Personal Finance Midterm!

Which best summarizes the first step to take in the decision-making process?

Define the problem

Which is the best technique to utilize when writing a cover letter?

Describe one's qualifications and request an interview.

Regarding personal finance, which of the following statements best explains why "even not choosing is a choice"?

Failing to make a choice may allow others to make the choice for you.

How many Federal Reserve districts are there in the United States?

12

Which example is false regarding expenses? A variable expense = monthly car payment B fixed expense = mortgage payment C unexpected expense = medical emergency D variable expense = groceries

A

What is a goal?

A goal is a target and has only one definition or interpretation

What does the acronym FDIC stand for?

Federal Deposit Insurance Corporation

According to the seven-step career-planning process, which is the next step after a person has selected a career she wishes to pursue?

Plan steps to reach the goal

Which step in the decision-making process helps individuals learn from mistakes?

Review the decision.

Which best describes the meaning of the phrase "self-esteem is dimensional"?

Self-esteem includes our feelings about numerous characteristics.

Which payroll tax is sometimes called OASDI or FICA?

Social Security

Which of the following is not a characteristic that goals should possess?

They should be as abstract as possible so they can be adapted

Which annual form listing the amount of taxable income for the year must employers provide to regular hourly and salaried employees?

W-2

Which is the most direct consequence of the lack of a governmental water conservation plan?

Water has become a limited resource.

Which statement best describes the economic principle of scarcity?

We have limited resources and unlimited wants.

How is the concept "masks off" related to self-esteem?

We need to see our true selves honestly and objectively.

Which phrase best describes our aptitudes?

Which phrase best describes our aptitudes?

Which phrase best describes the purpose of the Federal Reserve System?

a bank for banks

Which of the following provides the best definition of a budget?

a written document containing financial goals, as well as anticipated and actual income and expenses

Which occupations would probably be best suited for an individual who is most interested in working with data?

accountant or file clerk

In the decision-making model discussed in our text, when do you review your decision?

after acting on the choice

If a pay stub shows an employee's YTD earnings as $5,840, what does that amount reflect?

amount earned so far in the current year

Which of the three "A" words is demonstrated by employees who have a positive outlook, even in challenging situations?

attitude

Which financial service provides automatic electronic withdrawal of payments for such things as utility and phone bills, insurance premiums, or car loans?

automatic payments system

Which type of market is said to exist when many people are selling their investments, driving down stock prices even more?

bear

Which of the following incorrectly matches a pay period and its number of occurrences in a year? weekly: 52 per year biweekly: 24 per year bimonthly: 24 per year monthly: 12 per year

biweekly: 24 per year

The Dow Jones Industrial Average uses the performance of the stocks of thirty large, well known and trusted companies in order to assess the general trend of the stock market. Which term is often used to describe the type of trusted stocks that make up such averages as the "Dow 30"?

blue-chip

Which of these investments is redeemable for its face value at maturity?

bond

What are the three categories of services offered by financial institutions? checking accounts, savings accounts, and ATMs credit cards, debit cards, and loans savings, payment services, and borrowing direct deposit, EFT, and online banking

c

Which of the following statements is true? All banks must be insured by the FDIC. All U.S. banks are required to charge the same fee rates. Most banks offer savings and checking accounts. Only Federal Reserve banks offer interest on savings accounts.

c

Which one of the following statements does not apply to the economic principle of scarcity? A Individuals must learn how to save what is limited and limit what they want. B The economic principle of scarcity refers to limited resources and unlimited wants. C The economic principle of scarcity is not a factor for extremely wealthy people because they have unlimited resources and limited wants. D It is important to recognize the difference between needs and wants and to prioritize how we plan to invest/spend our dollars.

c

Which of the following is an example of a savings service offered by a financial institution?

certificate of deposit

Which skill are employers seeking when they hire workers who are able to express their ideas both orally and in writing?

communication

Which of the following financial institutions would be least likely to offer ATM and EFT services? consumer finance company commercial bank credit union mutual savings bank

consumer finance company

Which of the following is an equity security?

corporate stock

When evaluating a career opportunity, which would be the least applicable factors to consider regarding the opportunity? tasks and duties needed for the career career trends in that field salary and benefits courage and creativity

courage and creativity

Which is best defined as a non-profit financial institution organized by a group of individuals such as teachers or labor union members who have something in common?

credit union

Corporate and government bonds are examples of which type of investment?

debt security

Which phrase best defines financial planning?

deciding how to earn, spend, save, and invest money to enhance quality of life

Which of the following pairs is not among the lifelong skills described in the Lesson 2 commentary? demographics and financial success striving for one's personal best and being a team player active listening and avoiding put-downs trustworthiness and truthfulness

demographics and financial success

Which of the following will most likely not appear on a pay stub? gross pay net pay disposable income discretionary income

discretionary income

Which term denotes the portion of a corporation's profits that is sometimes distributed to its stockholders?

dividends

What is an objective?

explains exactly what you will do to reach the goal

Which of the following is an example of a depository financial institution? life insurance company consumer finance company check-cashing outlet factory workers credit union

factory workers credit union

In addition to wages, some employers provide their workers perks such as paid vacation and health insurance. What term is used for these perks?

fringe benefits

For the typical worker, which of the following amounts would most likely be the largest? gross income net income discretionary income disposable income

gross income

What best defines discretionary income?

income left over after taxes and living expenses are paid

How does the FDIC help protect consumers?

insures individuals' deposits in member banks up to $250,000

For several years there has been a drought in the region around a fast-growing city. Nearby reservoirs, which provide the city's water, are shrinking, and the community is worried about a water shortage. However, many people continue to use large amounts of water for watering their lawns and filling recreational swimming pools, because the local and state governments have failed to ban such activities in this area. From an economic point of view, which term best describes the water in this scenario?

limited resource

Which of the following is an example of a non-depository financial institution? credit union mortgage company commercial bank savings and loan

mortgage company

Which type of financial institution focuses on loans for the purchase of homes or other real estate?

mortgage lenders

When preparing a résumé, which is the best way to organize the names of one's former employers?

most recent to least recent

Which type of investment is a professionally managed portfolio containing a variety of stocks, bonds, and other securities?

mutual fund

Jeremiah works outdoors in Alaska. He recently purchased a warm, waterproof jacket that will protect him while he works in subzero winter temperatures. Which term best categorizes Jeremiah's jacket?

need

Which information is not commonly found on a pay stub? YTD earnings deductions in pay net pay number of dependents

number of dependents

Nathaniel spent $85 on a new pair of dress shoes. Which term best describes the things he gave up when he used the money for new shoes rather than for some other purpose?

opportunity cost

A consumer electronics company has contracted with a company in another country to assemble its products. This situation best illustrates which factor affecting the type and quantity of job opportunities?

outsourcing

Which set includes the primary factors that influence decisions that young people make?

parents and friends values and beliefs risks and consequences

Which phrase most accurately describes gross pay?

pay before taxes and deductions

Which of the following would not be considered a "cost" of earning money? income taxes uniforms transportation profit sharing

profit sharing

Which financial report must companies that sell new securities publish?

prospectus

Janet is on her way to a job interview. She is wearing a navy blue business suit with a white blouse and black, closed-toe shoes. Her long hair is pulled back neatly. Large, dangling red earrings and five ruby rings nicely match her bright red lipstick. She forgot to put on her favorite perfume before leaving the house. Which aspect of Janet's self-presentation today would be most problematic for her in an interview?

quantity of jewlery

Which best describes the annual percentage yield (APY) of a savings account?

rate of actual interest earned in a year

Which type of interest is paid only on an investment's original principal?

simple

Which consideration is not an aspect of the self-inventory component of the career-planning process? values—things that are important to us education/training—our willingness to learn socioeconomic status—how much money we have interests—things we enjoy

socioeconomic status

Net pay is

the amount one receives after taxes and deductions have been withheld during a pay period

Trevor is a senior in high school who has set several goals. Which of the following is the best example of one of his long-term goals?

to become a family practice physician

For which purpose do new employees fill out a W-4 Form?

to determine the amount of federal income tax to be withheld

Which term most closely mimics the term opportunity cost?

trade-off

Imaging is an important part of career planning because it helps us to

visualize what we want to be.

Naomi lives in Miami, Florida. On a recent trip to the mall, she couldn't resist purchasing a new bathing suit that was on sale. She now has bathing suits in numerous styles and colors. Which term best categorizes the bathing suit she just bought?

want

When determining how much federal income tax is to be withheld from their paychecks, what do workers claim for themselves and each person for whom they have financial responsibility?

withholding allowances

Which of the following includes all the steps of the decision-making model in the proper order, as discussed in our text? A The decision-making model should be used in making all decisions. It includes finding the best place to get help with problems, listing all those sources, and picking three or four that are equally good. That way, when a problem arises, you can quickly choose one of the sources to help you reach a decision. B Define the problem or the decision that must be made, identify the various choices, evaluate choices, make a list of the advantages and disadvantages of each, choose one after evaluating the advantages and disadvantages of each possibility, act on your choice, and then review your decision. C Define the problem or the decision that must be made, identify the various choices, evaluate the choices, make a list of the disadvantages of each, and choose two or three that might work. D Define the problem or the decision that must be made, identify the various choices, evaluate each choice, make a list of the advantages of each, choose one after evaluating the advantages of each possibility, and review your decision.

B

Which statement is false regarding the Federal Reserve System? A All national banks must be members of the Fed. B All state banks must be members of the Fed. C The Fed sets interest rates and sells government securities. D The Fed holds required reserves for member banks.

B

Which rule of résumé preparation is most concerned with things such as text spacing and the use of boldfaced or underlined text?

Be consistent

Which best explains the statement, "Pay yourself first"?

Always save or invest money before spending money.

Which of the following best describes how the principle of economic scarcity applies when researching and choosing a career? A When researching careers, it is important to match aptitudes and abilities/skills to what is required in a career. The economic principle of scarcity states that if we do not have the ability/skill now, we should not consider that career. B The economic principle of scarcity states that money is an unlimited resource. Being a good worker means that money will never be in short supply. C Choosing a good career means that we will be able to afford all of our needs and wants. D As social and business needs change, careers and jobs can become in short supply or be phased out completely over time, thus affecting our ability to supply our economic needs.

D

What does it mean if an employer offers a "cafeteria" plan?

Employees can choose the benefits they want.

Which statement best describes the relationship between choices and consequences?

Individuals are free to make choices but cannot necessarily choose consequences.

Why is prioritizing an important part of making financial decisions?

It helps one to decide which goals are most important.

What is the difference between a no-load mutual fund and a load fund?

Load funds require payment of a sales commission.

Which of the following is an example of a required payroll deduction? Medicare tax insurance premiums savings/investments paid vacation

Medicare tax

Which stock index contains about three thousand stocks, including many high-technology companies?

NASDAQ

Which of the following acronyms denotes an agency that would most likely have supervisory and oversight powers regarding lending and savings institutions whose services are focused on specific worker groups?

NCUA

Which personal finance term is best applied to items such as food, clothing, and shelter?

Needs

How can establishing objectives help people reach the financial goals they have set?

Objectives divide goals into smaller pieces.

According to the Lesson 10 Commentary, which formula best calculates simple interest?

P × R × T = I