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1LS Personal Finance
LS Personal Finance Final Review
| Question | Answer |
|---|---|
| What do Financial advisors say will give you a 90% better chance of reaching goals? | Write goals down |
| A well written financial goal includes what elements? | Specific, measureable, attainable, realistic, time-bound |
| What protects a customer against loss at a financial institution? | FDIC insurance |
| What has Check 21 done for electronic banking? | Instantaneous electronic banking |
| What medical information is found on a consumer's credit report? | Information regarding late medical payments |
| On average, what is the largest major expenditure? | Housing |
| What financial tool assists the individual with reaching financial goals and helps track where their money is going? | Spending plan |
| What is the least secure method for an employer to pay the employee? | Mailing printed paychecks |
| Does the government provide to health insurance for most American workers? | The American government does not provide health insurance to employed people. |
| What 2 types of insurance are included in a homeowner's policy? | Property and liability |
| What do goals help people focus on? | Important things keeping the end in mind |
| What is the relationship between values and financial decisions? | Because values are influenced by family, friends, and experiences, they affect a person's financial decisions. |
| How do financial decisions influence a person's interpretation of needs and wants? | By recognizing needs and wants, they guide a person's decisions |
| Identify a non-contractual (flexible) expense? | Eating out |
| What is the function of the Federal Deposit Insurance Corporation? | |
| What is the best way to handle job interview questions about your weaknesses? | Discuss a weakness you had, but have now overcome |
| What category of expenses does food fit in? | Cost of living expenses |
| What are some specific deductions taken from a person's paycheck? | Federal withholding tax, state withholding tax, and FICA |
| Is developing a spending plan a one time process? | Developing a spending plan is a continual process because it will change with an individual's or family's financial situation |
| According to the time value of money, how does the power of time benefit an individual? | Money paid out or received in the future is not equivalent to money paid out or received today. |
| What does "pay yourself first" mean? | An individual should consider savings to be a fixed expense |
| How does electronic banking benefit customers? | Electronic banking allows customers to perform transactions via electronic funds transfers 24 hours a day. |
| What accounts are unique to a credit union? | Share accounts and share draft accounts |
| Name an ATM safety tip. | Shield the screen from on lookers |
| What is the primary purpose of a checking account? | Help manage money and make paying bills more convenient |
| Why is Regulation E implemented by the Federal Reserve? | Combat the security issues of online banking |
| What is an advantage of using credit? | Not having to carry large amounts of cash |
| Name an example of identity theft. | An individual who uses another's personal information to opne an account. |
| What should a consumer do if they are a victim of identity theft? | Call all majoy credeit bureaus to request a "fraud alert" be put on file. |
| How can an individual protect their social security number which is the key number to their identity? | Obtain alternate numbers on driver's licenses, insurance cards or other financial materials. |
| What are two out-of-pocket costs of being insured? | Deductible and premium |
| What do people transfer when they buy insurance? | Part of the risk of financial loss to the insurance company |
| What does disability insurance replace? | A portion of one's income if they become unable to work due to illness or injury. |
| If a person plans to put a purchase on a credit card that will take them five months to repay, what is it important for them to consider when choosing a credit card? | Low annual percentage rate for purchases |
| If a person needs to borrow cash from a credit card, what is it important for them to consider when choosing a credit card? | Low percentage rate with a low minimum fee |
| What is the relationship between risk and return? | The higher the possible return, the higher the risk |
| What does an individual have to accept to increase the potential rate of a higher rate of return on their investments? | A growing risk to their capital invested |
| How should a person work toward a goal of buying a home? | Create a financial plan to save up for the down payment and other housing costs which may mean cutting current expenses to save money. |
| What is most important to remember about a housing lease? | The terms of a lease agreement are legally binding. |
| What is a security deposit? | Money paid prior to moving into a living space to the landlord or the property manager to be used for repairs or damage to the space beyond wear and tear expected. |
| What is the maximum amount an individual should pay for a home? | Two and one half times his/her annual household income |
| If a driver has liabilbity insurance on their vehicle and were involved in accident that was their fault, what would their insurance cover? | Injuries to the other driver and damages to the other driver's vehicle |
| What makes a new vehicle considered a "lemon"? | Remains unfixed after four repair attempts |
| If exspenses exceed income on a spending plan, what would be a financially smart solution? | Decrease expenses |
| Explain the liquidity of saving and/or investing? | Savings are generally considered more liquid and easily accessible |
| What form(s)must be completed when and employee starts a new job in order to receive a paycheck? | W-4 and I-9 |
| What is the approximate amount deducted from the paycheck for taxes? | 31% |
| At which stage of the Personal Financial Management Pyramid is the process of writing SMART goals coarried out? | Every stage |
| What are the three stages of the financial life cycle? | Basic wealth protection, wealth accumulation, and wealth distribution |
| What is the purpose of a cover letter? | Get an interview |
| Why is investing in human capital for career development important? | An investment in one's human capital lasts a lifetime. |
| What does a person lose if they receive their pay for their job in the form of a payroll card, and the card is lost or stolen? | The individual may lose only $50 because of the Regulation E or Electronic Funds Tranfer Act |
| If no payment is made on a debt with an interest rate of 8%, according to the Rule of 72 when will the debt double? | 9 years |
| If you suddenly acquired $500 and wanted to save the money to be used for a specific purpose in five years, what type of cash management tool would be the best option? | A certificate of deposit because it would be for a specified time length |
| Beau discovered charges that he did not make while reviewing his credit card statement. What is the first thing he should do to resolve the theft? . | Contact the credit card company immediately |
| At 18 years old you applied for credit for the first time. Your credit application was declined because you had no credit history. What could you do to begin to build a positive credit history? | Obtain a secured credit card |
| Define deductible. | Amount paid by the policy holder for an agreed upon pportion of loss |
| Define stock. | A share of ownership of the assets and earnings of a company. |
| Define credit report. | A record of an individual's credit history. |
| Define net worth. | Amount of money left when liabilities are subtracted from assets. |
| Define phishing. | When internet scam artists use either pop-up messages or emails to lure people into giving personal information. |
| Define inflation. | Steady rise in the general level of prices |
| Define collateral. | An item promised to the lender if the borrower does not pay back the loan |
| Define broker. | A person licensed to buy and sell stocks and provide investrment advice. |
| Define premium. | Discounted savings tool purchased for 50% of the face value from the US government |
| Define mutual fund. | A company combines the funds of many different investors and then invests that money in a diversified portfolio of stocks and bonds |
| Define savings bond. | A type of debt that a company issues to investors for a specific amount of time. |
| Define generic brand. | Items that have less fancy packaging and are cheaper because they are not advertised. |
| Define diversified portfolio. | Spreading investment money among a wide array of investment tools that will provide an acceptable return with an acceptable exposure of riswk |
| Define tiered interest rate. | The amount of interest earned depends on the account balance |
| Tom is working for a grocer. He earns $8.00 an hour, works 40 hours a week, and gets paid every 2 weeks. He pays $63.08 into federal withholdings, $33.21 into state withholdings, and $42.05 into FICA withholding. | Tom's gross pay on his paycheck is $640.00. |
| Tom is working for a grocer. He earns $8.00 an hour, works 40 hours a week, and gets paid every 2 weeks. He pays $63.08 into federal withholdings, $33.21 into state withholdings, and $42.05 into FICA withholding. | Tom’s net pay on his paycheck is $363.32. |
| You made a mistake on your checking account recordkeeping and spent $10 more than you had deposited in this account. As a result, you can expect to be charged an: | Overdraft Fee |
| Tessa's net income is $1500 per month and her total expenses equal $1200. What is the minimum amount of money she should keep in a liquid asset emergency fund? | $9,000 |
| What is the component that determines the majority of your credit score? | Outstanding debt |
| Define savings tools. | Secure and liquid accounts offered by depository institutions assisting in the management of a savings fund |
| Define withholding allowance. | Determines the percentage of gross pay which will be withheld for taxes |
| Define APR. | Annual Percentage Rate |
| Define financial goal. | Specific objectives that are accomplished through financial planning. |
| If you are going to the beach in one year and need to save $1,000, what would be the best savings or investment tool for you to use? | CD |
| The terms of your automobile insurance policy are 20/50/10. If you were in an accident involving 3 people having bodily injuries, what is the maximum the policy would pay per person for bodily injury | $20,000 per person with a maximum of $50,000 |
| Define iability insurance. | The minimum amount of automobile insurance required by law |
| What does the spending plan encompass? | Future money management plan |
| What occurs as you move up the investment pyramid? | Risk increases |
| If you are going snow skiing in six months and need to save for the trip, what would be the best savings or investment tool for you to use? | Savings account |
| What formula is used to calculate net worth? | Total Assets - Total Liabilities = Net Worth |
| Differentiate between assets and liabilities. | Assets are everything owned of value and liabilities are everything owed to others. |
Created by:
vpowell
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