FIN123

Using the "Rule of 72," approximately how many years will it take to double your money if you are earning a return of 8% annually?

72 / 8 = 9 years

You do not need to compare the interest rates and fees charged by credit card issuers since the issuers are heavily regulated by government agencies.

False

If you have reviewed all of your expenses, and you are still short of cash, which of the following should you try next?

Find a part-time job

Of the following, what is the greatest financial advantage of living on campus?

Proximity to classes and low transportation costs

It is a good idea to buy a car because it has a low monthly payment.

False

Car dealers:

All of the above

For students, having a credit card is often necessary for convenience or emergencies. Having ____ credit cards is adequate for most students.

No more than 1 or 2

When watching an infomercial, look for the small disclaimer at the bottom of the screen which will almost always say something like:

"Results shown not typical"

Health insurance is one type of insurance that virtually everyone needs, regardless of age. Fortunately, young people can be covered under their parents' health insurance until their _______ birthday.

26th

You are a millionaire when you have:

A net worth of $1 million

Buying a house or condo while in school can make a lot of sense for you or your parents, but only if home prices appreciate when you are in school. What other expenses do you need to consider when buying?

All of the above

Credit card companies may charge you fees and/or interest if you:

All of the above

Extended warranties are:

All of the above

Focusing on short term investment results, with their inherent volatility, can cause investors to _________, which might not occur if they focused on more smooth long term results. It's called myopic (near sighted) risk aversion.

All of the above

For a student, what are the advantages of renting (dorm room or apartment) as opposed to owning (house or condo)?

All of the above

If you do not understand how interest compounds, you will likely:

All of the above

Market bubbles sometimes build up when a consensus forms and investors get excited, bidding up prices to extreme valuations. Examples include:

All of the above

Marketers love to create a sense of urgency to buy an item. They do this by:

All of the above

Regulators of investment advisors include:

All of the above

Savings accounts, used for safety (federal deposit insurance) , immediate access, and interest paid, may be opened at:

All of the above

Vices, such as coffee, smoking and alcohol, are budget busting expenses because they:

All of the above

What are some important things to consider when you are about to sign a lease for an apartment?

All of the above

What makes a goal effective?

All of the above

Which of the following do not count, at least not directly, in determining your credit score?

All of the above

Which of the following expenses are important to keep under control?

All of the above

Which of the following statements is true?

All of the above

Which of these taxes might a college student encounter?

All of the above

"Zero % Financing" when purchasing electronics and furniture is:

Almost always hazardous because of interest and penalties that will kick in if you do not pay off the loan within the 0% period

Used car dealers might do this to you, setting a price so high that you feel like you are getting a great deal after you negotiate the price down. But you might also do it to yourself, locking in predetermined prices in your mind for a variety of products and investments. It's called:

Anchoring

Even if you do not want to put together a complete budget, you can still help yourself significantly by focusing on just a few:

Both of the above

The concept of compounding:

Both of the above

Given history, which of the following would you expect to have the highest investment return over time?

Common stock

You earn interest on your money when you save. The concept of earning interest on the interest you have already earned , resulting in a lot more money than you might expect, is called:

Compounding

You are borrowing money when you use a:

Credit card

The age old idea of not putting all of your eggs in one basket is formally known in finance as the concept of

Diversification

Financial goals are important for:

Everyone (all of the above)

All financial aid for students is alike.

False

College students usually pay no Federal or State taxes of any kind, due to typically low incomes and high expenses.

False

Federal income taxes in the United States are "regressive"; that is, rich, high income taxpayers do not pay a higher tax rate on their last dollar earned than low income taxpayers.

False

It is not necessary to shop around for insurance coverage, since insurance companies are highly regulated by the government. Pricing is therefore consistent among companies.

False

Seasonal savings for college can come from money earned from summer jobs or internships. It can never be significant enough, however, to make a difference to a student due to the high cost of education.

False

Taking out student loans now cannot hurt your ability to obtain loans for houses or cars in the future.

False

If you do not want to negotiate the price of your car purchase, you can use a car buying service. Commonly offered through auto and warehouse clubs, these services will:

Get you a fair price

The single most important factor in determining your credit score is:

How you pay your bills

Accounts which resemble savings accounts, but that are actually diversified pools of short term investments with no FDIC insurance, are known as ______. They are generally considered to be very safe and are sold through brokerage firms or mutual fund companies.

Money market funds

If you just make the "minimum payment" every month, and continue to use your credit card, you will likely pay off your credit card balance:

Never

Which of the following is always a good deal?

None of the above

Men are more prone to this. Single men are even more prone to this. It's important because it might cause you to trade investments excessively and harm your investment results. It's:

Overconfidence

Your assets (what you ____) minus your liabilities (what you ____) is called your "net worth."

Own; Owe

When you buy a common stock, you become a ______ the company.

Owner of

If your private health insurance company gives you a lot of choice, giving you a list of doctors who have agreed to see patients at a reduced rate, you likely are in a:

PPO

Which of the following is the best (cheapest) way to obtain a car for most people?

Pay cash

We all tend to underestimate the power of compounding. One way to cope with this mental mistake is to remember the:

Rule of 72

You are usually better off, with lower costs, when you:

Shorten the wait for your refund by having it deposited directly into your bank account

Buying a used car from a private party, instead of a dealer, can be risky. One significant advantage, however, is:

There is no sales tax on cars bought from private parties in Arizona

Which of the following should normally be your last option in financing your education?

Student loans

Which of the following types of student financial aid has to be repaid?

Student loans

Many financial advisors recommend ______ life insurance due to its relatively low cost. It offers a death benefit for a specified amount of time, but has no savings or investment features.

Term

Credit monitoring services, while helpful, can be expensive in relation to what you receive. For many individuals, they are an unnecessary expense. For others, they can be beneficial if they face abnormally high identity theft risks or if:

They are planning a major purchase such as a home, requiring a loan

Why might you need to file a Federal or State income tax return even if your income is low and you owe no taxes?

To request a refund of taxes already withheld from your pay

Health, prescription drug, dental, disability, and even life insurance coverage, is frequently offered through employers. Often at a reduced rate due to group buying power.

True

It is never too early to begin saving. And saving more now means you can consume more later in life.

True

Most people become much more effective savers when they automate deposits into savings accounts or retirement plans. That way, the money is set aside before it can be spent.

True

People with high credit scores often receive lower interest rates on loans than people with poor credit scores.

True

The simple advice, "Only spend money on what's truly important to you," is a great single suggestion to help control spending.

True

There is a general relationship between the amount of risk you take and the investment return you expect to earn. The higher the risk, the higher the expected return. The lower the risk, the lower the expected return.

True

We often draw conclusions based only on vivid and recent information; that is, conclusions drawn based on the "availability" rather than completeness of information.

True

While many people do not think in terms of money when they consider their goals in life, financial goals are helpful for everyone because they can help them achieve life goals.

True

You can reduce many expenses, most notably transportations costs, by making a wise housing decision.

True

The only truly free website that allows you to look at your credit file is:

annualcreditreport.com