Name: Personal Financial Literacy - Final Exam - 2013-2014 - Part 2 1) As resources become scarce or more difficult to get, prices rise in the form of a) demand-pull inflation b) cost-push inflation c) real-cost inflation d) all of the above 2) The rate that banks charge their most creditworthy business customers is called the a) discount rate b) prime rate c) federal funds rate d) reserve rate 3) The cost of making and delivering Product A is $5000 The company marks up this amount by 40 percent to set the price What is the price of the product? a) $7000 b) $7525 c) $9000 d) $6235 4) Which of the following would typically be considered a need (rather than a want)? a) a new car b) housing c) vacation trip d) several pairs of shoes 5) Which of the following would be considered a cash inflow? a) net pay b) rent c) savings d) expenses 6) Which of the following is an asset? a) credit card balance b) net worth c) savings account d) car loan 7) The value of what you give up (when you make a choice) is the a) tradeoff b) asset c) net worth d) opportunity cost 8) The amount you budgeted to spend on food for June was $500 The amount you actually spent was $455, resulting in a a) $45 unfavorable variance b) $55 favorable variance c) $45 favorable variance d) None of these
9) Which of the following is a fixed expense? a) food b) rent for an apartment that has a yearly lease c) utilities d) clothing 10) Which of the following is a variable expense? a) rent for an apartment that has a yearly lease b) payment for car insurance c) car payment d) entertainment 11) When you create a personal budget, the second step in the process is to a) balance the budget b) plan the amount you will save c) estimate your income d) estimate your expenses 12) Basic needs include items that make life more enjoyable, such as a television 13) The term wants refers to items people desire for reasons beyond survival and basic comfort 14) A financial plan should include a) personal goals b) financial goals c) a timeline for reaching goals d) all of these 15) With an automatic withdrawal, money is added to your account electronically 16) An ATM card can be used to withdraw money from a checking account 17) Floating a check is a common consumer practice that makes effective use of a checking account
18) A certificate of deposit (CD) is a demand deposit that allows you to withdraw your money at any time without penalty 19) Money placed in an IRA may be tax-deductible when deposited 20) If you deposit $500 for 6 months at an annual interest rate of 7 percent, how much interest will you earn? a) $35000 b) $3500 c) $1750 d) $750 21) US savings bonds a) do not pay a guaranteed rate of interest b) may be purchased at the TreasuryDirect website c) are discount bonds issued by a state government d) none of these 22) When a paper check is transformed into a digital image, it is called a a) traveler s check b) cashier s check c) canceled check d) truncated check 23) For how many years do most savings bonds earn interest? a) 1 year b) 10 years c) 20 years d) 30 years 24) Writing For Deposit Only and then signing your name on the back of a check is a(n) a) blank endorsement b) restrictive endorsement c) special endorsement d) endorsement in full 25) A tool used to track checks, withdrawals, deposits, and fees for your checking account is a a) checkbook register b) deposit slip c) bank reconciliation d) signature card 26) The writer of a check is called the drawer
27) A card that carries an electronic balance is called a(n) a) ATM card b) debit card c) smart card d) all of these 28) c Bounced Check 29) e Endorsement 30) f Money Order 31) d Postdated Check 32) a Rule of 72 33) b Bank Reconciliation a) A formula for computing how long it will take to double money invested at a given rate b) The process of adjusting the checkbook register and bank statement balances so that they agree c) A check that is not honored by a bank and is returned to the payee s bank due to nonsufficient funds d) A check written with a date that will occur in the future e) A signature, with or without instructions, written on the back of a check f) A type of check used to pay bills or make payments for which the money is guaranteed 34) Of the many risks you will face during your lifetime, some are avoidable, and others are not 35) A business can take action to avoid or lessen the impact of a systemic risk 36) Avoiding risks is the strategy whereby you stop the behavior that leads to the risk 37) When you buy insurance, you are following a risk strategy known as transferring risk 38) Self-insuring is an effective method of reducing risks
39) c Beneficiary 40) b Probability 41) d Self-Insure 42) a Renter's Insurance a) A tenant s policy that protects against the loss of personal property b) The likelihood of a risk resulting in a loss c) The person designated to receive money from a life insurance policy d) Setting aside money to be used in the event of injury or loss 43) Losing money, big or small, is which type of risk? a) risk of financial loss b) personal risk c) risk of financial resources d) unavoidable risk 44) The amount of money you must pay toward your medical expenses before your insurance company begins to pay is called the a) deductible b) copay c) coinsurance d) rebate 45) Group insurance plans (Click ALL that may apply) a) typically have lower premiums than the same plan purchased individually b) typically have higher premiums than the same plan purchased individually c) may be provided by employers d) none of these 46) Which of the following types of health insurance coverage provides for routine medical care, hospital stays, and surgery services? a) basic health care b) major medical c) catastrophic illness d) vision and dental 47) Which of the following risk strategies involves lowering your chances of risk, such as taking lessons to lower your risk of falling while skiing? a) avoiding risks b) reducing risks c) transferring risks d) assuming risks 48) Which of the following types of risk might involve breaking your leg and missing an important event? a) risk of financial loss b) personal risk c) risk of financial resources d) all of these
49) Which type of automobile insurance provides coverage against damage to your car if it is hit by another car or turns over? a) liability b) collision c) comprehensive d) uninsured motorist 50) A type of life insurance that allows policyholders to change the premiums and the death benefit throughout the life of the policy is called a) whole life b) variable life c) universal life d) term