Deck 15: Personal Finances

Question 1

If you find errors in your credit report, it is nearly impossible to get them corrected.

Answer 1

False

Question 2

If whenever something goes wrong (car repairs, doctors' bills), you have to use your credit card, this is a sign of financial problems.

Answer 2

True

Question 3

Credit bureaus compile a numerical credit score called a FDIO score for each credit user.

Answer 3

False

Question 4

In determining your credit score, the length of your credit history is not nearly as important as the types of credit you use.

Question 5

Extrafax, Expertion, and TransAtlantic are the three national credit bureaus.

Question 6

You have financial problems if you're a splurger and/or your bills are too high for your income.

Question 7

It is against the law to charge a higher interest rate to individuals with poor credit.

Question 8

FICO stands for Fair Isaac Company-the company that developed the credit score.

Question 9

The majority of FICO scores fall into the 700-900 range.

Question 10

Individuals with high FICO scores are likely to have to pay higher interest rates, if they can get a loan at all.

Question 11

Failing to pay debts can ultimately cause you to serve time in prison.

Question 12

When you obtain a free credit report, it will contain your FICO score.

Question 13

If you are unable to pay your debts, the best thing to do is to change your phone number to avoid collection calls.

Question 14

Whenever you use credit, those you borrow from provide information on your debt and payment habits to three national credit bureaus.

Question 15

An alternative to a credit card is a debit card, which pulls money out of your checking account whenever you use the card to buy something or get cash from an ATM.

Question 16

Average credit card debt per U.S.household has been decreasing since the 1990s.

Question 17

In order to get a high credit score, you need to use credit sensibly.

Question 18

By law, credit bureaus cannot share personal credit scores and other information about credit history with others.

Question 19

Basically all credit cards are the same in terms of interest rates, fees and payment schedules.

Question 20

If your monthly bills are too high for your income, do whatever you can to bring down those bills.

Question 21

Typically, your financial plans do not change very much over the course of your life.

Question 22

In order to get out of debt, it is recommended that you do all of the following except:

A)cut up your credit cards.
B)start living on a cash-only basis.
C)try to lower your monthly bills.
D)take out a cash advance on one card and pay off the others with the cash received.

Question 23

Finance concerns the flow of money from one place to another.

Question 24

Credit cards _____.

A)are all about the same
B)all charge annual fees
C)often allow cash advances
D)rarely charge late payment fees

Question 25

Which of the following is not true about debit cards?

A)If you spend or take out more money through an ATM machine than you have in your account, banks do not charge fees if you are in the overdraft protection program.
B)Debit cards are accepted by most merchants.
C)Debit cards can help you to control spending.
D)Banks need to get your permission before enrolling you in an overdraft protection program.

Question 26

In order to get a handle on your finances and begin to get out of debt, financial planners suggest you do the following for one week:

A)pay only the minimum balance due on your credit cards.
B)count up your ATM fees.
C)cash your paycheck rather than putting it in the bank.
D)sell your textbook.

Question 27

In compiling your credit score, the credit bureaus considers all of the following except_____.

A)payment history
B)total amount owed
C)length of your credit history
D)income

Question 28

If for some reason you can't pay your debt you should:

A)try to return anything you've purchased.
B)stop making your house and car payment and concentrate on your credit card bills.
C)change your phone to an unlisted number.
D)call your lenders and explain the situation.

Question 29

Stage 1 of an individual's financial plan should focus on preserving wealth.

Question 30

Your FICO score will be _____.

A)average if it is in the 600-700 point range.
B)lower if you pay more than the minimum balance due on your credit cards
C)higher if you recently applied for several loans
D)lower if you have borrowed from a mix of lenders

Question 31

What is the best way to get a copy of your credit report?

A)Ask someone at your bank
B)Ask your credit card company
C)Go online and request a free copy
D)Buy a copy from one of the three credit report agencies.

Question 32

Which of the following is not true about credit card costs?

A)You can avoid annual fees by shopping around but the tradeoff for no annual fee might be a higher interest rate.
B)Over-limit fees are charged whenever you exceed your credit line.
C)6% of late-payment fees are incurred by college students.
D)Cash advance fees are often about 1% of the amount borrowed.

Question 33

Budgeting is the application of financial principles to the monetary decisions that you make either for your individual benefit or for that of your family.

Question 34

A big advantage of a credit card is that:

A)it helps you build credit.
B)if you miss a payment, you will get a grace period.
C)you can get unlimited cash advances for any amount.
D)the annual fee is lower than for a debit card.

Question 35

Discuss today's relevance of the saying from the great English writer, Samuel Johnson, "Do not accustom yourself to consider debt only as an inconvenience; you will find it a calamity."

Question 36

Explain the functions of a credit bureau.

Question 37

You are more likely to qualify for a loan if you _____.

A)never had a need for a credit card
B)are married
C)rent an apartment rather than own a house with a mortgage
D)have a history of borrowing

Question 38

If you take out a $10,000 loan to buy a used car and pay the loan off in four years, your borrowing cost at 14% is _____ as it is at 6%.

A)about the same
B)more than twice as much
C)three times as much
D)four times as much

Question 39

Debit cards can be expensive to use because:

A)they can cause you to overdraft your checking account and consequently incur an overdraft fee.
B)the finance charge on debit cards is higher than on credit cards.
C)the annual fee for these cards is higher than for credit cards.
D)merchants charge a fee when you use them.

Question 40

If your credit score has been damaged, what can you do to improve it?

A)It cannot be repaired
B)It is easy to repair
C)Pay more than the minimum balance due on your credit cards
D)Get credit in another name

Question 41

Insurance pays an income to an insured person when he or she is unable to work for an extended period of time.

Question 42

A potential employer will likely spend ten minutes reviewing your résumé.

Question 43

Disability insurance pays an income to an insured person when he or she is unable to work for a few days.

Question 44

A defined benefit plan allows a specified amount of pretax dollars to be used to pay for qualified expenses, including health care and childcare.

Question 45

Over the course of the financial life cycle, families headed by college graduates will earn about ___________more than families headed by high school graduates who didn't attend college.

A)$1.6 million
B)$500,000
C)$200,000
D)$3.4 million

Question 46

The purpose of a résumé is to get an interview.

Question 47

Life stages and events play a big part in the determination of financial planning.

Question 48

Generally, financial needs peak somewhere in stage 2, at approximately age fifty-five, or ten years before typical retirement age.

Question 49

Your first step in applying for a job is to write a cover letter- a document that explains why you're sending your résumé and highlights your qualifications.

Question 50

In entrepreneurship as in most other walks of adult life, the better your education, the more promising your financial future.

Question 51

For every $1 that you spend on your college education, you can expect to earn about $35 during the course of your financial life cycle.

Question 52

People who graduate from college can expect to generate _____ more annual income each year than those earning only a high school diploma.

A)$33,000
B)$17,500
C)$5,000
D)$10,000

Question 53

Most young people can get along without medical insurance.

Question 54

For every dollar that you spend on your college education, you can expect to earn about _______ during the course of your life.

A)$100
B)$3
C)$500
D)$35

Question 55

The first step in getting a good job offer is the interview.

Question 56

Which of the following questions would you not ask yourself if you were engaging in financial planning?

A)How much debt do I have
B)How much money will I need when I retire
C)Would I have been better off if I had purchased a car rather than leased it
D)What's my annual income

Question 57

Federal Plus is a federally sponsored program that provides students with paid, part-time jobs on campus.

Question 58

Most employer-sponsored health insurance plans include dental and eye coverage.

Question 59

It is required by law that employer-sponsored health insurance plans cover the employee, the employee's spouse and their children.

Question 60

About 90% of young people with college degrees indicate that their education has already paid off or will pay off in the future.

Question 61

Which of these employee benefits is just as important or perhaps even more important than medical insurance?

A)Retirement plans
B)Disability insurance
C)Vacation and sick leave pay
D)Flexible spending account

Question 62

What should you consider when evaluating a job offer?

Question 63

To understand the value of saving money, the most important thing to learn is the power of _____.

A)investing
B)compound interest
C)the money market
D)the stock market

Question 64

What is your primary goal during a job interview?

A)To get a job offer
B)To discuss salary
C)To discuss job benefits
D)To decide if you want to work for the company

Question 65

John Creighton just received a financial aid package that includes several forms of support.Which of the following type of aid is based on his financial need and does not have to be repaid?

A)Athletic scholarship
B)Pell Grant
C)Work study
D)Both b and c

Question 66

Which type of student loan accrues (builds up) interest while the student is enrolled in college at least part-time?

A)Subsidized Federal Stafford Loan
B)Unsubsidized Federal Stafford Loan
C)Federal Perkins Loan
D)Federal Stafford Jumbo Loan

Question 67

The principle whereby a dollar received in the present is worth more than a dollar received in the future is called compound interest.

Question 68

The purpose of interest is to cover the cost of lost opportunity.

Question 69

Paula Gordon just completed an important job interview as an applicant.She is home now.What should she do?

A)Call the company and thank the interviewer.
B)Call the company and ask if she got the job.
C)Send a thank-you note (or thank-you email) to the interviewer/company.
D)Send the receptionist a thank-you card and small gift.

Question 70

The first step in getting a job offer is to prepare a(an) _____.

A)financial plan
B)résumé
C)cover letter
D)reference list

Question 71

After sending a résumé and cover letter to the company for the job you want, the next thing to do is to:

A)follow up to see if your materials got to the right place and offer additional information.
B)wait to see if you get a response.
C)further refine your résumé and cover letter.
D)make several calls to the company requesting an interview.

Question 72

Mike gets 5% interest on his savings, but the inflation rate is 3%.So his rate of return is 8%.

Question 73

Discuss the major job benefits often provided by employers.

Question 74

With simple interest, principal plus interest earns more interest.

Question 75

A(n) _____ is a form of retirement savings plan in which the employee contributes money each pay period to his or her retirement account and the employer matches a portion of the contribution.

A)defined benefit plan
B)open enrollment plan
C)cafeteria plan
D)defined contribution plan

Question 76

The purpose(s) of a cover letter is to:

A)indicate why you are sending your resume.
B)detail your educational achievements and relevant job experiences.
C)highlight your qualifications.
D)both a and C

Question 77

The main purpose of a résumé is to _____.

A)get you a job interview
B)highlight your work experience
C)emphasize your recent education
D)point out your skills and abilities

Question 78

What is the purpose of disability insurance?

A)Covers medical costs for you and your family members
B)Pays you for time lost from work due to a job injury
C)Provides medical coverage to individuals with disabilities
D)Pays an income to you when you are unable to work because of illness for an extended period of time

Question 79

A general job search would include all of the following approaches except:

A)checking career web sites.
B)reading classified ads in newspapers.
C)placing "available for work" ads in magazines.
D)attending career fairs.

Question 80

After writing your résumé and cover letter, the next step is to:

A)create a list of companies you would like to work for.
B)practice interview skills.
C)buy clothes for an interview.
D)network with friends and family.