Personal Finance 2015 Chapter 2

1.

1 point

Save a $500 emergency fund

Fourth Foundation

Fifth Foundation

Third Foundation

First Foundation

Second Foundation

2.

1 point

Saving is about:

Pride and Greed

Contentment and earning more money

Having more money and discipline

Contentment and emotion

3.

1 point

Percentage paid to a lender for the use of borrowed money, or the percentage earned on invested principal

interest rate

principal

savings rate

dividend

4.

1 point

Why should interest earned NOT be a factor with your emergency fund?

Inflation can eat up the interest earned.

Interest-bearing accounts at banks earn a high rate of interest, therefore, interest is not a concern.

The emergency fund is not intended to grow wealth.

None of the above

5.

1 point

Instead of borrowing money for large purchases, you should set money aside in a ______over time and pay with cash

emergency fund

credit card fraud

sinking fund

mortgage fund

6.

1 point

Which of the following is a reason that people donʹt save money?

they lack discipline

they do not live on a budget

they lack focus

all of the above

7.

1 point

Americans typically maintain a very high savings rate.

True

False

8.

1 point

Your income level greatly affects your saving habits.

True

False

9.

1 point

When a person intentionally invests money in a place where it can earn more money

sinking fund

interest rate

wealth building

installment loan

10.

1 point

Which of the following is NOT one of the three basic reasons for saving money?

Have money available to lend to friends

emergency fund

Large purchases

build wealth

11.

1 point

Money set aside and left alone for a ʺrainy day.ʺ

emergency fund

allowance

credit card

savings account

12.

1 point

Why is having a fully funded emergency fund so important when it comes to your financial well-being?

As long as you have a good-paying job, you really donʹt need an emergency fund

The purpose of an emergency fund is to set money aside for unexpected financial emergencies and to provide a sense of financial security.

The purpose of an emergency fund is to have money set aside for large purchases, like vacations.

none of the above

13.

1 point

At your age, a fully funded emergency fund should be

$5000

$500

$1000

$100

14.

1 point

Saving money over time for a large purchase.

installment loan

allowance

sinking fund

interest

15.

1 point

For which of the following should you save

purchases

wealth building

emergency fund

all of the above

16.

1 point

When youʹre older and out of school, youʹll need to grow your emergency fund into a full three to six monthsʹ worth of expenses.

True

False

17.

1 point

What does it mean to have a negative savings rate?

Spending more money than you make and acquiring debt

Saving for something that is a want instead of a need

Having a fully funded emergency fund

Having no savings at all

18.

1 point

When youʹre in high school, you wonʹt have the same emergency expenses as your parents.

True

False

19.

1 point

Interest paid on interest previously earned

interest

not interested

compound interest

simple interest

20.

1 point

You should keep your emergency fund in the same account as your spending money.

True

False

21.

1 point

The first thing you should save for is your retirement fund.

True

False

22.

1 point

The persistent rise in the cost of goods and services

Unflation

Reflation

Inflation

Deflation

23.

1 point

The five steps to financial success

five money truths

five foundations

five money myths

the Jackson Five

24.

1 point

Which of these is not a key to saving money?

discipline

making saving a habit and a priority

focus

your income

25.

1 point

Which of the following steps is the First Foundation?

Build wealth and give

Get out of debt

Pay cash for your car

Save a $500 emergency fund

26.

1 point

Using the sinking fund approach, how much do you have to save each month to buy a $4,800 car one year from now?

$300

$400

$500

$275

27.

1 point

You should save money for three basic reasons: emergency fund, purchases and wealth building.

True

False

28.

1 point

When it comes to saving money, the amount you save is determined by how much you have left at the end of the month once all of your spending is done.

True

False

29.

1 point

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 your emergency fund savings can earn a lot of interest.

So that you do not get your spending and saving money confused.

So that it is not too easy to access.

so that it is clear what money is only to be used for emergencies

30.

1 point

The saving habits of Ben and Arthur best illustrate which principle of saving?

The amount of the initial investment is the key.

The length of time money is invested matters.

Rate of return matters.

Both A and C