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Questions and Answers
What is the term for the total money one gets to 'take home' from a paycheck after taxes and deductions are taken out?
What is the term for the total money one gets to 'take home' from a paycheck after taxes and deductions are taken out?
What form do employers use to determine how much tax to deduct from an employee's paycheck?
What form do employers use to determine how much tax to deduct from an employee's paycheck?
Which form provides employees with the total amount of money deducted from their paychecks throughout the year?
Which form provides employees with the total amount of money deducted from their paychecks throughout the year?
Which statement best describes gross pay?
Which statement best describes gross pay?
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Which of the following expenses can be paid as part of the escrow funds in a mortgage?
Which of the following expenses can be paid as part of the escrow funds in a mortgage?
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What document is required to open a bank account?
What document is required to open a bank account?
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What additional cost must be considered when purchasing a product at a store?
What additional cost must be considered when purchasing a product at a store?
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How does a certificate of deposit (CD) differ from a traditional savings account?
How does a certificate of deposit (CD) differ from a traditional savings account?
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Which investment is insured by the FDIC or NCUA and has the lowest interest rate?
Which investment is insured by the FDIC or NCUA and has the lowest interest rate?
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What term describes interest earned on interest gained?
What term describes interest earned on interest gained?
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What type of financial institution primarily handles the safekeeping of money?
What type of financial institution primarily handles the safekeeping of money?
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Using the simple interest formula $I = prt$, what is the interest earned on $150 at a 6% return after one year?
Using the simple interest formula $I = prt$, what is the interest earned on $150 at a 6% return after one year?
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What is it called when a product or service is received now but paid for later?
What is it called when a product or service is received now but paid for later?
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Which of the following is not an example of an installment loan?
Which of the following is not an example of an installment loan?
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Which card removes funds from a checking account immediately after a purchase?
Which card removes funds from a checking account immediately after a purchase?
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What advantage do credit unions generally have over banks?
What advantage do credit unions generally have over banks?
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Which expense is least likely to increase if the value of one's house rises?
Which expense is least likely to increase if the value of one's house rises?
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What personal circumstance is NOT likely to affect federal income tax brackets?
What personal circumstance is NOT likely to affect federal income tax brackets?
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Which type of insurance assists in covering medical expenses associated with short-term illness and accidents?
Which type of insurance assists in covering medical expenses associated with short-term illness and accidents?
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What type of insurance helps pay for stays in a nursing home?
What type of insurance helps pay for stays in a nursing home?
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What is a notable advantage of having a good credit score?
What is a notable advantage of having a good credit score?
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Which action could harm your credit score the most?
Which action could harm your credit score the most?
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What is the primary purpose of an umbrella insurance policy?
What is the primary purpose of an umbrella insurance policy?
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What does 'balancing a checkbook' typically involve?
What does 'balancing a checkbook' typically involve?
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Which practice does not typically lead to a higher car insurance rate?
Which practice does not typically lead to a higher car insurance rate?
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What term describes a person who relies on someone else financially?
What term describes a person who relies on someone else financially?
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What is the fee called when one spends more than is available in their bank account?
What is the fee called when one spends more than is available in their bank account?
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If someone identifies charges they did not authorize on their statement, they are likely a victim of what?
If someone identifies charges they did not authorize on their statement, they are likely a victim of what?
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What does a variable expense refer to when planning a personal budget?
What does a variable expense refer to when planning a personal budget?
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What is the Rule of 72 used to calculate?
What is the Rule of 72 used to calculate?
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What payment method allows a deposit with the item remaining unpaid until the balance is completed?
What payment method allows a deposit with the item remaining unpaid until the balance is completed?
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What is the term for when one party to a contract does not fulfill the contract requirements?
What is the term for when one party to a contract does not fulfill the contract requirements?
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What is a disadvantage of rent-to-own agreements for consumers?
What is a disadvantage of rent-to-own agreements for consumers?
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Which financial institution is specifically designed to provide cash for checks without requiring a traditional bank account?
Which financial institution is specifically designed to provide cash for checks without requiring a traditional bank account?
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Which financial institution is known for facing criticism due to high interest rates imposed on vulnerable populations?
Which financial institution is known for facing criticism due to high interest rates imposed on vulnerable populations?
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What is the primary purpose of a safety deposit box offered by banks?
What is the primary purpose of a safety deposit box offered by banks?
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When dining out, which of the following is an additional cost that should be considered?
When dining out, which of the following is an additional cost that should be considered?
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Investing in a commodity primarily involves investing in what?
Investing in a commodity primarily involves investing in what?
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If an individual cannot make a large down payment on a mortgage loan, they may be required to pay for what?
If an individual cannot make a large down payment on a mortgage loan, they may be required to pay for what?
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What is the typical length of time over which a borrower must repay a mortgage loan?
What is the typical length of time over which a borrower must repay a mortgage loan?
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Which investment type is characterized as risky, offers ownership in a corporation, and has the potential for high rewards?
Which investment type is characterized as risky, offers ownership in a corporation, and has the potential for high rewards?
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Study Notes
Understanding Paychecks
- Net pay is the amount of money an employee takes home after taxes and deductions are taken out.
- Gross pay is the amount of money an employee earns before taxes and deductions are taken out.
- Form W-4 is used by employers to determine how much tax to withhold from an employee's paycheck.
- Form W-2 is provided to employees by employers to show how much money was withheld for taxes during a given year.
Mortgages and Escrow
- Escrow funds are money held by a lender to pay property taxes and homeowner's insurance premiums.
Banking Basics
- A government-issued identification is required to open a bank account.
- Sales tax is an additional cost added to the price of a product at a store.
Credit Cards and APR
- APR (Annual Percentage Rate) is the yearly interest rate charged on a credit card.
Investments: CDs and Savings Accounts
- A certificate of deposit (CD) is a type of savings account where the money must remain untouched for a fixed period of time.
- CDs typically have higher interest rates than traditional savings accounts.
Bundling Insurance
- Bundling insurance involves combining different insurance policies, like home and auto insurance, into a single policy for potential savings.
Investment Options
- A traditional savings account is insured by the FDIC or NCUA, has the lowest interest rate of all investments, and may have limits on withdrawals.
- Compound interest is interest earned on interest that has already been gained.
Financial Institutions
- Banks are financial institutions that handle money, including keeping it safe for savings or commercial purposes.
Simple Interest Calculations
- Simple interest formula: I = prt, where I is interest, p is principal, r is interest rate, and t is time.
Credit and Debt
- Credit allows someone to receive a product or service now and pay for it later.
- Installment loans are loans repaid with regular payments over a set period of time.
- Debit cards remove funds from a checking account almost instantly after a purchase.
Credit Unions vs. Banks
- Credit unions are often owned by their members, who can vote and elect board of directors, and may offer lower interest rates on loans.
Mortgage Loans
- Government-insured loans are designed to help individuals with lower credit scores, smaller down payments, or who are first-time homebuyers.
Federal Interest Rates
- When the federal government raises interest rates, this typically has a positive impact on savings accounts and a negative impact on credit card payments, real estate investments, and stock investments.
Types of Insurance
- Life insurance provides income to people who depend on a wage earner after the wage earner dies.
- Health insurance helps cover medical expenses associated with short-term illness and accidents.
- Long-term care insurance helps pay for stays in a nursing home.
- Umbrella insurance provides extra liability coverage beyond what is covered by other insurance policies.
Car Insurance Factors
- Receiving a speeding ticket can lead to higher car insurance rates.
Personal Budgeting
- Variable expenses are those that may change in amount from month to month.
The Rule of 72
- The Rule of 72 calculates how long it will take for an investment to double in value.
Contracts
- Breach of contract occurs when a party does not fulfill the requirements of the contract.
- Order of contract formation: Offer, Acceptance, Consideration, Agreement.
Contract Signatures
- A notary public can confirm signatures to a contract.
Sales Tax Rates
- Sales tax amounts are generally established by state and local rates.
Home Value and Expenses
- When the value of a house increases, typically the house insurance, escrow payment, and property tax will also rise.
Federal Income Tax Brackets
- Marriage status can impact federal income tax brackets.
Benefits of a Good Credit Score
- A good credit score can increase the likelihood of receiving a loan with a low interest rate.
Practices that Negatively Impact Credit Score
- Reaching the spending limit on a credit account can negatively affect a credit score.
Checkbook Balancing
- Balancing a checkbook involves comparing bank statements to withdrawal records to track spending.
- Overdraft fees are charged for spending more money than is available in a bank account.
Fraud and Identity Theft
- Identity theft can occur when unauthorized charges appear on a banking or credit statement.
Layaway Plans
- Layaway plans allow customers to pay a deposit on an item and receive it after the balance is paid in full.
Bonds
- Bonds are investments where an investor loans money to a city, government, or company. The money is repaid on a certain date with interest. Bonds are generally considered a safe investment, but they are not insured by the FDIC.
Rent-to-Own Agreements
- Rent-to-own agreements can negatively impact consumers due to high interest rates.
Financial Institutions and Vulnerable Populations
- Payday lenders are criticized for charging extremely high interest rates, often targeting people in poverty and other vulnerable populations.
Safety Deposit Boxes
- Safety deposit boxes provide a secure place to protect personal documents from potential loss.
Restaurant Costs
- Tips are an additional cost to the price of a meal and sales tax at a restaurant.
Commodities
- A commodity is a natural resource that is traded on an exchange, like oil or gold.
Mortgage Loans and Insurance
- If an individual cannot make a large down payment on a mortgage loan, they often have to pay for private mortgage insurance.
Mortgage Loan Terms
- Most mortgage loans have a term of 30 years.
Stocks
- Stocks are a risky investment representing ownership in a corporation, which may pay dividends.
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Description
Test your knowledge on key financial concepts such as net pay, gross pay, and the importance of government-issued identification for banking. Additionally, assess your understanding of credit cards, APR, and investment tools like CDs and savings accounts. This quiz is designed to help you navigate the basics of personal finance and banking.
