Unit 8: Personal Finance

Jared is saving money at the Bundt Bank and receiving simple interest. He deposited $1000. At 3% interest how much money will he have in 7 years. Principal = $1000 Rate = 3% Term =7 years

$1210

Which step in the Paced Decision Making Process belongs in D on this graphic?

Identify the alternative you selected as your decision.

_____________ is a fee for letting you use money.

Interest

Which of the following statements is correct about risk and return?

Riskier investments if successful may give a higher rate of return.

According to this graph, which statement is correct.

Women in all ethnic groups are getting paid less than men in the same ethnic group.

Cynthia will be living off campus at her college next year. She will have a part time job and her parents plan to give her an allowance each month. What type of account should Cynthia establish for paying her rent and other monthly bills?

checking account

Jacqueline is planning to begin her retirement savings plan next month. What kind of interest will give her the greatest yield over time?

compound interest

Which of the following are the LEAST appropriate items for which to use long term credit?

consumable goods such pizzas, restaurant meals, travel

Out of the investments listed below, which one carries the greatest risk?

individual stocks

When making your college plans, you and your parents may complete a form called FAFSA. This form

is required for students seeking any federal financial aid or loans.

Examine the credit card bill. This account

is under the credit limit.

Examine the credit card bill. Under fees charged, the $69.45 might be for

late payment.

Companies issue stock to get money for various things, which may include:

launching new products, enlarging facilities or building new ones, paying off debt, expanding into new markets or regions.

Which type of policy is not likely to have a deductible?

life insurance

Student loans

may allow a student to afford an education and increase life long earning power.

Which of the following types of college financial aid have to be repaid by the student?

student loans

When selecting a bank to use for savings accounts, certificates of deposit, and checking accounts, one should check to see if

the bank is insured by FDIC.

When Maria paid for a homeowners insurance policy and the insurance company accepted her payment

the risk of paying for accidental damages transferred from Maria to the insurance company.

If you track all of your daily spending you will most likely

more easily stay within your budget.

Match the terms with their description. 1. return 2. risk

1. the profit that is made from an investment 2. the danger of losing money invested

Select all options that apply. Which of the following statements about the labor force are correct?

Highly skilled and educated workers benefit a nation and increase economic growth, Salary levels are influence by the market forces of supply and demand, With economic growth comes increased demand for skilled and educated workers, Increasing our human capital can lead to higher earnings.

Which of the following statements is true based on this advertisement?

No deposits less than $500 will be accepted at the bank.

Which agency regulates stocks and bonds and works to protect investors from fraud?

The Securities and Exchange Commission

Which is NOT a reason that many merchants target American teenage consumers with advertising?

The average American teenager controls less than $500 annually in disposable income.

A bear market refers to

an extended period of time during which investors are reluctant and stock prices are falling.

The personal information on a credit report will NOT show

arrest record

How do investors earn money on their stocks? Select all that apply.

capital appreciation (growth in value of the stock), collecting dividends

Select all the responses which apply. Companies, governments and municipalities issue bonds to get money for various things, which may include:

financing debt., Funding capital investments in schools, highways, hospitals, and other projects, providing operating cash flow.

Granting consumers credit

has allowed business and the GDP to grow.

Which of the following are financial decisions faced by wage earners and consumers? Select all that apply.

how to select financial institutions, how to select insurance, how to use credit, how to manage money

Diane was having a difficult time deciding on which of the colleges that accepted her to attend. She made a chart and listed the colleges vertically. Horizontally she listed her criteria; cost, proximity to home, having her major, and being near a city. She was about to use the

paced decision making model.

This credit report shows that the individual

pays his auto loan on time.

What are the three costs associated with health care insurance?

premium, deductible, co pay

Gloria is about 5 years away from beginning her retirement. She should

she should begin moving her investments into dividend paying stocks and interest paying bonds.

The policy holder is

the person who owns the policy.

Match the term with its description. 1. credit reporting agency 2. installment loan 3. credit 4. credit report 5. mortgage

1. Equifax, Trans Union, or Experian 2. credit broken into equal monthly payments, usually for a large purchase like and auto or furniture 3. buy now and pay later with interest 4. document provided detailing a person's borrowing and repayment history 5. installment loan for a house, commercial building, or other real estate

Match the credit related terms with their descriptions. 1. annual fee 2. credit limit 3. APR 4. grace period 5. late penalty

1. a fee charged each year for acquiring the credit card 2. the maximum amount of money that can be charged on a particular credit card 3. the cost of credit usually compounded daily 4. an interest free period between the date of purchase and the due date of the monthly bill 5. a fee for paying the credit card balance or minimum payment past the due date

Match the investment with its description. 1. mutual funds 2. stocks 3. certificates of deposits 4. bonds

1. a group of stocks and or bonds selected and managed by a professional manager sometimes preferred by professionals and workers too busy to manage their investments 2. shares or part ownership in a corporation or a company 3. a timed deposit that pays higher interest than a savings account but invokes penalties for early withdrawal 4. securities that lend money to government or corporations and pay interest

Before issuing a credit card or making a loan, a lender will establish the credit worthiness of a borrower according to the 3 C's. Match the C's with their descriptions. 1. Lenders may get employer verification or ask for income tax returns to determine if the borrower has sufficient income to pay the bill or loan. They will want to know how long the borrower has been at the present employment or in the business. 2. Lenders will examine credit reports and look at bill paying history to assess whether the person is reliable and dependable. They look for a high credit score. 3. Lenders want to know if borrowers have valuable assets such as real estate or investments that can be used to pay off the loan if the borrower loses his/her job or source of income. Correct match:

1. capacity 2. character 3. collateral

Match the type of stock with its description. 1. growth 2. common 3. income 4. preferred

1. have earnings growing at a faster rate than the market average. They rarely pay dividends and investors buy them in the hope of capital appreciation. A start-up technology company is likely to be a growth stock. 2. stock entitles owners to vote at shareholder meetings and receive dividends. 3. stockholders usually don't have voting rights but they receive dividend payments before common stockholders do, and have priority over common stockholders if the company goes bankrupt and its assets are liquidated. 4. pay dividends consistently. Investors buy them for the income they generate. An established utility company is likely to be an income stock.

Match the types of insurance with their descriptions. 1. Health Insurance 2. Automobile Insurance 3. Renters Insurance 4. Life Insurance 5. Disability Insurance 6. Homeowners Insurance

1. pays for medical care 2. pays for damages if the insured causes an accident or if the vehicle is damaged at no fault of the individual and no one else can be held liable 3. covers the belongings of an individual and liability in an apartment or house where he/she is a tenant 4. provides money to one's family at the time of death 5. provides income for a period of time if a person is unable to work due to illness or injury 6. insures a house or condominium in the case of accidental damage and destruction, may cover homeowner liabilities

Match the term with its description. 1. income 2. salary 3. earnings 4. paycheck 5. wages

1. wages, salaries, profits, interests payments, rents and other forms of earnings received... in a given period of time 2. set payment for services, not an hourly rate, but usually stated in annual terms 3. income, wages, and profits 4. given to an employee weekly, bi weekly, or monthly. The stub shows deductions and withholding. It may be deposited electronically. 5. the amount or hourly rate workers get paid by employers