PF EXAM
Taylor wants to create a budget to track her expenses and identify ways she can reduce spending. What tools could she use?
Quicken spreadsheets Mint BudgetTracker
Spending wisely ____.
helps you be a better steward of God's resources
The purpose of taxes is to _____.
provide police protection pay for roads and road maintenance provide air traffic controllers provide judges and a court system
To help you decide on a career, you should _____.
reflect on your God-given talents and skills, explore career options, apply the PACED decision-making process, and write goals
trustworthy, information you can trust with certainty
reliable
Emily, a college student, reads an article in Money magazine. The author has a degree in finance. The article is about getting a home equity loan. This information is _____.
reliable, but irrelevant
Jeff works as a computer repair technician. He has money in a savings account and he owns some stock. What types of income does he have?
salary, interest, and dividends
When prioritizing goals, how should you order them?
in order of importance
Adults pay _____ taxes.
income, property, and sales
money the bank gives you when you keep your money in one of their accounts
interest
When making a career decision, you should reflect on your _____.
interests skills values personality traits
Using money to try to make more money is called _____.
investing
Diversifying means _____.
investing in a variety of types of investments in order to minimize risk
Someone who is financially honest _____.
is honest about everything to do with money
A good steward _____.
is responsible and careful with God's resources
If you want your investment or savings account to be easily turned into cash without losing its value, you should consider the _____.
liquidity
the ease with which an investment can be turned into cash without losing its value
liquidity
The first step in creating a budget is to _____.
list and total your income
an individual's knowledge of a certain area or field
literacy
a desired result which may be attained in more than one year
long-term goal
Jim purchases land, hoping its value will increase during the next five years. What risk does Jim face?
losing money in an investment
When selecting the best financial institution for you, you should consider each of these factors_____.
minimum balance services offered locations of banks and ATMs fees
a misunderstanding; a mistaken thought or idea
misconception
Financial literacy is knowledge about _____.
money
a form of payment that resembles a check
money order
the portion of the wages that the employee actually gets to take home
net pay
the amount you have minus the amount you owe
net worth
Select all the parts in a financial plan.
net worth statement financial goals savings and investing plan insurance plan budget
To avoid financial risks, you should _____.
obtain health insurance keep your money in a safe place protect your personal information become educated and informed have an emergency fund purchase warranties know your consumer rights
a person's usual work or business; a way of earning a living
occupation
An online savings account _____.
offers higher interest rates because they don't have the overhead that standard banks have
Erik bought a savings bond. He could have invested in a mutual fund and earned 2 percent more. The 2 percent he could have earned is the _____.
opportunity cost
Mike accidentally wrote a check for more than the balance in his checking account. The bank transferred money from his savings account to his checking account to cover the check. This banking service is _____.
overdraft protection
The amount with which an individual starts an investment is called the _____.
principal
To maintain creditworthiness, individuals should _____. Choose all that apply.
protect their credit card and account numbers to prevent unauthorized use quickly report lost or stolen credit cards look for credit cards that have no annual fees and lower interest rates read the terms of the credit carefully and make informed decisions pay off their total balance each month don't spend more than their credit limit
Luis received his account statement. He needs to make sure the balance in his checkbook register is correct. To reconcile his checkbook, the first thing he should do is _____.
put a checkmark next to all the transactions in the register that appear on the statement
the four common investments
real estate stock mutual fund retirement accounts
If the principal on one loan is $1,000 more than another loan, the total cost of the loan is $1,000 more.
False
If you pay the minimum payment each month, you will quickly pay off your credit card.
False
The Rule of 72 is a formula that helps you calculate how much money you will have in your account in 72 months.
False
Select all the types of retirement accounts.
IRA 401(k) 403(b)
Select the differences between saving and investing.
Investing is riskier, but has the potential for a higher rate of return. Some investments earn dividends. Savings accounts earn interest. To collect money from an investment, it is necessary to sell the investment.
List at least three of the costs that make up a mortgage payment.
Taxes Insurance Interest
An employer takes a deduction from your paycheck for federal taxes. Where does this money go?
The money is sent to the federal government to pay for goods and services for the community.
Simon just completed and double-checked his 1040EZ tax return form. Now he should _____.
send it to the IRS before April 15
A spreadsheet is _____.
software that allows you to make calculations, organize data, and make comparisons
An organized way for people to buy and sell stocks and for corporations to raise money is called the _____.
stock market
a request by an account holder for the bank to not pay a specific payment
stop-payment
Select all the choices that will help pay for the costs of college.
student loans grants scholarships
To balance your checkbook, you should _____.
subtract the withdrawals and add the deposits
Christina was getting harassed at work by companies to which she owed money. What act protects her from this?
the Fair Debt Collection Practices Act
A premium is _____.
the amount an individual pays for an insurance policy
The periodic rate is _____.
the interest rate you are charged for one payment period
After the end of the year, you can expect to receive a form from your employer stating how much you earned and how much you paid in taxes for the year. This form is the _____.
W-2 form
Each of the following is a retirement account except _____.
a mutual fund
A credit report is a _____.
a report prepared by a credit bureau which shows details of an individual's credit history
Julia complained to the Better Business Bureau about a business that provided poor construction. Which consumer right enabled Julia to do this?
the right to be heard
Craig graduated from college and got his first job. He rented an apartment and purchased new furniture, appliances, and a television. What risk does he face?
theft
Amelia has money in a CD earning 2 percent interest. How long will it take for the money to double?
thirty-six years
contributing to the church one-tenth of the resources God has given you, including your income
tithing
Tips for spending wisely include _____.
tracking your spending avoiding impulse purchases using credit cards infrequently looking for bargains
The safest and most popular type of mortgage loan has a fixed rate and is called a _____.
traditional loan
One reason to create a budget is to know what you can and can't afford.
true
To obtain your credit report, you should _____.
visit the official web site, complete the fields, and click "continue"
Select the items from the following list that are included in financial literacy.
applying for a credit card using a credit card to make a purchase paying taxes opening a checking account deciding to rent an apartment
Exempt means you _____.
are free from deducting federal income tax from paychecks
items owned that could be sold for cash
assets
To be good stewards with God's resources, you should _____.
create a financial plan organize your financial documents spend wisely create a budget manage your risks learn about services offered at your bank
The number that lenders look at to see if an individual is creditworthy is called a _____.
credit score
appropriate, suitable, fitting
relevant
If a lender is not paid and the collateral that secured the loan is taken, this is called _____.
repossession
Sara notices that she double-paid her gas bill. What online service should she use?
request a stop-payment
accountable, reliable, dependable
responsible
the profit or gain from saving or investing money
return
the income a business makes
revenue
something that causes or increases personal satisfaction
rewards
Floods, product failure, change in demand, and ineffective sales are all examples of _____.
risks
When an individual starts a new business, there are _____.
risks and costs
Your career choice, education, and skills will affect your _____.
salary
a fixed amount of money periodically paid to a person for work
salary
Which of the following is the least risky?
savings account
Regal Financial Institution specializes in home loans. What type of financial institution is it?
savings and loan
a fraudulent scheme
scam
an account with a financial institution used to pay taxes and insurance
escrow
Bankruptcy is a possible consequence of having _____.
excessive debt
Financial literacy means knowing how to make financial decisions.
false
The four types of insurance are health, life, homeowner's, and automobile insurance.
false
When you want to open a new bank account, speak to a loan officer.
false
A net worth statement, insurance plan, and a budget are all part of a _____.
financial plan
a cost that stays the same from month to month
fixed expense
a process through which a lender obtains money from an individual's employer to pay an unpaid debt
garnishment
When selecting stock, some financial experts recommend _____.
going with what you know
money awarded to students that does not need to be repaid
grants
Financially responsible people _____.
have a budget spend less than they make give one-tenth of their income to the church save their money pay bills on time
Becoming financially literate is important because it can _____.
help you become a better steward of God's resources
Select all the reasons an individual would save his or her money in a CD.
high interest rates safe no fees
perks provided by your employer
employee benefit
If you pay the balance on your credit card each month, the _____ is the most important factor to consider when selecting a credit card.
annual fee
How much would Vincent have in his account after three years if he started with $100 and earns 5 percent, compounding annually?
$115.76
Andy has a remaining unpaid balance of $845 on his credit card. His credit card company has an APR of 18 percent. How much will Andy pay in interest for one month?
$12.68
If Sam invested $3,000, earning $300 over six months, his principal is _____.
$3,000
Sophie's credit card has an APR of 19 percent. What is the periodic rate?
1.58 percent
Natalie makes $2,000 per month. She spends $100 on credit card payments and $250 on an auto loan. What is her debt-to-income ratio?
17.5 percent
Owen makes $3,000 per month. He spends $300 on credit card payments and $350 on an auto loan. What is his debt-to-income ratio?
22 percent
Paul would like to spend $700 on a vacation. He will sell some of his stock to pay for the vacation. If the stock is worth $32 per share, how many shares will Paul need to sell?
22 shares
a savings plan for education designed to help set aside funds to pay for future college costs
529 plan
Holly deposited $7,000 in a CD and will get charged penalties if she makes withdrawals within five years. However, she will need this money to pay for college tuition next year. What saving and investing principle should Holly have followed?
Consider how long you plan to keep your money in the investment.
Nadia had money in a savings account at a Savings and Loan, but the Savings and Loan closed. What act protects her money in the savings account?
FDIC Deposit Insurance Regulations
An IRA is a retirement plan that some companies offer their employees.
False
Bankruptcy is a process in which a lender tries to obtain money from an individual's employer to pay an unpaid debt.
False
What should be your first step if you have a complaint that you think violates your consumer rights?
Contact the seller, remain calm, and state the problem.
Mariah wants to be a good steward. Why should she avoid debt?
Debt is expensive. God wants us to be financially responsible. Having debt deters her from being generous later. Debt, when avoidable, goes against Biblical principles.
Carrie is single and because of this, feels that she will not be approved for a loan. Which law protects Carrie?
Equal Credit Opportunity Act
John wants to know how much he should pay for a particular used car. What should John do?
He should find reliable and relevant information; he could look up the information in the Kelly Blue Book.
steps for calculating net worth in the correct order.
List your assets. Total your assets. List your liabilities. Total your liabilities. Subtract your liabilities from your assets.
Allen needed to buy new soccer shoes. He stopped by the closest store and bought a pair for $98. Later, he saw an advertisement selling the same shoes for $82. What tip could have helped Allen?
Look for bargains.
Which of the following is not a biblical principal as far as debt is concerned?
Only accumulate long-term debt.
A process for making financial decisions is called _____.
PACED
Select all the strategies you can use to manage risks.
Purchase health insurance. Have an emergency fund. Obtain a warranty. Become informed.
Carl has a checking account. He'd like to find out as soon as his refund check from the IRS is deposited in his account. What should Carl do?
Set up an alert.
A financially responsible person reacts quickly to problems.
True
A small-business loan is used to pay for the costs associated with starting your own company.
True
Jason's balance in his checkbook register is $20.60. He receives his bank statement and sees that the balance is $50.60. He notices that a check in the amount of $30 does not appear on the statement. Is the balance in his checkbook register correct?
Yes
Keith had no cash. He decided not to take a cash advance because his credit card company would charge a $20 fee and start charging 22 percent interest immediately. Is Keith a good steward using credit responsibly?
Yes
Carlos would like to start saving for his son's college expenses. Which type of savings account should Carlos open?
a 529 plan
An account that earns a higher rate of interest when you make large deposits is called _____.
a money market account
Mitchell doesn't have a checking account, but needs to pay a bill. What can Mitchell pay with?
a money order
When selecting a savings account, you should look at all the following factors _____.
annual percentage yield (APY) fees minimum balance interest thresholds variable interest rates
a process in which banks check your history to make sure you will be a responsible account holder
account verification
a process where banks check your history to make sure you will be responsible
account verification
No yard maintenance and the freedom to move easily are both _____.
advantages of renting
The annual percentage yield (APY) is the _____.
amount of interest you'll earn in one year from a savings account
An insurance policy is _____.
an agreement to reimburse an individual for a loss that occurs
Debt is _____.
an amount of money that is owed to a bank, credit card company, store, or another individual
A withholding allowance is _____.
an amount you enter on a W-4 form
Mr. Stanley started a new business and created a product that raises the standard of living for people who use wheel chairs. Mr. Stanley may be considered _____.
an entrepreneur
An account with a financial institution that is used to pay taxes and insurance is called _____.
an escrow account
a plan for how you will spend and save money
budget
Tammy wants to track her spending in categories. What tool should she use?
budget software
Select all the tools you could use to track your expenses.
budget software spreadsheet Mint Mvelopes
A stock broker _____.
buys and sells stock
your net worth; the value of the items you own and the cash you have
capital
Fees associated with buying a house and finalizing the loan are known as _____.
closing costs
When you finance a car, the car then becomes _____ for the loan.
collateral
a piece of property that a person promises to give the lender if a loan is not paid
collateral
Choosing products that do not harm the environment and gathering information about a product's quality are examples of _____.
consumer responsibilities
A lender uses a credit report to _____.
decide if the applicant is creditworthy
an amount that is subtracted from your paycheck
deduction
investing in a variety of investments in order to limit losses in the event of a sharp decline in a particular type of investment
diversification
Jordan wants to know how long it will take for the money she deposited to double. She has an interest rate of 4 percent. Calculate how long it will take her money to double.
eighteen years
What are the continuing costs for an apartment?
electricity bill rent water bill renter's insurance pet fees
target or result that is desired
goal
Shawn made $32,500 last year. He is single with no children. He does not have any deductions to itemize. He should use the _____ to file his tax return.
1040EZ tax form
How do cities and towns get money to pay for places and services for the community?
Cities and towns collect property taxes.
Ashley bought an expensive pair of jeans. Her friend got the same pair of jeans for almost $20 less. What tip could have helped Ashley?
Look for bargains.
Amy wants to invest money for two years. She doesn't know which investment is best for her. What should Amy do?
She should use the Bible for guidance and become more knowledgeable by talking with a financial adviser, reading books, or by taking a class.
Molly is getting ready to file her tax return. She works and has a savings account. What tax forms does she need?
W-2 form from her employer, tax forms from the bank, and a tax return form
The first step in setting goals is _____.
calculating your net worth
income earned by the sale of assets, such as stocks or property, the gain of which is the difference between the price paid and the selling price
capital gains
money earned from the sale of property
capital gains
a request for payment from an insurance company
claim
Allison sells pharmaceuticals. She earns twelve percent of every sale. This is a _____.
commission
a fee paid to employees for their sale or services, the amount of which is usually based on a percentage of the sale price
commission
money earned from your employer because you made a sale
commission
Employee salaries, equipment purchases, consultant fees, and legal fees are all examples of _____.
costs
the price paid to acquire, produce, or accomplish something
costs
standards for evaluating something
criteria
the amount an individual has to pay when they make a claim, with the remaining cost covered by the insurance company
deductible
Rachel's paycheck stub shows an amount that was subtracted from her pay for health insurance. This is a _____.
deduction
Lisa owns stock in Company ABC. Company ABC sent out an earnings report and gave each of the stockholders an amount of money based on how much stock they owned. This is a _____.
dividend
money paid from a company's earnings to people who own stock in that company
dividends
An example of an ongoing cost is _____.
employee salaries
a person who takes a risk to create a new product or develop a better way to operate a business
entrepreneur
Adrianna will be a college freshman soon, and she is struggling to make a career choice. Which activities will help her?
exploring careers thinking about God's plan for her life reflecting on skills, interests, values, and personality traits using the PACED decision-making process taking a career test
Supply is the amount needed.
false
When the revenue for a business is less than its costs, it's making a profit.
false
Written goals should be simple and short.
false
Your financial decisions will only affect you yourself and nobody else.
false
Matt expects to get his first paycheck today. What deductions may be listed on his paycheck stub?
federal tax state tax Medicare Social Security
anything that has to do with money and investments
financial
money owed
liabilities
insurance that covers other people's injury or loss for which you are responsible
liability coverage
requesting confidential information over the internet under false pretenses in order to fraudulently obtain credit card numbers, passwords, or other personal data
phishing
The third step in the PACED decision-making process is to _____.
select the criteria
a desired result that may be attained in less than one year
short-term goal
When writing a check, you must complete all these steps except _____.
signing the back of the check
Tips, bonuses, and capital gains are all _____.
sources of income
An example of financial irresponsibility is _____.
spending your entire paycheck
careful and responsible management of God's resources, including money
stewardship
employee benefits.
stock purchase plan bonus group health plan tuition reimbursement
A career goal should be measurable, detailed, and include a plan.
true
A misconception is a mistaken idea or thought.
true
An individual's irresponsibility may affect the world God has created.
true
Sam will finish high school this year. He does not think he needs any further education. This is a misconception.
true
The local government uses property taxes to pay for goods and services in the community.
true
You pick up a brochure at the grocery store. You cannot find any information about the organization that created it. This information is probably _____.
unreliable
a written guarantee given to the purchaser usually specifying that the manufacturer will make any repairs or replace defective parts free of charge for a certain period of time
warranty
Theresa just graduated from high school. She is making career decisions. What criteria should she consider?
work location, salary, daily tasks, job satisfaction, work schedule, and job outlook