Budget Challenge Test Answers

Which is an effective strategy for reducing insurance costs?

Bundle different policies with a single insurer.

In which situation would an employer be required to pay overtime?

An hourly employee works 48 hours in one week.

Which investor would be best advised to use a full service broker or advisor?

An inexperienced investor who knows little about where or how to invest.

What is true of purchasing insurance through a local agent instead of an online website?

A local agent can help you deal with a complicated claim.

Who would benefit the least from setting up EFTs to automatically pay recurring bills?

A person who doesn't have funds in their account to pay bills when due.

Who would be most likely to benefit from a prescription drug program as part of their health insurance?

A person who has a condition that requires taking medication every day.

Which is a recommended procedure to safeguard personal information?

Change passwords of important accounts frequently.

You notice that your credit card bill has not been arriving as usual. You log into your account and notice your account address has been changed. You thoroughly review your statement but find no unusual activity. What is your best course of action

Change the address back, cancel your existing card and request a new one.

Which is a good step to take to secure your home internet connection?

Change the default router password to something unique and complex.

You are reviewing your credit card account on-line and notice charges you did not make. Besides contacting the credit card company what else should you do?

Change your login and PIN for this and all other financial accounts.

Which is not a good strategy for someone who is concerned that the credit card utilization is too high?

Charge more than the credit limit consecutive months to trigger an increase.

What is the difference between community colleges and four year colleges and universities?

Community college students are more likely to attend part-time.

Which is a drawback of attending a community college instead of a four year college?

Community colleges offer less of a campus atmosphere.

Which best describes the main role of the three major credit reporting agencies?

Compile consumer credit and loan information and provide it to lenders and businesses.

What is the first step to take if dissatisfied with a good or service you purchased?

Contact the seller and try to resolve the problem.

What is the first step you should take if unable to make bill payments on time?

Contact your creditors to request an extension.

What would a FICO score of 810 be considered?

Excellent

Which is a benefit of being an employee paid commission?

Excellent job performance is rewarded with higher pay.

Which is an example of negligence?

Failing to stop at a stop sign causing an accident.

What is a disadvantage of taking out a home equity loan?

Failure to repay could result in the loss of your home.

Which is a voluntary deduction from pay?

Health Savings Account

Which is an advantage of buying a used vehicle from a dealer instead of a private seller?

Dealers are often required to disclose any mechanical problems a vehicle has.

If planning to enter the workforce directly after high school what should be your most important consideration?

Does the work fit into your long-term career goals?

If offered an extended service contract for a small purchase, which is usually the best thing to do?

Don't purchase it and try to use a credit card that extends the warranty.

What should you do if you forget to pay a bill?

Pay the bill and any late fees and then request a one-time fee waiver.

Which is a benefit of using electronic funds transfers (EFTs) to automatically pay a recurring bill such as a utility bill or student loan payment?

Paying automatically with an EFT means the payment is less likely to be missed.

An emergency fund is money set aside to cover the financial cost of an unexpected event. Which would be the best use of your emergency fund?

Paying for an expensive car repair not covered under warranty.

What type of identity theft does "phishing" refer to?

Posing as a credit card company or bank to steal your identity.

Why is it important to complete and use the Cash Flow Budgeting Tool (CFB)?

It allows you to predict future checking account balances.

What is the purpose of a power of attorney?

It authorizes someone to make legal and financial decisions if you are unable to.

Which is a typical return policy for something that you purchased from an internet seller, did not use, but decided later you didn't want?

It can be returned but you'll have to pay for the return shipping.

Which is not a benefit of using a credit card when travelling?

It can be used as a legal form of identification in most states.

Which is true about purchasing a vehicle?

It is easy to purchase a vehicle you really can't afford.

Which is true of private disability insurance?

It is in addition to any government provided disability benefits.

If a specific product has a longer parts and labor warranty than other competitive products, which is most likely to be true?

It is likely to be of higher quality.

Which is true of homeowners insurance?

It is required by the lender if there is a mortgage on the house.

Which is true about purchasing a product from an on-line seller?

It is very convenient.

Why is diversification important in an investment portfolio?

It reduces the overall risk of the portfolio.

Which is true of overdraft protection (ODP)?

It requires funds to be available from a linked account.

Which is true when it comes to using your Social Security number?

It should not be printed on checks or used as a username.

Which is true about the open enrollment process for health insurance?

It typically takes place for only a three or four week period.

Jason is shopping for a new car. He completes new credit applications at four different dealerships. Will this affect his credit score?

It will negatively affect his score.

What is the effect of a $3,000 adjustment to a filer's income?

It will reduce the filer's taxable income by $3,000.

On what date would a person no longer be automatically eligible to stay on their parent's health insurance plan, regardless of marital, education or dependent status?

January 1 the year after they turn 26

Which of the following individuals could take advantage of COBRA?

Jeanie no longer works for her employer but wants to continue her insurance.

How does credit utilization affect your credit score?

Keeping credit utilization below 30% increases your score.

Which is an advantage fixed rate loans have over variable rate loans?

Long-term budget planning is easier.

How does a vehicle's depreciation affect the cost of leasing a vehicle?

Lower depreciation decreases the cost.

Which is a benefit of using payment apps and online payment services?

Most allow the transfer of funds between friends and family at no charge.

In what way are employee benefits actually better than wages?

Most benefits are exempt from federal and state income taxes.

Why do some people use check cashing stores to cash payroll checks instead of a depository institution like a bank or credit union?

Most depository institutions require customers to have an account in order to cash a check.

How is a mutual savings bank different from a commercial bank?

Mutual savings banks are owned by their depositors.

Tyler has a valuable collection of sports cards. Would it be covered by his regular homeowners insurance?

No, unless he purchases an additional policy or rider.

Which is an advantage of obtaining financing from a depository institution like a bank or credit union instead of the seller of a good or service?

Obtaining financing from a depository institution makes it easier to comparison shop.

Why is estate planning necessary to consider as you graduate from high school?

Once you become a legal adult your parents can no longer make legal decisions for you.

A buyer and seller reach an agreement on the sale of a home, and both sign the purchase agreement. Which would allow the buyer to withdraw from the agreement without losing their earnest money deposit?

One of the contingencies in the agreement is not met.

Sales and service contracts may be several pages long and contain fine print. What should you do before signing any type of contract or agreement?

Read it to make sure you understand all the costs, commitment, and terms of service.

What is a good way to document your household belongings for insurance purposes?

Record a video walk through and save the file to cloud storage or email it to yourself.

Which is an advantage of filing a federal tax return?

Refundable tax credits can only be received by filing.

Which is the best strategy to determine if you are on track to meet your financial goals?

Regularly review account balances, debt and credit card balances, and net worth.

Which is a lifestyle drawback to renting versus buying?

Renters follow more rules regulating what they can and cannot do.

What is the best way to defend against fraudulent charges to your credit card?

Review your credit card statement every month.

Emma is a high school student with a part-time job. She is not eligible for any employer sponsored plan. She wants to start investing for retirement. What is the best type of account for her to use?

Roth IRA

Which retirement plan provides no up-front tax benefit but allows contributions and earnings to be withdrawn tax free during retirement?

Roth IRA

What is the best strategy when it comes to paying recurring bills in the simulation?

Schedule bill payments in advance and make sure funds will be available.

How are financial services websites offering an additional level of security at login?

Sending a security code to the account holder's cell phone that must be used at log-in.

When evaluating comparable job offers, which is the best guidance to follow?

Take into consideration the value of all benefits as well as potential incentive-based pay.

Which would be the best example of the benefits received principle of tax fairness?

Tax on gasoline used to pay for roads.

Which is true of self-employed individuals?

They must pay an additional 15.3% self-employment tax.

Which is true of big box retailers?

They offer a wide variety of products.

Which is true of credit unions?

They operate as non-profit organizations.

Which is generally true about the cost of vehicle insurance?

The more expensive the vehicle the more it costs to insure.

Which is true of Social Security and Medicare taxes?

The employer matches the amount the employee pays to the government.

Online access to your checking account will show you the current balance. Why is it still important to maintain a checking account register, record checks and deposits, and calculate the account balance?

The online balance does not include checks that have been written but not cashed.

Which is a disadvantage of getting a loan from friends or family members?

They may expect you to manage your finances in a certain way.

Which would be a good reason for a borrower to use a Peer-to-Peer (P2P) lender?

They may not be able to borrow money from any other source.

Erica's employer offers to match her 401(k) contributions up to 4% of her pay. What should she do?

Try to contribute at least 4% of her pay to take advantage of the full employer match.

Where can you find any quizzes that your teacher has assigned to you?

Under the Written Test Take Action section

Which is the most practical way of protecting yourself against identity theft from a lost or stolen cell phone?

Use a complex password or other login security and do not save account passwords.

What should you do if you are constantly forgetting log-ins and passwords for important accounts?

Use a reputable company that provides password management services.

Which is a need?

a safe place to live

If you decide to become an entrepreneur or go into business for yourself, is it possible to set up your own business retirement savings plan?

Yes, you can set up and invest in a plan called an Individual or Solo 401(k).

What is true about using margin to buy stock?

You are increasing the risk of your investment.

Why is it important to know about any custodial accounts that have been set up for you?

You are legally responsible for any tax liability they are creating.

Why is it important to have health insurance?

You are open to significant financial risk without it.

How is a security breach at a large company most likely to affect your personal data security?

You are vulnerable to identity theft if any of your information was stored in their system.

What happens if you overpay a vendor or pay the same bill twice?

You can request a refund in the action column on the vendor page.

Which would be covered by the liability portion of your insurance policy?

You go off the road while driving your car and damage a fence.

Which is a drawback to purchasing a vehicle from a private seller?

You have little or no recourse if the vehicle has problems.

Which is a minimum requirement to be accepted into the military?

You must have a high school diploma or GED.

Which is a benefit to declaring bankruptcy?

You will get out of the legal obligation to repay most of your debts.

When can you find the lowest prices on seasonal merchandise?

after the season

A job-training program where an employer or other sponsor pays you to work in and learn about an occupation is known as

an apprenticeship.

Which type of housing is always a rental?

apartment

Individuals who win large lottery payouts

are more likely to declare bankruptcy than those who don't.

Which would most likely be paid salary plus commission?

automobile salesperson

What is the main reason governments levy taxes?

raise revenue

Which refers to the rate of return after taking into consideration inflation?

real rate of return

Which will automatically result in you earning positive points?

receiving an employer 401(k) match

Which of the following high growth occupations pays the most?

registered nurse

The less someone makes, the higher the percentage of income they pay in taxes is a

regressive tax.

Which is a common characteristic of outlet stores?

single brand of merchandise

Which is the most popular type of home?

single-family dwelling

You had an oil change done at a local shop. They made a mistake and caused engine damage that will cost $1,200 to repair. They are unwilling to pay for your repair. What is the best option to make them pay your repair bill?

small claims court

Jasmine is interested in purchasing a quality bicycle to commute to college and work. She doesn't know much about bikes but wants a good one that will last a long time. She also wants to be sure she can get it serviced where she purchased it. What would be her best option?

specialty retailer

Which type of debt is usually not erased by a bankruptcy filing?

student loan

You believe your identity and credit card information has been stolen when trying to purchase goods through a website you now believe was fake. Besides your credit card company, who else should you report the theft to?

the Federal Trade Commission www.IdentityTheft.gov

Which is not a service for most customers of on-line discount brokerages?

the ability to get personal assistance in selecting investments

Gross pay refers to

the amount of pay before any deductions or taxes are taken out

All of the following are reasons that a mortgage application could be rejected except

the applicant previously had a mortgage.

Which is a characteristic of a website you can trust for accurate and reliable information about a product you are considering purchasing?

is an actual publication with editors

A well-known software company issues both common stock and bonds. An investment in the bonds

is less likely to lose money.

If planning to eventually transfer from one school to another the most important consideration is

making sure credits earned will transfer.

Which is typically the least expensive type of living unit to purchase?

manufactured home

Which is not a characteristic of exchange traded stock funds?

minimal risk

Which of the following expenses would be considered a "need" instead of a "want"?

monthly electric and natural gas bill

Which of the following is not considered taxable income by the IRS?

most gifts

Which on-time payment will actually improve your credit score?

car loan

Tara doesn't get paid at the end of each month but most of her bills are due during the third and fourth weeks of the month. What term best describes her problem?

cash flow

What problem are most people who use payday lenders or cash advance stores trying to solve?

cash flow

Which should be entered on a Cash Flow Budgeting Tool?

charged overdraft fees

A person has $3000 to deposit in a financial institution. Assuming all options were offered by the same institution, which account is likely to have the lowest interest rate or pay no interest at all?

checking account

Which is not a strategy for successfully investing for retirement?

choose the safest invests

Which type of depository institution is most likely to have hundreds of branches throughout the United States?

commercial bank

Which investment has both the highest potential risk and the highest potential reward?

common stocks

You are driving down the highway and hit a deer with your car. What type of insurance would pay for repairs to your vehicle?

comprehensive

Which is not one of the "5 Cs of Credit?

consumer

Which type of mortgage has a payment that remains the same until it is paid off?

conventional

Which method of purchase will offer the buyer the greatest protection if there is a problem?

credit card

In the Budget Challenge simulation, penalty and reward points are assessed for negative and positive financial behaviors. As an adult these behaviors would most affect your

credit score.

Which is not considered when determining your credit score?

current annual income

In order to earn the Debt Reduction trophy, you must

pay an additional $500 towards your student loan.

A person who has a high credit score will

pay less for credit than those with lower scores.

Which will charge the highest interest rate on a short-term loan?

payday lender

Which is a responsibility that comes with renting?

paying rent for the duration of the lease

Which would be an example of a fixed expense?

paying your auto loan bill

Which makes up the largest percentage of your FICO score?

payment history

Which of the following is a characteristic of a preferred stock?

pays a dividend but has no voting rights

Which are the top-selling vehicles in the United States?

pickup trucks

Leasing a vehicle is most likely to be better than buying for someone who

plans to get a new vehicle every two or three years.

What is the payment that you make to pay for insurance called?

premium

How can both stocks and bonds generate a positive return for investors?

price appreciation

Leases typically contain all of the following except

price if the tenant wishes to purchase the property.

Which is an optional fee many dealers charge on a new vehicle sale?

document fee

Which is not one of the four pieces of information required for an identity thief to steal your identity?

driver's license number

Emma is graduating from high school and planning for her future. She really didn't like high school that much except for her classes in food preparation. She is very creative, likes to bend the rules, and enjoys cooking. Her goal is to someday be a chef in a large restaurant. What would be the best option for her to achieve her career goal?

enroll in vocational school

Ryan is considering purchasing a used five year old hatchback with 75,000 miles on it for $13,000. His main use would be commuting 20 miles to work each day. Which should he be most concerned about?

factory warranty has expired

Which usually does not have excise taxes levied on it?

food

An advantage of direct deposit for the employee is that

funds are available to use at the earliest possible date.

According to the Federal Trade Commission which is the most common type of identity theft?

government documents or benefits fraud

Which of the following does not use consumer credit scores as part of their process?

graduate school admission officers

Which tax do local governments rely on the most?

property tax

How are load mutual funds different from no-load mutual funds?

they charge a sales fee

What is the minimum warranty coverage for new vehicles sold in the United States?

three years/36,000 miles

A person has $3000 to deposit in a financial institution. Assuming all options were offered by the same institution, which account is likely to pay the highest interest rate?

three-year certificate of deposit

What is not a necessary step to take after using a public computer to transmit personal or financial information?

turn the computer off

Which would be most helpful when deciding how much to have withheld from your next paycheck for your 401(k) contribution?

updated Budget and Cashflow Spreadsheet

Which is an example of a secured loan?

vehicle loan

It is better to buy a vehicle then lease it, if the customer

wants to keep the vehicle for a long time.

Assuming the same rate of pay, which frequency of pay is best for managing your cash flow?

weekly

What type of insurance combines life insurance with a savings account?

whole life insurance

Uninsured and underinsured motorist protection provides coverage for

you are in an accident with someone who doesn't have insurance.

Lauren rents an apartment for $1,000 per month. How much equity will she have built up after living there for two years?

$0

According to a 2019 One Poll study, approximately how much does the average adult spend per month on non-essential items?

$1,500

Moneygrabber mutual fund gains 25% in year one and loses 20% in year two. What is its actual annual return?

0%

Which best describes the goal of playing Budget Challenge?

Learning to become a more financially capable adult.

Why is it necessary to regularly review and revise your budget?

Life changes will require changes to your financial plan.

Why is it necessary to invest for retirement instead of saving for retirement?

The return on savings is too low to build the wealth needed for retirement.

When choosing mutual funds what does market capitalization refer to?

The size of the companies the fund invests in.

What is true when it comes to unit pricing of products?

The unit price is usually posted on the store shelf beneath the product.

Which is an advantage of leasing a vehicle instead of buying it?

The vehicle may be under warranty for the entire duration of the lease.

Which is a benefit to purchasing a vehicle from a private seller?

There are no hidden charges or fees.

Which is true about long-term capital gains and income taxes?

They are taxed at a lower rate than earned income.

Cara writes an e-check on Monday to pay a bill in the simulation. What is the earliest it will be applied to the vendor account?

Wednesday

Which is a financial advantage of renting versus buying?

You need less money upfront to move-in.

Which is true of military service?

You receive an excellent benefit package including a housing allowance.

What will happen at the simulation end?

You will be asked to complete a survey.

What is the biggest advantage of working directly after high school instead of continuing your education?

You will be earning money rather than spending money.

Which public record would be part of a credit report?

bankruptcy filing

Which is an advantage many sedans have over pickup trucks and crossovers?

better fuel economy

Which is true of both index funds and actively managed funds?

both may invest in stocks or bonds

Which type of insurance is not included in a typical renters policy?

building and other structures

Which is an example of a revolving loan?

credit card

Which is not a typical fee financial institutions charge?

direct deposit fee

Which is an advantage mutual or exchange traded funds have over individual stocks when investing for retirement?

diversification

A salaried employee will always have a(n)

employment contract.

Which is a variable expense?

entertainment

What tax can be levied on a person's assets after they die?

estate tax

Which would be an example of a tax designed to influence behavior?

excise tax on cigarettes

Which benefit typically costs an employer the most to provide to their employees?

health insurance

Which best explains the concept of time value of money?

Money received now is worth more than the same amount received in the future.

Which is not a factor that insurers typically consider when determining how much to charge for life insurance?

income

What is the largest source of federal revenue?

individual income taxes

How is the credit card used during the simulation?

Monthly charges of $500 to $750 are automatically made.

What is a common benefit of purchasing a good or service from a specialty retailer?

knowledgeable salespeople

Which is a disadvantage of being a salaried employee?

Overtime is rarely paid for working over 40 hours a week.

Which best describes liability?

legal responsibility

What type of insurance would cover the medical bills of a pedestrian you accidentally hit while driving your vehicle?

liability

Which is an advantage of purchasing a new vehicle instead of a comparable older used vehicle?

longer warranty

Which is an advantage of purchasing a late model used vehicle instead of a comparable new vehicle?

lower initial cost

Which best describes charities?

non-profit organizations

Which would most likely be a contracted hourly employee?

nurse

If Jonah wasn't saving his paycheck for college, he would use it to buy a used car. What concept does the used car represent for Jonah?

opportunity cost

Which is not a common type of paid time off (PTO)?

paydays

How can a person invest in real estate without buying property and becoming a landlord?

purchasing shares of a real-estate investment trust

Which is the best definition of investing?

putting aside money to make more money

Which would not qualify an individual to use a special enrollment period to sign up for health insurance?

sustaining a serious injury

What type of fund should a retirement investor select if they do not want to worry about diversification or asset allocation as they near retirement?

target-date fund

What is the relationship between the insurance deductible and premium?

the higher the deductible the lower the premium.

Which auto insurance coverage is not needed if your vehicle is still under the factory warranty?

towing and emergency road service

Monica is interested in early childhood education. She decides to spend the summer as a volunteer at a non-profit that provides childcare for young children. Which would not be a potential benefit of her volunteering?

She will be earning money she can apply towards college.

What is an insurance deductible?

The amount the insured pays before the insurer pays.

When it comes to private party transactions, the principle that often applies is caveat emptor. What does that mean?

The buyer must do their own research and due diligence.

Which best describes the relationship between the effective income tax rate and the bracket rate?

The effective tax rate will always be lower than the bracket rate.

Which is usually true of employer sponsored health insurance plans?

The employee is expected to pay for part of the insurance premium.

Which is a drawback to declaring bankruptcy?

The filing stays on your credit report for ten years.

What is the vesting period?

The length of time you must work before you own your retirement benefits.

Which is true about the privacy policies users must agree to before using a website?

The majority of people do not read them before agreeing to them.

What is a normal consequence of carrying a balance on a credit card?

The net cost of the purchases made will be higher.

How many points do you earn when you accomplish a trophy goal?

1,000 points

What is the daily penalty for being over your credit card limit?

100 points

Which is the standard form individuals use to file their federal income tax?

1040

DuraValue mutual fund gains 20% in year one. It gains 10% in year two. It gains 30% in year three. What is the average annual return of the fund?

20%

When obtaining a mortgage, what is typically the minimum down payment required to avoid having to purchase private mortgage insurance?

20%

Kelly buys $2000 worth of shares in a mutual fund. Three years later she sells her shares for $2600. What is her return on investment (ROI)?

30%

What is the approximate percentage of an employee's total compensation that benefits make up?

30%

According to many financial planners, what is the most you should spend on rent?

30% of gross income

According to most financial planners, what percentage of your retirement investments can you withdraw annually in retirement and not run out of money?

4%

How old are most Medicare recipients?

65 and older

Credit card utilization penalty points are charged once balance exceeds

75%.

Who would be a good candidate for a high deductible health plan?

A 27 year old man with no history of health problems.

Which is an example of a vishing scheme?

A caller informs you of suspicious credit card activity and asks to confirm your identity.

What is Workers' Compensation?

A government program that helps workers who suffer a disabling injury on the job.

When should a consumer file a fraud alert with the credit bureaus?

Any time they suspect they have been a victim of identity theft.

Which is the best way for a college student to start building their credit score?

Apply for a credit card, use it to make small purchases and pay the full balance each month.

Aidan needs a four-year degree to become a teacher but wants to save as much money as possible. Which would be his best strategy?

Attend a community college for two years and then transfer to a four year college or university.

Why do credit unions tend to have lower fees and pay higher rates of return on deposits than commercial banks?

Credit unions do not have to generate profits for their shareholders.

What type of fund should an investor choose if they want to invest in companies that are environmentally and socially responsible?

ESG fund

Which is an advantage exchange traded funds (ETFs) have over mutual funds?

ETFs do not generate taxable capital gains until they are sold.

What is a drawback of jobs that pay salary plus commission?

Earnings can vary from pay period to pay period.

What trophy is earned for transferring $500 into your savings account?

Emergency Fund

Which Trophy Goal is not directly affected by your ability to manage your credit card?

Emergency Fund

Felicia has moved to a city with a high cost of housing, where apartments rent for 50% more than what she has budgeted. Which is likely to be her best option?

Find a roommate to share housing costs.

Michael is looking for a college rental. He finds a really nice house for rent close to campus that is less than half that of other comparable listings. When he calls, he is told that because it is such a good deal, he must first email an application and wire the security deposit in order to see the property. If he doesn't like it, he is told he can get a refund. What should he do?

Find another listing, this one is most likely a scam.

In what way can using a credit card be like getting an interest free loan?

If you pay the balance in full by the due date no interest is charged.

Which is true about the cost of attending a four-year college or university?

It has been rising faster than the rate of inflation.

According to AAA, what is the total operating cost for a new midsize sedan driven 15,000 miles per year?

$24 per day

Jared has health insurance through his employer, which he has never considered using until now. The plan has a $1,000 annual deductible and 20% co-pay for office visits with a minimum of $25. Jared cut his foot and went to his doctor's office where he got stitches. The bill from the doctor's office was $240. How much of the bill will Jared have to pay himself?

$240

Which would be most beneficial for most tax filers?

$500 credit

Juan earned $100,000 last year. Approximately how much was withheld from his pay for FICA?

$7,650

Which best describes why people purchase insurance?

A way to manage risk that occurs as part of daily life.

Which bond fund would be considered the safest?

U.S. treasury bond

Why is it important to build a good credit score before shopping for a house?

You will need a good credit score in order to obtain a mortgage.

Which is the best source of information on the ownership and maintenance history of a specific used vehicle you are looking at?

a Carfax or AutoCheck report for that vehicle

Who is usually your best resource to assist during the home purchase process?

a real estate agent

What coverage would a 20 year-old full-time college student typically need to purchase, even if they are still listed on their parent's insurance policies?

renters insurance if living off-campus

Jonah purchases a new flat screen television and declines the extended service plan. What risk management strategy is he employing?

risk assumption

Insurance is based on the concept of

risk pooling.

You get a new job, and you have money in your previous employer's 401(k) plan. Which is the best option for most people?

roll the money over

How long before a negative account report is removed from your credit history?

seven years

Lucas invests $2000 per year in his retirement account for 40 years in an investment with an average annual return of 10%. Approximately how much will he have after 40 years?

$975,000

Which is a sign that identity theft has taken place?

An account statement billing you for items you didn't purchase.

Which is the best definition of credit?

An agreement to receive goods or services now and pay at a later date.

Austin needs a vehicle to get to his new job. His loan application is denied due to his lack of credit history and time on the job. What would be the fastest way to get his loan approved?

Ask a parent or family member with good credit to be a co-signer on the loan.

Which is a common tradeoff for getting the latest phone for free or at a significant discount?

Having to sign up for a multi-year service plan.

How are Health Care Flexible Spending Accounts (HCFSA) and Health Savings Accounts (HSAs) similar?

Both allow the plan owner to pay expenses with pre-tax dollars.

Which is a consequence of making your credit card payment late?

Interest will be charged on the balance not paid on time.

What is the greatest advantage of a defined benefit pension plan for the employee?

Defined benefit plans make retirement planning easier.

Why does group health insurance often have lower premiums than individuals purchasing the same insurance on their own?

Groups benefit from their ability to negotiate the purchase of multiple policies.

Which is the best strategy to avoid late fees and negative impacts to your credit score?

Have bills automatically paid from a bank account.

What is financial capability?

Having the knowledge, skills, and motivation to make appropriate decisions about your finances.

Why is it important to keep track of the credit utilization on your credit cards?

High credit card utilization can lead to a reduction in a cardholder's credit score.

What is depreciation?

How much value a vehicle loses over time.

What important information does a Form W-2 provide?

How much was withheld from your pay for taxes.

Which best explains what a full warranty covers?

If a product fails due to a manufacturing defect it will be repaired or replaced.

Which is true of the credit card grace period?

If the balance is paid in full by the monthly due date interest does not accrue.

When would it make sense to use a payday lender or cash advance store?

If there is no better way to secure the funds you need for a required payment.

Why is it important to plan early for your retirement?

In order to take advantage of the power of compounding.

What is the likely result of using an out-of-network provider for routine health services?

Insurance may not pay for the cost of the services provided.

Which is a financial drawback of home ownership compared to renting?

Owners are responsible for the additional costs of taxes, insurance, and maintenance.

What is the difference between private and public vocational and technical schools?

Private schools cost significantly more.

Which is a government sponsored retirement plan?

Social Security

Which is a drawback of internet only banks?

Some services, such as getting a document notarized, can only be done in person.

You see an online ad from a private seller for a low mileage used car. It is priced at less than half what it would normally sell for. The car looks great in the pictures. What best explains the low price?

The advertisement is a scam designed to defraud a potential buyer.

Which best explains the concept of out-of-pocket maximum in health insurance?

The amount the insured pays after which insurance covers 100% of all costs.

Which is an advantage of investing $500 in an S&P 500 Index mutual fund instead of in the shares of any single company's stock?

The fund offers greater diversification.

How does your credit score affect your vehicle insurance in most states?

The higher your credit score, the lower your insurance premium.

What is the significance of the debt-to-income ratio (DTI)?

The lower your DTI the better when applying for a loan.

Which is the best conclusion you can draw about a person who received a large income tax refund?

They had more withheld from their pay than they owed in taxes.

Which best describes net pay?

The pay the employee receives or has deposited to their account.

What would be the most likely difference between loans offered to someone with a good credit score versus a loan offered to someone with an excellent score?

The person with good credit will pay a higher interest rate than the person with excellent credit.

Kira is 22 years old and a senior in college. Her mother has a job that provides health insurance for the family. What criteria must be met in order for her to stay on her mother's policy next year?

The policy must still be in effect.

Which is true of credit card interest?

The rate is higher than that of other consumer loans.

Which is usually true of variable rate loans?

They have a lower introductory rate than fixed rate loans.

When investing for retirement, why is it better to use an Individual Retirement Account (IRA) than a standard brokerage account?

There are tax advantages to using an IRA.

Which is an advantage of purchasing a plan through the Health Insurance Marketplace?

There are usually many options, and it is easy to compare policies.

Which is true about filing a fraud alert with the credit bureaus?

There is no charge for filing a fraud alert or a credit freeze.

How is it that the states that impose the same percent tax on income, no matter the amount, still end up having a progressive income tax?

They allow for some form of deduction or exemption of income.

Which is not true of all condominiums?

They are buildings of four or more stories.

Which is true of investing in United States government bonds?

They are considered a safe investment.

Which is true of making vendor selections?

They are made at the start of the simulation.

Which is true of credit card convenience checks?

They can be used to get cash.

Which is a benefit of debit cards?

They can be used to purchase goods and services online.

Which is not a reason individuals and businesses support charities?

They can receive a share of the charity's profits.

Why do websites track your online activity?

They can use the information to send you targeted ads.

Which is generally true of unsecured loans?

They charge higher interest rates than secured loans.

What is the difference between vocational and technical schools and community colleges?

They do not offer clubs, sports, or other activities community colleges offer.

How are charities different than businesses?

They do not pay taxes on money they raise.

What is the main purpose of an appraisal in the home sale process?

To determine if the property qualifies for a loan.

How is retirement planning different for young adults today from past generations?

Very few of today's young adults will be offered a defined benefits pension plan.

What form does an employee use to determine how much should be withheld from their pay for income taxes?

W-4

Which is not one of the three major credit reporting agencies?

Wells Fargo

Rodrigo uses his laptop every day for work. What is the most important consideration when shopping for a new one?

What is the warranty and how does he obtain service?

When opening a regular checking or share draft account, which is the most important consideration for most people?

What types of fees are charged for maintaining and using the account?

Why is it sometimes difficult to determine your best career option?

What you do in a job is usually different from studying the subject in school.

What is the opportunity cost of purchasing a new video game console?

What you would purchase with the money instead.

How is leasing a vehicle different from purchasing a vehicle?

With leasing you are renting the vehicle not buying it.

Should a person include "wants" when creating a budget?

Yes, a budget should be realistic and include things that make us happy.

Should you have your paycheck directly deposited to your financial institution if your employer provides that option?

Yes, it is convenient, and you will have access to your money the day deposited.

Who is responsible for setting up and managing the investments in an Individual Retirement Account (IRA)?

the individual