Test 1 Part 1

Question 1

What does a collection agency usually refer to?

Answer 1

A business that pursues payments of debts owed by individuals or businesses.

Question 2

To garnish a person’s wages means to do which of the following?

Answer 2

To take extra money from their paycheck for legal reasons related to debt that is owed.

Question 3

Financially, the term grace period is usually associated with which of the following?

Answer 3

Allows payment to be received for a certain period of time after the actual due date.

Question 4

How many years will it take to pay off $1,600 in credit card debt at 18% and making minimum payments of 3%? Use the Credit Card Calculator under the Financial Websites tab.

Answer 4

10.25 Years

Question 5

How many years will it take to pay off $10,000 in credit card debt at 18.9% and making minimum payments of 3%? Use the Credit Card Calculator under the Financial Websites tab.

Answer 5

21.3 Years

Question 6

What is a scam?

Answer 6

A dishonest way of making money by cheating people

Question 7

When an asset increases in value compared to the original purchase price, then this is known as which of the following?

Answer 7

Capital Gain

Question 8

In financial terms, what does compensation refer to?

Answer 8

All of the above

Question 9

Which of the following is the best example of diversification?

Answer 9

Buy stock from ten different companies.

Question 10

Which of the following is the best example of a mutual fund?

Answer 10

Owning 5 Shares of a stock portfolio that includes 30 different companies in the portfolio.

Question 11

Which of the following are examples of philanthropy?

Answer 11

Giving a lot of money to a charitable cause.

Question 12

Which of the following is an example of fraud?

Answer 12

Making up expenses on your tax return so you won’t have to pay the government as much money.

Question 13

Use the Compound Interest Calculator under the Financial Websites Tab. If you put $1,000 in the stock market and invest another $1,000 in the stock market each year for 40 years at an average interest rate of 8.5%, then how much money will you accumulate after 40 years?

Answer 13

Over $340,000

Question 14

Use the Compound Interest Calculator under the Financial Websites Tab. If you put $1,000 in the stock market and earn 8.5% interest each year, then how much money will you have after 40 years?

Answer 14

Around $26,000

Question 15

What is the difference between leasing and buying a car?

Answer 15

If you want a new car and don’t drive too many miles, leasing can be a better deal for some people.

Question 16

What is the problem with having a budget of $6,000 a month and a income of $60,000 per year.

Answer 16

The expenses of $6,000 per month are greater than the monthly income.

Question 17

What is GDP?

Answer 17

Gross Domestic Product

Question 18

If the CPI index becomes higher, how does this affect inflation?

Answer 18

Inflation will usually become higher.

Question 19

When inflation is high, which of the following is true?

Answer 19

Answers A and B.

Question 20

What is the Federal Reserve?

Answer 20

It is the central bank of the United States and it determines monetary policy.

Question 21

If you make $12 and hour and work a regular 40 hour week, then approximately how much money will you earn in a month before taxes (gross income)?

Answer 21

Approximately $2000

Question 22

If you plan on spending $480 per year on clothes, how much should you budget per month for clothes?

Answer 22

$40

Question 23

What is the main purpose of a budget?

Answer 23

All of the above.

Question 24

Microsoft’s share price is much less than Apple. Which of the following is true?

Answer 24

It just means each share of Microsoft is less expensive but it doesn’t tell you which company is a better company.

Question 25

Which of the following companies is the largest private company?

Answer 25

Cargill

Question 26

What is the difference between a public and private company?

Answer 26

A public company has to provide it’s financial information to the public and it’s shareholders.

Question 27

What is the SEC?

Answer 27

Securities and Exchange Commission

Question 28

What is the current price of a share of Apple Stock?

Answer 28

$500-600

Question 29

What is the current level of the Dow Jones Industrial Average?

Answer 29

Between 15,500 and 16,500

Question 30

Which of the following is the best example of a salary?

Answer 30

A payment that you receive on a regular basis for a job that you have.