financial literacy review ms. kohl 2012-13 answer in true or false format
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2. There is gross income and net income. The difference between the two is that net income is gross income minus payroll deductions.
True - Net income is what is left over after various payroll deductions, including insurance, taxes, etc.
3. Dave makes $400/week. After deducting $60 for federal taxes, $25 for state taxes, and $25 for FICA (Social Security), Dave’s net pay is $300.
4. Centoria has a mortgage payment, a car payment, and insurance payments for both every month. These are examples of variable expenses.
6. A good example of a long-term goal is saving to take your “special someone” out for a nice dinner for their birthday.
8. Mr. Ursa pays $1160 total for car insurance for a period of 8 months. This is an example of a periodic expense.
True - Items such as insurance payments can be considered “periodic” as long as they aren’t set by the terms of the policy to be monthly payments.
9. Some good rules to follow for your financial life are get an education, spend less than you earn, and create a budget that includes savings and sound financial investments.
10. If you are saving for a down payment on a condo and want to do it within a three-year span, it is considered a minimum payment.
False - Nah, I don’t think so. A good example of an asset that has good economic value as collateral.
16. FICA deductions are contributions to Social Security. Only the employee makes FICA contributions.
17. When enough resources are not available to provide all the goods and resources people want, this is a good example of scarcity.
20. Ms. Kohl loves to play volleyball and read but has a ton of homework to grade, so she does that. Her “opportunity cost” is that she fulfills her obligations and gets her work done instead of relaxing.
True - You don’t get something for nothing. In this case, she gives up the opportunity to relax to work instead.
True - Again, the word “scarcity” means there is not an infinite amount of anything available, whether it’s goods, services, or manpower.
23. When problem solving, the first three steps are identify goals, list criteria, and list alternatives.
False - The first three steps in the Problem-Solving Model are identify the problem, list alternatives, and evaluate.
True - Again, you don’t get something for nothing. If you want to save for the future, you have to give up some spending in the present.
27. The FDIC (Federal Deposit Insurance Corporation) insures accounts such as your checking and savings accounts.
28. When funds are channeled through an intermediary from savers to borrowers, this is done through institutions such as stock markets, banks, and credit unions.
29. Salih has a balance in his checking account of $25. He uses his debit card to purchase a Snickers bar and a Red Bull, the purchase totaling $4.50. The balance in his checking account is now $19.50
Let’s Talk About Credit
30. The annual percentage rate (APR) is the amount of credit a customer has for a period of one year.
False - The APR is the amount of interest charged, expressed as a % per year, for the use of the credit card.
31. If you are applying for a credit card with an APR of 14%, this means you have to pay 14% interest per year for use of the credit.
True - You are paying 14% interest per year for the use of the credit. The higher the balance at the end of the term year, the more APR you will be paying.
32. If Norberto lends Juan Carlos $200 for a period of six months and, at the end of the term, Juan Carlos is supposed to pay the amount, then Juan Carlos is the lender and Norberto is the borrower.
False - When you lend someone money, you are the lender and the person who receives the money is the borrower.
33. If you choose a 15-year mortgage instead of a 30-year mortgage, your monthly payment is higher but the interest is lower.
35. If someone wants to obtain credit to buy a car or loan, things such as number of credit cards, occupation, and income are important when deciding whether to loan them the money.
True - The amount of money you do or do not owe, along with your income and occupation, are important when creditors are deciding on lending you money.
36. A written record exists of a borrower’s bill paying habits. Another name for this is a collection report.
True - A high FICO score means you have a good credit rating and have a good record of paying your debts.
40. If you have an open-ended credit account, the smallest payment you can make in any given month is known as the minimum payment
True - Every open-ended credit account, if you have a balance, has a minimum monthly payment on the balance.
False - Nothing beneficial about that. It helps people but a good or service now and pay for it later.
44. Your FICO score is a password that helps you access a credit agency to find out your credit rating.
False - Your FICO score is a number procured from your credit history that tells a lender if you will be reliable in paying borrowed funds.
45. Some of the factors that determine your credit score are whether bills are paid on time, the amount owed on all accounts, the number of credit cards, and number of years a person has had credit.
True - Your ability to pay bills on time, how much you owe, the amount of years you have credit, and how many credit cards all affect your credit score.
46. If you are shopping for a credit card, it is best to look for things such as a low annual percentage rate, low penalty fees, no annual fee, and interest calculated on the average daily balance.
Stocks and Bonds
47. Some of the differences between stocks and bonds are that bonds are a riskier investment but stocks could possibly pay a higher return on investments.
False - Stocks are a much riskier investment than bonds, but it is true that stocks could possibly pay a higher return on investment.
True - “Coupon” is an indicator that interest is paid in increments as opposed to at the end of the bond’s maturity.
True - Economic conditions, both in this country and worldwide, along with price and demand, all affect a stock’s value.
False - Municipal bonds are a loan to a local government for the purpose of civic improvements, such as road repairs and development projects.
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