received and lifetime earnings?

Bachelor's Degree.

Where should you look to find your current expenses when building your budget?

Bank and credit statements.

_____________ are good places to look to find your current expenses when building your budget.

Bank and credit statements.

In your budgeting process, when should you look at recurring expenses?

Before reviewing your wants.

Healthcare, paid off time, disability insurance, and matching contributions to a retirement account are all types of ________________ available from your employer.

Benefits.

Which item is important to consider when selecting a credit card?

Both APR and fees.

Maria is a high school senior. She wants to go to the local community college and become a nurse. Her grades are average, but she comes from a low-income family. What could she do to in order to afford the next step in her dream to become a nurse?

Both b and c are correct) Maria could apply for federal grants to help pay for college and Maria can apply for need-based scholarships.

Credit cards can help ______________ when paid off on time regularly.

Build credit history.

What is NOT a good way to prevent unnecessary spending?

Buy all your wants at one time.

Which of the following financial institutions typically have the highest fees?

Check cashing and payday loan companies.

What should you do before you approach an ATM?

Check for any suspicious people lurking nearby.

Savings accounts typically offer more interest then what type of account?

Checking account.

Which type of bank account typically offers the least (if any) interest?

Checking account.

Annual Percentage Rate (APR), credit limit, and penalties and fees are important to consider when _______________.

Choosing a credit card.

When looking for pre-approval on a car loan you should...

Compare pre-approval offers and select the one that is best for you.

How would you reconcile your bank account to avoid spending more than you have?

Compare your own records of your spending with your financial institution's records.

An unanticipated expense that will make it difficult to get by day-to-day would be candidate for...

Emergency fund spending.

This helps you prepare for unexpected expenses.

Emergency fund.

Bank statement , credit statements, and records of cash expenses help you to estimate your ______________.

Expenses.

Which of the following is NOT a recommended method to protect you from identity theft?

Expensive specialty locking or monitoring service.

All of the following may be a part of your benefits package available from your employer, except:

FICA.

Having a good credit score will make it easier for you to get into a better educational institution.

False.

How much you're being paid is the only thing you need to consider when considering a job offer.

False.

When considering a job offer, you should only consider how much you're being paid before you accept the offer.

False.

Your financial institution can't help you if there is a mistake on your bank account.

False.

What type of federal funding is free money, but is based on financial need only?

Federal grants.

When setting a budget, you should consider...

Financial goals, current expenses, and income.

What budgeting tip(s) would help you to stay on track financially?

Find a friend with similar goals and hold each other accountable.

The gig economy offers _____________.

Flexible, short-term, and independent jobs.

Which of the following is NOT considered part of you benefits package available from your employer?

Free technology equipment.

Which of the following should NOT be considered when setting a current budget?

Future income.

When looking for pre-approval on a car loan you should NOT...

Get a loan from the car dealer directly to keep things simple.

The ____________ is a flexible market that allows you to work short-term, independent jobs.

Gig economy.

Andrew doesn´t want to spend a lot of money on student loans, and does not qualify for grants. What is his best option for affording a Bachelor´s Degree?

He can attend the local community college whose courses transfer to the public four-year college.

The W-2 form is a form that tells you ________________.

How much taxes you've paid in the last year based on how much you've earned.

What does the W-2 form tell you?

How much you've earned and how much taxes you've paid in the last year.

Which of the following statements is TRUE?

If there is a mistake on your bank account, you should contact your financial institution immediately.

Which of the following is NOT a good way to track your spending?

In your head.

Which of the following answers lists 4 year colleges from generally the least expensive to most expensive?

In-state public university, out-of-state public university, private university.

Earning a degree can be expensive but which example shows why it might be worth it?

Individuals with a Bachelor´s degree typically earn a higher annual salary than those without one.

What should you do before you use an ATM?

Inspect the ATM and its surroundings to make sure it is safe to use.

What should you do before you withdraw money from the ATM?

Inspect the ATM to make sure it wasn't tampered with.

Which of the following statements about investing is FALSE?

Investing is a guaranteed way to grow your money.

Which of the following statements about investing is TRUE?

Investing is riskier than putting money in a savings accounts.

Which of the following is NOT a common feature of a financial institution?

Investment trading.

All of the following are true about why it is important to complete the Free Application for Federal Student Aid (FAFSA) process EXCEPT:

It allows you to be eligible for early admission.

Which of the following is NOT a reason to complete the Free Application for Federal Student Aid (FAFSA)?

It allows you to be eligible for early admission.

Everyone interested in post secondary education should complete the Free Application for Federal Student Aid (FAFSA) because...

It allows you to be eligible for federal student aid and other scholarships and grants.

A 529 plan can help you save more money than a traditional savings account because...

It is a tax free.

Living at home could save you money while enrolled in post secondary school or training because...

It reduces costs of room and board.

The cost of a secured loan is typically lower than the cost of an unsecured loan because ____________.

It requires collateral.

How can you avoid spending more than what is in your bank account?

Keep your own records to compare with your financial institution's records.

Investing is best for ________________.

Long-term financial goals, like paying for retirement.

What should you consider when setting a budget?

Needs, wants and savings.

The amount of money you're paid, after all the taxes and deductions are taken out of your paycheck is called _____________.

Net pay.

Which of the following statements is TRUE?

None of the above) Recurring expenses don't need to be planned for because they rarely happen, recurring expenses are expenses that can never be stopped, and recurring expenses should be planned for after looking at your wants.

Going directly to a car dealer for a loan to keep things simple is a...

Not great because they typically offer higher interest rates.

Benefits to paying the full balance of your credit card each month include:

Not having late fees.

Which savings account will earn you the most money?

One that compounds interest daily.

Which savings account will earn you the least money?

One that earns simple interest monthly.

Preparing to pay for higher education can start in the 9th grade or earlier by...

Opening a 529 plan.

Which of the following is NOT a possible tax or deduction that could come out of your paycheck?

Overtime pay.

Which is a positive reason for using a credit card to finance purchases?

Paying it off on time can help build your credit history.

Paying only the minimum balance on your credit card can lead to...

Paying more interest.

Recommended methods to protect yourself from identity theft and fraud include ________________.

Placing a credit freeze with the credit bureaus.

In addition to needs, what should you plan for first when creating a budget?

Recurring expenses.

Which of the following expenses would be a good reason to spend money from an emergency fund?

Repair your laptop that you use for homework.

Living at home while enrolled in post secondary school or training can save money on...

Room and board but it raises costs for transportation.

Which of these additional costs will most likely be the most expensive?

Room and board.

How can you ensure you don´t go over you budget?

Round up your expenses estimates to add a buffer.

Which of the following is NOT a possible tax or deduction that could show up on your paycheck?

Sales tax.

The W-4 tax form is used to _____________.

Tell your employer how much federal income tax to withhold from your paychecks to send to the IRS.

What has the biggest impact on whether a 4 year university is affordable?

The amount of financial aid that the university offers.

What is net pay?

The amount of money you're paid after all taxes and deductions are taken out of your paycheck.

The fact that you are more likely to earn more money over your lifetime with a post secondary degree means...

The cost of a post-secondary degree is worth it.

Which of the following is NOT true about the Free Application for Federal Student Aid (FAFSA)?

The earliest you can submit your FAFSA is January 1st of each year.

All of the following are true about the Free Application for Federal Student Aid (FAFSA) EXCEPT:

The form is only available online.

Which of these items is NOT important to consider when selecting a credit card?

The look of the credit card.

Making the choice to spend money on post secondary education pays off in the long run because:

The salary you will earn with a degree will pay back the cost of college over you career.

Dmitri´s counselor told him that post-secondary education because of its cost since in the long run:

The salary you will earn with a degree will pay back the cost of college over your career.

How does the government pay for roads, schools, and emergency services?

They are funded through taxes.

Which of the following is NOT true about emergency funds?

They are used for anything listed on the budget.

Which of the following statements about check cashing companies is FALSE?

They charge low fees.

What is NOT true about unexpected expenses?

They do not occur if you have a budget.

Which of the following is TRUE regarding unexpected expenses?

They should be planned for.

Charitable donations, entertainment expenses, and financial goals are all examples of...

Things to consider when creating a budget.

When you start a new job, you fill out a W-4 form to _____________.

To determine how much federal income tax your employer should withhold from your paychecks.

What is the purpose of the W-4 form?

To inform your employer of how much federal income tax to withhold from your paychecks.

The envelope method, notebook and pencil, and online software are all methods of ____________.

Tracking your spending.

Living on campus while earning your degree can help you save money on...

Transportation.

A savings account that compounds interest daily will earn a higher return than a savings account that plays simple interest daily?

True.

Generally, the more education you receive, the higher your lifetime earning will be.

True.

When considering a job offer, you should only consider how much you're being paid and any other employee benefits before you accept the offer.

True.

Your employer sends you a ________________ form that tells you how much you've made and how much you've paid in taxes in the last year.

W-2.

What is a benefit of having a good credit score?

When you need a loan, you´ll have more loan offers to pick from.

What do you need in order to fill out your 1040?

Your W-2.

If there is an issue with your bank statement or account balance, who should you contact to resolve the issue?

Your bank.

All of the following are benefits to paying the full balance on your credit card each month EXCEPT:

Your credit score can decrease.

What will happen to your credit score if you do not manage your debt wisely?

Your credit score will go down.

What do you NOT need in order to fill out your 1040?

Your employer benefits documentation.

If there is a mistake with one of your bank accounts, who should you contact to resolve the issue?

Your financial institution.

Net pay is NOT _______________.

Your gross pay plus any bonuses.

What is NOT a benefit of having a good credit score?

You´ll get accepted to better education institutions.