Diagnostic Exam

Diagnostic Exam

1. Sylvester is taking out a loan and is confused by the jargon. Which of the following explanations might help him? 

   1. TERM is the length of the loan, and INTEREST RATE is how much total money he will pay

   2. PRINCIPAL is how much he owes per month, and TERM is how much he owes overall

   3. INTEREST RATE is how much the lender charges per year for the loan, and PRINCIPAL is the initial amount Sylvester takes out

   4. MONTHLY PAYMENT is how much interest costs him each month, and TERM is the name of his lender

1. Which should you use when creating a budget - your NET PAY or GROSS PAY? 

   1. Net pay, because it’s what is reported to the government by your employer for tax purposes

   2. Gross pay, because it’s the total amount you’ve earned that month

   3. Net pay, because it’s the total amount you’ve earned minus taxes and other deductions

   4. Gross pay, because it’s the total amount you’ve earned minus any recurring bills you owe for the month

1. Every month, Tatiana's take home pay is $3200. After she does all of her spending, she's left with anywhere from $25 to $250 that she puts into her emergency fund. Her goal is to have 3 months' pay in the emergency fund as soon as possible. What "first step" would be MOST effective in reaching this goal?

1. Every time she is about to make a purchase, ask herself, "Is this a need or a want?"

2. Stop making her student loan payments until she has an emergency fund built up 

3. Try to increase her savings by at least $10 each month

4. Set up deposit of $350 per month from her paycheck directly into savings, and redo her budget around this savings plan

1. When trying to decide which college has the lowest cost of attendance, which is the most important for students to consider?

   1. Sticker price

   2. Net price

   3. FAFSA

   4. Room & board

1. How can you improve your credit score?

   1. Pay all of your bills on time

   2. Spend more money on each of your credit cards

   3. Pay off and then close all of your credit cards

   4. When merchants ask, "Credit or debit?" always choose credit

1.  Which of the following is a method of accessing the money in your checking account?

   1. Buy a prepaid card using cash

   2. Deposit a paycheck from your job

   3. Insert your debit card at a store and sign the electronic machine or paper receipt

   4. Take money from the ATM using your credit card

1. StayWell Health Insurance is offering a plan with a monthly premium of $240, a deductible of $6500, and maximum out-of-pocket expenses of $10,000. Which of the following people is that plan BEST suited for?

   1. Charles, who has long-term health problems and sees a doctor an average of 8 times per year

   2. Jeanie, who has two children in elementary school and is having her third child this fall

   3. Velma, who has been experiencing knee pain and is pretty sure she'll need surgery some time soon

   4. Anthony, who sees a dermatologist yearly for his eczema but is otherwise healthy

1. In order to qualify for financial aid, prospective college students must file their _____________.

   1. Financial aid letter

   2. FAFSA

   3. PSAT, SAT, or ACT scores

   4. Parent's credit score

1. Which of the following best describes the amount of money you'll have if you put $1000 into a CD earning 2% annual compound interest for 10 years? You can ignore the impact of inflation in this question.

   1. The same $1000 you started with

   2. Exactly $1200

   3. Slightly more than $1200

   4. $2000

1. When discussing credit scores, your friends make the following statements. Which one of them is WRONG? 

   1. Casnell says, "Even if you close a credit card, the record of that card stays on your report for several years."

   2. Joel says, "It's best to establish credit early, so you have a long credit history before you apply for a mortgage."

   3. Jessie says, "Once you turn 18, it will be really easy to get approved for a credit card."

   4. Kwame says, "Using your credit card every month, but paying off the balance each time, is a great way to boost your credit score.”

1. When making a decision about a financial product (loan, savings account, credit card, etc.), which of these pieces of advice is LEAST valuable?

   1. Compare products based on the factors you personally find most important

   2. Do research to learn more about each of the options

   3. Read the fine print of any disclosures so you understand the fees and terms of your account

   4. Simply choose the option that your parents use

1. Which of the following will result in your paying the LARGEST amount of interest to the credit card company?

   1. Paying 20% of your credit card balance every month

   2. Making the minimum payment every month

   3. Paying off your balance every month

   4. Saying "credit" every time the cashier asks "Debit or credit?"

1. Which of the following is TRUE about a Target Date Fund (TDF)? 

   1. It is an actively managed fund that usually charges a 1-2% management fee. 

   2. A TDF will automatically adjust your assets for you over time as you get closer to retirement. 

   3. You can only sign up for the TDF that aligns with your projected retirement year. 

   4. A TDF only invests in stocks and will adjust your money between different industries over time.

1.  When it comes to paying for college, your best option is

   1. a grant or scholarship, because you don't repay them

   2. a Federal student loan, because they offer low, fixed interest rates

   3. a private loan, because they are tailored specifically for you and your family

   4. work-study, because it comes with low, fixed interest rates

1. Which of the following statements about car insurance is TRUE? 

   1. If you have insurance and are pulled over for speeding, you won't get "points" on your license

   2. If you pay your premium on-time every month, you won't have to pay anything extra if you are in an accident

   3. If you are in an accident, the other driver cannot sue if you have car insurance

   4. If you cause an accident and another driver is injured, your insurance will cover portions of his/her medical bills

1. Which of the following people is MOST likely to be a victim of identity theft? 

   1. Jordan, who uses different, strong passwords for various accounts

   2. Chelsea, who regularly checks her bank account balance while connected to the WiFi at her local cafe

   3. Morgan, who shreds all documents containing personal information before throwing them away

   4. Abby, who avoids posting on social media about topics that could be used as security questions

1.  Which description of the difference between saving and investing is MOST accurate?

   1. Saving and investing are the exact same thing

   2. Investing is best for the short-term and for emergencies while saving is best for the long-term

   3. If you have less than $10,000 in an account, what you are doing is saving. If you have more than $10,000 in your account, you are investing.

   4. Savings accounts provide a stated rate of return that is less risky. On the other hand, investors do not know what their return will be, making investing riskier. 

1. Now that you have a part time job, you'd like to open a checking account where you can deposit your biweekly checks and then use your debit card to pay for expenses with your friends. You'll probably have at most $450 in your account at any one time. As you decide where to open the account, which account feature should you probably care LEAST about?

   1. The interest rate

   2. The annual fee

   3. Overdraft fee

   4. ATM fees

1. Anna receives her first paycheck and realizes that her take-home pay is substantially less than the rate she was offered when hired. Which of the following would help explain this problem?

   1. Taxes, social security, and Medicare are being deducted from her pay

   2. Most employers charge a "payroll fee," which the company collects to offset the cost of preparing each employee's paycheck every pay period

   3. Her company is downsizing and has decided to pay her less without notice

   4. Anna's pay is smaller than she anticipated because businesses typically pay high school students less than minimum wage

1. Each of the following is a benefit of using online and mobile banking EXCEPT...

   1. You can check your balances before you make a purchase

   2. You can transfer money electronically between accounts

   3. You can eliminate overdraft fees

   4. You can keep an ongoing record of your deposits and withdrawals

1. Carmen has just graduated from college and receives a bunch of paperwork from her new job's Human Resources department. Which of the following should be her first step in making sure she's paying the correct amount of taxes?

   1. Complete a 1040 form

   2. Buy a copy of TurboTax and file her taxes

   3. Complete an I-9 form

   4. Complete a W-4 form

1. Sam has $2500 per month to spend. He estimates his monthly costs to be: rent of $800, car expenses of $650, utilities of $200, insurance of $350, food for $200, and other expenses of $100. What is the end result?

   1. A budget deficit of $200

   2. A budget deficit of $4800

   3. A budget surplus of $200

   4. A budget surplus of $4800

1. Which of the following is TRUE about robo-advising? 

   1. Robo-advisers are a form of active investing 

   2. Robo-advisers will automatically adjust your asset allocation based on your preferences

   3. Robo-advisers usually come with much higher fees than if you were to use a fund manager

   4. Robo-advisers are primarily used by people from older generations

1.  Tahira wants to put a small portion of every paycheck into a low-risk investment. Which would be her best option? 

   1. Pick 2 individual stocks and invest half of her money in each

   2. Buy shares of a super profitable tech company

   3. Invest in an S&P 500 index fund

   4. Pick 12 stocks from a variety of industries and invest in one company each month for a year

1.  Angelo has a savings account worth $1000 that earns 2% interest, a student loan of $40,000 that charges 4.6% interest, and a credit card bill that has $1500 on it with a 23.4% interest rate. He has a budget surplus of $300 at the end of the month. What should he do with the $300?

   1. Put it in the savings account so that if he does the same next month, he'll have more than enough to pay his credit card bill in full

   2. Just leave it in his checking account in case he needs it next month

   3. Pay it toward his credit card bill, because it has the highest interest rate

   4. Pay it toward the student loan, because he owes far more there than on the credit card