Personal Finance Exam 1

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When preparing an estimated value of contents list for your renter’s insurance, which of the following would you include on that list?

television

computer

stereo

all of the above

Which type of policy should you purchase after getting married, buying a home, and having children?

Life Insurance

Renter’s insurance

Property Insurance

Health Insurance

Which type of health insurance policy do you have if your insurance company does not pay anything until you have reached your deductible?

Fee-for-service plan

High Deductible health plan

HMO

PPO

If you wanted to ensure that you were able to receive the lowest premium rate for your homeowner’s insurance, which of the following would not help your rate?

smoke detectors

swimming pool

sprinkler system

fire alarm

Your friend is married, owns a home, and has two children. He wants to get the most insurance possible for the cheapest rate. Which policy would you recommend?

Term life insurance

Variable life insurance

Universal life insurance

Whole life insurance

You just bought your first new (used) car for $15,000. The car is out of factory warranty but the salesman can offer you an extended warranty that is 5 years, 50,000 miles, and covers the same items as a factory warranty for $2,000. Will you purchase it? Why or why not?

You purchased a new camera for $500 and it comes with a 1 year limited warranty. The salesperson is offering you a 3 year extended warranty for $50. Will you purchase it? Why or why not?

Based on what you learned in this section, which type of insurance policy do you think is the most important to have and why?

Decide if the person should typically use savings, short-term debt, long-term debt or doing without.

Buying a new TV without having a job or savings:

savings

short-term debt

long-term debt

do without

Decide if the person should typically use savings, short-term debt, long-term debt or do without.

Paying for your mortgage if you have just lost your job:

savings

short-term debt

long-term debt

do without

“Youth culture” is a term that marketers use when they are trying to sell their product to which group?

children between the ages of 1-5

children between the ages of 6-10

teenagers

college students

Which of the following are NOT typical characters used in a commercial by a company marketing to teenagers?

Popular Radio DJs

Current Hip-Hop Artists

Popular Classical Musicians

Popular Professional Athletes

Which of the following graphs is the best way to display your income?

histogram

pie chart

bar Graph

line Graph

Sherri got a new job as a teacher for the local school. Her rent is going to be 40% of her income, she will save 10% each month, she plans to use 40% of her income on other fixed expenses, and will use 20% of her income to pay for flexible expenses such as going out with friends. What mistake is Sherri making?

40% of her income is going to rent.

She is saving 10% of her income each month.

She is using 40% of her income on other fixed expenses.

She is making less than she is spending.

Which of the following is not a way to accumulate wealth?

Getting a mortgage and making monthly payments on your home

Being sure to save money each month

Only saving money when you have a chance

Using a compound interest account for your savings

Which item helps you prepare for a future financial emergency?

Savings

Rent

Utility Bill

Water Bill

Tejas has decided to finance his college education through student loans. He is planning on taking out $100,000 in loans to become a nursery school teacher. On average, would this be something a finance professional would recommend?

Yes, because you should always finance your education

No, because he is taking out more debt then he will ever be able to pay back

Yes, because he is using the money to advance his career

No, because you should never take out student loans

Which of the following is the best example of making a financial mistake?

Running up credit card bills and not being able to afford to pay them off

Going into debt to get a mortgage for a new home

Going into debt to pay for your undergraduate degree at a university

Charging an item on your credit card but waiting until the bill is due to pay it off the same month

Which of the following accounts would you have a debit card linked to?

Savings account

Checking accountCD

ATM account

Based on what you learned about managing assets, which account would you typically pay your bills from each month?

Savings Account

Money Market Account

Checking Account

CD

If you wanted to open an account for everyday use and were not concerned about earning interest, which account would you choose?

Savings Account

Money Market Account

Checking Account

CD

Which account would you put money in if you wanted to earn a guaranteed interest rate over a period of 6 months?

Savings Account

Money Market Account

Checking Account

CD

Which financial institution usually offers the higher interest rate on savings accounts?

National or Regional Bank

Credit Union

What is one advantage to using a credit union?

They are able to offer better rates than commercial banks because they are exempt from being monitored

They are able to offer better rates than commercial banks because they are exempt from federal taxes

They are able to offer better rates than commercial banks because they are exempt from rules and regulations

none of the above

One financial institution is offering a 3% interest rate on savings accounts while another institution is offering a 2% interest rate on savings accounts. Out of the two financial institutions, which offer would the bank probably be offering?

3% interest rate

2% interest rate

One financial institution is offering a 3% interest rate on savings accounts while another institution is offering a 2% interest rate on savings accounts. Out of the two financial institutions, which offer would the credit union probably be offering?

3% interest rate

2% interest rate

Which financial institution would you typically use if you moved around a lot?

brick and mortar bank

internet bank

Which bank typically provides 24/7 access to your finances?

brick and mortar bank

internet bank

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