Personal Finance Test 2 lbot
You set up monthly recurring payments of $110.03, $45.66, and $22.87. How much will your recurring payments total over one year? a) $1,865.22 b) $2,142.72 c) $2,562.49 d) $3,452.94
b) $2,142.72
When you borrowed $50 from your rich cousin, and then had to pay her back $60, what is the original $50 called? a) Bribery b) Interest c) Principal d) Credit
c) Principal
A course that costs $500 will allow you to get a job that pays $2 more per hour than your current job. How many hours will you need to work at the new job before your investment in education has "paid off"? a) 20 b) 100 c) 150 d) 250
d) 250
You can order a copy of your credit report: a) Free online from www.annualcreditreport.com once a year from each of the credit reporting companies b) Free online from the Fair Isaac Corporation c) Only if you have good credit because this service is not available if you are a poor risk d) Only if you are applying for a credit card
a) Free online from www.annualcreditreport.com once a year from each of the credit reporting companies
To build up a good credit history, you should: a) Get a Social Security Number if you do not already have one b) Get as many credit cards as you can c) Always pay at least the minimum amount due on your credit card d) A and C
a) Get a Social Security Number if you do not already have one
You are told that your credit score of 650 is better than 40% of the population. Your neighbor has a credit score of 600. Which of the following could be true? a) His score is better than 30% of the population b) His score is better than 40% of the population c) His score is better than 50% of the population
a) His score is better than 30% of the population
The federal government: a) Is the national government of the U.S. that takes in taxes and funds such programs as maintaining interstate highways and the military b) Does not supply Social Security cards c) Is not allowed to tax income
a) Is the national government of the U.S. that takes in taxes and funds such programs as maintaining interstate highways and the military
It is important for goals to have accomplishment dates because: a) It is easy to put off long term goals and a deadline keeps you focused b) You will want to compare your success to other peoples' successes c) Bonus money always comes with meeting personal goals d) Career goals are based on interests and aptitudes
a) It is easy to put off long term goals and a deadline keeps you focused
Improving your credit score will let you get: a) Lower interest rates on loans b) Higher interest rates on savings accounts c) Neither of the above d) Both of the Above
a) Lower interest rates on loans
Tax refunds: a) Occur when a taxpayer's income tax withholding exceeds what they owe b) Come from extra money the federal government has left over at the end of the year, and are distributed around February 15 c) Come to taxpayers regardless of whether they file an income tax return or not d) Include interest paid to the taxpayer by the federal government based on holding that money throughout the tax year
a) Occur when a taxpayer's income tax withholding exceeds what they owe
Matt has $471.60 in his checking account and feels he's doing pretty well financially. Then his car stops running. His mechanic is able to fix it in a day, but with the towing charges, parts, and mechanic's labor, he now needs to pay the service center $624.11 so he can drive his car to work. Of the following choices, which is the best course of action for Matt? a) Pay the service center with his Visa credit card b) Pay the service center with his MasterCard debit card c) Write a check for $624.11 and hope the service center doesn't take it to the bank before next payday d) Call his employer to say he won't be able to come to work
a) Pay the service center with his Visa credit card
If your payment history counts for 35% of your credit score and the type of credit you use accounts for 10% of your score, which should you probably work harder on to improve your score? a) Payment history b) Types of credit you use
a) Payment history
A credit union: a) Requires membership, but in other respects is like a bank b) Can't keep savings accounts c) Never has interest rates as good as a bank d) Is only open to college students
a) Requires membership, but in other respects is like a bank
To balance your checkbook: a) Subtract any checks in your check register that are not marked as cleared b) Subtract any deposits in your check register that have not been marked as cleared c) Add the interest paid and bank charges to the register balance d) Add any checks in your check register that are not marked as cleared
a) Subtract any checks in your check register that are not marked as cleared
Your credit history tells: a) The history of your saving, borrowing, and repayment performance b) The history of your grade report cards c) The history of the formation of the Experian and Equifax companies d) The history of your parents' saving, borrowing, and repayment performance
a) The history of your saving, borrowing, and repayment performance
True or False: A job may require a specific training course to be completed. a) True b) False
a) True
True or False: Student loans often don't require you to start paying them back until after you've completed the course(s). a) True b) False
a) True
True or False: The federal government offers tax breaks for people saving for education. a) True b) False
a) True
You have a balance of $15,300 on your credit card with an 18% interest rate (1.5% per month). You pay $200 this month. Did your balance go up or down? a) Up b) Down c) Can't tell
a) Up
Your check register shows a balance of $565. Your last bank statement shows an ending balance of $715. All transactions match except for two outstanding checks for $100 and $50. Does your register balance with the statement? a) Yes b) No c) Can't tell
a) Yes
Online banking is probably not necessary if: a) You only have two checks per month and no automatic deposits b) You need to download your bank transactions into Quicken to help you keep track of your business expenses c) You have five automatic payments per month and your paycheck is automatically deposited d) You have a history of overdraft charges due to not knowing your balance
a) You only have two checks per month and no automatic deposits
By opting out of paper bank statements, your bank promises savings of $2 per month. How much will you save in a year? a) $12 per year b) $24 per year c) $36 per year d) $48 per year
b) $24 per year
Your checkbook shows a balance of $413. Your bank statement says you have $373. Assuming you are missing just one transaction, what is the amount of the transaction you are missing? a) $20 b) $40 c) $373 d) $413
b) $40
Oh no! Someone stole your credit card and charged $2,500 worth of purchases before you even knew the card was missing. How much of the unauthorized charges can you be required to pay? a) zero b) $50 c) $250 d) $2,500
b) $50
You have accumulated $85,000 in student loans that average 5% interest. You graduate next month and will be paying off the loans over 10 years. Which of the following is most likely to be your monthly payment assuming you pay interest and a portion of the principal each month? a) $37 b) $900 c) $117,500 d) $175,000
b) $900
You decide to become a neurosurgeon. After high school, you will need four years of college, four years of medical school, five years of residency and a two-year fellowship. Assume you graduate high school at 18. How old will you be when you finish training? a) 28 years old b) 33 years old c) 35 years old d) 38 years old
b) 33 years old
You receive three credit scores: 680, 705, 695. What is your average credit score? a) 690 b) 693 c) 695 d) 700
b) 693
An installment loan is: a) A credit card paid off right away b) A loan paid off in a certain amount of time, in installments, or equal payments c) When an item is paid for before it is picked up d) Always a positive item on a credit report, even if it was not paid off
b) A loan paid off in a certain amount of time, in installments, or equal payments
An online account transfer is: a) An online bill payment b) A transfer of money from one account to another conducted online c) An automatic payment of a cell phone bill from a credit card d) Moving from one MySpace page to another while online
b) A transfer of money from one account to another conducted online
Scholarships: a) Are only available once a student is enrolled b) Are available for residents of every state, all religious affiliations, and academic interest c) Are always applied for by the student alone without any help from the college or training program d) Are never as good of a deal as loans from the student's bank
b) Are available for residents of every state, all religious affiliations, and academic interest
Internships: a) Are always paid b) Can be paid or unpaid c) Can never turn into a paid position d) Always last for one year
b) Can be paid or unpaid
An ATM check card: a) Is exactly the same as an ATM debit card b) Can only be used to withdraw money that is in your account, not to overdraw your account c) Can overdraw your account if you make a store purchase beyond your current account balance
b) Can only be used to withdraw money that is in your account, not to overdraw your account
The penalty for not paying taxes owed: a) Can't be calculated if you do not file taxes b) Includes penalty fees and interest calculated starting April 15 of the year the taxes are owed c) Can be determined by the Social Security Administration even if withholding is not taken from your paycheck d) Will be $600 plus interest starting April 15 if you do not file a tax return, regardless of the amount of your wages
b) Includes penalty fees and interest calculated starting April 15 of the year the taxes are owed
You ran short of cash and borrowed $50 from your rich cousin. When you paid her back, she insisted that you owed $60. What is the extra $10 called? a) Bribery b) Interest c) Principal d) Credit
b) Interest
Overdraft protection: a) Is always a free service provided by banks b) Is like a credit card you don't use until your checking account gets below a zero balance c) Is always a waste of money because people don't bounce checks any more d) Should be bought by everyone, even if they always keep a significant amount of money in their account
b) Is like a credit card you don't use until your checking account gets below a zero balance
The W2 form: a) Reports interest from your bank to the IRS b) Is provided to you by your employer, and it lists total income and all tax withheld amounts c) Is provided by the IRS, and lists your tax paid for the year d) Keeps track of charitable donations made by cash or check outside of work
b) Is provided to you by your employer, and it lists total income and all tax withheld amounts
You have scheduled payments of $28.31, $34.56, and $19.12 coming up in the next week. Your current balance is $70.23. You do not expect any deposits. Will you have enough money in the account to cover the payments? a) Yes b) No c) Can't tell
b) No
What is the name of the leading provider of student loans, an organization founded in 1972 as a government sponsored agency, which is now a publicly traded company? a) Freddie Mac b) Sallie Mae c) Ginnie Mae d) FICA
b) Sallie Mae
Credit history includes: a) Library fines b) Savings and credit card accounts c) Being a good friend d) Only positive items, regardless of your borrowing past
b) Savings and credit card accounts
A savings account: a) Is no use in developing a credit history b) Should have your correct Social Security Number attached so that it helps your credit history c) Can be used to write checks and is a credit account d) Can only be opened once you are 18 years old
b) Should have your correct Social Security Number attached so that it helps your credit history
When paying bills online, a payee is: a) Someone who pays you b) Someone to whom you send a payment c) A middleman who relays a payment to another party
b) Someone to whom you send a payment
A paycheck has withholding tax taken out: a) If a person earns more than $600 a year b) That is paid to state and federal taxing authorities c) That is automatically refunded to workers even without filing a 1040EZ form d) That is always equal to $9.54
b) That is paid to state and federal taxing authorities
You are offered a choice between paying a flat tax (one rate on all income) of 20% on $44,000 of income and paying a graduated tax of the following schedule on the same income. Schedule: 10% on the first $25,000; 30% on your income over $25,000. Which is better for you? a) The flat tax b) The graduated tax c) Can't tell
b) The graduated tax
Which of the following is the best definition of a minimum payment on a credit card? a) A fee that must be paid whether the card is used or not b) The smallest payment that will keep a credit card holder in good standing with the lender c) The interest on the purchases that were made on the credit card d) A low introductory payment offered by the lender for a few months until the card holder has established good credit
b) The smallest payment that will keep a credit card holder in good standing with the lender
Phishing is: a) Using the telephone to intimidate bank customers b) Using a fake Web site or e-mail to intimidate someone into giving away personal information such as user names, passwords, or Social Security numbers c) An automatic transfer of money from one account to another d) What happens when your bank branch calls you to verify unusual purchases
b) Using a fake Web site or e-mail to intimidate someone into giving away personal information such as usernames, passwords, or Social Security numbers
A bank tells you that if you increase your credit score by 50 points, it will reduce your interest rate on your $10,000 car loan by 1 percent. How much will this save you in the first year? a) $1 b) $10 c) $100 d) $1,000
c) $100
You have two accounts with balances $450 and $35. You want to bring up the balance in the second account but do not want the balance of the first to drop below $215. How much can you transfer from the first to the second account? a) $35 b) $215 c) $235 d) $450
c) $235
The following transactions, in order, are expected to hit your checking account next month: $30 deposit, $20 withdrawal, $30 withdrawal, $40 deposit, and $50 withdrawal. What is the least amount you can have as a beginning balance without overdrawing the account? a) $10 b) $20 c) $30 d) $40
c) $30
You have a balance of $4,000 on your credit card with a 12% interest rate (1% per month). You plan to make no new purchases with the card. You want to reduce your balance to zero over the next year. Which monthly payment is most likely to accomplish this in 11 or 12 months? a) $100 b) $250 c) $400 d) $1,000
c) $400
Which of the following forms reports interest income earned on a savings account? a) 1040EZ b) 1099MISC c) 1099INT d) W2
c) 1099INT
You earned $34,000 and your total tax due was $6,200. What was your average tax rate? a) 8% b) 10% c) 18% d) 20%
c) 18%
You discover that every month that you make a loan payment on time, your credit score goes up 3 points. You want to raise your score from 640 to 700. How many months will it take you? a) 3 months b) 12 months c) 20 months d) 180 months
c) 20 months
Your current schedule only lets you take two 1-credit courses every six months. You need 12 credits to get the degree you want. How long will it take you to get the degree? a) 1 year b) 2 years c) 3 years d) 4 years
c) 3 years
You forgot to pay last month's credit card bill. Your creditor will probably: a) Cancel your account b) Send you a reminder to pay the bill c) Add finance charges and late fees to your bill d) Reduce your minimum payment
c) Add finance charges and late fees to your bill
Which formula best expresses your monthly ending balance? a) Beginning Balance + Withdrawals + Deposits = Ending Balance b) Beginning Balance + Withdrawals - Deposits = Ending Balance c) Beginning Balance - Withdrawals + Deposits = Ending Balance
c) Beginning Balance - Withdrawals + Deposits = Ending Balance
Payday loans: a) Are a cheap way to borrow money, since it is for such a short term b) Are available from your local bank branch c) Charge far more in interest than a typical credit card interest charge d) Are the best way for young students to build up a good credit rating
c) Charge far more in interest than a typical credit card interest charge
Your FICO score: a) Does not depend on your payment history b) Is better if you have not held credit accounts for very long c) Depends most on the amounts you owe and your payment history d) Depends most on new account information
c) Depends most on the amounts you owe and your payment history
A document showing that you have completed a course of study is called a: a) Resume b) Cover Letter c) Diploma d) Affidavit
c) Diploma
A good password: a) Is an easily remembered number such as your phone number or Social Security number b) Should be used for all your online accounts, including ones you share with friends c) Includes a combination of letters and numbers that are memorable and meaningful to you d) Should be written down in your wallet so you will have it wherever you go
c) Includes a combination of letters and numbers that are memorable and meaningful to you
Overdraft fees can be avoided by: a) Trying to keep a minimum balance of $10 in your account b) Going to the bank branch after being charged the fee and explaining that you meant to have more money in the account but forgot c) Knowing your account balance and what upcoming bills will be paid d) Having a cell phone bill that automatically re-ups your minutes without you being aware of how much money that will cost
c) Knowing your account balance and what upcoming bills will be paid
With online banking, you can: a) Access accounts that are not your own and transfer money into your own account b) Use a telephone to talk to a bank teller c) Pay bills, check your balance, and see if checks have cleared on your bank's online Web site d) Put a check through a scanner to pay bills automatically
c) Pay bills, check your balance, and see if checks have cleared on your bank's online Web Site
Taxes go to pay for: a) Social Security 10%, National Defense 10%, and Medicare 12% b) Social Security 50%, National Defense 50%, and Medicare 12% c) Social Security 21%, National Defense 21%, and net interest 9% d) Social Security 12%, National Defense 12%, and Medicare 12%
c) Social Security 21%, National Defense 21%, and net interest 9%
When writing a check: a) Always print your signature b) Sign on the line that says "Pay to the order of" c) Spell out the dollars and cents on the long line that ends in "Dollars" d) Spell out the dollars and cents in the short box next to the $ symbol
c) Spell out the dollars and cents on the long line that ends in "Dollars"
Chandra likes her new credit card. She uses it whenever she can, but she's careful to stay below her credit limit. After two months she notices her credit card bill includes huge finance charges. She chose her card because it featured 0% APR, so she doesn't think she should have any finance charges at all. What is the most likely explanation for the finance charges on Chandra's bill? a) The credit card company made a billing error b) This is a case of credit card fraud c) The introductory rate on the card is no longer in effect d) The APR does not apply because she is under the credit limit
c) The introductory rate on the card is no longer in effect
To file your taxes, you need: a) Every pay stub from the entire year b) Every deposit slip from your savings account c) W2 and 1099INT reports, and charitable deduction receipts d) A computer
c) W2 and 1099INT reports, and charitable deduction receipts
Banks offer "points" or "rewards" because: a) They have excess profits and want to distribute some of those profits to customers. b) They like to make your life more fun c) You will be more likely to switch to the bank offering "points" or "rewards" because you feel you are getting "something for nothing" d) They want you to practice good saving habits
c) You will be more likely to switch to the bank offering "points" or "rewards" because you feel you are getting "something for nothing"
You earn $22,000. The tax table says you owe $3,456 in taxes. During the year, your tax withholdings were $5,333. What is your refund? a) $22,000 b) $5,333 c) $3,456 d) $1,877
d) $1,877
You are paying 11% interest on a credit card balance of $2,000. Which of the following best estimates the interest you are paying each month? a) $11.00 b) $13.33 c) $15.33 d) $18.33
d) $18.33
You start the month with $332.11 in your checking account. You have the following withdrawals during the month: $34.56, $223.00, $12.22. You have deposits of $125.88 and $29.88 during the month. What is your balance at the end of the month? a) $125.88 b) $203.45 c) $212.08 d) $218.09
d) $218.09
You are told that having a college education increases a person's earnings by 30% over their lifetime. A non-college graduate earns about $30,000 per year. How much more will you earn with a college education over a 40 year career? a) $30,000 b) $120,000 c) $240,000 d) $360,000
d) $360,000
You have a balance of $4,500 on your credit card. The interest rate is 12% (1% per month). The late payment fee is $40. You miss a payment. What are your fees plus interest for the month? a) $40 b) $45 c) $65 d) $85
d) $85
Your current account balance is $215. You have $322 of expenses each month. Your income is $444 per month. How long will it take you to accumulate a balance of $1000 in your account. a) 1.4 months b) 2.6 months c) 4.6 months d) 6.4 months
d) 6.4 months
A business that gives you a loan is: a) A credit bureau b) A debt collection agency c) A credit counseling agency d) A creditor
d) A creditor
An overdraft fee: a) Is a fee charged by a business when a check you write to them bounces b) Is the minimum balance required to be held in a bank account c) Is a fee paid to a payday loan company d) Is the fee charged by a bank when your checking account balance goes below zero
d) Is the fee charged by a bank when your checking account balance goes below zero
A regular paycheck helps your credit score because: a) It can be cashed and spent quickly b) It has taxes pulled out c) It shows you will not pay your bills on time d) It indicates you are likely a good credit risk
d) It indicates you are likely a good credit risk
If you get your first credit card while you're a full-time student, what can you expect about the card's APR on outstanding balances? a) It will probably be about the same as the APR on your parents' card b) It will probably be low c) It will probably be low until you graduate, and then it will rise d) It will probably be high
d) It will probably be high
Identity theft is important to be aware of because: a) Once your identity is stolen, it can't be used again by another thief b) Once your identity is stolen, it is impossible to ever have good credit again c) Once your identity is stolen, it will not affect your life once you are on your own d) Once your identity is stolen, it can be fraudulently sold, and others can continue to use your good credit to obtain credit cards and loans
d) Once your identity is stolen, it can be fraudulently sold, and others can continue to use your good credit to obtain credit cards and loans
Negative items on a credit report that are not correct: a) Can never be removed b) Don't affect your credit rating c) Are best ignored d) Should be removed once the mistake is shown to the credit reporting company
d) Should be removed once the mistake is shown to the credit reporting company
No one should choose a goal based on: a) Interests, likes, and dislikes b) The type of work that appeals to that person c) A hobby that person puts free time into that could become a career d) What other people think of the goal, who do not know the person very well
d) What other people think of the goal, who do not know the person very well
A plan for a career starting in two years: a) Will give you less opportunities than a career starting right away b) Means that no plans or training are necessary, since the goal is two years away c) Cannot benefit from talking to a counselor or consulting a book d) Will give you more opportunities than a career starting right away
d) Will give you more opportunities than a career starting right away
It is important to balance your checkbook every month because: a) Even automatic check readers can misread an amount you wrote on your check b) Banks calculate interest by hand, and sometimes they forget to do this step c) Otherwise you are likely to spend more money than you earn
a) Even automatic check readers can misread an amount you wrote on your check
Cleared checks: a) Are available as online images for you to refer to, or as reduced images sent with each monthly statement b) Are always sent to the account holder with each monthly statement c) Should be used to notify the people you wrote the check to, since they haven't cashed the checks yet d) Are automatically redeposited if the check image is lost
a) Are available as online images for you to refer to, or as reduced images sent with each monthly statement
The most secure Internet access is available through: a) Cable modem, DSL, or dial-up Internet b) Wi-Fi at a coffee house c) Wi-Fi at a public library
a) Cable modem, DSL, or dial-up Internet
Online bill payment: a) Can happen automatically every month, even if you set it up just once b) Will definitely cause an overdraft charge c) Can only be set up by making an appointment with a bank branch manager d) Cannot be set up online
a) Can happen automatically every month, even if you set it up just once
A program like Quicken or Money: a) Can help keep track of receipts over a year to make taxes easier to complete b) Is required to complete taxes c) Is necessary in order to get the refund owed to the taxpayer d) Can only be used when filing electronically
a) Can help keep track of receipts over a year to make taxes easier to complete
A major payroll tax is called: a) FICA, for Federal Insurance Contributions Act b) SSN, for Social Security Number c) Capital gains tax d) Business tax
a) FICA, for Federal Insurance Contributions Act
You discovered you can deduct medical expenses over 6% of your income. Your income is $42,000, and you had medical expenses of $567. What portion of your medical expenses can you deduct? a) $0 b) $34 c) $567 d) $2,520
a) $0
Tax rates are 10% on the first $10,000 you earn and 20% on amounts over that. You earn $15,000. What is your tax? a) $2,000 b) $3,000 c) $4,000 d) $5,000
a) $2,000
You got a new credit card and spent $200 on the card last month. You forgot to make the payment on time and were assessed a $40 late fee. What is the late fee as a percentage of your balance? a) 20% b) 25% c) 40% d) 50%
a) 20%
You can best compare credit card offers by looking at these two features: a) APR and fees b) Minimum payment c) Principal and interest d) Introductory rate and credit limit
a) APR and fees