Personal Finance Final

Use the 20-10 Rule to calculate the maximum total debt for a person who earns a yearly net income of $20,500. Round your answer to the nearest whole dollar.

$4,100

Lisa will buy two new car tires three months from now before taking a long trip. Each tire costs $75. How much will Lisa need to save each month to reach her goal?

50

Luiz has worked 35 hours each of the past two weeks. If he earns $7.50 an hour and is paid every two weeks, what is his gross pay for the last two-week pay period?

525

Rank the investments highest (#1) to lowest (#5) to show how they compare according to the potential for return.

1.Company Stock 2.Balanced Mutual Fund 3.U.S. Savings Bond 4.Certificate of Deposit 5.Money Market Deposit Account

Madeline is comparing her options to borrow $5,000 to buy inventory and equipment for her new sub sandwich shop. Which loan appears to be the best deal? (Hint: Use the simple interest formula to estimate the interest.)

10 percent interest loan due in one year

What is the guideline for the maximum amount you should owe each month for loan payments (not including a home loan payment)?

10 percent of monthly net income

Marcus set a goal to buy a used car in the next few months. He plans to make a $2,500 down payment and has already saved $1,300. If he can save $150 each month for this goal to buy a car, how long will it take him to save the entire $2,500?

8 months

Which of the following would be a good reason to use online banking?

A college student attends school out of state in Minnesota but her bank is in Colorado.

The time value of money can best be explained using which one of the following concepts?

A dollar today is worth more than a dollar tomorrow.

What is the Simple Interest Formula?

A=Principal or amount (1+rate or percentage per year*time or year

Janelle is considering a future career in graphic design. Which one of these summer jobs has the most potential to help Janelle jumpstart her career?

An advertising assistant for the local newspaper: minimum wage job that requires proofreading and setting up ads in the weekly newspaper

An opportunity to combine on-the-job training with class instruction

Apprentiship

An amount paid by employers in recognition of exceptional work

Bonus

You can't find your credit card, and you think it may have been stolen. What should you do?

Call the credit card company as soon as you are aware the card is missing

If you suspect that someone may know your online banking login information, what can you do to prevent unauthorized access to your bank account?

Change your login password(s)

Something of value that lenders can repossess if you are unable or unwilling to repay a loan as promised.

Collateral

Pay is based on a percentage of the cost of items or services sold.

Commision

A way for you to buy something now and pay for it later.

Credit

A reference of how you have used credit in the past.

Credit Report

The total amount of money you owe other people.

Debt

Which of the following strategies has the most potential to prevent you from boosting your earning potential?

Frequently changing jobs with different employers to learn new skills and gain experience

You can do all of the following with mobile banking except which of the following banking actions?

Get $40 cash

Suki will soon turn 18 and wants to move into her own apartment in a few years. But she is worried that she won't be able to rent an apartment without any credit history. What can Suki do to start building a good credit history?

Get and use a store credit card or major credit card and pay off amounts due each month

A period of time before interest starts accumulating on charged purchases.

Grace Period

Any money you receive such as an allowance or paycheck

Income

What you pay to use another person's money.

Interest

Delay making payments on borrowed money

Loan deferment

Which of the following can impact your credit score?

Making a late car loan payment

Shaunda wants to buy her grandmother's car to drive back and forth to college next year. Her grandmother agrees to sell Shaunda the car for $1,200 in a year. This is an example of what type of goal?

Medium-Term

You have searched everywhere for your debit card. You think it may have been stolen. Of the following actions, what is the best thing to do now?

Notify the company that issued your card.

Which is an example of an opportunity cost related to earning potential?

Reduce income by cutting back on work hours to have time to attend classes at the local community college.

Kyle isn't willing to take much risk with his money as he sets money aside to use when he buys a car next year. Which one of the following types of investments potentially has the lowest investment risk while also growing in value?

Savings Account

A payment made for academic achievement

Scholarship

An employer-sponsored retirement savings plan is

a valuable employee benefit.

Which of the following agencies provide free credit reports for consumers?

TransUnion, Experian

You can do all of the following at an ATM EXCEPT which of the following banking actions?

Transfer money from your account to someone else's account.

Although he is only 17, Sean can invest in a retirement fund because he earns income from his summer job at the health club.

True

If your payment for your full credit card is received by the lender before the due date, you will not owe any interest.

True

One of the single greatest assets an individual has is earning power.

True

When you use a debit card, you give your bank permission to immediately remove money from your bank account.

True

Who may review your credit report without your permission?

Your current employer

Which of the following is a major factor in helping you achieve your financial goals?

Your job choice

What is an advantage of electronic funds transfer (EFT)?

Your paycheck can be deposited directly to your checking account.

Why would someone want to start his or her own business rather than work for someone else?

able to make own business decisions regarding what services or products to sell

Given the same principal amount and interest of 1.3 percent APY for all options below, which option will earn the most interest over three years?

certificate of deposit that has interest compounded daily

The basic rule of a risk-to-return relationship is that

the higher the risk, the higher the return rate.

Mark wants to visit his foreign exchange "brother" who lives in Brazil. He'd like to make the trip 18 months from now, right after graduation. Mark estimates that he will need $3,000 total to pay for transportation, food, and other expenses. He has already saved $300. How much will Mark need to save each month to reach his goal?

150

In eight months, Kelly's parents will need to make the final payment for Kelly's braces. Half of the total cost was paid when her braces were put on. The total cost is $3,200. How much will Kelly's parents need to save each month to pay off the balance owed?

200

During her first year on the job, Monique earned a $22,880 annual salary ($11 an hour). She started the job with paid leave for five vacation days and five sick days. Plus, her employer pays the $300 monthly premium for health insurance. What is Monique's total annual compensation?

26,480

Koneta has money saved and invested several ways with a goal to grow her money at a rate higher than inflation. What is the historical long-term annual average rate of inflation?

3%

Willie is 15-year-old student who works a few hours on weekends at the local ice cream shop. One day he asks his mom for money to see to a movie with his friends. His mom replies, "Willie, what do you do with your paycheck money? You shouldn't need to ask me for more money each week." Willie decided to write down how he spent his money last week. He also listed money he received during the week. Look at his list and answer the questions below. Willie's Weekly Spending Log Bought five lunches, $4 each Gave a friend $5 gas money for rides to and from school Cashed weekly paycheck, $57 Received $5 from Aunt Lillie Purchased a used video game, $14 Bought two bus day passes, $1.25 each Purchased a concert ticket, $20 What was the total of Willie's expenses during the week?

61.50

Of the following types of jobs, which would be the best option to support the hobby of Alison, who performs in a band for area festivals, dances, and receptions?

Dental Assistant

Pete sets aside $50 each month from his earnings to have money for a car down payment. Of the following choices, what is the best way for him to store the money each month until he meets his goal for a down payment?

Deposit the money into his savings account.

Setting aside money to have on hand for unexpected expenses and events

Emergency Fund

If you write the wrong payee name while writing a check, it's OK to neatly cross out the wrong information and add the correct name in your own handwriting.

False

Martin does not have to pay income taxes on the cash tips he received while working his shift at the car wash.

False

Minors have to wait until they are adults before they can buy and stocks and bonds.

False

The best time to start investing is after working on a job full-time for at least five years.

False

Using a debit credit card for purchases is a convenient way to buy now and pay later.

False

When items are bought on credit and paid for over a long period of time, the cost to the buyer is the same as if the items were bought with cash.

False

A predictable amount of money spent to buy something or do something that is the exact same amount every time

Fixed Expenses

Kendra just received a promotion with a nice raise. She has her spending plan under control, so she decides to adjust her long-range investing plan now that she can take on more investment risk. Which one of the following types of investments potentially has the highest risk and is most likely a higher rate of return for Kendra?

Government Bonds

The total amount of income earned during a pay period

Gross Pay

Monica starts a mutual fund with $500 and adds $500 to her mutual fund every year for another nine years. Mason decides to wait 10 years so he can save up a lump sum of $5,000 to invest at one time in a mutual fund. If both Monica and Mason earn on average of 7 percent APY, who will have the larger mutual fund balance in 20 years?

Monica [Monica started investing early and has the advantage of compounded interest and reinvested earnings over the ten years before Mason starts to invest.]

As Koneta decides how to invest her money, which one of the following options is most likely to grow at a rate higher than inflation?

Mutual Fund

Which statement below is true about mutual funds?

Mutual funds are convenient and professionally managed.

Credit experts recommend that you check the status of your credit reports at least

Once a year

After you write and sign your check, who can legally cash the check?

Only the payee

Giving up the next best choice when making a decision

Opportunity Cost

Saving a certain amount of money to be used later for financial goals

Pay yourself First

As you scroll through your recent email messages, you are alarmed to see a message that your debit card is no longer valid. The message includes a web link where you can confirm information to reactivate your card. This may be an instance where you have been a victim of ...

Phishing

What is one benefit to using a checking account that is not a benefit of using a savings account?

Proof of payment

You cannot assume that you will receive the same employee benefits wherever you work full-time.

True

A value can be described as

a belief or idea you consider important or desirable