Personal finance Midterm

Diversification is important in investing because...

it helps you to balance your risk across different investment types

The main trade-off that all investors must consider is:

risk vs. reward

When you gamble, you need to make sure you NEVER:

spend money that is budgeted for your monthly expenses

What is "probability"?

the likelihood that something will happen

Which piece of information is most useful to an identity thief?

your full name and social security number

hat is the difference between a "not-for-profit" and a "for-profit" organization?

"not-for-profit" means the money that an organization earns goes to the organization to help it achieve its purpose rather than going to stockholders.

Isaiah needs to visit the doctor. The cost of the appointment without insurance is $200. Isaiah has an insurance plan through his employer with a $50 premium and $20 co-payment. How much will Isaiah have to pay his doctor?

$20

Being charitable can:

. Improve your health, improve your self-confidence and help you become more satisfied with your life.

Use Figure 3 to answer the following: What is the annual fee for this card?

0$

You legally declare you can't pay your bills. This is a definition of what?

Bankruptcy.

What is a main reason that many people end up in trouble financially and see bankriptcy as thier only option?

Because they have poor budgeting skills they do not know how to manage their money.

Which statement is most correct when choosing to rent or buy a home?

Buy or rent a home based on your individual circumstance

You owe $2300 on your motorcycle. What type of debt is this?

Secured debt.

If youre debt is increasing, regardless of your payments and you are in danger of losing your home. What should you do?

Seek counseling from a bankruptcy attorney.

How often are you entitled to a free credit report from each of the major credit reporting companies?

Yearly

What age do you have to be to start donating to charitable organizations?

You can donate at any age.

Which of the following drivers will likely pay the highest auto insurance premium?

Younger, inexperienced drivers

The period before you have to begin repaying your stuent loans is know as the:

grace period

Which type of bank account typically offers no interest?

Checking

Which of the following steps best protects your credit history if you suspect fraud?

Contact the credit bureaus and report suspected fraud

Which of the following typically has the lowest fees or costs to use?

debit card

Use the rule of 72 to calculate how long it will take for your money to double if it's earning 6% in interest:

12 years

Use Figure 3 to answer the following: What is the customary APR on purchases after the initial 12 months?

18.25%

Which of the following statements is most correct? a. A benefit of owning a home is that it is easier to move. b. A benefit of renting a home is that you can move out whenever you want. Selected: c. A benefit of owning a home is that the value may appreciate. This answer is correct. d. A benefit of renting a home is that you can make renovations to the home.

A benefit of owning a home is that the value may appreciate

The term referring to the rate of yearly interest for your credit card is commonly known as:

APR

By what date must federal taxes typically be filed and sent to the IRS?

April 15

Asim earns $250 per month. Which statement below is most correct?

Asim spends more than she makes.

The form filed by students to receive federal financial aid for school is known as:

FAFSA

Which of the following is an advantage of federal student loans?

Federal student loans have a fixed interest rate.

You are a person mistakenly believes you have a better chance to win really big if you just keep on gambling. What is that belief called?

Gamblers Fallacy

Which of the following typically have the highest fees?

Payday Lender

Which choice shows people who are LESS likely to be hurt by gambling?

People who budget money for gambling as they budget money for other entertainment, and stick with that budget

Whihc of the following provides the best protection against identity theft?

Shred documents that contain personal information

Borrowing a subsidized federal student loan means:

The government will pay the interest on the loan until 6 months after you graduate.

Which of the following could potentially damange your credit score? Selected: a. Ignoring a late payment notice This answer is correct. Selected: b. Paying a credit card bill late This answer is correct. c. Opening a checking account Selected: d. Opening 3 credit cards at once This answer is correct. e. Paying a roommate back f. Paying a speeding ticket

a. Ignoring a late payment notice b. Paying a credit card bill late d. Opening 3 credit cards at once ]

Check all that apply) Which of the following should you take into consideration when deciding to buy or lease a car? Selected: a. Your monthly budget This answer is correct. Selected: b. Down payment This answer is correct. Selected: c. cost of the car This answer is correct. Selected: d. Monthly loan payment This answer is correct. Selected: e. Your current savings This answer is correct. f. Car interior and features

a. Your monthly budget b. Down payment c. cost of the car d. Monthly loan payment e. Your current savings

Check all that apply) Good credit is usually required for which of the following? Selected: a. buying a new car This answer is correct. Selected: b. buying new furniture This answer is incorrect. Selected: c. Getting a credit card This answer is correct. d. Adopting a pet Selected: e. Renting an apartment This answer is correct. Selected: f. Purchasing a home

a. buying a new car b. buying new furniture c. Getting a credit card e. Renting an apartment f. Purchasing a home

If people know the changes of making a profit when they gamble is very, very small, why do they keep gambling?

a. for some people, gambling is fun and a good form of entertainment. b. Some people don't understand how bad the odds are when you gamble. c. gambling companies do a great job of marketing and encouraging people to believe they can really win big. Selected: d. all of the above.

Which form is your employer required to send to you before you file your tax return?

a. w-2

(Check all that apply) Which of the following are examples of types of savings vehicles? a. Savings Account Selected: b. Certificate of deposit (CD) This answer is correct. Selected: c. Money market Account This answer is correct. Selected: d. Checking Account

b. Certificate of deposit (CD) This answer is correct. Selected: c. Money market Account This answer is correct. Selected: d. Checking Account

Use Figure 2 to answer the following: The first set of numbers (74894934) on the check represent the:

bank routing number

Who should you contact first if you are having difficulties making your monthly payments on time but are not yet in "default"?

bankruptcy attorneys.

When buying a stock in a company, you are:

buying a portion of a company

Use Figure 2 to answer the following: The set of numbers (101) on the top-right of the check represents the:

check number

Which will most benefit you financially? a. A savings account that does not compound interest Selected: b. A savings account that compound interest yearly This answer is incorrect. c. A savings account that compound interest monthly d. A savings account that compound interest daily

d. A savings account that compound interest daily

What are the responsibilities of a renter versus an owner?

d. An owner of a house has complete responsibility and control over the property.

When should you file for Chapter 7 bankruptcy? a. When you have consulted a debt counseling service. b. When you are hopelessly in debt, have no chance of paying your bills, and need your debts discharged. c. When you have consulted a bankruptcy attorney. d. Only if A, B, and C have taken place.

d. Only if A, B, and C have taken place.

According to consumer advocates many debt settlement companies are scams. Which of the following would indicate that a debt settlement company may not be a good one? a. The debt settlement company is more interested in collecting fees than in helping you with your specific debt problem. b. The debt settlement company promises to get you out of debt in just a few short months. c. The debt settlement company listens to your debt problems and gives you a sensible plan to help you with your financial problems. Selected: d. Both A and B

d. both a and b

Your credit history is tracked by all of the following EXCEPT: Selected: a. Trans Union This answer is incorrect. b. Experian c. Equifax d. federal reserve

d. federal reserve

When you pruchase a municipal bond, you are:

loaning money to a municipality