Money Matters Final Exam

Which of the following statements is TRUE about the value of a college degree? A high school graduate can expect to earn about the same as a college graduate Every college graduate can expect to have a starting salary over $60,000 right after college A college graduate can expect to earn, on average, more than a high school graduate over a career A college graduate typically earns less than someone with a high school diploma for the first 10 years

A college graduate can expect to earn, on average, more than a high school graduate over a career

What kinds of behaviors can PREVENT people from making smart investing decisions? Staying calm when the market is experiencing a downturn Buying stocks when prices are low and selling them when they're high Exiting the market because that's what everyone else is doing Investing in a diversified portfolio instead of trying to beat the market

Exiting the market because that's what everyone else is doing

Which repayment option does not accrue interest while your required payments are paused? Consolidation Deferment Refinancing Forbearance

Deferment

Each of the following organizations offers grants to college students EXCEPT... the federal government colleges private companies FAFSA

FAFSA

Which of the following statements about Exchange Traded Funds (ETFs) is TRUE? ETFs are traded once a day after the market closes An ETF is a single stock that you can buy in the stock market Actively managed ETFs have very low fees ETF prices can change throughout the day as they are exchanged on the market

ETF prices can change throughout the day as they are exchanged on the market

Reading through a credit card's Schumer Box, you see the APR for a specific card is set at 9.99% - 23.99%. Which statement is true? When given a range of APRs like this, you can assume most cardholders pay the lowest rate listed Your APR will be within that range, depending on the strength of your credit history In this case, you want the highest APR in the range because you'll earn more The APR on credit cards is usually fixed, so it won't be adjusted as long as you are a cardholder

Your APR will be within that range, depending on the strength of your credit history

A loan with a shorter term length will have __________ monthly payments, and you will pay __________ in total interest. The shorter your term length, the _______ your monthly payments, and the _______ total interest you will pay. higher, less, higher, less higher, more, higher, more lower, less, lower, less lower, more, lower, more

higher, less, higher, less

You will find each of the following pieces of information on your Student Aid Report (SAR) EXCEPT... a record of the answers you submitted on your FAFSA your Expected Family Contribution (EFC) your eligibility for federal student aid a record of all scholarships you have applied for

a record of all scholarships you have applied for

In order to qualify for financial aid, which application must you submit? FAFSA PLUS EFC SAR

FAFSA

Your renter's insurance policy costs $20/month and has a $1,000 deductible. A thief breaks into your apartment and steals your $800 TV set. How much would your insurance company pay? $0 $200 $800 $1,000

$0

Frank has an auto policy with a coverage limit of $30,000 and a deductible of $1,000. He gets into an accident and the damages to his car total $6,200. Fortunately, he has collision coverage. How much will Frank need to pay out-of-pocket? $0 $1,000 $6,200 $30,000

$1,000

Sam is 22, just started his first full-time job, and is selecting his investments through his company's 401(k) plan. Why might a target date fund (TDF) be a good option for Sam? A TDF is actively managed by a fund manager but comes with low fees A TDF buys a single stock and bond so that beginner investors can practice day trading A TDF is insured by the federal government, so Sam's money is protected even if the fund performs poorly A TDF will automatically adjust his asset allocation based on the retirement year he has chosen

A TDF will automatically adjust his asset allocation based on the retirement year he has chosen

How is a bond different from a stock? A bond is a loan you give to an organization while a stock is partial ownership in a company Bonds are typically riskier than stocks but have the potential to earn higher returns Bonds are usually issued by smaller startup companies while stocks are issued by well established organizations Bonds are best for earning high returns while stocks are best for providing a stable source of income

A bond is a loan you give to an organization while a stock is partial ownership in a company

Which BEST describes what is meant by a health insurance marketplace? An online directory that lists doctor and hospital contact information The portal you use to register for employer-sponsored group plans A federal- or state-run website with the individual health insurance plans available in a given state Any doctor's office or hospital that shares a physical location with other medical providers

A federal- or state-run website with the individual health insurance plans available in a given state

Your parents tell you that on your 22nd birthday, they would like for you to get your own health insurance. You are very healthy, are not taking any prescription medicines, and generally only see your doctor for your annual physical. What type of health insurance is likely to be best for you? A low deductible plan with a high monthly premium A high deductible plan with a low monthly premium Your parents MUST keep you on their plan. They cannot legally remove you. You do not need health insurance because you are healthy

A high deductible plan with a low monthly premium

Amy and Chuck each buy a house in the same neighborhood for $250,000. Amy's monthly mortgage payment is $400 more per month than Chuck's. Which one of the following statements could explain this difference? Amy chose a shorter term for her mortgage, so her monthly payments are higher Amy made a larger down payment, so her monthly payments are also larger Chuck chose a shorter term for his mortgage, so his monthly payments are also lower Chuck has a lower credit score, so his interest payments are also lower

Amy chose a shorter term for her mortgage, so her monthly payments are higher

Bruce has just graduated from college and decides that instead of paying for insurance, he'll work on building up his emergency fund. This way, if something goes wrong, he can just pay for it using cash. Why is this a risky idea? It is mandatory to have auto, health, life, disability, and renters/home insurance, so he'll have to pay 5 penalties per year for not enrolling in these insurance types An accident or illness can strike at any time and be quite expensive, so it's possible he'd need a big sum of money well before his emergency fund was large enough Having insurance not only protects you financially, but also physically, so he'll be less likely to experience illness or accident if he has insurance The sooner he starts paying for insurance, the sooner he will reach his maximum lifetime requirement and can stop paying altogether for coverage

An accident or illness can strike at any time and be quite expensive, so it's possible he'd need a big sum of money well before his emergency fund was large enough

Which of the following is most likely to represent a fixed rate, secured debt? A student loan A credit card A prepaid debit card An auto loan

An auto loan

As you make decisions during college, you should focus on... Minimizing your student loan debt at all costs Having fun, because you're only in college once Focusing entirely on your studies to maximize your GPA Balancing your academic, social, and financial decisions to make the most out of the entire experience while setting yourself up for success post-college

Balancing your academic, social, and financial decisions to make the most out of the entire experience while setting yourself up for success post-college

Which term refers to the percentage of covered medical expenses you are responsible for paying after your deductible is met? Deductible limit Premium Out-of-network fees Co-insurance

Co-insurance

Insurance companies make money by... Refusing to pay out claims to policyholders Collecting money from the government Collecting more in premiums than they need to pay out each year Keeping costs low with minimal advertising

Collecting more in premiums than they need to pay out each year

Which of the following statements is TRUE about compound interest? Compound interest is difficult to calculate, so those who use it earn higher profits for their efforts Compound interest means you have a fund manager who is compounding your returns without charging a fee Compound interest allows you to earn interest not only on the amount you have saved, but also on the interest you've already earned Compound interest directly impacts how much you will be charged in fees

Compound interest allows you to earn interest not only on the amount you have saved, but also on the interest you've already earned

Someone broke into Sam's car by smashing the passenger window. Which type of auto insurance coverage will help cover the cost to get the window replaced? Bodily injury liability Property liability Collision Comprehensive

Comprehensive

When loans are amortized, monthly payments are _______ , while the amount of your monthly payment applied to interest ________ and the amount of your monthly payment applied to the principal _______ over time. Constant, Increases, Increases Constant, Decreases, Increases Variable, Decreases, Increases Variable, Decreases, Decreases

Constant, Decreases, Increases

Katrina works for Penny's Pickles, which offers a 401(k) match for up to 3% of her salary, which is $65,000 per year. In her budget, she only has $150 per month available to save for retirement. What should she do? Opt out of the 401(k) plan since she doesn't have much to contribute; use the money elsewhere in her budget Contribute $75/mo to her 401(k) and $75/mo to an IRA, so that she's diversified Save the $150/mo in a bank account until she has enough to max out her 401(k), and then invest Contribute the full $150/mo to the 401(k) because her company will match that full amount, "doubling" her investment every month

Contribute the full $150/mo to the 401(k) because her company will match that full amount, "doubling" her investment every month

Why is diversification a recommended investment strategy? Investing in a diversified portfolio guarantees that you won't lose money with your investments If you tell your fund manager to use diversification, they'll charge you lower fees Diversifying your portfolio helps reduce risk If you diversify your portfolio, you will definitely earn a high return

Diversifying your portfolio helps reduce risk

What is one question an investor should ask when deciding whether or not they would like to open a Roth IRA or a Traditional IRA? Do I want to make a guaranteed return of 6% or 8%? Do I want to pay taxes now or later? Do I want to take advantage of my employer's matching contribution? Do I want to take on more or less risk?

Do I want to pay taxes now or later?

Which of the following is a characteristic of dollar-cost averaging? Dollar-cost averaging is a way to decrease your risk Dollar-cost averaging is a strategy that only expert investors use Dollar-cost averaging is advantageous because earnings are untaxed Dollar-cost averaging is offered exclusively through robo-advisors

Dollar-cost averaging is a way to decrease your risk

During a period of financial hardship, you can apply for this to pause student loan payments while interest still accrues... Grace period Grants and scholarships FAFSA Forbearance

Forbearance

What types of money are used in paying for college and in what order should you use them? Your money, borrowed money, free money Borrowed money, your money, free money Your money, free money, borrowed money Free money, your money, borrowed money

Free money, your money, borrowed money

Which of the following ways to pay for college is MOST likely to be based on someone's financial need? Direct PLUS Loans Grants Scholarships Federal Subsidized Loans

Grants

Finn moves from a rented apartment into his very first house. What should he expect regarding the cost of homeowners insurance compared to renters insurance? He will not need homeowners insurance, because owning a home is less risky than renting His homeowners insurance will be LESS expensive than his renters insurance was His homeowners insurance will be the same cost as his renters insurance was His homeowners insurance will be MORE expensive than his renters insurance was

His homeowners insurance will be MORE expensive than his renters insurance was

Which of the following statements is CORRECT about secured loans? They are a good choice to use for student loans If the borrower does not make payments, the lender can repossess the item In the event of default, the borrower loses nothing except for the down payment They usually have higher interest rates as compared with unsecured loans

If the borrower does not make payments, the lender can repossess the item

Which of the following statements is TRUE about auto insurance premiums? If you have an auto insurance policy and don't get into a car accident or file any claims for a year, you get your premiums back from the insurance company If you have an auto insurance policy and get into multiple accidents within one year, your premium amount will decrease Auto insurance premiums are a fixed price across all insurance companies If you have an auto insurance policy and get into multiple accidents within one year, your premium amount will increase

If you have an auto insurance policy and get into multiple accidents within one year, your premium amount will increase

Medicaid generally provides insurance for which of the following groups of people? The elderly or disabled Individuals in low-income households Anyone who wants to buy coverage from the Marketplace Employees who have a government position

Individuals in low-income households

How does investing in the stock market differ from putting money in a savings account at a bank? Investing is always a less risky option than saving Investing is best for short-term situations like emergency funds; saving is best for the long-term Investing typically earns between 1-2% while saving generally earns between 5-7% Investing allows you to accumulate wealth for retirement while saving is best for short-term purchases or emergencies

Investing allows you to accumulate wealth for retirement while saving is best for short-term purchases or emergencies

Which of the statements below BEST describes the relationship between risk and return when considering an investment? Investors expect to earn a lower return when they invest in a high risk asset Investors expect to earn a higher return when they invest in a low risk asset Investors expect to earn a higher return when they invest in a high risk asset Investors expect to earn zero return when investing in a low risk asset

Investors expect to earn a higher return when they invest in a high risk asset

An actively managed mutual fund... Generally has lower fees than a passively managed index fund Is managed by a fund manager who charges a fee Always performs better than an index fund Is a mix of two types of stocks and two types of bonds to diversify your portfolio

Is managed by a fund manager who charges a fee

Although it's not a type of financial aid, how can transferring credits from a community college help save you money on college costs? It reduces amount of credits you'll have to pay for at your 4-year college Colleges will pay you for any credits transferred from a community college The cost of community college credits can be deducted on your taxes Transferring credits from a community college makes you eligible for lower interest rates when taking out federal student loans

It reduces amount of credits you'll have to pay for at your 4-year college

Keith's tuition, room & board, and fees for freshman year total $26,000. Including scholarships, grants, and federal student loans, his financial aid package is $25,500. Which option below is both realistic and the most financially responsible? Keith's financial aid package covers all of his necessary costs, so there is no need for him to do anything else Keith should take out a private loan and limit himself to $8000 in other expenses freshman year Keith should pick up a part-time job to cover his remaining costs and personal expenses Keith should not attend this college because he cannot afford it

Keith should pick up a part-time job to cover his remaining costs and personal expenses

Which of the following insurance coverage options would be the lowest priority for a typical single person, with no children, 1-2 years out of high school? Health Insurance Auto Insurance (if they have a car) Life Insurance Renter's Insurance (if they are renting an apartment)

Life Insurance

Lula's got a pet dog, for whom she bought an accident and illness pet insurance policy three months ago. The dog steps on a mouse trap set out by neighbors and needs his first vet services of the year, totaling $800. Lula's deductible is $1000, her reimbursement rate is 75%, and her coverage limit is $15,000. How much does Lula pay, and how much does the insurance pay? Lula pays $0, the insurance pays $800 Lula pays $200, the insurance pays $600 Lula pays $600, the insurance pays $200 Lula pays $800, the insurance pays $0

Lula pays $800, the insurance pays $0

Your school counselor is a great resource for all of the following EXCEPT... Providing information about scholarships and grants you wouldn't be able to find elsewhere Negotiating lower interest rates with your lenders Suggesting specific scholarship and grant opportunities based on your personal strengths and accomplishments Comparing different colleges, their costs of attendance, and financial aid offers

Negotiating lower interest rates with your lenders

Typically, when should you first file the FAFSA? After you finish freshman year of high school October or November of your last year of high school After you receive your Student Aid Report Once you are ready to start repaying your student loans

October or November of your last year of high school

Denise took out a payday loan for $300 in August. By February of the next year, she was able to pay back the loan, but she had spent a total of $750 doing so. What's the most likely story of how this happened? The minimum monthly payment for payday loans is usually only $10 or $15, so a lot of interested accumulated Upfront, Denise knew there would be $450 of fees attached to the loan, but she took out the loan anyway Payday loans must be paid in full within two weeks, and if not, the only option is to renew the loan for a high penalty fee, which she did approximately 12 times Denise not only paid the $300 she owed, but she prepaid an extra $450 in case she needs another loan in upcoming months

Payday loans must be paid in full within two weeks, and if not, the only option is to renew the loan for a high penalty fee, which she did approximately 12 times

Why are payday loans so much easier to qualify for than traditional bank loans? Payday loans are only used by affluent households, and the banks know they have enough money to cover them Payday loans are just another word for direct deposit, and almost all employers offer their employees direct deposit instead of a paper paycheck Payday loans require proof of employment or other regular income but not a credit check Payday loans are typically for such small dollar amounts that no one cares if you repay them or not

Payday loans require proof of employment or other regular income but not a credit check

Nancy is new to investing and is eager to get started. All of the following are things she should do EXCEPT... Invest in a low cost index fund Estimate how much she will need for retirement to determine how much she needs to invest each month Pick individual stocks to see if she can beat the market Invest in a diversified portfolio

Pick individual stocks to see if she can beat the market

Taylor is about to go car shopping, and she has $5000 saved that she can use for a down payment while still having extra cash in her emergency fund. She expects the exact model car she's looking for to cost $35,000. If her top priority is having the lowest monthly payments possible, which advice should she follow? Put in $0 for your down payment, and choose a loan with a short term length Put in $2500 for your down payment, and choose a loan with a short term length Put in $3500 for your down payment, and choose a loan with a long term length Put in $5000 for your down payment, and choose a loan with a long term length

Put in $5000 for your down payment, and choose a loan with a long term length

An excellent credit score will help with which aspect of car financing? Bargaining for a great sales price Receiving a large down payment Qualifying for a low interest rate Having a wide selection of term lengths

Qualifying for a low interest rate

Insurance companies operate by charging individuals different prices for coverage depending on their risk levels. Then, they collect everyone's monthly premiums together and use the money to make payments when people file a claim (for example, someone is in an auto accident or needs to see a doctor). This concept is known as... Comprehensive coverage Risk pooling Underwriting Risk management

Risk pooling

Sanjana is explaining what Social Security is to her younger brother. Which of the following descriptions should she use? Social Security is a type of retirement savings plan that you can open through a brokerage firm Social Security is a government program that pools contributions from current workers to fund retirement support benefits to those who are eligible Social Security is a type of retirement savings plan offered by some employers Social security is a government mandate that requires employers to offer their employees a 401(k) or pension plan

Social Security is a government program that pools contributions from current workers to fund retirement support benefits to those who are eligible

Which of the following is the default federal student loan repayment plan college graduates are entered into, requires the same minimum payment for the life of the loan, and ensures the borrower will pay the loan in full in ten years? Standard repayment plan Graduated repayment plan Extended repayment plan Income-driven repayment plan

Standard repayment plan

Which of the formulas below correctly calculates net price? Sticker price - student loans = net price Grants and scholarships + student loans = net price Sticker price - grants and scholarships = net price Sticker price + grants and scholarships = net price

Sticker price - grants and scholarships = net price

In general, how do insurance companies decide how much to charge an individual for their monthly premiums? The company assesses the individual's risk factors and assigns higher premiums to higher risk individuals The company looks at the individual's tax filings from the previous year to assess overall wealth and ability to pay The company charges the same premium for every individual eligible for coverage The company increases or decreases premium rates based on the stock market

The company assesses the individual's risk factors and assigns higher premiums to higher risk individuals

Which of these statements best explains why it's often a good idea to pay more than the monthly amount due on an amortized loan? Every time you pay extra, the lender will reduce the interest rate they're charging by a small amount The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly The extra payment will be applied to the interest you owe, which will reduce the overall cost of your loan Amortized loans typically have much higher interest rates than credit cards, so they're the best place to put your extra cash

The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly

As a result of completing the FAFSA, you get a student aid report that indicates your EFC is $10,000. What does this mean? You can expect to receive $10,000 in grants from the federal government to pay for college You should only apply to schools that cost $10,000 or less You can expect to receive $10,000 in loans from the federal government to pay for college The government expects that your family can contribute about $10,000 to the cost of your education

The government expects that your family can contribute about $10,000 to the cost of your education

Which of the following is a benefit of an income-driven repayment plan? Theoretically, your payment should never be more than you can afford You will pay the least amount of interest over the life of the loan when compared to other loans They're structured to be paid off in 5-10 years Even if you start to make more money, your monthly payments won't change

Theoretically, your payment should never be more than you can afford

Why are Index Funds such a popular investing option? They are a mix of 2-3 individual stocks that can help you diversify your portfolio They provide a low-cost, diversified investment option that closely matches the overall return of a given index, such as the S&P 500 They are actively managed by a fund manager They are managed by robo-advisors that guarantee higher returns than the overall stock market

They provide a low-cost, diversified investment option that closely matches

How can someone make money from investing in a stock? They sell the stock for a lower price than what they bought it for They receive dividends or they sell the stock at a higher price than what they bought it for The stock loses value but the overall market experiences a positive return They sell the stock for the same price they bought it for

They receive dividends or they sell the stock at a higher price than what they bought it for

Which of the following is considered a direct cost of attendance? Travel expenses Cell phone bill Tuition Food and entertainment

Tuition

Who is eligible to receive Direct Subsidized loans? Graduate students Professional students Undergraduate students Students enrolled less than half-time

Undergraduate students

What is an advantage of using a credit card? It will not affect your credit score or credit history Since it is tied directly to your checking account, it prevents you from spending money you do not have If you need to carry a balance, the interest rates are generally quite low (less than 5%) You can make an emergency purchase that you otherwise don't have the money to pay for right now

You can make an emergency purchase that you otherwise don't have the money to pay for right now

A disadvantage of using a robo-adviser might be that... You are charged higher fees than if a human fund manager adjusted your portfolio You may not be able to get advice from a human financial advisor when you want it You don't have any input as to how your portfolio is invested You'll be put on a waitlist to use the robo-adviser since there are only a handful of them to choose from

You may not be able to get advice from a human financial advisor when you want it

As a shareholder in a public company, what are the benefits available to you? You may receive dividends from the company, if the company pays them, and you have ownership of a portion of the company You must receive dividends from the company (all companies must pay them) and you can select members of the management team (e.g., the Chief Executive Officer (CEO)) You can select members of the management team [e.g., the Chief Executive Officer (CEO)] and vote for members of the Board of Directors You have ownership of a portion of the company and receive coupon payments from the issuer

You may receive dividends from the company, if the company pays them, and you have ownership of a portion of the company

Why is it important for you to understand your risk tolerance before you start investing? It helps you decide if you want to participate in your employer's match program for your 401(k) It's recommended that people with a low risk tolerance shouldn't invest at all If you have a high risk tolerance, you may be eligible for lower fees since you won't care if your portfolio drastically loses value You should tailor your investment portfolio so that it assumes an amount of risk you are comfortable with

You should tailor your investment portfolio so that it assumes an amount of risk you are comfortable with

Your employer offers an employer-sponsored health insurance plan. Which of the following statements is TRUE? You can only see doctors who are also employees of the same company Your health insurance premiums will be paid directly from your paycheck, pre-tax Your employer cannot fire you if you get sick or injured because you have employer-sponsored health care You can remain on that health insurance plan even if you switch jobs

Your health insurance premiums will be paid directly from your paycheck, pre-tax

When setting your premium, your car insurance company may consider each of the following EXCEPT... How many miles you drive per year Your age Your driving record Your height

Your height

What is an insurance premium? Your monthly payment to your insurer, regardless of whether you use any services A list of the procedures covered by your insurance carrier An added cost you pay in order to receive higher-quality services The amount you pay out-of-pocket for a specific procedure or service

Your monthly payment to your insurer, regardless of whether you use any services

Each of these is considered an "out-of-pocket" expense EXCEPT... Your monthly premium A copay of $15 to fill a prescription A $1000 deductible if you're in an auto accident Excess bills from a car accident once you've gone over your maximum coverage limit

Your monthly premium

Duc has a credit card with a $1000 credit limit. His outstanding balance is currently $800. What is the maximum amount he can now spend on this credit card? a. $200 b. $800 c. $1000 d. $1800

a. $200

Your health insurance plan has a $20 copay for certain covered prescription medications. You arrive at the pharmacist and pick up your prescription (which is covered under your plan) which has a list price of $75. How much would you pay the pharmacy? $0 since health insurance plans waive the cost of prescription drugs $20 $55 $75

$20

You cause an accident and injure the other driver. The case goes to trial and there is a verdict to compensate the injured person with $58,000. You have a $75,000 coverage limit per person for Bodily Injury. How much will the insurance company pay? $0 $17,000 $58,000 $75,000

$58,000

The average APR for a payday loan is closest to ... 4% 14% 40% 400%

400%

Which of the following accurately describes a difference between an individual bond compared to a bond fund? A bond pays you dividends while a bond fund pays you regular interest A bond guarantees you a higher rate of return than a bond fund A bond is issued by a company while bond funds only invest in government bonds A bond is considered to be a less diversified investment than a bond fund

A bond is considered to be a less diversified investment than a bond fund

Trudy tells her mom that she wants to buy a house within two years of graduating from college. Her mom says Trudy will need a down payment first. What is a down payment? A large sum of money you pay when taking out a mortgage so that the principal of your loan is smaller A specific type of tax advantaged bank account used for saving money to buy a house The first year's worth of property taxes, held in reserve A prepayment to a real estate agent so that they will start helping you house hunt

A large sum of money you pay when taking out a mortgage so that the principal of your loan is smaller

A standard renters insurance policy would cover each of the following EXCEPT... A small TV and some sneakers, stolen in a robbery A new window when a baseball breaks the original one A lawsuit brought when a visitor hits their head on a low hanging light fixture A week of hotel reservations when the tenant has to move out due to fire damage

A new window when a baseball breaks the original one

Which of the following is true about fixed and adjustable-rate mortgages? Fixed-rate mortgages have a constant payment every month, but an interest rate that increases throughout the term of the loan Fixed-rate mortgages have a fixed interest rate for a few years, after which time the interest rate fluctuates according to general market conditions Adjustable-rate mortgages have a fixed interest rate for a few years, after which time the interest rate fluctuates according to general market conditions The two mortgages work the same way but are called different names depending if they come from a bank or a credit union

Adjustable-rate mortgages have a fixed interest rate for a few years, after which time the interest rate fluctuates according to general market conditions

Shira is trying to decide between getting a debit card, a prepaid debit card, and a credit card. Which statement is true? All 3 cards are completely different Debit cards and prepaid debit cards are the same Debit cards and credit cards are the same All 3 cards are completely the same

All 3 cards are completely different

Which of these options lists the types of financial aid from MOST attractive to LEAST attractive? Private loans, Federal loans, Work-study, Grants/Scholarships Grants/Scholarships, Work-study, Federal loans, Private loans Work-study, Grants/Scholarships, Federal loans, Private loans Federal loans, Grants/Scholarships, Work-study, Private loans

Grants/Scholarships, Work-study, Federal loans, Private loans

Why would someone choose to get long term disability insurance even if they already have health insurance? Long term disability only covers medical bills, while health insurance will help compensate for lost work with 40-60% of their income Long term disability insurance plans can also extend coverage to family members and pets Health insurance only covers regular check ups, while long term disability insurance also covers emergencies Health insurance only covers medical bills, while long term disability will help compensate for lost work with a percentage of their income

Health insurance only covers medical bills, while long term disability will help compensate for lost work with a percentage of their income

Daniel has saved $2,000 in a savings account that earns 0.5% interest annually. What will most likely happen to the purchasing power of his savings over time? His purchasing power will DECREASE because the interest rate is lower than the historical rate of inflation His purchasing power will INCREASE because the interest rate is higher than the historical rate of inflation His purchasing power will INCREASE because the interest will compound faster than the historical rate of inflation His purchasing power will remain the SAME because the interest rate is the same as the historical rate of inflation

His purchasing power will DECREASE because the interest rate is lower than the historical rate of inflation

What type of auto insurance are you required to carry in almost every state (49 out of 50)? Insurance if you damage your own property Insurance if you cause injury to another person Insurance in case you get into an accident with someone who does not have insurance Insurance if you cause injury to yourself

Insurance if you cause injury to another person

How much does it cost to file the FAFSA? It is free It is free the first time you file, but costs $9.99/year thereafter It is 2% of your total loan amount $50

It is free

Janelle's family earns about $60,000 per year. She has been accepted to College A and College B and is comparing their financial aid packages. College A has a sticker price of $28,000 and net price of $12,000. College B has a sticker price of $60,000 and net price of $9,000. Which statement below is FALSE? It will cost less to attend College A College B is providing Janelle more grants and scholarships College A has a lower sticker price than College B It will cost less to attend College B

It will cost less to attend College A

What is a brokerage account used for? It's an online portal that allows you to set up appointments with a fund manager It's the account you use to pay any taxes you owe on money you earned on your investments It's a type of account used to buy and sell stocks, bonds, and funds It's a special type of 401(k) plan that only some employers offer

It's a type of account used to buy and sell stocks, bonds, and funds

Select the statement below that accurately describes a characteristic of a credit card. You owe the same payment every month You must have money deposited into a checking account to use the credit card for purchases Making full payments on-time every month is the only way to avoid interest charges They do not charge interest

Making full payments on-time every month is the only way to avoid interest charges

Which of these credit payback strategies would lead to the HIGHEST overall cost? Paying off your credit card bill in full every month Paying 20% of your credit card balance every month on time Making the minimum payment (3% of your credit card balance) every month on time Making the minimum payment (3% of your credit card balance) every month with an occasional late payment

Making the minimum payment (3% of your credit card balance) every month with an occasional late payment

Geraldo reviews his brokerage statement and sees the following two mutual fund investments that he made a year ago. ActiveFund20 had an average return (before fees) of 7.0% per year and an annual fee of 1%. PassiveFund500 had an average return (before fees) of 6.5% per year and an annual fee of 0.1%. Which investment had a better return for Geraldo (net of fees)? ActiveFund20: It had an overall return of 8.0% while PassiveFund500 had an overall return of 6.6% PassiveFund500: It had an overall return of 6.6% while ActiveFund20 had an overall return of 8% ActiveFund20: It had an overall return of 7.0% while PassiveFund500 had an overall return of 6.5% PassiveFund500: It had an overall return of 6.4% while ActiveFund20 had an overall return of 6.0%

PassiveFund500: It had an overall return of 6.4% while ActiveFund20 had an overall return of 6.0%

ou bought 10 shares of stock in StreamingVideoCo for $45 per share. Two months later you sold the 10 shares of stock for $80 per share. What was your profit or loss on StreamingVideoCo stock? (Assume that StreamingVideoCo didn't pay a dividend and that you didn't incur any trading fees during that period.) Loss of $800 Profit of $350 Loss of $450 Profit of $800

Profit of $350

Which person will probably have the MOST expensive health insurance premiums? Julian, who has 3 children and is eligible for Medicaid Samantha, a widow who is eligible for Medicare Patty, who works as an administrative assistant for an employer with a group plan Robin, a high earning business owner who buys a plan for their whole family on the Marketplace

Robin, a high earning business owner who buys a plan for their whole family on the Marketplace

Which of the following is a good strategy to use when it comes to paying for college? Only report your own earnings and savings, not those of your parents, even if you live with them full-time See how much you can borrow in loans before applying for scholarships Spend the money that you earn from your summer job so you can get more financial aid Save your earnings from your summer job so that you can reduce the amount of loans you need to take

Save your earnings from your summer job so that you can reduce the amount of loans you need to take

If you are having trouble making auto loan payments and are really following a tight budget, which recommendation below represents the WORST advice? Find an extra source of income by taking a second job, working longer hours, or borrowing from family if they can afford to help Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control Continue making all payments and call your lenders and see if you can negotiate lower monthly payments, lower interest rates, or longer terms Explore whether a free or non-profit credit counseling service could help

Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control

The federal government makes interest payments on __________ while you're enrolled in school at least half-time, for the first six months after you leave school, and during any period of deferment. Work-Study Subsidized federal loans Unsubsidized federal loans Grants

Subsidized federal loans

As a young adult, all of the following are good strategies for building credit, EXCEPT: Open a credit card, with your parent or guardian as a cosigner Take out a payday loan Become an authorized user on a credit card used by your parent or guardian Open and use a secured credit card

Take out a payday loan

Credit card disclosure: "Your due date is at least 25 days after the end of the billing cycle. We will not charge you interest on new purchases provided that you have paid your previous balance in full by the due date each month." Identify the true statement. If you make the minimum payment on your card within the 25 day period, the credit card company will not charge you interest If you pay your previous balance in full after the due date, the credit card company will not charge you interest 25 days is an exceptionally long period without paying a credit card bill The 25 days after the end of the billing cycle is referred to as the grace period

The 25 days after the end of the billing cycle is referred to as the grace period

You buy a bond with a fixed coupon rate of 5%. A year later, similar bonds that are issued have a coupon rate of 3%. Which of the following is TRUE? The price of your bond will increase The demand for your bond will decrease The price of your bond will stay the same The interest rate for your bond will fall to 3%

The price of your bond will increase

Who receives and uses the information submitted in your FAFSA? Your employer to see if you'll still be able to work while attending college Your parents to keep track of your progress at college The federal government for tax purposes The schools you've applied to and your state government to determine your eligibility for financial aid

The schools you've applied to and your state government to determine your eligibility for financial aid

Why would credit card companies prefer that their cardholders make the minimum monthly payment every month rather than paying their total balance in full? This is required by federal law for tax purposes This allows the card holder to pay their bill quickly and close the card when they're ready This enables the credit card company to make more money This helps cardholders develop financial independence

This enables the credit card company to make more money

Which of the following statements comparing credit and debit cards is TRUE? Far more businesses accept credit cards than debit cards Credit cards pull money directly from your bank account, while debit cards get their money from Visa or Mastercard Credit card companies provide you with a monthly statement, while debit cards do not With debit cards, you're spending your own money at point of sale, but with credit cards, you're getting a loan that you need to pay back later

With debit cards, you're spending your own money at point of sale, but with credit cards, you're getting a loan that you need to pay back later