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Chapter 4-Review Guide

Multiple Choice
Identify the choice that best completes the statement or answers the question.
 

 1. 
A budget is a plan based on expected income and expenses. Why would an individual NOT want to create a budget?
A.
It would help an individual learn to spend money uncontrollably.
C.
It would help an individual meet his/her financial goals.
B.
It would help an individual learn to manage his/her money.
D.
It would help an individual plan how to spend his/her money.
 

 2. 
Which of the following is a common Internet scam in which an e-mail is sent from someone posing as your bank or other legitimate business asking for personal information?
A.
phishing
C.
Ponzi scheme
B.
hacking
D.
pigeon drop
 

 3. 
Ryan has taken a part-time job after school for the months of November through January to help with is goal of getting new shoes for baseball. He is saving his money to purchase a new pair of NikeÒ cleats. What type of goal has he set?
A.
short term goal
C.
medium term goal
B.
long term goal
D.
temporary goals
 

 4. 
Blake wants to have his house loan paid off within 10 years. What type of goal has he set?
A.
short term goal
C.
medium term goal
B.
long term goal
D.
temporary goals
 

 5. 
Goals you wish to achieve in the next two to five years are
A.
temporary goals
C.
medium-term goals
B.
short-term goals
D.
long-term goals
 

 6. 
Libby sets aside $125 for savings each time she is paid before she pays any of her bills. What is she doing by setting this money aside?
A.
She is keeping the money safe.
C.
She is paying her bills.
B.
She is paying herself first.
D.
She is earning interest.
 

 7. 
Standards against which progress is measured in reaching goals are called
A.
benchmarks
C.
variances
B.
timelines
D.
assets
 

 8. 
Which of the following items would MOST LIKELY be considered a need?
A.
A vacation.
C.
A new car.
B.
A house.
D.
A yacht.
 

 9. 
Julia  has made a list of items that she wants to purchase. This list includes clothing, a house, groceries, and an iPad. Which of the items would be most likely to be considered a want?
A.
The clothing.
C.
The iPad.
B.
The house.
D.
The groceries.
 

 10. 
Stephanie owns a home, a car, an iPad and a Total Gym. Which of her assets is an “appreciating” asset?
A.
The car.
C.
The iPad.
B.
The house.
D.
The Total Gym®.
 

 11. 
Waldo owns a car, a house, a mutual fund, and a savings account. Which of his assets are considered to be a “depreciating” asset?
A.
The car.
C.
The mutual fund.
B.
The house.
D.
The savings account.
 

 12. 
Regan has priced a DSLR camera at the local stores, and has found that she has saved enough money to purchase one, but has decided to wait to make a purchase in hopes of getting a better deal.  What trade-off has she made?
A.
economic choice
C.
trade decision
B.
opportunity cost
D.
net worth
 
 
Use the information on Emily and Blake to answer questions 12 through 15.

Emily and Blake have purchased their first home. They are creating a budget to help them manage all of the expenses that are associated with owning a home.

Emily and Blake’s Monthly Budget
Income $3,785.00
Savings
$760.00
 
Expenses:  
  House Payment
$650.00
 
  Cell Phone
$175.00
 
  Gas purchases
$150.00
 
  Car Insurance
$100.00
 
  House Insurance
$50.00
 
  Grocery purchases
$250.00
 
  Personal/Care Laundry
$350.00
 
  Student Loans
$350.00
 
  Car Payment
$500.00
 
  Entertainment/TV     
$100.00
 
  Utilities
$350.00
 
Total Expenses $X,XXX.XX
 

 13. 
Which of Emily and Blake’s expenses would be classified as a variable expense?
A.
house payment
C.
car payment
B.
car insurance
D.
utilities
 

 14. 
Which of Emily and Blake’s expenses would be classified as a fixed expense?
A.
gas purchases
C.
student loan payment
B.
grocery purchases
D.
utilities
 
 
Use the scenario on Megan to answer questions 14-16.

Megan graduated college 2 years ago and has been working as an Advertising Director. She has worked hard over the last 2 years to save money so that she could move towards the next stage of her life. She wants to purchase a home. She plans on meeting with her local banker so she has organized her current financial information for her meeting.


Student Loan                  $25,000.00
Savings Account      $10,000.00     
Savings Bonds            $5,000.00     
Checking Account      $15,000.00
Retirement Account      $8,000.00
 

 15. 
Which of Megan’s financial items would be considered a liability?
A.
Her student loan.
C.
Her retirement account.
B.
Her savings account.
D.
Her savings bond.
 

 16. 
What would be the total of Megan’s assets?
A.
$25,000
C.
$33,000
B.
$30,000
D.
$38,000
 

 17. 
What is Megan’s net worth?
A.
$10,000
C.
$17,000
B.
$13,000
D.
$22,000
 
 
Use the scenario on Richardson’s to answer questions 16-19.

The Richardson’s, Jill and Tim keep their financial records on their computer. They uses a spreadsheet software to create a budget and keep their checkbook register. They also store their federal income tax forms electronically. Their financial records contain their social security number, their birth date and their checking and savings account numbers.
 

 18. 
The Richardson’s friend Patrick has suggested that they convert their data into a coded form when sending it over the Internet with software. What is this called?
A.
encryption
C.
variance
B.
hacking
D.
phishing
 

 19. 
How can the Richardson’s best protect their electronic financial records when accessing the Internet with the computer that they store their financial records on?
A.
They should install a firewall.
C.
They should install a virus.
B.
They should install a keylogger.
D.
They should install software sent in an email.
 

 20. 
Which of the following is a benefit of electronic records for the Richardson’s?
A.
They can access information quickly.
C.
They can’t show their information to others.
B.
They can store the files in a file cabinet.
D.
They can’t update their information
 



 
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