Semester 2 Consumer Math Final
Joyce sees a credit card offer, advertising 0% APR. Which of the following is least likely true? 0% offer is introductory and lasts only 6 months 0% offer is only available to those with high credit scores 0% offer is good on new purchases only, not cash advances 0% offer lasts indefinitely, as long as you always make at least your minimum monthly payment
0% offer lasts indefinitely, as long as you always make at least your minimum monthly payment
Which form tells you how much you were paid by a company of which you are NOT an employee and often contains income that did NOT have taxes withheld? W-2 W-4 1099 1040
1099
One difference between bonds and bond funds is... Buying an individual bond is generally cheaper than buying a bond fund A bond fund can help prevent you from "putting all your eggs in one basket" Bonds pay dividends to its investors You receive the principal amount you invest in a bond fund after a certain amount of time
A bond fund can help prevent you from "putting all your eggs in one basket"
Which of the following most accurately describes what a bond is? A bond is a government loan made to an individual investor that must be paid back with interest. A bond is an investment in which a corporation lends an individual investor money that must be paid back with interest. A bond is a government loan made to a corporation that must be paid back with interest. A bond is an investment in which an investor lends money to a corporation or government and it must be paid back with interest.
A bond is an investment in which an investor lends money to a corporation or government and it must be paid back with interest.
Which of the following correctly orders investment options from lowest to highest risk? An index fund tracking the S&P 500, an ETF tracking the technology sector, a government bond, an individual stock A government bond, an index fund tracking the S&P 500, an ETF tracking the technology sector, an individual stock A government bond, An ETF tracking the technology sector, an individual stock, an index fund tracking the S&P 500 An index fund tracking the S&P 500, a government bond, an individual stock, an ETF tracking the technology sector
A government bond, an index fund tracking the S&P 500, an ETF tracking the technology sector, an individual stock
What are the advantages of investing in a mutual fund, rather than an individual stock? A mutual fund is actively managed, resulting in lower overall fees A mutual fund is diversified, so your investment is lower risk A mutual fund has a target date to be sold, so you can pay less attention to changes in the market A mutual fund always pays out higher dividends than an individual stock
A mutual fund is diversified, so your investment is lower risk
If you stop making your debt payments, which of the following will happen? All unsecured debts will show up on your credit report All unpaid debts will show up on your credit report Only bills sent to collection agencies will show up on your credit report Only unpaid debts over which you are sued will show up on your credit report
All unpaid debts will show up on your credit report
Which of the following is a TRUE statement describing the benefits of an installment loan? An installment loan allows you to make one large purchase, even if you don't have all the money for it up front An installment loan does not require a credit check, so they are easy to obtain An installment loan allows you to make many small purchases as you need them, as long as you're under your credit limit An installment loan does not require monthly payments, so they can be paid back when the borrower is ready
An installment loan allows you to make one large purchase, even if you don't have all the money for it up front
Which of the following is usually a secured debt? Student loan Auto loan Credit card Personal loan
Auto loan
Each of the following plays a key role in determining your credit score EXCEPT: Payment history Debt-to-credit ratio Average interest rate Number of times you've opened new credit accounts or had new requests for credit
Average interest rate
Which of the following statements describes investing? Putting $100 per month into an FDIC-insured bank account for short-term goals Buying and selling stocks within the same day to take advantage of short-term price variation Reducing the purchasing power of your money over time Buying assets, like stocks, with the intention to hold them and grow your wealth over the long term.
Buying assets, like stocks, with the intention to hold them and grow your wealth over the long term.
You've ordered your credit report, and your mom said you should review it for errors. Which of the following should you be looking for? Items you know you did not purchase Credit cards or loans that you did not open or do not recognize Monthly balances that seem too high or too low Entries that are more than 7 years old, because they should not be on your credit report
Credit cards or loans that you did not open or do not recognize
What is the name given to the numerical rating that you receive based on your credit habits? Credit report Credit score Credit history Credit card
Credit score
Which of the following is NOT included in a Schumer Box? APR Minimum Interest charge Fees Credit score
Credit score
If you find yourself with a lot of debt, which of these is a RESPONSIBLE strategy for paying off your debts? Pay your secured debt first so you don't lose your house or car, then worry about your unsecured debt later on Pay your unsecured debt first, then worry about your secured debt later on because that debt is backed up by your house or car Cut out all unnecessary spending from your budget, and put all the extra cash toward paying down debt File for bankruptcy so you can start anew with a clean slate
Cut out all unnecessary spending from your budget, and put all the extra cash toward paying down debt
Which of the following is likely to INCREASE the monthly payment on your auto loan? Increasing the size of your down payment Decreasing the number of months in your term Qualifying for a lower APR Applying the trade-in value of your old car toward your new car purchase
Decreasing the number of months in your term
All of the following are true about e-filing taxes EXCEPT... E-filing is a good option for those who don't have a complex tax return E-filing will result in the quickest submission and approval of your tax return E-filing is the most expensive option for filing your tax return E-filing has software that provides assistance while you fill out your tax return
E-filing has software that provides assistance while you fill out your tax return
How do exchange traded funds (ETFs) differ from actively managed mutual funds? ETFs generally come with high fees while actively managed mutual funds do not ETFs can be traded throughout the day while actively managed mutual funds cannot ETFs use a pool of money from multiple investors while actively managed mutual funds do not ETFs are generally seen as high-risk investments while actively managed mutual funds are not
ETFs can be traded throughout the day while actively managed mutual funds cannot
All of these are top 3 areas that the federal government spends tax money on EXCEPT: Social Security Education Medicaid Military
Education
Which of the following would have the most severe effect on your credit score? Bankruptcy A charge-off by your credit card company A late or missed payment on your credit card Four consecutive months of late payment on your car loan
Four consecutive months of late payment on your car loan
In retirement, it's common to rely on income from all of the following sources EXCEPT... Social Security Pension Income Government loan Investment Income
Government loan
If Toni is trying to calculate her net worth, which of the following items would go on the liabilities list? Original sale price of her car Her Mortgage Savings account balance Value of her 401(k) plan
Her Mortgage
Ramon and Stephen are each considering taking out a $1200 loan so they can buy dirt bikes to enjoy on the weekend. Ramon's bank is offering him a 4.3% interest rate, while Stephen's is offering him a 2.4% interest rate. Which of the following statements is TRUE? If each loan has a term of 3 years, Ramon's monthly payments will be higher If they both make $300 payments a month, Ramon will pay off his loan faster Both men would likely get a better interest rate if they used a credit card, rather than a personal loan, to make their purchases If Ramon applies to Stephen's bank, instead, for his loan, he's guaranteed to get the same 2.4% interest rate that Stephen's been offered
If each loan has a term of 3 years, Ramon's monthly payments will be higher
You're about to open a new credit card. Which best describes the relationship between your credit score and the interest rate you'll likely be offered by the credit card company? If your credit score is high, your interest rate will be high If your credit score is high, your interest rate will be low Your credit score will approximately match your interest rate There is no relationship between credit score and interest rate
If your credit score is high, your interest rate will be low
Why do potential lenders frequently request to see your credit report before allowing you to borrow money? It allows them to see exactly what you purchase on a regular basis, so they can assess your character It's the only way they can legally see how much you have in your bank accounts It allows them to assess your creditworthiness by reviewing where you went to college, where you work, and how much you've paid, so far, in taxes It allows them to assess how much current debt you have and how responsible you've been in making payments on existing debt
It allows them to assess how much current debt you have and how responsible you've been in making payments on existing debt
What makes a loan be categorized as secured? It is secured after all payments are made It is secured because it is backed up with some form of collateral It is secured when the borrower receives the loan amount from the bank It is secured when someone co-signs on the loan
It is secured because it is backed up with some form of collateral
Why is your W-2 so important? It proves that you're legally allowed to work in the US It determines how much tax money is withheld from each paycheck It provides the income and tax information you need to complete a 1040 form
It provides the income and tax information you need to complete a 1040 form
Which of the following people is legally required to file a tax return? Millie, who can be claimed as a dependent and earned $350 by mowing neighborhood lawns Juan, who can be claimed as a dependent and earned $12,900 from his internship Helen, who can be claimed as a dependent and earned $1,500 as a babysitter Sam, who can be claimed as a dependent and earned $250 from his own business
Juan, who can be claimed as a dependent and earned $12,900 from his internship
Laura has a substantially higher credit score than her sister, Caroline. They are both shopping for new cars and plan to pay for them over 4 years. Which statement is likely TRUE? Laura's APR and monthly payments will both be lower Laura's APR and monthly payments will both be higher Laura's APR will be lower but her monthly payment will be higher Laura's APR will be higher but her monthly payment will be lower
Laura's APR and monthly payments will both be lower
Which statement about car leases is TRUE? Leases typically have lower monthly payments than you'd pay to purchase the same car using a loan Leases typically have higher monthly payments than you'd pay to purchase the same car using a loan Leases are always the better option when getting a car, especially if you have a downpayment Leases are never the better option when getting a car, especially if you have a downpayment
Leases typically have lower monthly payments than you'd pay to purchase the same car using a loan
When choosing a mutual fund to invest in, all of the following are important factors to consider, EXCEPT... Length of the fund fact sheet Diversification across asset classes Management fees and expense ratios Companies held by the fund
Length of the fund fact sheet
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? Cara: On subsidized loans, you never pay any interest; you pay interest on unsubsidized loans. 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. 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. Clare: Subsidized loans come from private banks, while unsubsidized loans come from the Federal government.
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.
An investor can best harness the power of compounding by doing all of the following, EXCEPT Making frequent trades Starting to invest early Reinvesting earnings Minimizing risk
Making frequent trades
Which of the following statements is TRUE about the state of retirement in the U.S.? Most Americans are able to retire at their full retirement age Many retirees are able to support themselves on Social Security payments alone The majority of employers offer pension plans for workers Many people may need to invest to build wealth and to support themselves in retirement
Many people may need to invest to build wealth and to support themselves in retirement
All of the following are common investing strategies EXCEPT Active Investing Dollar-Cost Averaging New York Stock Exchange Socially Responsible Investing
New York Stock Exchange
Which of the following is a characteristic of a brokerage account? Typically no capital gains tax Limits on how much you can invest No penalties for withdrawing your money Used for retirement savings
No penalties for withdrawing your money
Which of the following represents a "rule of thumb" for how much student loan debt you should be willing to incur to pay for college? Borrow no more than one year of your parents' annual salary Determine the sticker price for the school, and then refuse to pay any more than half that amount One year of student loan debt should be no more than the starting salary in your anticipated career Your total student loan debt should be no more than the starting salary in your anticipated career
One year of student loan debt should be no more than the starting salary in your anticipated career
All of the following are true about a passively managed fund EXCEPT... Fees for a passively managed fund are typically lower than those for an actively managed fund Passively managed funds are generally seen as low risk investments A passively managed fund guarantees the average return of the securities it includes Passively managed funds are managed by a fund manager
Passively managed funds are managed by a fund manager
What is the most reliable way to improve your credit score? Pay all of your bills on time Borrow more money on each of your credit cards Increase the credit limit on your credit card Review your credit report annually
Pay all of your bills on time
Which of the following statements about payday loans is TRUE? The average payday loan amount in the US is $1000 The typical term for a payday loan is 5 years Payday loans do not require a credit check, so they are available to borrowers even with bad credit Payday loans are easy to repay because the lender takes a small portion of every paycheck until the loan is paid off
Payday loans do not require a credit check, so they are available to borrowers even with bad credit
Which of the following statements is TRUE? Private student loans will build a student's credit while federal students loan will not Private student loans typically have more flexible repayment plans than federal loans Private student loans are best for students who have already received all possible federal loans but still have a funding gap Private student loans are almost always taken out by parents because the federal government doesn't offer loans to parents
Private student loans are best for students who have already received all possible federal loans but still have a funding gap
Which of the following is a key feature of the debt snowball method? Ranking your debts from largest to smallest debt so you can pay off the largest one first Ranking your debts from smallest to largest debt so you can pay off the smallest one first Making the minimum payment on all debts and then putting the rest of your money into investments Making the minimum payment on all debts and then distributing the remainder between the debts
Ranking your debts from smallest to largest debt so you can pay off the smallest one first
All of the following are true about self-employed workers EXCEPT...? Self-employed workers generally have to pay self-employment taxes Self-employed workers are always exempt from filing income tax returns Self-employed workers generally have to file an annual return and pay estimated taxes quarterly Self employed workers define their work and how they will do it
Self-employed workers are always exempt from filing income tax returns
Why might a target date fund be a good option for someone who wants a hands-off approach to investing? Target date funds automatically adjust your asset allocation as you get to retirement Target date funds are actively managed by a fund manager Target date funds only invest in low-risk bonds Target date funds offer low fees while also promising to outperform the market
Target date funds automatically adjust your asset allocation as you get to retirement
Which of the following is TRUE about the difference between tax CREDITS and tax DEDUCTIONS? Both lower your overall tax burden in the exact same way Tax CREDITS are a dollar amount you have applied to next year's tax return, while tax DEDUCTIONs apply directly to this year's tax return Tax CREDITS are subtracted from your gross income, while tax DEDUCTIONS reduce the amount of taxes you owe Tax CREDITS reduce the amount of taxes you owe, while tax DEDUCTIONS are subtracted from your gross income
Tax CREDITS reduce the amount of taxes you owe, while tax DEDUCTIONS are subtracted from your gross income
Kelsey wants to open a credit card and has narrowed her choice down to three possible options. Which factor is MOST important in determining which card she should get? Which card her best friend has The annual fee for each card Whether each card FDIC insured The most recognizable brand
The annual fee for each card
Eli is planning ahead for retirement. They should consider all of the following factors when determining how much they'll need in retirement EXCEPT... What age they plan to retire The current balance in their checking account The lifestyle they want to lead in retirement How much money they expect to receive through Social Security
The current balance in their checking account
The United States has a "progressive" tax system. This means that... All individuals pay the same tax rate You pay the tax rate of the highest bracket you fall into The higher your income is, the lower your tax rate becomes The higher your income is, the higher your tax rate becomes
The higher your income is, the higher your tax rate becomes
The definition of credit card APR is... The total amount of purchases they charge on an annual basis The total interest paid for a purchase The average credit score each person is assigned based on their payment history The percent the credit card company charges you for the benefit of receiving a temporary loan from them
The percent the credit card company charges you for the benefit of receiving a temporary loan from them
Juan buys a bond with a fixed coupon rate of 3%. Six months later, similar bonds that are issued have a coupon rate of 4%. Which of the following is TRUE? The price of Juan's bond will increase More investors will be willing to buy Juan's bond The interest rate of Juan's bond will increase to reflect the current market The price of Juan's bond will decrease
The price of Juan's bond will decrease
If someone asks you what your "tax bracket" is, they are asking about your marginal tax rate which is... The tax rate you pay on your last dollar of income The total amount of money you paid in taxes last year The refund amount on your last tax return The average tax rate you pay on your entire income
The tax rate you pay on your last dollar of income
Why might someone want to file a tax return even if they don't meet the minimum income requirement? They claimed EXEMPT on their W-4 form There is a penalty fee for not filing no matter your income They may get a refund for any income tax withheld from their paychecks The IRS expedites processing your future tax returns
They may get a refund for any income tax withheld from their paychecks
All of the following are reasons to invest, EXCEPT... To minimize the impact on inflation, which causes you to lose purchasing power To earn a consistent rate of return with lower risk than typical savings accounts To build wealth by reinvesting your returns and allowing them to compound To earn higher average rates of return than you would in a typical savings account
To earn a consistent rate of return with lower risk than typical savings accounts
Explain what it means to own an individual stock.
To own a part of a company
You start a new job running the fryer at Bushel of Burgers. Which form will you receive first from your employer? W-2 W-4 1099 1040
W-4
To file your tax return, you need all of the following EXCEPT... W-2 Forms from all employers W-4 Forms from all employers 1040 Form Social Security Number or Tax ID Number
W-4 Forms from all employers
Which of the following makes up part of your credit score? Your salary Your employment status Whether you rent versus own your home Whether you've applied for a new loan recently
Whether you've applied for a new loan recently
Which statement includes one real benefit from shopping with a credit card? You may earn cash back, travel rewards, or other perks for each dollar you spend Most stores will give you a discount if you pay with credit instead of cash or debit It pulls money directly from your bank account, preventing you from overspending If you do not have the money to pay your monthly bill, you can just wait a few months and pay the same amount then
You may earn cash back, travel rewards, or other perks for each dollar you spend
Which of the following pieces of information should you expect to provide to a lender on loan applications? Your race or ethnicity Your education background Your annual income At least three personal references
Your annual income
Your investor profile is a snapshot of what kind of investor you are and takes into account: Your net worth The amount of debt you have How much investing experience you have Your time horizon and risk tolerance
Your time horizon and risk tolerance
What risk are you taking when you invest your money in the stock market?
not making a profit and loosing money in the market
What are the two ways you can make money from investing in the stock market?
selling stocks for a higher price, receiving dividends
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? the APR the term the credit limit the annual fee
the annual fee
