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Insurance — Unit test Answers

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Through the successful study of personal finance, an individual will be

better prepared to calculate financial risks

able to spend available assets.

faced with long-term challenges.

more likely to avoid high opportunity costs.

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Emma has decided that she needs to assess the risk and return of buying an extended warranty for her new laptop for school. Which of these practical questions should she ask herself to assess the risk? Select three options.Will the warranty cover the cost of any physical damage?Should I buy a different model?Would it be better for me to buy a desktop computer?Is the cost of replacement less than the cost of the warranty?Is the laptop worth the extra expense of the warranty?

Will the warranty cover the cost of any physical damage?

Should I buy a different model?

Would it be better for me to buy a desktop computer?

Is the cost of replacement less than the cost of the warranty?

Is the laptop worth the extra expense of the warranty?

Which best describes the purpose of recording past income and spending in a budget?

to know the historic cost of goods

to serve as the basis for future planning

to learn why having savings is important

to learn why expenditures are likely to increase

The Dumescu family made a chart to compare its budget items. Liliana noticed that the sum of three of the budget items was half of the budget. Which three items was she referring to?

housing, clothing, and savings

housing, medical, and food

food, transportation, and clothing

transportation, savings, and housing

What are possible advantages and disadvantages of using automatic withdrawal to pay bills? Check all that apply.

not having to keep track of the balance in a checking account

avoiding late payment fees

having to share your account information

not having to find a stamp and a mailbox

not knowing when the payment will be taken out of your account

possible overdraft fees if there is not enough money in the account to cover the payment amount

having to pay a fee for the service

What does purchasing insurance for a business reveal about the business owner’s attitude toward financial risk?

It shows that the owner expects financial risk and is eliminating it by making an insurance company liable.

It shows that the owner acknowledges the financial risks and is willing to pay every month to transfer the risk to an insurance company.

It shows that the owner is willing to share ownership of the business to reduce financial risk.

It shows that the owner is willing to budget for short-term financial risks to avoid long-term risks.

Yarin’s gross pay for the year was $3,500. The federal income tax withholding from his pay was 9% of his gross pay. Yarin determined the federal income tax he owes is $115. How much of a refund can Yarin expect?

$200

$315

$3,035

$3,185

What term is used to describe an individual's money and personal property?

budget

income

assets

finances

A refrigerator is priced at $1,250. There are two options offered to reduce the price: either a 25% discount off the price or a rebate of $300. Which is the better choice, and what is the extra amount saved?

The 25% discount is better; it saves $12.50 more.

The rebate is better; it saves $12.50 more.

The 25% discount is better; it saves $75 more.

The rebate is better; it saves $75 more.

Yuri wants to pay for his new chair using a check. What must he consider before using that method of payment?

Yuri must check his credit history.

Yuri must know the interest rate on a furniture loan.

Yuri must be sure he has enough left in his checking account for any expenses and automatic payments.

Yuri must check his credit card balance.

Kaleb wants to get a payday loan in the amount of $375. He knows that the annual percentage rates (APR) for these types of loans are high, but he is hoping to find one that has an APR of 40%. If Kaleb finds a business that charges a fee of $37 for the loan, what would the term of the loan need to be in order for Kaleb to get his desired APR?

9 days

19 days

90 days

95 days

A consumer charges a $46.92 purchase on a credit card. The card has a daily interest rate of 0.039%. If the consumer pays off the balance at the end of 30 days, how much in interest will be paid for the purchase?

$0.06

$0.18

$0.55

$5.49

Ben and his housemates signed a lease for an apartment for 12 months for $563 per month of which Ben agreed to pay $215 per month. Which of the following statements best gives the reasons that Ben’s rent payment is an essential (fixed) expense?

It cannot be eliminated in a later budget, in order to save money.

Living expenses have a higher priority than any other type of expense.

The spender controls the amount of the rent by choice of apartment.

He agreed to pay the same amount every month.

Antonio is ready to move out of his parent's house and live on his own. He found a great apartment that has all utilities included. His job as an assistant plumber requires him to have a car, but his hours are flexible enough to give him time on the weekends to have fun with his friends. What is the best way Antonio's budget can be modified to help him save enough for the $200 down payment and make the $500 monthly rental payment? Monthly Budget Old Budget New Budget Income Wages $1500 $1500 Expenses Food Cell Phone Savings Entertainment Car Expenses . $250 $175 $200 $200 $300 . $____ $____ $____ $____ $____ Net Income $375 $____

Antonio could keep his budget the same and hope he gets a raise at work.

Antonio could reduce his monthly entertainment expenses by $100 to help pay the monthly rent. He could take $200 out of savings once for the deposit.

Antonio could live at his parent’s house for one more month and save his net income. After one month of living at home, he would have enough additional money for the deposit and one year’s rent at the apartment.

Antonio could reduce his monthly entertainment expenses by $75 and his food expenses by $50 to pay the monthly rent. He could take $200 out of savings once for the deposit.

Marco is reconstructing his expenses for the past two weeks. Here are the records of his expenses:TransactionCost ($)T-shirt20Gas22Movie13Video game39Jeans34Hat15Books31Marco’s bank statement says that he has an ending balance of $81. What is Marco’s starting balance?

$255

$93

$174

$210

Predict how much money can be saved without having a negative actual net income.Monthly BudgetBudgeted AmountActual AmountIncome Wages$1025$675Expenses Rent Utilities Food Cell Phone Savings $300$100$175$75$300$300$100$200$75$____Net Income$75$____

It is not possible to save any money this month without having a negative actual net income.

$350 can be saved resulting in an actual net income of $0.

$200 can be saved resulting in an actual net income of $75.

Because there is a $75 budgeted net income, that $75 can be put towards savings.

Ann needs to have money available to pay an annual renters insurance premium of $224, ten months from now. She has savings of $0 in her current budget, a retirement fund of $4,833, and a reserve fund of $0. Which of the following would NOT be part of her reasonable plan to establish a reserve fund for this expense?

Reduce a non-essential expense to save money.

Establish a savings account for Other Expenses.

Pay the premium right away using the retirement fund investments.

Divide it into a monthly savings amount, and add the savings to the budget.

Mario spent a total of $87.33 last week, but did not keep a perfect record of where his money went. Fortunately, Mario does have all but one of his receipts. He enters all of the information he has into his expense spreadsheet as shown below. How much did Mario spend on golfing?

$35.20

$45.20

$47.88

$143.96

Manny makes the following purchases at the store:pair of jeans for $32.653 t-shirts for $14.89 eachpair of sneakers for $39.99The store is having a promotional sale where 10% is taken off of each customer’s total purchase before tax. The sales tax is 8%. If Manny paid $114.03 , then he _____ for his purchase.

paid $5.63 too little

paid $3.28 too little

paid the correct amount

paid $8.45 too much

Enzel goes online to buy a graphing calculator. He finds a site that currently has a promotion of 15% off on all orders over $50. Enzel decides to buy his graphing calculator, with a price tag of $83, at this site because he knows that he will get the 15% discount when he checks out. Enzel pays 4.5% sales tax on the discounted price and pays a shipping fee of $6.35. What is the total of Enzel’s online purchase?

$80.07

$80.36

$86.74

$93.09

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Insurance — Unit test Answers

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