Money Matters Final Exam Review
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
Help!
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| Something you will accomplish within 3 months | Short-term goal
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| Type of loan used to purchase goods and services; there is no payoff deadline; monthly minimum payments vary based on the balance | Credit Card
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| The process used to balance the checkbook register each month to the balance shown on the bank statement | Reconcile
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| something that you have to have | need
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| * Systematically invest the same amount in the same investment at regular intervals to reduce the impact of price swings | Dollar Cost Averaging
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| * Used to determine how long it takes for your money to double | Rule of 72
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| How much money you owe in total versus how much you make | Debt-to-Income Ratio
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| Type of bankruptcy that erases most of your debt; requires you undergo financial counseling | Chapter 7
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| a plan for managing your money during a given period of time | Budget
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| The entire amount of money you owe to lenders | Debt
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| spreading your money among different savings and investments | diversification
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| place to record all transactions including deposits, checks, debit card purchases, additional fees, and ATM use | check register
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| The mathematical relationship between time, money, a rate of return, and earnings growth | Time value of money
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| something you would like to have | wants
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| expenses that fluctuate in amount; usually have more control over how much they'll be | variable expenses
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| method by which employers can deposit your paycheck directly into your bank account | EFT (Electronic Funds Transfer)
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| Ability to wait in order to obtain something he or she wants | Delayed Gratification
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| the process of earning interest on interest | compounding
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| goals that are specific, measurable, attainable, realistic, and time bound | SMART goal
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| Type of loan used to buy a house; is typically repaid over 15-30 years | mortgage
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| expenses that cost the same amount every time | fixed expenses
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| Occurs when someone uses your name, Social Security number, credit card number, or other personal information without your permission | Identity Theft
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| Type of endorsement where all you do is sign the back of the check | Blank endorsement
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| When the difference between the purchase price and the selling price is positive | capital gains
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| provides small income and other services to the elderly | Social Security Tax
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| Total amount of income from your wages, before any payroll deductions are taken out. | Gross Income
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| __________ is an example of a fixed expense. A. Groceries B. Electric Bill C. Rent or mortgage D. Auto insurance | Rent or mortgage
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| What is NOT a low/risk reward investment? | commodities
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| What type of check endorsement is more secure than a blank endorsement because the receiver writes "For Deposit Only" and the account number where the money will be deposited above the signature. | Restrictive endorsement
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| What are the 3 credit reporting agencies? | Equifax, Transunion, and Experian
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| What can happen if a check "bounces" | A. you will be charged a fee by the store
B. You will be charged a fee by your bank
C. your credit score can be reduced
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| Which type of credit has the highest interest rate? (2) | Credit Card (2)
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| According to the Rule of 72, how long will it take $10,000 invested at 6% to double in value? | 12 years
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| Which stock index would you most likley find smaller technology companies? | NASDAQ (National Association of Securities Dealers Automated Quotations)
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| Oh no! Lost your job? What is the best thing to do? | Have at least 3 months' of savings as a financial safety net to get through this crisis
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| What does S&P stand for in the S&P 500? | Standard & Poors
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| Which equity index is the most commonly followed in the US? | DIJA (Dow Jones Industrial Average)
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| Approximately how much should you expect to be taken out of your paycheck every month for taxes? | 20%
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| A number, roughly between the average of 300 to 850 that reflects the credit history detailed by a person's credit report is called what? | Credit Score
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| T or F? Rent is considered a variable expense. | False
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| T or F? An overdraft occurs when a consumer withdrawal from a bank account exceeds the available balance. | True
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| T or F? How you manage your cash flow affects if, when, and how you reach your goals. | True
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| T or F? The interest paid on a mortgage is typically higher than any other type of credit. | False
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| T or F? Not paying your bills on time does not affect your credit score. | False
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| T or F? Income is any money you spend. | False
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| T or F? Diversification is reducing investment risk by putting money in several different types of investments. | True
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| T or F? A pro of using a debit card is that it doesn't allow for overspending. | True
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| T or F? You use an EFT machine to withdrawal cash and make deposits. | False
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| T or F? it is best to enter all transactions and fees in your check book register to avoid any overdrafts. | True
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| T or F? Credit is something of value that lenders can repossess if you are unable to repay a loan as promised. | False
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| True or False? Your parents credit score determines your credit score. | False
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| T or F? P.Y.F. (Pay Yourself First) refers to your savings. | True
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| T or F? You can use the interest from your mortgage as a tax deduction. | True
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| T or F? Gross income is your take-home pay. | False
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| T or F? The sooner you invest your money, the more time it has to make new money, making it likely that you could earn much more as a result. | True
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| T or F? A check with a blank endorsement can be cashed by anyone. | True
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| T or F? It is a good idea to write your Social Security Number on all checks to avoid having to look it up every time a merchant asks for it. | False
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| T or F? Maintaining high balances on your cards does not hurt your credit score. | False
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| T or F? Your budget will change as your income grows and your priorities change. | True
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| T or F? The risk/reward trade-off is the principle that an investment must offer higher potential returns to compensate for the increased potential unpredictability. | True
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| T or F? A common long-term goal may involve saving for collage for parents of a newborn child. | True.
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| How do you use the Rule of 72? | Take 72 and divide it by your interest %.
Ex: 72/10
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| What is the Rule of 72? | Allows you to divide your interest rate by 72 and find how long it takes for your investment to double.
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