LHS Personal Finance Final
T/F: Collateral refers to financial assets you possess that are worth more than your debts.
False
Last week Marty worked 52 hours at his job. His regular hourly rate is $9 and his employer pays the typical rate for overtime. He had the following deductions: Federal income tax: $35.00 State income tax: $15.00 Social Security tax: $28.68 Medicare tax: $5.00 Health insurance: $10.00
$428.32 40 hours x $9 + 12 hours x $13.50 = total pay (without deduction) then subtract deductions
Colleen purchases a home for $225,000. If she makes a down-payment of 20%, what will the amount of Colleen's mortgage be?
$45,000 home price x down payment
The state of Ohio sales tax is 8%. If you go to an electronics store and buy a computer for $675.80 and a case for $32.95, what amount will you pay once the sales tax is added to your purchase?
$765.45 total x tax rate total + answer
Carla's financial aid package from Magna University includes a grant as well as unsubsidized and subsidized Federal student loans. Her parents said they're also willing to cosign on her taking out a private student loan, if needed. Carla goes to her guidance counselor for help deciding which of these funding options to use first. Which of the following options will likely be MOST expensive for Carla? a. Private loan b. Grant c. Unsubsidized federal student loan d. Subsidized federal student loan
A
When you open a checking account for the first time, you need to have each of these items EXCEPT... a. Proof of employment, such as your last paycheck b. The required minimum deposit c. A legal form of identification, such as Social Security card, driver's license, or birth certificate d. A completed application
A
Which of the following is LEAST important to a college freshman opening a checking account? a. The interest rate they'll earn on money in the account. b. How accessible a bank branch or ATM is to their campus. c. Whether the bank has a minimum balance and/or waives annual fees for students. d. Whether having the account will be convenient both on campus and when they return home.
A
Which of the statements about the current U.S. tax system is TRUE? a. Our current system is described as being a progressive system because it imposes higher rates on those who earn more. b. Your friend tells you his marginal tax rate is 22%. That means that he pays 22% on all of his income. c. Everyone in the US who makes more than $12,000 pays one flat tax rate. d. Our current system is described as being a regressive system because it imposes higher rates on those who earn less.
A
Which statement about car leases is TRUE? a. Leases typically have lower monthly payments than you'd pay to purchase the same car using a loan. b. Leases typically have higher monthly payments than you'd pay to purchase the same car using a loan. c. Leases are always the better option when getting a car, especially if you have a downpayment. d. Leases are never the better option when getting a car, especially if you have a downpayment.
A
Who tracks all of your credit information? a. Companies named Equifax, Experian and TransUnion b. Federal government c. Consumer Financial Protection Board (CFPB) d. Lenders
A
What is the difference between a subsidized and unsubsidized federal loan?
A subsidized loan, interest is paid by the government while you are enrolled, then, after you graduate, you are responsible. Unsubsidized loans have interest that needs paid WHILE enrolled.
What does "Pay Yourself First" mean?
An individual should set aside a predetermined amount of money for saving before using any of that money for spending.
What action corresponds to the advice "Pay Yourself First?" a. Wait until the end of the month to determine how much to save b. Directly deposit 20% of your paycheck into your savings account c. Spend your regular paycheck and save your bonus check d. Take two jobs and use one job for your expenses and one job for your wants
B
Which of the following is likely to INCREASE your monthly payment? a. Increasing the size of your down payment b. Decreasing the number of months in your term c. Qualifying for a lower APR d. Applying the trade-in value of your old car toward your new car purchase
B
Which of the following will help you begin developing a credit history before you graduate from college. a. Always say "credit" when asked "credit or debit?" at a store b. Make small payments on your student loans while in college, even though they are not required to be paid back until you leave c. Any time you borrow money from your parents, friends, or family, be sure to pay it back promptly d. Be sure to keep a bit of your paycheck in a savings account instead of a checking account
B
Why should you accurately complete a W-4 form any time you start a new job or change your tax status? a. You need a copy of your W-4 to file your tax return annually b. Your W-4 determines how much Federal income tax money your employer should withhold c. Your W-4 determines your total tax bill at the end of the year d. Completing a W-4 will guarantee you receive a large tax refund
B
You are at the checkout counter at the local supermarket and use your debit card to pay for your groceries. Where does the money for this purchase come from? a. Your credit card company covers the cost b. It is deducted directly from your checking account c. Your bank writes a check to the supermarket, and the money comes from your account once the check clears d. Your bank sends the supermarket the money from your account at the end of the month, once you approve it on your statement
B
Yun is trying to remember the difference between subsidized and unsubsidized student loans. He asks his friends at lunch, and they give the following answers. Which friend is right? a. Cara: On subsidized loans, you never pay any interest; you pay interest on unsubsidized loans. b. Liz: On subsidized loans, the government pays the interest while you're in college, and then you pay the interest once you're no longer enrolled. c. Bill: With subsidized loans, if you don't graduate and earn a diploma, you don't have to pay those loans back. All unsubsidized loans must be repaid. d. Clare: Subsidized loans come from private banks, while unsubsidized loans come from the Federal government.
B
Choose the option that best completes this sentence: When using a credit card... a. you will pay interest whether or not you pay your bill every month. b. you are transferring money from your savings account directly to another party. c. you are getting a short-term loan to allow you to purchase an item now which you can pay for later. d. you always have the option to wait to make a payment because late payments don't affect your credit.
C
Mia doesn't have any credit history, so she's going to open a secured credit card to begin building her credit. She puts down an $800 security deposit. What feature of an unsecured credit card is Mia's security deposit most like? a. the APR b. the term c. the credit limit d. the annual fee
C
Wanda's bank is FDIC Insured. What is the benefit to Wanda? a. If she makes a purchase with her debit card and the item breaks, she'll get a full refund b. She can use her bank card at any bank, nationwide, without incurring a fee c. If Wanda's bank goes out of business, she will receive all of her money back from her accounts up to $250,000 d. She will receive a debit card and a checkbook she can use to make purchases
C
What are the two most important factors in calculating your credit score? a. Payment history and type of account b. Amounts owed and length of credit history c. Payment history and amounts owed d. Length of credit history and new credit inquiries
C
Which of the following is one potential danger of taking advantage of a "0% APR for 1 year" deal? a. After the first year you will no longer be able to use the card b. Having such a low rate for so long might decrease your credit score c. One late payment may cancel the 0% introductory rate d. After the first year you will pay interest on every purchase, even if you pay them off right away
C
Which of the following statements best explains the purpose of a Schumer box? a. Gives the lender a clear report of your credit history and creditworthiness for a new card b. Calculates the total interest you will be charged on your previous month's purchases c. Gives the borrower a clear description of the APR, fees, and other major conditions of their credit card d. Provides a list of all purchases made on a credit card and the price of each item, for the benefit of the lender and the borrower
C
Each of the following is likely to check your credit score EXCEPT? a. Credit card companies b. Auto loan lenders c. Landlords d. Federal student loan office
D
Which of the following is an example of credit? a. Getting a certificate of deposit (CD) from the bank b. Paying for college with money your parents helped save c. Splitting the cost of a meal with a friend d. Taking out a mortgage to buy a home
D
Which of these best describes why you should make sure your bank is FDIC insured? a. It guarantees you will get all of your money back, regardless of balance, if your bank goes out of business b. It guarantees you will earn interest on your checking account balance up to $250,000 c. It prohibits your bank from charging fees unless you have over $250,000 in the bank d. It guarantees you will get all of your money back, up to $250,000, if your bank goes out of business.
D
What is the difference between earned and unearned income?
Earned income is obtained through a job while unearned comes from things like stocks or savings. AKA, it is not physically worked for.
FDIC insurance protects the deposits of customers against loss up to $1,000,000 per account.
False
T/F: A check cannot be cashed until it has been reconciled.
False
T/F: Annual percentage yield is the actual interest rate a savings or checking account pays, stated on a yearly basis without compounding included.
False
T/F: If goals are to be meaningful, they should be broadly stated and without specified time frames for their achievement.
False
T/F: In the short-run, fixed costs are easier to change than variable costs.
False
T/F: It is not possible to protect yourself from the consequences of pure risks.
False
T/F: Overtime pay is not considered when you calculate your gross pay.
False
T/F: Before you prepare a budget, it is a good idea to keep track of your income and expenses for a month or two.
True
T/F: Checking your credit report frequently can help with early detection of identity theft.
True
T/F: Earnings on the principal amount is called interest.
True
T/F: Employers must contribute matching amounts into each employee's Medicare and Social Security accounts.
True
T/F: Generally, the higher the deductible, the lower the insurance premium.
True
T/F: If you file a joint tax return, you can take an exemption for your spouse.
True
T/F: Most credit cards are revolving credit agreements.
True
T/F: On a local level, taxes pay for services such as education, parks, roads, and police, fire, and health departments.
True
T/F: Payments on a credit account include both principal and interest.
True
T/F: Property insurance is usually a requirement of the loan agreement to protect the interests of the mortgage lender as well as the homeowner.
True
T/F: The biggest advantage of scholarships is that they do not have to be repaid if you complete your education.
True
T/F: You should negotiate the price for a new car separately from the price of your trade-in.
True
