FIN 101 Exam 1| 100% Accurate.
What is the term that refers to the ability to understand personal finance information? correct
answers financial literacy
What is risk tolerance? correct answers your willingness to engage in financial endeavors that
have uncertain outcomes
SMART goals correct answers Specific: documenting the when, what, where and how aspects of
the goal
Measurable: attaching a quantifiable standard for achieving the goal
Attainable: being realistic about whether you can really achieve the goal
Relevant: developing those financial goals that are the most crucial to improving your financial
situation
Timely: having the ability to meet the goals in a reasonable amount of time
Low risk investments lead to __________ rewards correct answers low
High risk = __________ reward correct answers high
What happens to your human capital and financial wealth as you get closer to retirement? correct
answers human capital decreases and wealth increases
What does loss-averse mean? correct answers most people dislike losing, people don't like
making decisions where loss is present
What happens to those who fall to the status quo bias? correct answers overemphasize the good
aspects of a current situation and underestimate the benefits that come from making a change and
fear the possibility of making a wrong decision regarding a new situation
What is self-efficacy? correct answers how well you believe you can do something
In the financial marketplace, the only way to accumulate a certain level of wealth is to take
__________ with your savings correct answers calculated risks
What are financial objectives? correct answers things that need to happen along the way towards
reaching a financial goal
Generally, healthy people work __________ hours and for a __________ period of years over
their life span compared to those with impaired health histories correct answers more, longer
Risk is the __________ associated with any choice in life correct answers uncertainty
What do you need to do to generate wealth? correct answers create a surplus which is having
more money than expenses (income-living=surplus)
, What is a capital gain? correct answers when you sell assets for more than you paid for it
Give some examples of a government benefit correct answers unemployment benefits, Medicaid,
SNAP, TANF and grants
What is a dividend? correct answers a sum of money paid regularly by a company to its
shareholders out of its profits
What characteristics do self-employed people share? correct answers set your own hours of
work, charge for yout products of services, charge for your products or services, pay your own
taxes
What is a comission? correct answers payment based on the sale of a product or service
What is the minimum wage? correct answers $7.25/hour. Is periodically reset by Congress
through the Fair Labor Standards Act, which was passed in 1938
What is a savings ratio? correct answers savings ration=savings/income. Under 30 12%, 30-40
15%
Different types of ways employees can be paid correct answers Wage: what an employer pays an
employee to work, usually wages are based on an hourly rate
Salary: payment for work for a set period of time, usually an annual amount
Commission: payment based on the sale of a product or service
Bonus: an extra payment usually based on performance
When you make a deposit, you are essentially __________ the bank or credit union money
correct answers giving the bank a loan
Give some examples of a capital asset correct answers buildings, computer equipment and
vehicles
What is a payroll deduction? correct answers takes money automatically from your paycheck,
contributes it directly to a retirement savings plan other savings account
What are the differences between net and gross income? correct answers Net income: the profit
made from revenue when total expenses are taken out
Gross income: the revenue generated from a business's sales of an individual's labor
What is the default legal structure of a self-employed individual? correct answers Advantages: 1.
easy to start up and requires no legal registration or paperwork
2. you are the owner and are in charge of the decisions
3. losses from your business can lower your tax liability
Disadvantages:
1. you have unlimited liability, that is, you are totally responsible for paying any business debt
and expenses
What is the term that refers to the ability to understand personal finance information? correct
answers financial literacy
What is risk tolerance? correct answers your willingness to engage in financial endeavors that
have uncertain outcomes
SMART goals correct answers Specific: documenting the when, what, where and how aspects of
the goal
Measurable: attaching a quantifiable standard for achieving the goal
Attainable: being realistic about whether you can really achieve the goal
Relevant: developing those financial goals that are the most crucial to improving your financial
situation
Timely: having the ability to meet the goals in a reasonable amount of time
Low risk investments lead to __________ rewards correct answers low
High risk = __________ reward correct answers high
What happens to your human capital and financial wealth as you get closer to retirement? correct
answers human capital decreases and wealth increases
What does loss-averse mean? correct answers most people dislike losing, people don't like
making decisions where loss is present
What happens to those who fall to the status quo bias? correct answers overemphasize the good
aspects of a current situation and underestimate the benefits that come from making a change and
fear the possibility of making a wrong decision regarding a new situation
What is self-efficacy? correct answers how well you believe you can do something
In the financial marketplace, the only way to accumulate a certain level of wealth is to take
__________ with your savings correct answers calculated risks
What are financial objectives? correct answers things that need to happen along the way towards
reaching a financial goal
Generally, healthy people work __________ hours and for a __________ period of years over
their life span compared to those with impaired health histories correct answers more, longer
Risk is the __________ associated with any choice in life correct answers uncertainty
What do you need to do to generate wealth? correct answers create a surplus which is having
more money than expenses (income-living=surplus)
, What is a capital gain? correct answers when you sell assets for more than you paid for it
Give some examples of a government benefit correct answers unemployment benefits, Medicaid,
SNAP, TANF and grants
What is a dividend? correct answers a sum of money paid regularly by a company to its
shareholders out of its profits
What characteristics do self-employed people share? correct answers set your own hours of
work, charge for yout products of services, charge for your products or services, pay your own
taxes
What is a comission? correct answers payment based on the sale of a product or service
What is the minimum wage? correct answers $7.25/hour. Is periodically reset by Congress
through the Fair Labor Standards Act, which was passed in 1938
What is a savings ratio? correct answers savings ration=savings/income. Under 30 12%, 30-40
15%
Different types of ways employees can be paid correct answers Wage: what an employer pays an
employee to work, usually wages are based on an hourly rate
Salary: payment for work for a set period of time, usually an annual amount
Commission: payment based on the sale of a product or service
Bonus: an extra payment usually based on performance
When you make a deposit, you are essentially __________ the bank or credit union money
correct answers giving the bank a loan
Give some examples of a capital asset correct answers buildings, computer equipment and
vehicles
What is a payroll deduction? correct answers takes money automatically from your paycheck,
contributes it directly to a retirement savings plan other savings account
What are the differences between net and gross income? correct answers Net income: the profit
made from revenue when total expenses are taken out
Gross income: the revenue generated from a business's sales of an individual's labor
What is the default legal structure of a self-employed individual? correct answers Advantages: 1.
easy to start up and requires no legal registration or paperwork
2. you are the owner and are in charge of the decisions
3. losses from your business can lower your tax liability
Disadvantages:
1. you have unlimited liability, that is, you are totally responsible for paying any business debt
and expenses
