FINANCIAL LITERACY FINAL EXAM AND
ANSWERS.
Key components of financial planning include all of the following except:
Write out a detailed plan for accomplishing your goals Replace money myths with money truths Buy on credit whenever possible Regularly monitor and re-assess your financial plan - Answers-Buy on credit whenever possible Which of the following statements best describes how Americans are Credit is marketed so well that we desire to have it while completely dismissing the fact that interest rates and fees continue to destroy our financial well-being We are taught that we can buy happiness Buying things on credit has become acceptable in our culture We are driven by consumerism - Answers-Credit is marketed so well that we desire to have it while completely dismissing the fact that interest rates and fees continue to destroy our financial well-being
Personal financial success is primarily the result of:
Managing your money behavior Winning the lottery Generous welfare and unemployment programs Inheriting money from your parents - Answers-Managing your money behavior Which of the following statements best explains why income alone does not determine wealth?Investing is the only factor that contributes to wealth building.Income alone does determine a person's wealth Only people who are natural savers can become wealthy.How much money a person makes does not dictate their spending and saving behavior
- Answers-How much money a person makes does not dictate their spending and
saving behavior Which of the following is a consequence of spending more than you make?Missed opportunity to save and invest Stress A cycle of debt All of the above - Answers-All of the above When it comes to managing money, success is about _____% knowledge and____% behavior. - Answers-20, 80 1 / 2
The widespread financial insecurity of Americans is primarily because: - Answers-The savings rate of Americans is low and many borrow in order spend more than they earn Why was the use of credit uncommon prior to 1917?Laws prevented lenders from charging high interest Borrowing money was generally not socially Lending money to others was not All of the above - Answers-All of the above When it comes to personal finance, the math is easy. Whatʹs challenging is managing your - Answers-Behavior During the Great Depression, New Deal policy makers came up with mortgage (home loans) and consumer lending policies that convinced commercial banks that: - Answers- Consumer credit could be profitable What is the First Foundation? - Answers-Save a $500 emergency fund Instead of borrowing money for large purchases, you should set money aside in a ________ over time and pay with cash - Answers-Sinking Fund This principle suggests that a certain amount of money today has different buying power than the same amount of money in the future. This is due to both the opportunity to earn interest on the money and because inflation will drive up, thereby changing the ʺvalueʺ of the money. - Answers-Time value of money For which of the following should you save?Purchases Wealth Emergency All of the above - Answers-All of the above
At your age, a fully funded emergency fund should be: - Answers-$500
Which of the following is not a reason your emergency fund should be kept in a separate savings account away from your spending money?So that you do not get your spending and saving money confused So that it is clear what money is only to be used for emergencies.So that it is not too easy to access.So that your emergency fund savings can earn a lot of interest. - Answers-So that it is clear what money is only to be used for emergencies Why is having a fully funded emergency fund so important when it comes to your financial well-being? - Answers-The purpose of an emergency fund is to set money aside for unexpected financial emergencies and to provide a sense of financial security
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