Midterm

Question 1

What should a consumer pay most attention to when shopping for a savings account?

Answer 1

Whether the account would be in a bank, savings loan, or credit union.

Question 2

What is the result of owning 100 shares of stock, valued at $25.35 per share, which splits 2 for 1.

Answer 2

You now own 200 shares of stock worth $2,535.

Question 3

List some facts about a 401(K) retirement plan.

Answer 3

Contributions are deducted from your salary before taxes and contributions are sometimes matched by the employer.

Question 4

You are offered to work overtime at the movie theater for an additional $50 on Saturday. You are also invited to a friend’s house for a cookout. After working hard all week, you have decided to have some downtime with your friend. What is your opportunity cost?

Answer 4

$50.

Question 5

What are two things that are required to determine your net worth?

Answer 5

Assets and liabilities.

Question 6

Using the Rule of 72, determine the interest rate needed to double $500 in 10 years.

Answer 6

7.2%

Question 7

As Mariah is looking over the sales receipt, she discovers a 9.75% additional charge on top of the purchase price. What is most likely the reason for the extra percent?

Answer 7

Sales tax on the shirt she purchased.

Question 8

What’s an example of a situation where liability insurance could protect a policy holder?

Answer 8

Angie backed into a vehicle in the grocery store parking lot and caused $3,000 in damages to the other vehicle.

Question 9

You have a $100 deductible on your collision car policy. You have a wreck which causes $500 in repairs. How much money should you expect to pay for the repairs?

Answer 9

$400.

Question 10

What are some examples of situations where stocks would increase or decrease for Delta Airlines?

Answer 10

Large increase in gas price or United Airlines going out of business.

Question 11

How can a card holder avoid paying interest on a credit card?

Answer 11

Pay the balance in full each month.

Question 12

What would be some good strategies for handling your ATM or debit card?

Answer 12

Memorize the PIN, keep in a safe place, and report loss immediately.

Question 13

Describe an accurate benefit for a budget.

Answer 13

It allows you to plan how your income will be saved/spent, leading to long-term financial security.

Question 14

It is suggested to save _____ of living expenses in an emergency fund.

Answer 14

3 to 6 months.

Question 15

How would a car or home be defined? A liability, asset, equity, or net worth?

Answer 15

As an asset

Question 16

List a fact about a loan variable.

Answer 16

The longer the time period of the loan, the smaller the payments.

Question 17

What is the term for providing traditional checking and savings accounts for individuals and businesses?

Answer 17

Depository Institution.

Question 18

What is the time frame in which short term financial goals should be set and accomplished.

Answer 18

Within one year.

Question 19

Which of the following is a variable expense? Rent, utility bills, insurance premiums, student loan payment.

Answer 19

Utility bills.

Question 20

What is the single most important decision you can make to keep your credit score high?

Answer 20

Pay the credit card bill in full.

Question 21

Which kind of credit is expressed in a store advertising with “30 Days Same as Cash”?

Answer 21

Non-installment credit

Question 22

What is the function of the FDIC? (Federal Deposit Insurance Corporation)

Answer 22

To insure member depository institutions against loss.

Question 23

Jane and Stephanie both borrow $15,000 from the same bank to purchase the same make and model car. Jane’s credit score is 732 and Stephanie’s is 588. Who is more likely to pay a lower finance charge?

Answer 23

Jane.

Question 24

What is an accurate comparison and contrast of debit and credit cards?

Answer 24

Unlike credit cards, a debit card withdraws money from your account from immediate payment.

Question 25

Yolanda owes $500 on each of her three credit cards. Credit card A charges 7% interest. Credit card B charges 8% interest. Credit card C charges 9% interest. If Yolanda has $1,000 to pay down her credit card debt, then what is her best choice to minimize future interest changes?

Answer 25

Pay off both cards B and C.