Henning 2012-13
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Financial Literacy Final Exam Study Guide
Chapter 1
1. What affect does education have on your earnings? What else can affect income?
2. What are some ways you can pay for college?
3. What details are included in job descriptions?
4. What are the college degrees we discussed?
5. How are subsidized and unsubsidized loans different?
6. Whatdo you call a thank you letter to a potential employer and when should you
send it?
7. Define job shadowing.
8. Name some good advice for resumes:
9. Name some good advice for job interviews:
Chapter 2
1. How are salaried and wage workers different?
2. Why is a 401k a good way to save for retirement?
3. What the two types of businesses for entrepreneurs and describe them?
4. List some “Perks” an employee may get along with salary and benefits in their job?
5. How much is overtime pay?
6. How is net pay calculated?
7. What kind of tax is a progressive tax? (i.e. Tax increases as amount gets higher)
8. What is “pay without work” and list some examples: see page 45
Henning 2012-13
9. Define benefits:
Chapter 3
1. Explain purchasing power.What makes it go up?
2. What does COLA stand for? Does it give you more purchasing power?
3. Is inflation always bad? Explain.
4. What are reflation, deflation, and hyperinflation?
5. How is inflation measured?
6. Name and describethe 3 types of buying strategies (good and bad)?
7. Define the time value of money:
8. What agency is the clearinghouse for handling complaints on identity theft?
Answer: Federal Trade Commission (FTC)
9. What is the federal agency that enforces laws to prevent selling of mislabeled foods,
drugs, cosmetics and medical devices? Answer: FDA (Food and Drug Administration)
Chapter 4
1. What is a liability and name some examples?
2. Needs and wants are ______________, but resources are ___________. So
consumers must choose wisely.
3. How is net worth calculated?
4. What is a benchmark in long-term goal setting?
5. Give an example of a fixed expense and a variable expense
6. What can be done your budget does not balance?
7. Define Assets, Liabilities and Financial resources
Henning 2012-13
8. Know the Budget Equation: Income = Savings + Expenses and explain what
adjustments you could make if your budget is not balanced. Be able to explain
why a budget is important (Essay)
Chapter 5
1. List an example of a demand deposit accounts (customer can withdraw money at
any time)
2. What is a disadvantage of a CD?
3. What do you write on a special endorsement?
4. What do you write on a restrictive endorsement?
5. Describe liquidity. Which is the most liquid, a savings account or an IRA (individual
retirement account)?
6. What does it mean if the bank posted an NSF (non sufficient funds) notice?
7. What kind of interest calculates on the principal as well as previously earned
interest?
8. What is an outstanding check?
Chapter 6
1. Who is a beneficiary?
2. What does renter’s insurance protect?
3. List the risk strategies discussed.
4. Explain the stop loss provision in a health insurance policy.
5. Describe these car insurances: Collision, Comprehensive, Liability
6. In health insurance, what is major medical insurance? What is basic?
7. Define insurance premium and deductible
Henning 2012-13
8. Be able to explain at least three different types of insurance – Auto, homeowners,
renters, health, life, and disability. Why is insurance important? (Essay)
Chapter 7
1. What is credit?
2. What are you doing when you look at pros and cons or buying something and lining
it up with your goals?
3. List some rewards of being financially responsible
4. What are characteristics of financial irresponsibility?
5. How does making late credit card payments affect you?
6. What are benefits of using credit card?
7. Be able to describe and explain characteristics of a financially responsible and
financially irresponsible lifestyle. (Essay)
8. Be able to name at least three types of credit and be able to explain them: (Essay)
Chapter 8
1. When should you get a preapproved loan?
2. What is an unsecured loan?
3. What does it mean to be upside down on a loan?See page 258
4. Who may offer high interest unsecured loans to people that can’t get credit?
5. What would the security deposit in a rental agreement used for?
Henning 2012-13
Chapter 9
1. Can a person when declaring bankruptcy keep any possessions? Anything?
2. How long does bankruptcy stay on your credit?
3. What are the 3 forms of bankruptcy and briefly describe them?
4. What can happen to your car if you don’t pay your car loan and you ignore collection
attempts?
5. The process of helping consumers resolve problems with creditors and others is
called what?
6. What is the Fair Credit Reporting Act?
Answer: Allows you to see what’s in your credit report
7. What is included in Truth in Lending Act? – Loan companies must disclose what up
front to borrowers?
Answer: All fees, finance percent (APR), and how finance charges are
computed, total amount you will pay over the course of the loan
A FEW IMPORTANT TAKEAWAYS FROM FINANCIAL LITERACY:
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Formal and/or informal education increases your __________ potential and your
_____opportunities so plan it out and research the 10-year outlook for your chosen
major!
Don’t _______________ more than you ________________.
RE: Savings: start _______________ and don’t raid the __________ _________. Pay
_____________ first!
Budget equation: Income = Savings + _______________. Make a budget and stick to it.
Using credit is spending money you have not __________ yet, so use credit _________.
Never pay only the _______________ payment required on a credit card.
Bankruptcy should be the very _______ _________.
Please come back and see me when you are out on your own and tell me how it is going!
SINCERE BEST WISHES for a solid financial future – I believe you can do it well!