Exam
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the
question.
1) During the Great Depression, New Deal policymakers came up with mortgage (home loans) and
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consumer lending policies that convinced commercial banks that:
A) They would not be able to compete with loan sharks in the industry of consumer lending
B) Consumer credit was not a profitable industry
C) Consumers would not be willing to use credit, since borrowing money for large purchases
D)
had not previously been an option for the middle class
Consumer credit could be profitable
2) Key components of financial planning include all of the following except:
A) Write out a detailed plan for accomplishing your goals
B) Replace money myths with money truths
C) Regularly monitor and reassess your financial plan
D) Allow your financial planner to make all of your major money decisions
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3) Which of the following steps is the First Foundation?
A) Get out of debt
B) Pay cash for your car
C) Save a $500 emergency fund
D) Build wealth and give
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4) Which of the following is not a record-keeping feature you could expect from your bank?
A) An account register
B) A monthly account statement
C) A reconciliation sheet
D) Customer service reconciles your account for you
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5) A credit score is intended to measure:
A) Your financial success
B) The amount of money you have in the bank
C) Your income level
D) The risk of your not repaying debt
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6) Which of the following could be a negative consequence of taking out student loans?
A) Not having the freedom to be a stay-at-home parent because of student loan payments
B) Having to delay investing and saving for your future because of student loan payments
C) Not having flexibility in your career options because of student loan payments
D) All of the above
6)
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7) Identify which method companies are using to compete for your money: TV commercials
A) Personal selling
B) Financing
C) Media
D) Product positioning
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8) Which of the following statements is false?
A) In addition to economic savings, wise consumers also enjoy improved health and have a
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positive impact on the larger social and even global environment.
B) Being a wise consumer involves developing a variety of skills, from product research to
careful comparative analysis.
Your choices as a consumer have no impact on the larger social environment.
C)
D) Using a cost-benefit analysis approach to your buying decisions will make you a wise
consumer.
9) When buying and selling investments, you should not:
A) Set your investment goals and consider a time frame
B) Understand basic investment strategies and identify ones that will help you reach your
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goals
Switch your investment strategy often, based on market conditions
C)
D) Learn the different types of investments
10) Life insurance policy for a specific period of time is called:
A) Level
B) Whole life
C) Universal
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D) Term
11) When it comes to communicating with others about money, you should not:
A) Pick the right time and place
B) Be honest
C) Listen
D) Manipulate
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12) Which of the following are characteristics of an effective personal goal?
A) It should be measurable and specific.
B) It should be easy to accomplish.
C) It should be determined by your friends or parents.
D) It should be vague.
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13) Your budget should include all of the following except:
A) Saving
B) Spending
C) Giving
D) Lending money to friends
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14) Which of the following is a consequence of spending more than you make?
A) Stress
B) Missed opportunity to save and invest
C) A cycle of debt
D) All of the above
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15) Why should interest earned not be a factor with your emergency fund?
A) Interest-bearing accounts at banks earn a high rate of interest, therefore, interest is not a
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concern.
B) The emergency fund is not intended to grow wealth.
C) Inflation can eat up the interest earned.
D) None of the above
16) Rent is a:
A) Fixed expense
C) Discretionary expense
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B) Variable expense
D) Intermittent expense
17) Which of the following is not a recommended step in the Drive Free method of purchasing a car?
A) Plan your purchase in advance using the sinking fund method of saving.
B) Place your savings in a mutual fund so that your money can make more money.
C) Explore new car dealerships for the best interest rate.
D) Start with an inexpensive car and gradually move up in car value as your savings increases.
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18) Which of the following statements is false?
A) Students rarely drop out of college due to financial trouble.
B) On-campus jobs may pay you directly or pay toward your tuition bill.
C) Research shows that students who work up to 20 hours a week have the highest grade point
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D)
averages.
Research shows that working more than 20 hours a week may affect your grades negatively.
19) Which of the following is not a form of product positioning?
A) Brand recognition
B) Shelf positioning
C) Financing
D) Packaging and color
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20) Which of the following describes why using cash is a great bargaining tool?
A) Cash has immediacy.
B) Cash is visual.
C) Cash is emotional.
D) All of the above
20)
21) The benefit of diversification in your investments is:
A) Increased return
B) Reduced risk
C) Reduced tax liability
D) Increased risk
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22) The time between the disabling event and the beginning of payments in your disability coverage
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is called:
A) Elimination period
B) Stop gap
D) Out of pocket
C) Deductible
23) For women, the ________ is the most important key to financial security.
A) Checking account
B) Job promotion
C) Emergency fund
D) Envelope system
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23)
24) The government relies on taxes to:
A) Remind citizens of the government's power
B) Pay for services such as roads, education and social services
C) Burden the public with an extra expense
D) All of the above
24)
25) What percentage of American households give to charity?
A) 65%
B) 5%
C) 20%
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D) 100%
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the
question.
26) Review the Chapter 1, Section 2 segment titled, "What's Your Money Personality?" Which
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27) Explain how marketing can affect your decisions when it comes to spending money.
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28) What two things do you consider when evaluating the time value of money?
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29) Describe the various payment options that come with a checking account.
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30) What should you do if you think you are a victim of identity theft?
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31) What excites you the most about life after high school?
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32) Identify ways companies compete for your money.
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33) What role does research play in getting good deals on purchases?
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34) Explain how compound interest works.
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35) Explain how someone becomes self-insured.
35)
36) How does communication about important financial matters in households reduce
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of the four student responses most matches your view of money?
conflict?
Select the word that is described in the statement.
37) Taxes paid by anyone who owns property such as land, a home or commercial real estate
37)
38) Write down something you learned in this chapter.
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(property taxes, estate taxes)
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39) Does the "history of credit and consumerism" segment make you view the use of credit
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40) Why do you need an emergency fund at your age?
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41) Describe some changes in circumstances that might affect a personal budget.
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42) What are some things you can do to protect your personal information?
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43) Write down three reasons why you should avoid student loans.
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44) What effect does inflation have on purchasing power?
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45) What are the most common types of consumer fraud?
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46) Why do single stocks carry a high degree of risk? Why do mutual funds carry less risk?
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47) Why should life insurance not be used as an investment?
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48) Summarize ways that you can overcome the challenges you summarized in question
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differently than you did before? Explain your answer.
number four.
Select the word that is described in the statement.
49) Taxes paid out by anyone who earns an income (estate taxes, income taxes)
49)
50) How can giving to others have a positive impact on you?
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TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
51) Most Americans today are wealthy and will have financial security when they retire.
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52) Since you are a teenager, what you do now with money will have little effect on your financial
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53) When you're older and out of school, you'll need to grow your emergency fund into a full three to
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54) Online bill pay allows you to make payments to whomever you wish without having to write a
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55) Co-signing a loan is a good way to help a friend or relative.
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future.
six months' worth of expenses.
check and send it in the mail.
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56) A four-year degree is necessary regardless of which career you're entering.
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57) Teens have cited "friends" as the strongest influence over their purchase decisions.
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58) Being married (or emotionally attached) to a purchase will cause you to lose bargaining power.
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59) A mutual fund portfolio that is properly diversified will have all investment dollars located in just
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60) Comprehensive coverage takes care of damage to your car that is not caused by a collision.
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61) Discussing important financial matters with household members can reduce conflict.
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62) It is expected that young adults will achieve the same standard of living as their parents shortly
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63) When we give to others, we become less self-focused.
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64) Learning the language of money is not that important because you will be able to depend on
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65) When you're in high school, you won't have the same emergency expenses as your parents.
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66) The envelope system works great for managing spending on things that don't normally have a
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67) If you are a victim of identity theft, you are only responsible for paying back half of the debt.
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68) The average millionaire reads one nonfiction book a month.
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69) You should never wait overnight before making a big purchase if there is only one item left.
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70) Making informed choices as a consumer will usually yield savings.
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71) Saving and investing have nothing to do with the amount of money you make.
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72) Duplicate coverage, or any extra insurance on top of your existing insurance, is not necessary.
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73) Communication, teamwork and consistency are all important elements in handling family
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one of four different classes of financial assets.
after graduating from college.
financial planners to manage your money.
fixed monthly expense.
finances.
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74) Without contentment, your whole life will just be jumping from one thing to another, always
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75) There is nothing that distinguishes your values and interests from those of other teenagers.
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hoping that the next thing will be the thing that will make you happy.
VOCABULARY. Define each term or phrase in the space provided or on a separate sheet of paper.
Select the word that is described in the statement.
76) A fee paid by a borrower to the lender for the use of borrowed money.(bills, interest)
77) A system by which goods and services are produced and distributed (assets, economy)
Select the word that is described in the statement.
78) Saving money over time for a large purchase (installment loan, sinking fund)
Select the word that is described in the statement.
79) Your own record of all your transactions (check register, account statement)
Select the word that is described in the statement.
80) A detailed report of an individual's credit history (credit report, cash flow statement)
Select the word that is described in the statement.
81) A program that allows students to work part time while continuing their studies (work study, overtime)
Select the word that is described in the statement.
82) To buy an item with credit; paying over time (financing, marketing plan)
Select the word that is described in the statement.
83) Type of yard sale with more items, usually the entire contents of a household (pawn shop, estate sale)
Select the word that is described in the statement.
84) Quality of an asset that permits it to be converted quickly into cash without loss of value; availability of money
(risk, liquidity)
Select the word that is described in the statement.
85) Specific amount of money that you pay when insurance only covers a portion of costs (fee, out-of-pocket
expense)
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Select the word that is described in the statement.
86) Cooperative and coordinated effort on the part of a group of persons acting together in the interest of a
common goal (isolation, teamwork)
Select the word that is described in the statement.
87) The practice of providing help and advice to people in a community before they have to ask for it (sponsor,
outreach)
Select the word that is described in the statement.
88) A period of temporary economic decline during which trade and industrial activity are reduced; generally
identified by a fall in gross domestic product (GDP) (market economy, recession)
Select the word that is described in the statement.
89) Compares after-tax income to the money people spend on a variety of items (interest rate, savings rate)
Select the word that is described in the statement.
90) To match your bank statement with your checkbook (cash flow plan, reconcile)
Select the word that is described in the statement.
91) Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a
loan (annual percentage rate (APR), annual fee)
Select the word that is described in the statement.
92) Allows students to learn basic professional skills in two years or less; typically cut out many of the general
courses required by traditional universities (trade school, self-education)
Select the word that is described in the statement.
93) The promotion of a product or service by identifying it with distinct characteristics; usually associated with
public perception, quality or effectiveness (product positioning, branding)
Select the word that is described in the statement.
94) Process by which the holder of a mortgage sells the property of a homeowner who has not made interest
and/or principal payments on time as stipulated in the mortgage contract (foreclosure, refund)
Select the word that is described in the statement.
95) Distribution of a portion of a company's earnings, decided by the board of directors, to a class of its
shareholders (interest, dividend)
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Select the word that is described in the statement.
96) An amount of money you pay to help cover a portion of your medical costs (annuity, co-payment)
Select the word that is described in the statement.
97) A confidence and satisfaction in oneself (self-esteem, money personality)
Select the word that is described in the statement.
98) The Fifth Foundation (save a $500 emergency fund, build wealth and give)
Select the word that is described in the statement.
99) A debt evidenced by a "note," which specifies the principal amount, interest rate and date of repayment (bank
fee, loan)
Select the word that is described in the statement.
100) Save a $500 emergency fund (the First Foundation, the Fourth Foundation)
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