UGBA 135 final PASSED Exam Questions
and CORRECT Answers
What is the Rule of 72? - Correct Answer- How long it takes to double money at a given
interest rate.
Divide 72 by the interest rate = how many years it will take your money to double
Divide 72 by years to double money = interest needed to earn
What is compounding? - Correct Answer- Earning interest on interest (interest on initial
investment + interest on interest on money you have earned prior)
Do I get paid first? - Correct Answer-
Before you sign contracts, remember to go over the checklist. What is on the checklist and
what should you be looking for? - Correct Answer- Look at terms & conditions
1) How much required to pay or be paid and when
2) How long term of contract is. Know what constitutes the "end" of contract
3) How amendments can be made
4) What happens if either party fails to perform
What is the difference between revenue and earnings? - Correct Answer- Revenue: is the
amount earned before deducting the cost of goods sold, expenses, and losses.
Earnings: is the net amount earned after deducting the cost of goods sold, expenses and losses
(T/F) Interest rates on federal student loans are higher for grad students than undergrad
students. - Correct Answer- True
Credit cards: Single biggest factor in determining your credit score - Correct Answer- Record
of paying bills on time, over time
,Who are the 3 major credit reporting agencies? - Correct Answer- Transunion, Equifax,
Experian
What is a variable rate of interest? - Correct Answer- An interest rate that moves up and down
based upon a benchmark interest rate which is not controlled by the lender. It is now
commonly used by credit card issuers.
What is a go-to rate of interest? - Correct Answer- Interest rate you are charged on unpaid
credit card balances, in addition to the variable rate, to determine total rate of interest on your
account. Based on credit history.
What is a default rate of interest? - Correct Answer- Accelerated rate of interest, typically 28-
35% charged on credit balance as penalty, when: 1) issuer did not receive at least minimum
payment by due date and time 2) payment not honored by bank (i.e. bounced check)
If you are a victim of credit card theft, what do you do first? - Correct Answer- Notify your
credit card issuer or a bank
What is a late penalty fee? - Correct Answer- Fee charged if you fail to meet the minimum
payment by the due date. The fee cannot be greater than your minimum payment, according
to the Federal Reserve Rules.
Is there a legal limit on how much interest you can be charged if you carry a balance on your
credit card? - Correct Answer- No (but I think the highest is 35%)
If you want to change your credit score, what do you have to change? - Correct Answer- Your
credit report
If you don't stay current on your student loans, paying them back will show up on your credit
report. - Correct Answer- True
All the things covered on the credit card act protect who? - Correct Answer- The consumers
In social security and medicare, the way we pay is 12.4%. Paid 6.2% by you and 6.2% by
your employer. There is a cap after which you don't have to continue paying for social
security. - Correct Answer- True
, Who is eligible to receive social security benefits? - Correct Answer- Citizen or lawful aliens
can receive SS.
Currently, seniors can take full benefits at age 66 and 4 months, or reduced benefits at age 62
subject to certain income restrictions.
Are social security benefits taxable? - Correct Answer- Yes
85% of them are taxable to individual but you do not pay SS taxes on unearned income like
interests, dividends, or capital gains
When it comes to Medicare, who is eligible to get benefits? - Correct Answer- Most people
over age 65, with permanent disabilities, or end-stage renal disease can receive Medicare
What does means tested refer to? - Correct Answer- A means test determines if a person or
household is eligible to receive some sort of benefit or payment.
What percent of your earned income is paid into Medicare part A? - Correct Answer- 2.9% of
earned income paid (1.45% by you and employer)
Is Medicare part A free? - Correct Answer- Yes, to people who qualify
Parts B and D of Medicare are funded by who? - Correct Answer- The medicare taxes we pay.
There is no cap. On top of this, for high income earners there is an additional surcharge on
unearned income.
When it comes to taxes, what is a W-4 form? - Correct Answer- IRS form employees use to
tell employers how much tax to withhold from each paycheck
What is the maximum individual tax rate? - Correct Answer- 37%
and CORRECT Answers
What is the Rule of 72? - Correct Answer- How long it takes to double money at a given
interest rate.
Divide 72 by the interest rate = how many years it will take your money to double
Divide 72 by years to double money = interest needed to earn
What is compounding? - Correct Answer- Earning interest on interest (interest on initial
investment + interest on interest on money you have earned prior)
Do I get paid first? - Correct Answer-
Before you sign contracts, remember to go over the checklist. What is on the checklist and
what should you be looking for? - Correct Answer- Look at terms & conditions
1) How much required to pay or be paid and when
2) How long term of contract is. Know what constitutes the "end" of contract
3) How amendments can be made
4) What happens if either party fails to perform
What is the difference between revenue and earnings? - Correct Answer- Revenue: is the
amount earned before deducting the cost of goods sold, expenses, and losses.
Earnings: is the net amount earned after deducting the cost of goods sold, expenses and losses
(T/F) Interest rates on federal student loans are higher for grad students than undergrad
students. - Correct Answer- True
Credit cards: Single biggest factor in determining your credit score - Correct Answer- Record
of paying bills on time, over time
,Who are the 3 major credit reporting agencies? - Correct Answer- Transunion, Equifax,
Experian
What is a variable rate of interest? - Correct Answer- An interest rate that moves up and down
based upon a benchmark interest rate which is not controlled by the lender. It is now
commonly used by credit card issuers.
What is a go-to rate of interest? - Correct Answer- Interest rate you are charged on unpaid
credit card balances, in addition to the variable rate, to determine total rate of interest on your
account. Based on credit history.
What is a default rate of interest? - Correct Answer- Accelerated rate of interest, typically 28-
35% charged on credit balance as penalty, when: 1) issuer did not receive at least minimum
payment by due date and time 2) payment not honored by bank (i.e. bounced check)
If you are a victim of credit card theft, what do you do first? - Correct Answer- Notify your
credit card issuer or a bank
What is a late penalty fee? - Correct Answer- Fee charged if you fail to meet the minimum
payment by the due date. The fee cannot be greater than your minimum payment, according
to the Federal Reserve Rules.
Is there a legal limit on how much interest you can be charged if you carry a balance on your
credit card? - Correct Answer- No (but I think the highest is 35%)
If you want to change your credit score, what do you have to change? - Correct Answer- Your
credit report
If you don't stay current on your student loans, paying them back will show up on your credit
report. - Correct Answer- True
All the things covered on the credit card act protect who? - Correct Answer- The consumers
In social security and medicare, the way we pay is 12.4%. Paid 6.2% by you and 6.2% by
your employer. There is a cap after which you don't have to continue paying for social
security. - Correct Answer- True
, Who is eligible to receive social security benefits? - Correct Answer- Citizen or lawful aliens
can receive SS.
Currently, seniors can take full benefits at age 66 and 4 months, or reduced benefits at age 62
subject to certain income restrictions.
Are social security benefits taxable? - Correct Answer- Yes
85% of them are taxable to individual but you do not pay SS taxes on unearned income like
interests, dividends, or capital gains
When it comes to Medicare, who is eligible to get benefits? - Correct Answer- Most people
over age 65, with permanent disabilities, or end-stage renal disease can receive Medicare
What does means tested refer to? - Correct Answer- A means test determines if a person or
household is eligible to receive some sort of benefit or payment.
What percent of your earned income is paid into Medicare part A? - Correct Answer- 2.9% of
earned income paid (1.45% by you and employer)
Is Medicare part A free? - Correct Answer- Yes, to people who qualify
Parts B and D of Medicare are funded by who? - Correct Answer- The medicare taxes we pay.
There is no cap. On top of this, for high income earners there is an additional surcharge on
unearned income.
When it comes to taxes, what is a W-4 form? - Correct Answer- IRS form employees use to
tell employers how much tax to withhold from each paycheck
What is the maximum individual tax rate? - Correct Answer- 37%
