Pf2015 Quiz 1: Investing, Saving, Budgeting

31 Questions | Total Attempts: 907

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Pf2015 Quiz 1: Investing, Saving, Budgeting - Quiz

A review of savings and budgeting concepts for Eastside Prep Personal Finance course. Good luck!


Questions and Answers
  • 1. 
    Your friend tells you that she can double her money in a savings account in 24 years.  Based on Rule of 72, what do you estimate to be the interest rate on her savings account?  
    • A. 

      1.5%

    • B. 

      2%

    • C. 

      3%

    • D. 

      6%

  • 2. 
    Isaiah works for the summer at a technology company and has a salary for the summer of $3,000.  After federal and state taxes and Social Security/Medicare taxes are deducted, his take-home pay is $2,500.  Which of the statements below is CORRECT?
    • A. 

      His gross pay is $2,500 and net pay is $3,000

    • B. 

      His gross pay is $3,000 and net pay is $2,500

    • C. 

      His gross and net pay are $3,000

    • D. 

      His net pay and gross pay are $2,500

  • 3. 
    When banks provide information about savings accounts, they typically quote the interest rates they offer (e.g. 1%) on a...
    • A. 

      Per day basis

    • B. 

      Per month basis

    • C. 

      Per six month basis

    • D. 

      Per year basis

  • 4. 
    Banks are required to provide a Truth in Savings Disclosure to all new savings account holders.  This disclosure includes information about the fees the bank charges on their savings accounts.  
    • A. 

      False

    • B. 

      True

  • 5. 
    If you deposit $200 into a savings account with an interest rate of 1% for 3 years, how much simple interest can you brag that you will earn after THREE years?WebRep currentVote  noRatingnoWeight           
    • A. 

      $3

    • B. 

      $5

    • C. 

      $6

    • D. 

      $60

  • 6. 
    A student completing their college education (with a bachelor's degree) at a four-year college can expect to earn how much more over a typical forty year career than a student with just a high school degree?   WebRep currentVote  noRatingnoWeight           
    • A. 

      $50,000

    • B. 

      $250,000

    • C. 

      $900,000

    • D. 

      $5,000,000

  • 7. 
    What is earned interest?WebRep currentVote  noRatingnoWeight           
    • A. 

      When prices increase as time goes by

    • B. 

      The money you pay as a fee when you use a debit card

    • C. 

      The money that a bank pays you for depositing your money in their bank

    • D. 

      Total amount of money in a bank

  • 8. 
    Which of these savings vehicles would work best today if you don't need to access the money for a number of years AND wanted the highest interest rate possible? WebRep currentVote  noRatingnoWeight           
    • A. 

      Money Market Savings Account

    • B. 

      Certificate of Deposit (CD)

    • C. 

      Simple Savings Account

    • D. 

      None of the options listed

  • 9. 
    Based on the rule of 72, a savings account earning 6% per year would allow you to double your money after...WebRep currentVote  noRatingnoWeight           
    • A. 

      6 years

    • B. 

      8 years

    • C. 

      12 years

    • D. 

      18 years

  • 10. 
    What would be the BALANCE of your savings account after THREE months if the savings account had an ANNUAL interest rate of 6% and you started with principal of $500?  
    • A. 

      $30

    • B. 

      $15

    • C. 

      $507.50

    • D. 

      $530.00

  • 11. 
    When putting together your personal budget, you find that your budget is in deficit.  Indicate the actions that you need to take to balance your budget.  
    • A. 

      Increase your income and expenses by the same amount

    • B. 

      Cut your expenses by an amount greater than your deficit

    • C. 

      Increase your expenses by an amount greater than your deficit

    • D. 

      Increase the spending on your wants

  • 12. 
    You are considering opening a savings account and are considering these two options:Bank A is in NOT in FDIC program, has interest rate of 5%, minimum deposit of $25 and fees that are competitive to other banks.  Bank B is in the FDIC program, has interest rate of 0.01%, minimum deposit of $50 and competitive fees.  If you had to choose one of the two banks, which would you choose?  
    • A. 

      Bank A

    • B. 

      Bank B

    • C. 

      Bank A and Bank B are the same

  • 13. 
    What was the MOST important lesson of the Bank Manager role play, when a volunteer came to the front of the class to discuss opening a savings account with Bill?WebRep currentVote  noRatingnoWeight           
    • A. 

      Savings accounts have low interest rates today

    • B. 

      Bank managers are usually straightforward in describing their savings products

    • C. 

      When pressured to sign an application to open an account (or buy a financial product), it is best to ask for time to review the materials and to walk away.

    • D. 

      It is best not to ask questions but to just let the bank manager describe their savings products.

  • 14. 
    Which of the statements below would be considered good advice for creating a budget (SELECT ALL ANSWERS THAT ARE CORRECT)?WebRep currentVote  noRatingnoWeight           
    • A. 

      Set aside money for Savings FIRST

    • B. 

      Be sure that your WANTS are met first before you set aside money for your NEEDS.

    • C. 

      Keep your expenses less than your income so that your budget will be in surplus.

    • D. 

      Be sure to compare your budget plan with your actual spending so that you can determine if you are staying within your budget.

    • E. 

      Only consider what to save after your wants and needs have been taken care of first.

  • 15. 
    True or False.  When looking at which college majors earned the highest starting salaries in 2013, it is clear that students who had technical skills gained from STEM majors (Science, Technology, Engineering and Math) had most of the positions in the "top 10 list."WebRep currentVote  noRatingnoWeight           
    • A. 

      True

    • B. 

      False

  • 16. 
    You purchase one share of Wal-Mart stock on January 1, 2014 for $100.00.  You decide to sell the stock on March 1, 2014 when the stock price was $97.00.  The return on your Wal-Mart investment is:WebRep currentVote  noRatingnoWeight           
    • A. 

      +3.0%

    • B. 

      -3.0%

    • C. 

      -4.0%

    • D. 

      +4.0%

    • E. 

      +8.0%

  • 17. 
    You are putting together your first budget after graduating from college.  Your take-home or net pay from your job will be $2,500 per month.  You estimate your monthly costs to be rent of $800, car payment of $350, car insurance of $150, car maintenance of $50, entertainment of $500, food expense of $250, mobile phone of $100, cable bill of $75, personal car expenses of $100 and other expense of $300.  How would you describe your budget after analyzing all of your income and expenses? WebRep currentVote  noRatingnoWeight           
    • A. 

      You have a surplus of $175

    • B. 

      You have a deficit of $175

    • C. 

      You have a balanced budget

    • D. 

      You have a deficit of $2,675

    • E. 

      You have a surplus of $2,500

  • 18. 
    You are considering your investment options.  Your choices are to buy stock in Facebook, Google, Nike, McDonalds or the S&P500 Index Fund.  Which investment will provide you with a diversified investment and therefore lower your risk?  WebRep currentVote  noRatingnoWeight           
    • A. 

      Facebook

    • B. 

      Google

    • C. 

      Nike

    • D. 

      McDonalds

    • E. 

      S&P500 Index Fund

  • 19. 
    You put $500 in a savings account with an interest rate of 10% per year (not a realistic rate in today's world).  Assuming that the bank offers you the benefit of compound interest, what would the BALANCE in your account be after 2 years?WebRep currentVote  noRatingnoWeight           
    • A. 

      Less than $600

    • B. 

      More than $600

    • C. 

      Exactly $600

    • D. 

      $550

    • E. 

      $100

  • 20. 
    When comparing investment choices, which statements below are TRUE (SELECT ALL THAT ARE TRUE)?WebRep currentVote  noRatingnoWeight           
    • A. 

      Investing in the stock market carries NO risk of losing money.

    • B. 

      Over the long term, the stock market has averaged returns of 8-9% per year.

    • C. 

      When it comes to investing, past performance of an investment is NO guarantee of how the stock will perform in the future.

    • D. 

      Over the past 50-60 years, savings accounts have provided higher returns than investing in the stock market.

    • E. 

      According to Warren Buffett, it is easy to find stocks that will perform better than the S&P500

  • 21. 
    You have $25 to open a savings account.   You are most interested in having easy access to your money and finding an account type that has low minimum balance requirements.  You are less interested in earning a high interest rate.  What type of account would you choose?WebRep currentVote  noRatingnoWeight           
    • A. 

      Money Market account

    • B. 

      Regular savings account

    • C. 

      Certificate of Deposit

    • D. 

      Stock index fund like the S&P500 Fund

  • 22. 
    You open a new bank account at Eastside Savings and see the FDIC stickers all around the bank branch.  You also go to the FDIC website to double check and see that the Eastside Savings branch you bank at is on the FDIC's list also.  Your savings balance is $500.  You hear on the radio that Eastside Savings is having trouble and may close down.  What would happen if Eastside Savings failed?WebRep currentVote  noRatingnoWeight           
    • A. 

      You would lose all your money.

    • B. 

      You could lose $250 since FDIC insurance only covers 50% of the money you have deposited.

    • C. 

      You would receive all the money you have deposited at Eastside Savings since FDIC insurance covers accounts up to $250,000.

    • D. 

      You would receive $250,000 since FDIC insurance provides each account at the bank with $250,000 regardless of how much they have deposited.

  • 23. 
    InvestmentPurchase PriceCurrent PriceReturn (%age)Apple$94.00$100.00?????McDonalds$73.00$65.00????Google$500.00$515.00????You have three stocks that you bought earlier this year.  You are looking at their current prices and curious as to how the stocks have performed relative to each other.  You are using their percentage return as your measurement tool.  Rank order the stocks from HIGHEST return to LOWEST return.  Remember to calculate the percentage return for each stock to arrive at your answer.  WebRep currentVote  noRatingnoWeight           
    • A. 

      Google, Apple, McDonalds

    • B. 

      Apple, Google, McDonalds

    • C. 

      McDonalds, Apple, Google

    • D. 

      Apple, McDonalds, Google

    • E. 

      They all have the same percentage returns.

  • 24. 
    You received $5 in company stock on the first day of class.  At the end of the summer session, you decide you want to sell your stock.  When you calculate the percentage return, you are excited to see that the price for your company stock increased by 10.0%.  How much money will you receive from me in exchange for handing in your stock certificate?  WebRep currentVote  noRatingnoWeight           
    • A. 

      $0.50

    • B. 

      $1.00

    • C. 

      $5.00

    • D. 

      $5.50

    • E. 

      $11.00

  • 25. 
    You have a meeting with a bank manager to open a savings account and he says you can only ask one question of him.  For the sake of this question, assume that his answer to your question is truthful.  What would you ask?WebRep currentVote  noRatingnoWeight           
    • A. 

      What is the interest I would earn with your regular savings account?

    • B. 

      What are the fees on your regular savings account?

    • C. 

      Is your bank FDIC insured?

    • D. 

      Is it true that I get a toaster oven if I open a new savings account his month?

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