MONEY MANAGEMENT FINAL EXAM TEST REVIEW

UNIT 1 – Test Review Choosing, Planning and Keeping a Career MONEY MANAGEMENT UNIT 1 – Test Review Choosing, Planning and Keeping a Career

Sick pay, vacation time, and profit sharing are all examples of: A general term for advances resulting from improvements in technical processes that increase productivity TECHNOLOGY Sick pay, vacation time, and profit sharing are all examples of: BENEFITS

One who organizes, manages and assumes the risk of a business enterprise. ENTREPRENEUR

A natural physical or mental ability is a(n) The things in your life that you consider to be important to you are called: VALUES The way you choose to live your life, which is based on your values, is called: LIFESTYLE A natural physical or mental ability is a(n) APTITUDE Individual qualities and traits which make you a unique person are known as PERSONALITY

When a person designs his or her lifestyle around a job so that he or she cannot afford to change jobs… this is known as being __________________. LOCKED IN A letter that explains how you are qualified for a job, impresses the employer as to your interest and desire for the job, and asks for an interview is called a(n) LETTER OF APPLICATION

A summary of skills, education, work history and personal information that qualifies you for a job is called a RESUME When you talk to your potential employer about your qualifications for a particular job that is called a JOB INTERVIEW A form that you fill in with requested job related information is knows as a(n) JOB APPLICATION

Understanding Paychecks, Benefits, Employee Taxes, and Tax Returns MONEY MANAGEMENT UNIT 2 – Test Review Understanding Paychecks, Benefits, Employee Taxes, and Tax Returns

CHAPTER FIVE Persons claimed that reduce the amount of tax withheld from your paycheck. ALLOWANCES When you report to work, you will be asked to fill out a form declaring how many allowances you are going to claim. What is that form called? W-4

A permanent work identification number A permanent work identification number. All American workers should have one: SOCIAL SECURITY NUMBER A social insurance program that covers the nation’s work force. It provides retirement, disability and survivor benefits to those qualified. SOCIAL SECURITY

Your employer must mail you your W-2 by what date? Lists income that you received during the year and all the amounts withheld from your paycheck. Mailed to you by your employer. W-2 Form Your employer must mail you your W-2 by what date? JANUARY 31ST When do you have to have your federal income tax return filed by? APRIL 15th What is the name of the employment law that set the minimum wage and the rules regarding overtime. FAIR LABOR STANDARDS ACT

The legally established lower limit on wages that employers must pay. Federally mandated program that provides that every state must have a program in place to protect workers who lose their job through no fault of their own. UNEMPLOYMENT COMPENSATION The legally established lower limit on wages that employers must pay. MINIMUM WAGE

Number of hours in the standard work week. Employers must pay hourly employees extra money for working more than 40 hours. That rate is: 1 ½ TIMES THEIR REGULAR PAY RATE

The name for laws that give financial security to worker’s and their families for injuries, illness, loss of income, or death that occurs as a result of your job or working conditions. WORKER’S COMPENSATION

CHAPTER SIX The total pay before any deductions are made is known as GROSS PAY _________________ is defined as hours worked beyond regular hours. OVERTIME Amounts subtracted from your gross pay: DEDUCTIONS

Company provided supplements to income are known as: The amount left when all the deductions are subtracted from your gross pay: NET PAY Company provided supplements to income are known as: BENEFITS

Employer provided retirement plan. Extras that companies offer to improve employee morale and working conditions. Examples might include store discounts, company car etc…. PERKS When employers allow you to leave your job, without pay, for a period of time with a guarantee that you will get your job back. LEAVE OF ABSENCE Employer provided retirement plan. PENSION

CHAPTER SEVEN Largest source of government revenue is: INCOME TAX Taxes that increase in proportion to your income are known as: PROGRESSIVE TAXES An example of a progressive tax that we discussed in class. FEDERAL INCOME TAX

Taxes that decrease in proportion to income: REGRESSIVE TAXES An example of a regressive tax that we discussed in class: SALES TAX OR EXCISE TAX Taxes where the % taxes stays constant even though the amount being taxed increases PROPORTIONAL TAXES An example of a proportional tax that we discussed in class: PROPERTY TAX

When the government brings in more than it spends it has a: Administrative agency in charge of collecting income taxes and enforcing tax laws: INTERNAL REVENUE SERVICE When the government spends more than it brings in with revenue it has a: DEFICIT When the government brings in more than it spends it has a: SURPLUS Easiest tax form to fill out: 1040EZ

UNIT 3 – Test Review Budgeting and Managing a Checking Account MONEY MANAGEMENT UNIT 3 – Test Review Budgeting and Managing a Checking Account

CHAPTER EIGHT QUESTION: ANSWER: Budget A plan for spending and saving money ANSWER: Budget

CHAPTER EIGHT QUESTION: Name the three major categories included in most budgets? ANSWER: Income, Savings, and Expenses

CHAPTER EIGHT QUESTION: Amount of money earned before taxes is known as? ANSWER: Gross Income

CHAPTER EIGHT QUESTION: Amount of money earned before after taxes is known as? ANSWER: Net Income

CHAPTER EIGHT QUESTION: ANSWER: Assuming a Gross Salary of $100,000 and a tax rate of 25%: What is your Gross Income? What is your total income tax bill? What is your Net Income? ANSWER: Gross Income = $100,000 Income Taxes = $25,000 Net Income = $75,000

CHAPTER EIGHT QUESTION: Unspent income is known as? ANSWER: Savings

CHAPTER EIGHT QUESTION: What are three types of savings? ANSWER: Short-term (new shoes), Long-Term (house), Retirement, Emergencies

CHAPTER EIGHT QUESTION: A cost to meet a need or pay a debt. ANSWER: Expense

CHAPTER EIGHT QUESTION: There are three types of expenses? What are they? ANSWER: Fixed, Variable and Discretionary

CHAPTER EIGHT QUESTION: ANSWER: Fixed Expense Rent, Car Payment etc… A cost that occurs regularly and doesn’t vary in amount is known as a: Give two examples: ANSWER: Fixed Expense Rent, Car Payment etc…

CHAPTER EIGHT QUESTION: ANSWER: Variable Expense A cost that occurs regularly but varies in amount is known as a: Give two examples: ANSWER: Variable Expense Phone, Electricity, Groceries etc…

CHAPTER EIGHT QUESTION: ANSWER: Discretionary Expense A cost that is determined by personal wants and needs: Give two examples: ANSWER: Discretionary Expense Vacations, Entertainment, Clothes

CHAPTER EIGHT QUESTION: The value of what you had to give up to pursue another option is known as? ANSWER: Opportunity Cost

CHAPTER NINE QUESTION: A checking account Banking service where you deposit money into it, and can then write drafts to people or businesses to pay off money owed? ANSWER: A checking account

CHAPTER NINE QUESTION: There are a lot of questions you should ask before opening up a checking account? Name one? ANSWER: Minimum balance? ATM card? Debit Card? Direct deposit? Free Checks? Etc…

CHAPTER NINE QUESTION: A check that the bank has already processed and paid out? ANSWER: Cancelled check (or cleared check)

CHAPTER NINE QUESTION: When you don’t have enough money in your account to cover a check? ANSWER: Overdraft (or bounced check)

CHAPTER NINE QUESTION: Floating a check When you know you don’t have enough money to cover a check but you send it anyway, hoping to make a deposit before the check clears. ANSWER: Floating a check

CHAPTER NINE QUESTION: Signature Card A form that you fill out when you open your checking account. Provides the bank with a record of how you sign your name. ANSWER: Signature Card

Parts of a check NAME ADDRESS

CHAPTER NINE QUESTION: A form you fill out when you are depositing money into your checking account. ANSWER: Deposit Slip

CHAPTER NINE QUESTION: A personal record of all your deposits and withdrawals should be kept in your: ANSWER: Checkbook Register

CHAPTER NINE QUESTION: What are examples of logical reasons your checkbook balance doesn’t match your bank statement balance? ANSWER: Outstanding checks (you wrote them but they haven’t been cashed yet) Outstanding deposits (you deposited them after the bank statement was mailed) ATM withdrawals or service fees that you forget to record in your checkbook register

CHAPTER NINE ANSWER: QUESTION: You cannot cash a check unless it has been ______________________. ANSWER: Endorsed

CHAPTER NINE ANSWER: QUESTION: What type of endorsement is this? Blank Endorsement

CHAPTER NINE ANSWER: QUESTION: What type of endorsement is this? Restrictive Endorsement

CHAPTER NINE QUESTION: Debit Card ANSWER: Special ATM Card that allows you to pay for transactions right out of your checking account by simply swiping the card ANSWER: Debit Card

UNIT 4 – TEST REVIEW PLANNING FOR YOUR FUTURE SAVINGS AND INVESTING MONEY MANAGEMENT UNIT 4 – TEST REVIEW PLANNING FOR YOUR FUTURE SAVINGS AND INVESTING

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: Financial security begins when you start doing what? ANSWER: SAVING MONEY!

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: List three “expected” items that most people save money for? ANSWER: HOUSE, CAR, VACATIONS etc…

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: You need to have some savings to take care of the unexpected things that life throws at you. Name three “unexpected” items that you might need your savings for: ANSWER: UNEMPLOYMENT, ACCIDENT, SICKNESS

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: The amount of money you have left after your bills is paid is referred to as your ___________? ANSWER: DISCRETIONARY INCOME

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: Money paid by the financial institution to the save for the use of their money is known as what? ANSWER: INTEREST

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: When interest is computed on the original principal plus accumulated interest, it is called what? ANSWER: COMPOUNDING INTEREST

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: In class we discussed a few ways people “save” their money. Name one: ANSWERS: REGULAR SAVINGS ACCOUNT CERTIFICATE OF DEPOSIT MONEY MARKET FUND

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: When assets can be easily converted into cash without a loss in value they are called what? ANSWER: LIQUID

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: Name a “pro” and a “con” about putting money into a regular savings account? ANSWER: PRO: HIGH LIQUIDITY CON: LOW INTEREST RATE

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: In class we discussed five factors that you should consider when setting up your savings. Can you name any of them? ANSWERS: LIQUIDITY SAFETY CONVENIENCE INTEREST EARNING POTENTIAL EARLY WITHDRAW PENALTIES

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: THE MOST IMPORTANT THING TO REMEMBER FROM THE CHAPTER ON SAVINGS IS TO DO WHAT? ANSWER: PAY YOURSELF FIRST!

CHAPTER ELEVEN MANAGING YOUR INVESTMENTS QUESTION: Once you have a “safe cushion” put away in regular savings, you can start doing more serious investing. What does the book consider a “safe cushion”? ANSWER: 3-6 MONTHS OF EXPENSES

CHAPTER ELEVEN MANAGING YOUR INVESTMENTS QUESTION: A measure of uncertainty about an investment is known as? ANSWER: RISK

CHAPTER ELEVEN MANAGING YOUR INVESTMENTS QUESTION: The rise in the general level of prices over time is known as __________________? ANSWER: INFLATION

CHAPTER ELEVEN MANAGING YOUR INVESTMENTS QUESTION: Represent ownership in a corporation. ANSWER: STOCKS

CHAPTER ELEVEN MANAGING YOUR INVESTMENTS QUESTION: One unit of ownership is known as: ANSWER: A SHARE

CHAPTER ELEVEN MANAGING YOUR INVESTMENTS QUESTION: When the government or a corporation borrow money from you and agree to pay you back with interest, that is known as a ___________? ANSWER: BOND

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: Stocks that are sold in multiples of 100 are called? ANSWER: ROUND LOTS

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: Portion of the profits that are redistributed to the shareholders of a corporation. ANSWER: DIVIDENDS

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: Stocks that have a consistent history of paying high dividends are known as? ANSWER: INCOME STOCKS

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: Companies that REINVEST their profits into the business so that they can grown and expand are known as ______________? ANSWER: GROWTH STOCKS

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: When a stock sells for less than $5 per share it is called a ________________? ANSWER: PENNY STOCK

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: Stocks of well-established, and usually profitable companies, are called __________________? ANSWER: BLUE-CHIP STOCKS

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: What are the two ways you can make money with stocks? ANSWER: THE STOCK PRICE CAN GO UP YOU CAN GET A DIVIDEND

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: A marketplace where stocks and other securities are bought and sold is called what? ANSWER: A SECURITIES EXCHANGE

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: The largest organized exchange in the United States is? ANSWER: THE NEW YORK STOCK EXCHANGE

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: Strategy you use if you think a stock price is going to drop? ANSWER: SHORTING A STOCK OR SELLING SHORT

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: Occurs when a company increases the number of shares they have outstanding, but lowers the selling price of the stock in direct proportion. ANSWER: STOCK SPLIT

CHAPTER FOURTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: Type of investment where investors from around the world pool their money together to buy stocks, bonds, and other securities. ANSWER: MUTUAL FUND

CHAPTER FOURTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: What are three reasons why people invest in mutual funds? ANSWER: Convenient Provides Diversification High Liquidity Usually less risky than the stock market

CHAPTER FOURTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: What type of investment has historically proven to give the best returns and give you the best defense against inflation? ANSWER: REAL ESTATE

CHAPTER FOURTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: When buying real estate you usually have to pay some money up front in order to secure the loan. This is known as what? ANSWER: A DOWN PAYMENT

CHAPTER FOURTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: Down Payments usually have to be at least how much? ANSWER: 20% OF THE TOTAL PRICE

CHAPTER FOURTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: The difference between what you can sell the house for and what you owe on is it is referred to as what? ANSWER: EQUITY

CHAPTER FOURTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: What are two HUGE benefits to investing in real estate? ANSWER: EXCELLENT RETURN ON INVESTMENT GREAT TAX BENEFITS

CHAPTER FOURTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: What is the biggest con of investing in real-estate? ANSWER: LOW LIQUIDITY – IT CAN BE HARD TO CONVERT YOUR INVESTMENT BACK INTO CASH

MONEY MANAGEMENT CREDIT IN AMERICA

CHAPTER SIXTEEN CREDIT QUESTION: What are some advantages to using credit? ANSWER: Able to buy items now Don’t have to carry cash Creates a record of purchases More convenient than writing checks Can make online purchases and reservations etc…

CHAPTER SIXTEEN CREDIT QUESTION: What are some disadvantages to using credit? ANSWER: High interest rates May require additional service fees Can lead to serious financial difficulties Impulse spending may occur

CHAPTER SIXTEEN CREDIT QUESTION: When banks need to decide whether or not to grant you credit they look at the three C’s. What are they? ANSWER: Character – Will you repay? Capital – What if you don’t repay? Capacity – Your ability to repay?

CHAPTER SIXTEEN CREDIT QUESTION: Name ways that you can start to build a good credit history? ANSWERS: Establish a steady work history Pay your bills on time Open checking and savings accounts. Don’t bounce checks and make regular deposits Apply a credit card and pay it off in full each month.

CHAPTER SIXTEEN CREDIT QUESTION: There are three types of credit: Single Payment, Installment and Revolving. Give an example of each. ANSWER: Single Payment – borrow once, pay once – EXAMPLE: Utilities Bill Installment – borrow once, pay off over time – EXAMPLE: House payment or car payment Revolving – keep borrowing within set limit, pay off monthly EXAMPLE: Credit card payments

CHAPTER SIXTEEN CREDIT QUESTION: To have a “safe amount” of debt you should owe under __________% of your yearly income in total debt. ANSWER: 20%

CHAPTER SIXTEEN CREDIT QUESTION: To have a “safe amount” of monthly debt payments you should be spending less than __________% of your monthly income on those payments. ANSWER: 10%

STUDY, STUDY, STUDY!