MONEY MATTERS
Virtual Business Simulation – Personal Finance
REVIEW
Matching:
a.
b.
c.
d.
e.
f.
g.
h.
i.
Capital Gain
Income Tax
Mutual Fund
Diversification
Credit History
Bull Market
Risk
Finance Charge
Growth Stock
j.
k.
l.
m.
n.
o.
p.
q.
r.
Dividends
Rate of Return
Bear Market
Large-Cap Stock
Interest Rate
401(k) Plan
Money Market
Pension
1040EZ
s.
t.
u.
v.
w.
x.
y.
z.
Principal
Bonds
W2
Market Capitalization
Capital Loss
Small-Cap Stock
FICO Score
Return
1.
G
The chance that an investment may lose value.
2.
T
Money loaned to the government or corporations that pays the investor interest.
3.
W
When what you sell a stock for is less than what you originally paid for the stock.
4.
Y
Credit score from 300-850 that rates how likely a person is to fall 90 days behind in a payment.
5.
I
Stocks of companies that generally do not pay dividends. Instead, money is invested back into
the business. Typically for new and entrepreneurial companies.
6.
K
The annual amount of money an investment makes, given as a percentage.
7.
A
When you sell a stock for more than you paid for it; income must be reported on taxes.
8.
V
A method of assessing the value of a company by multiplying the number of shares by the stock
price. The dollar value of total stock ownership.
9.
H
A fee for borrowing money, added to a monthly credit card bill.
10. M
Stocks of very large companies such as WalMart, General Electric, and IBM that have a market
capitalization of between $10 billion and $200 billion.
11. O
A type of employer-sponsored retirement plan in which money is contributed on a pre-tax basis.
12. U
Report sent from the employer to both the IRS and the employee, showing how much the individual earned and paid in taxes the previous year.
13. F
A time with generally rising stock prices.
14. N
The fee a borrower owes for the use of a creditor’s money.
15. D
Owning a collection of investments such as stocks, real estate, money market funds, etc. in order
to spread risk and have a safer investment overall.
16. P
An account that invests in short-term, liquid investments.
17. B
Tax paid to the state, federal, and local governments based on income earned over the past year.
18. C
A pool of stocks, bonds, and other securities managed by an investment company.
19. R
The quick tax form most often used, in paper or online, for those with uncomplicated tax situations.
They are considered very low risk.
20. L
A time with generally falling stock prices.
21. S
The amount of money borrowed.
bought with the card.
22. E
A summary of a person’s borrowing and repayment history.
23. Z
Monetary increase that an investment makes.
24. Q
A fixed sum paid regularly by an employer to an employee after retirement.
25. J
Quarterly payout of profits by a company to all shareholders.
26. X
Stocks of largely unknown companies with smaller market capitalization of between $300 million
and $2 billion.
On a credit card bill, this is the purchase price of all items
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
27. B
28. D
You ran short of cash and borrowed $50 from your rich cousin.
insisted that you owed $60. What is the extra $10 called?
a. Bribery
c. Principal
b. Interest
d. Credit
You are paying 11% interest on a cred card balance of $2,000.
you are paying each month?
a. $11.00
c. $13.33
b. $15.33
d. $18.33
When you pad her back, she
Which of the following best estimates the intere
29. C
A paycheck has withholding tax taken out:
a. If a person earns more than
c. That is paid to state and federal taxing authorities
$600 a year
b. That is always equal to $9.54
d. That is automatically refunded to workers even without
filing a 1040EZ form
30. C
An associate degree is a
a. 4-year degree
b. 6-year degree
31. B
c.
d.
2-year degree
None of these
You put $1,000 in an interest bearing bank account that pays 1% per year but has a fee of $2
per month. Are you getting ahead?
a. Yes
b. No
32. C
You forgot to pay last month’s credit card bill. Your creditor will probably:
a. Cancel your account
b. Send you a reminder to pay the bill
c. Add finance charges and late
d. Reduce your minimum payment
fees to your bill
33. A
Improving your credit score will let you get
a. Lower interest rates on loans
b. Higher interest rates on savings accounts
34. B
35. A
36. C
You invest $5,000 in a fund. You check your statement at the end of March and you have lost
15%. When the statement for April comes, you see you have gained 15% in April. What is
the value of your account? Round to the nearest dollar.
a. $5,000
c. $5,150
b. $4,888
d. $4,500
Tax refunds:
a. Occur when a taxpayer’s income tax withhold exceeds
what they owe
b. Come to taxpayers regardless
of whether they file an income
tax return or not
c.
Come from extra money the federal government
has left over at the end of the year
d.
Include interest paid to the taxpayer by the federal government based on hold that money
throughout the tax year
You earn $22,000. The tax table says you owe $3,456 in taxes. During the year, your tax
withholdings were $5,333. What happens next?
a. You owe an additional $3,456
c. You will receive a refund of $1,877
b. You owe an additional $1,877
d. Nothing, you’re even.
37. D
Someone who can tolerate a risky investment would:
a. Wake up in the middle of the
c. Be very concerned that a downturn would wipe
night worrying about the
out the long-term gains
investment
b. Keep all money in a savings
d. Understand that an investment that fell when the
account at a bank for long-term
entire market fell was not necessarily a bad
growth
investment
38. B
A resume is generally _____ page(s) in length.
a. Two to five
c. Three
b. One
d. Any of these page counts
39. B
If you buy enough different stocks, you can diversify out all risk in the stock market.
a. True
b. False
40. A
Diversification is good because:
a. It spreads the risk of
investment
b. Interest rates rise and fall
41. C
42. A
c.
Mutual funds have higher fees than individual stocks
d.
It focuses investments on a single stock to take advantage
of growth potential
The penalty for not paying taxes owed:
a. Can’t be calculated if you do
c.
not file taxes
b. Can be determined by the
d.
Social Security Administration
even if withholding is not taken
from your paycheck
Includes penalty fees and interest calculated starting
April 15 of the year the taxes are owed
Will be $600 plus interest starting April 15 if you do not
file a tax return, regardless of the amount of your wages
Why is it harder to estimate expenses than to estimate income?
a. Expenses often change more
c. You can never truly know how much you spend
from month to month
b. Your income will never change d. None of these
43. B
You have some cash. You can either invest it in a mutual fund that pays approximately 6% of
payoff some credit card debt at 10%. Which should you do?
a. Invest in the mutual fund
b. Pay off the credit card
44. A
When should you begin saving for retirement?
a. As soon as you enter the
c. In your 30s
workforce
b. In your 50s
d. Right before you retire
45. B
Savings accounts generally offer a higher yield than stock investments.
a. True
b. False
46. A
If you have a long-time horizon for investing, you should:
a. Lean toward high-risk
c. Keep at least 75% cash or money market funds for immediate
investments with high-return
availability
potential
b. Own only one stock
d. Diversify into savings accounts and U.S. savings bonds
47. C
What is the official retirement age, according to the US government?
a. 55
c. 67
b. 65
d. 70
48. D
49. B
50. C
You invested $2,300 in a stock. Your account now has a value of $2,643.
gain on the investment (rounded to the nearest percent) was ?
a. 0%
c. 10%
b. 5%
d. 15%
Your percentage
All investments eventually increase in value if held long enough.
a. True
b. False
You expect that an investment could gain or lose as much as 20% in a year.
is $15,000. What is the lowest value you expect at the end of the year?
a. $3,000
c. $12,000
b. $7,000
d. $15,000
Your investment