BYU FINL Flashcards
What is the definition of a “want”?
something you would like to have but can survive without
Paul wants to purchase a brand new truck. He has to take out a loan from the truck company in order to pay. He will be making payments of $550 a month. If at any time he is unable to pay, the truck company can take Paul’s truck from him. Which of the following is the best term for this scenario?
a. repossession
b. secured loan
c. all of the above
repossession and secured loan (all of the above)
Jacob, who accumulated some debt when he was in college, wants to eliminate his debt. Now that he is working, he can put $100 extra toward his debt elimination. He owes $450 on his credit card, $1,650 on his car, and $1,500 on his student loan. He determines that paying off his credit card balance first is best since it has the highest APR and that his car loan has the second highest APR. What is the total amount of Jacob’s debt when he begins his debt elimination plan?
$3,600
Which type of interest matches this definition: “interest that creditors add each year based on what your principal balance is”?
compound interest
What is something that you must have in order to survive?
a need
Which term refers to money that a lender will let you use (usually for a fee) and allows you to pay back in the future?
credit
What indicates that you have a secure connection when you are purchasing something online?
https://
what does the federal reserve do
determines the annual interest rate for our country
Which of the following is a key component of financial literacy?
a. being aware of your needs and wants
b. being educated about credit and debt
c. knowing how to make a financial plan
d. all of the above
being aware of your needs and wants, being educated about credit and debt, and knowing how to make a financial plan (all of the above)
According to the lesson, what is the average amount of credit card debt American households have accumulated?
between $15,000 and $16,000
Use the following data to determine the amount of interest you would pay on this simple interest loan: Principal Amount, $15,000; Interest Rate, 3%; Monthly Payment, $100; Loan Term, 5 years.
450$
Who should be responsible for your finances
You.
what are good reasons to learn money management skills
to make wise financial decisions, to make better decisions about what purchases you make, and to know how to make realistic budgets (all of the above)
Pick the scenario that best represents the most positive financial outcome.
a. Brett and Wendy are newlyweds who have accumulated loans totaling $5,000 for their wedding and honeymoon costs. They have a plan to pay off those loans in one year and another plan to save for a down payment on a new car.
b. Matilda has one credit card with a $500 maximum limit. Using her credit card will help her establish a good credit rating to show loan institutions that she is financially responsible. She does not pay any financial costs because she pays the entire amount she borrowed on that card each month so she does not incur interest. When the time comes that she desires to purchase a car, she will be a good candidate to receive a loan.
c. Karen attends a private college where tuition is rather expensive. Before attending, she works at a part-time job and is able to save up enough money to pay for her books and supplies. However, she still has to figure out a way to pay for the expensive tuition, room, and board. She qualifies for a student loan so she takes out the maximum amount possible which exceeds the amount she actually needs.
d. Together, Susie and Mark make $84,000 and have incurred over $100,000 in credit card debt. Their monthly expenses total $6,500, so they determine they can pay a little bit more than the minimum payment toward their debt.
Matilda has one credit card with a $500 maximum limit. Using her credit card will help her establish a good credit rating to show loan institutions that she is financially responsible. She does not pay any financial costs because she pays the entire amount she borrowed on that card each month so she does not incur interest. When the time comes that she desires to purchase a car, she will be a good candidate to receive a loan.
What is the correct term for “giving up something you could purchase for a different alternative”?
opportunity cost
which scenario is a good application of simple interest a. Your brother lends you $1000, which he requires you to pay back in five months. He charges you 5% simple interest. The total amount you will pay is $1025.
b. Your best friend lends you $1000, which she requires you to pay back in ten months with no interest.
c. Your aunt lends you $1000 to help pay for college tuition. She doesn’t require you to pay it back until after you graduate. She charges you 5% simple interest. The total amount you will pay is $1050.
d. Your sister lends you $1000, which she requires you to pay back in ten months. She charges you 10% simple interest. The total amount you will pay is $950.
Your aunt lends you $1000 to help pay for college tuition. She doesn’t require you to pay it back until after you graduate. She charges you 5% simple interest. The total amount you will pay is $1050.
Your aunt lends you $1000 to help pay for college tuition. She doesn’t require you to pay it back until after you graduate. She charges you 5% simple interest. The total amount you will pay is $1050.
What is the correct term for “what consumers will pay for using credit from a lender, often referred to as interest payments”?
cost of credit
What is the definition of the term FICO?
a way to translate a person’s credit history into a number system resulting in a credit score
What is the correct term for “giving up something you could purchase for a different alternative”?
opportunity cost
Which steps should you do to protect your identity?
Prevent others from seeing your personal information, Shred all financial documents instead of throwing them in the trash, and Document all your charges and review your credit card statements each month (All of the above)
Freddie and his family are on their way to Disneyland. They decide to stop on the way and get some food since food is so expensive in the park. Freddie stops at Jimmy John’s to purchase five turkey and avocado sandwiches. He is told that they only have enough avocado for two of the sandwiches, so three people will have to go without.
scarcity
What is used when calculating the finance charge on most credit card balances?
average daily balance (ADB)
What is not an example of a positive incentive?
threats
What is the best way to describe a Ponzi scheme?
a get-rich-quick scheme
What is the actual range for credit scores in the United States?
300-850
Which body of government organizations determines the annual interest rate for our country?
Federal Reserve
Filing bankruptcy should not be an option until all other possibilities have been explored, especially working things out with creditors and finding ways to pay back debts.(True or False)
True
Margret needs to purchase some new shoes, but she only has a certain amount to spend. She finds three stores with the options she seeks. Which of the items below should Margret consider when looking at her different options?
a. the sizes available on the day of the sale
b. the designs available on the day of the sale
c. the cost when compared to the other two options
d. all of the above
the sizes available on the day of the sale, the designs available on the day of the sale, and the cost when compared to the other two options (all of the above)
Which statement is true of credit cards?
a. Credit cards are the number one reason that more than half of all Americans spend more money than they make.
b. Credit card companies target mostly college students.
c. Credit card company interest rates are determined by the Federal Reserve.
d. All of the above.
Credit cards are the number one reason that more than half of all Americans spend more money than they make, Credit card companies target mostly college students, and Credit card company interest rates are determined by the Federal Reserve (All of the above)
Which situation applies to when you should use money management principles?
a. in high school
b. in college
c. when you get married
d. all of the above
in high school, in college, and when you get married (all of the above)
