JROTC Final Study Guide

Zach made a goal to buy the collections of his five favorite musical artists. He wrote his goal on paper and constructed a plan to reach his goal. Of the following steps in his goal and financial plan, which one would you recommend he change in order to best stay on track?

A) "I will use all of my earnings from my job until I reach my goal."

According to NEFE®, what is a W-4?

A) A federal from that tells the employer how much to withhold in payroll taxes from your earnings

"A yearly fee charged by credit grantors for the privilege of using a credit card is known as a/an ___________."

A) Annual fee

"__________ is the cost of credit at a yearly rate."

A) Annual percentage rate

"An itemized summary of estimated or intended expenditures for a given period along with proposals for financing them."

A) Budget

"A/An _____________ is a record or file to a prospective lender or employer on the credit standing of a prospective borrower."

A) Credit report

"A government levy on the members of a nation to meet its expenses."

A) Federal income tax

"Expenses that do not vary."

A) Fixed expenses

According to the NEFE® program, what is the first step toward ensuring a successful career that leads to financial stability?

A) Having a high school diploma or college degree

A/An __________ situation is one based on an imagined example or conjecture.

A) Hypothetical

"The percentage increase in the cost for the same items over time"

A) Inflation rate

"The agreed length of a loan is a/an __________."

A) Loan term

"A type of investment that is made up of a variety of stocks and/or bonds to meet a specific investment objective"

A) Mutual fund

"Choosing one option may mean giving up on another"

A) Opportunity cost

You want to take a class offered by a private college, but you don't have the $1,500 to pay for it. Since you understand how credit now works, you apply for loans at two banks, a savings and loan, and a credit union. If you earn enough money to make the necessary payments on any of the loans, which one will cost you the least total amount of money?

A) The first bank: 9% interest (APR) for 2 months

Tom told a subordinate "If you mess up in the color guard, I'm going to give you the worst job at our school clean up event next weekend." This is an example of __________.

A) Threatening a subordinate

T or F: If you buy stocks, you only make money when you sell the stocks.

A) True

T or F: If you put money into a Certificate of Deposit (CD) you will be penalized if you try to cash it out too soon.

A) True

An ethical dilemma involves situations where you choose from __________.

A) Two or more options that are not fully ethical

What in NEFE® does "P.Y.F." stand for?

B) "Pay Yourself First" - the concept of treating savings, or paying yourself, as a fixed expense that you can make a regular part of your budget

You just received your first credit card, so you bought an iPad for $400. Your credit card has an interest rate of 15%, and you decide to make $80 payments each month. How many months will it take you to pay off?

B) 6 months

According to the NEFE® program, how much of your net income or take-home pay should go toward all your loan payments, excluding mortgage?

B) A maximum of 10%

According to the NEFE® program, what is an "A.P.R."?

B) Annual percentage rate, or the amount it costs you per year to use credit, expressed as a percentage rate

A(n) __________ is a plan for managing money during a given period of time, according to the NEFE® program.

B) Budget

"A measure of the money you receive and the money you spend"

B) Cash flow

"Earning on your balance plus the previously earned interest"

B) Compounding

"An amount paid in cash or share of stock, based on the amount of stock shares owned"

B) Dividend

"Something spent to attain a goal or accomplish a purpose."

B) Expenses

T or F: As a leader, you should get your subordinates to comply with your own political beliefs.

B) False

"The cost of consumer credit expressed as a dollar amount, including interest, transaction fees, and service fees, is known as a/an __________."

B) Finance charge

Which of the following statements indicates the person saying them is experiencing an ethical dilemma?

B) I have to choose between the lesser of two evils.

"A federal tax used to assist in running a program under the U.S. Social Security Administration that reimburses hospitals and physicians for medical care provided to qualified people over 65 years old."

B) Medicare tax

"The sum of money to be taken out of an employee's paycheck to meet agreed-on obligations."

B) Payroll deductions

Personal Financial Planning is a process of defining goals, developing a plan to achieve the goals, and putting the plan into action. Goals should be SMART (specific, measurable, attainable, relevant, and time-bound); plans should be rigid; and putting the plan into action requires restraint and responsibility.

B) Replace "rigid" with "flexible"

The P.Y.F. strategy is best for __________.

B) Saving for big ticket items or an emergency fund

What is the difference between saving and investing?

B) Saving is depositing money into a financial institution and earning interest. Investing is buying something with the expectation that it will make money for you.

"A cost that does not remain fixed."

B) Variable expenses

"A record of how one has paid credit accounts in the past is known as a __________."

B) credit history

You wrote a check for $25 to an auto parts store for new headlights. Unfortunately, you only had $20 in your account. Your bank charged a $25 overdraft fee, and the auto parts store's bank charged you a $25 bad check fee. How much are you actually paying for your new headlights?

C) $75

Lisa wanted to buy a new video camera, so she developed her own financial planning process to achieve that goal. She showed it to you to see if you would recommend any changes. You told her that the steps were good, but that you would rearrange the order. How would you recommend she order her steps?

C) 3,2,1,5,4

A friend offers to share a streaming video service with you if you'll split the cost of the annual subscription. You know the service contract forbids people in different households from sharing one account.

C) Could i explain my actions to a court?

"___________ is a liability or obligation in the form of bonds, loan notes, or mortgages owed to another person."

C) Debt

__________ is the payment you receive for allowing a financial institution or corporation to use your money, according to NEFE®.

C) Earned interest

According to NEFE®, __________ are expenses that have a set dollar amount and are the exact same amount every time they are paid.

C) Fixed expenses

Bonds earn money on __________.

C) Fixed interest

"The __________ is a time frame in which a person can avoid finance charges by paying off a balance in full before its due date."

C) Grace period

"For an individual, all income except as specifically exempted by the internal revenue code."

C) Gross income

__________ is the total amount of income from your wages or salary before payroll deductions, according to the NEFE® program.

C) Gross income

"Buying something with the expectation that it will make money for you"

C) Investing

You have $11,000 in debts. You earn enough money to make your payments, but you forget to pay your bills on time so you pay extra bank charges. The company you work for just awarded you a $4,500 bonus, and you want to use it to pay off some debt. What should you do to best help yourself get out of debt at the earliest possible time?

C) Pay off the bank credit card, the bank loan, and gas credit card

"The self-control to save your money for a future goal"

C) Restraint

Ethical leadership in JROTC is supported by the Army Leadership Model and __________.

C) Seven army values

"Federal tax levied equally on employers and employees and used to pay for social security programs."

C) Social security tax

"A percentage of ownership in a company"

C) Stock

"To place a tax on income, property, or goods."

C) Taxes

You were taking an aptitude test when you accidentally saw the test proctor's answer sheet for the section that you are working on. You want to get an honest assessment of your skills, but you are also having difficulty with that section of the test.

C) Tell the proctor that you accidentally saw the answer sheet

According to the NEFE® program, __________ is the relationship between time, money, and rate of return (interest), and their effect on earnings growth.

C) The time value of money

According to the NEFE® program, __________ means someone is willing to loan you money, called principal, in exchange for your promise to pay it back, usually with interest.

C) credit

You just used your new credit card to purchase a big screen TV. The TV cost $2,300. The APR on your credit card is 19%. If you pay off the credit card in 12 months, how much will you actually pay for your big screen TV?

D) $2,737

"__________ is when one becomes financially ruined."

D) Bankruptcy

"You lend money to a government or a company. In return, the borrower promises to repay you with interest on a certain date"

D) Bond

"__________ is a trust or promise to pay later for goods or services purchased today."

D) Credit

To gain the most money, you should look for an account that compounds interest __________.

D) Daily

According to the NEFE® program, __________ is the entire amount of money you owe to lenders.

D) Debt

"Process of considering and analyzing information to make a decision"

D) Decision-making

When you attempt to resolve an ethical dilemma, which of the following is NOT a question you should ask yourself?

D) How will this benefit me?

"The cost of borrowing or lending money that is usually a percentage of the amount borrowed or loaned is known as ___________."

D) Interest

"Income after all expenses and taxes have been deducted."

D) Net income

"'Pay Yourself First' is the secret to getting what you want and becoming a disciplined saver."

D) P.Y.F

"State tax levied equally on employers and employees; used to pay for state programs."

D) State income tax

Net income is also called your ______________, according to the NEFE® program.

D) Take home pay

According to NEFE®, what is "compounding" interest?

D) The idea of earning interest on interest

"The concept that holds that a specific sum of money is more valuable the sooner it is received"

D) Time value of money

"The amount of money or its equivalent received during a period of time in exchange for labor or services, from the sale of goods or property, or as profit from financial investments."

D) income