BYU Financial Literacy Final Test Questions & Answers, Already Passed!!

What is the definition of a "want"? a. something you would like to have but have to purchase on credit b. something you would like to have and something you must have c. something you would like to have but can survive without d. something you would like to have as long as it doesn't cost too much - Answer-something you would like to have but can survive without Paul wants to purchase a brand new truck. He has to take out a loan from the truck company in order to pay. He will be making payments of $550 a month. If at any time he is unable to pay, the truck company can take Paul's truck from him. Which of the following is the best term for this scenario? a. repossession b. secured loan c. all of the above - Answer-repossession and secured loan (all of the above) Jacob, who accumulated some debt when he was in college, wants to eliminate his debt. Now that he is working, he can put $100 extra toward his debt elimination. He owes $450 on his credit card, $1,650 on his car, and $1,500 on his student loan. He determines that paying off his credit card balance first is best since it has the highest APR and that his car loan has the second highest APR. What is the total amount of Jacob's debt when he begins his debt elimination plan? a. $3,500 b. $2,600 c. $3,600 d. $3,450 - Answer-$3,600 Which type of interest matches this definition: "interest that creditors add each year based on what your principal balance is"? a. simple interest b. compound interestc. variable interest d. all of the above - Answer-compound interest What indicates that you have a secure connection when you are purchasing something online? a. https:// b. www. c. http:// d. .org - Answer-https:// What is something that you must have in order to survive? a. a goal b. a want c. a budget d. a need - Answer-a need Which term refers to money that a lender will let you use (usually for a fee) and allows you to pay back in the future? a. incentive b. budget c. consolidation d. credit - Answer-credit Which of the following is a key component of financial literacy? a. being aware of your needs and wants b. being educated about credit and debt c. knowing how to make a financial plan d. all of the above - Answer-being aware of your needs and wants, being educated about credit and debt, and knowing how to make a financial plan (all of the above)The Federal Reserve does which of the following? a. determines what tax bracket you are in b. determines the annual interest rate for our country c. determines the maximum amount a person can save d. determines how much to tax on goods sold - Answer-determines the annual interest rate for our country Use the following data to determine the amount of interest you would pay on this simple interest loan: Principal Amount, $15,000; Interest Rate, 3%; Monthly Payment, $100; Loan Term, 5 years. a. $45 b. $500 c. $450 d. $4,500 - Answer-$450 Which option reflects who should be responsible for your finances? a. your bank or credit union b. you c. the American welfare system d. the Federal Reserve - Answer-you According to the lesson, what is the average amount of credit card debt American households have accumulated? a. More than $25,000 b. Less than $5,000 c. Between $10,000 and $12,000 d. Between $15,000 and $16,000 - Answer-between $15,000 and $16,000Which scenario is an accurate example of simple interest? a. Your brother lends you $1000, which he requires you to pay back in five months. He charges you 5% simple interest. The total amount you will pay is $1025. b. Your best friend lends you $1000, which she requires you to pay back in ten months with no interest. c. Your aunt lends you $1000 to help pay for college tuition. She doesn't require you to pay it back until after you graduate. She charges you 5% simple interest. The total amount you will pay is $1050. d. Your sister lends you $1000, which she requires you to pay back in ten months. She charges you 10% simple interest. The total amount you will pay is $950. - Answer-Your aunt lends you $1000 to help pay for college tuition. She doesn't require you to pay it back until after you graduate. She charges you 5% simple interest. The total amount you will pay is $1050. Which of these is a good reason to learn money management skills? a. to make wise financial decisions b. to make better decisions about what purchases you make c. to know how to make realistic budgets d. all of the above - Answer-to make wise financial decisions, to make better decisions about what purchases you make, and to know how to make realistic budgets (all of the above) Pick the scenario that best represents the most positive financial outcome. a. Brett and Wendy are newlyweds who have accumulated loans totaling $5,000 for their wedding and honeymoon costs. They have a plan to pay off those loans in one year and another plan to save for a down payment on a new car. b. Matilda has one credit card with a $500 maximum limit. Using her credit card will help her establish a good credit rating to show loan institutions that she is financially responsible. She does not pay any financial costs because she pays the entire amount she borrowed on that card each month so she does not incur interest. When the time comes that she desires to purchase a car, she will be a good candidate to receive a loan. c. Karen attends a private college where tuition is rather expensive. Before attending, she works at a part-time job and is able to save up enough money to pay for her books and supplies. However - Answer-Matilda has one credit card with a $500 maximum limit. Using her credit card will help her establish a good credit rating to show loan institutions that she is financially responsible. She does not pay any financial costs because she pays the entire amount she borrowed on that card each month so she does not incur interest. When the time comes that she desires to purchase a car, she will be a good candidate to receive a loan.What is the correct term for "what consumers will pay for using credit from a lender, often referred to as interest payments"? a. opportunity cost b. marginal cost c. cost comparison d. cost of credit - Answer-cost of credit