PERSONAL FINANCE REVIEW cards
Teacher instructions:
-
Hand each student a set of A, B, C, D cards to use for answering the questions as you post them (using attached PowerPoint)
-
Go through each question, wait for all to answer, and then go over WHY for the correct answer.
*You can divide into teams of 3-4 students if you prefer (can also use mini dry erase boards)*
Economics Personal Finance Review Questions
1.
Mr. Simpson has money which he would like set aside for future use. He could put it in savings or he could invest it. What is the difference
between the two options?
a. There is a greater risk is money is deposited in a savings account
b. An investment has a set interest rate, but a savings account does not
c. There is little risk of loss in savings, while investment implies some risk
d. Mr. Simpson could increase his funds in a savings account, but not with an investment
2.
Kim is deciding between getting a loan from her bank for a new computer or charging her credit card. Which would be the BEST decision?
a. Charge the credit card because she can get the computer right away
b. Get the loan because the interest rate will be fixed, rather than variable
c. Charge the card and pay a little each month so she can get lots of credit built up
d. Get the loan because Kim will want to talk to nice bank tellers rather than mean credit card agents.
3.
Which of the following are usually the BEST predictors of financial and career success?
a. Level of ambition and determination the person has to succeed
b. High school GPA and a stellar list of extra-curricular activities
c. The persons level of education and training as well as work place skills
d. Athletic awards and recognition combined with personal popularity
4.
Which type of insurance does Tom need if he wishes to help his loved ones cover expenses after his death?
a. Health
b. Disability
c. Life
d. Automobile
5.
When dealing with investments, as risk of losing money decreases
a. Less insurance is needed to protect the investment.
b. The rate of return is usually lower.
c. It is more likely the investment is going to produce a high return.
d. More people take that risk.
6.
If a bank pays 2.7% interest on savings, how much interest will it charge for loans?
a. 2.7%
c. no more than 2.7%
b. at least 2.8%
d. the discount rate
7.
Which type of insurance pays you if a burglar comes to your house and steals all your appliances?
a. Property
b. Health
c. Life
d. Disability
8.
Which of the following might lower your credit score?
a. having applied for and used a Macy’s card, Belk’s card, Shell gas card, and Maurice’s card in the past month
b. having never missed a car payment on your Ford F-150
c. having always paid your Diverse Power bill on time
d. having worked at the same job for at least 2 years
9.
Bill obtained a $14,000 bank loan to make improvements on his house. Which is the MOST important consideration in the bank giving him
the loan?
a. the reliability of Jumbo’s Construction company
c. the specific improvements Bill was going to make
b. the total value of his house, car, and boat (used as collateral)
d. the estimate of how much the improvements would cost
10. Which kind of insurance pays for part of the arm splint that Johnny has to get after he falls off his motorcycle and injures his arm?
a. Life
b. Home
c. Disability
d. Health
11. The cost you pay for your insurance coverage is called
a. Policy
b. Premium
c. Deductible
d. Coverage limit
12. Tommy wants to make sure that his deductible is as low as possible for his car insurance, what does this mean for his monthly premium?
a. It will be higher
c. It will be lower
b. It will be the same
d. There is no way to know
13. Dusty is trying to decide whether to invest in stocks or bonds. Which sentence BEST describes his options in terms of risks and returns?
a. Stocks offer fewer risks and higher potential rewards
b. Stocks offer fewer risks, but bonds higher potential rewards
c. Bonds offer fewer risks and higher potential rewards
d. Bonds offer fewer risks, but stocks higher potential rewards
14. Joey is choosing between two savings accounts. One has simple interest and the other has compound interest. If Joey is planning on saving
money for a long period of time and he wants the most return he should choose the account with
a. Simple interest because it pays interest on the total amount in the account at all times.
b. Simple interest because it is easier to calculate.
c. Compound interest because it pays interest on principal plus interest earned over time.
d. Compound interest because it pays an increasing amount of interest based on the original deposit.
15. Which is a primary benefit of all types of insurance?
a. People can be more careless
b. It helps people share risk
c. Lawsuits are easier to settle
d. Insurance keeps prices low in a market
16. Which type of financial institution is least concerned with making a profit and therefore offers lower interest rates for loans to members?
a. Commercial Bank
b. Savings and Loan bank
c. Credit Union
d. The Federal Reserve
17. Which type of savings account has the least liquidity, but offers the highest rate of interest?
a. Standard savings
c. Certificate of deposit
b. Money market savings
d. Mutual funds
18. Why is diversification important?
a. So you can spread out risk
b. So you can put all your investments into stocks
c. so you can guarantee all your money
d. so you can share liability with others
19. Why is investment in education important?
a. Investment in education directly correlates to higher wages
b. Investment in education makes your wall look pretty with diplomas
c. Investment in education increases the knowledge you have for trivia crack
d. Investment in education is a financial liability and can be detrimental to your success
20. All of the following are important skills for the workplace EXCEPT:
a. Punctuality
c. Efficiency
b. Excessive absences
d. Investment in human capital