Financial Math - Diagnostic Exam

1. Sylvester is taking out a loan and is confused by the jargon (words).

2. Which of the following explanations might help him? 

• 1. A. TERM is the length of the loan, and INTEREST RATE is how much total money he will pay

• B. PRINCIPAL is how much he owes per month, and TERM is how much he owes overall

• 1. C. INTEREST RATE is how much the lender charges per year for the loan, and PRINCIPAL is the initial amount Sylvester borrows

• 1. D. MONTHLY PAYMENT is how much interest costs him each month, and TERM is the name of his lender

Which should you use when creating a budget - your NET PAY or GROSS PAY?

• 1. A. Net pay, because it’s what is reported to the government by your employer for tax purposes

• 1. B. Gross pay, because it’s the total amount you’ve earned that month

• 1. C. Net pay, because it’s the total amount you’ve earned minus taxes and other deductions

• 1. D. Gross pay, because it’s the total amount you’ve earned minus any recurring bills you owe for the month

1. Which of the following is a recommended way of following up with a personal connection after a job interview?

• 1. A. Returning to the office the next day to express your continued interest in the job

• 1. B. Buying the interviewer(s) a gift

• C. Sending a friend request to the interviewer(s) on social media

• D. Sending a personalized thank you letter or email

1. Which amount is found when you subtract your grants and scholarships from a college’s cost of attendance?

• A. Sticker price

• B. Net price

• 1. C. Student Aid Index

• D. Room & board

1. All of the following are benefits of taking out a loan with a cosigner EXCEPT…

• 1. A. There are no penalties for late payments

• 1. B. You gain access to loans you might not have been approved for on your own

• C. Your interest rate might be lower

• 1. D. Your credit score will be positively impacted by making timely payments

Which of the following is a method of accessing the money in your checking account?

• 1. A. Buy a prepaid card using cash

• 1. B. Deposit a paycheck from your job

• 1. C. Insert your debit card at a store and sign the electronic machine or paper receipt

• 1. D. Take money from the ATM using your credit card

1. Your little sister wants to know how renters insurance works. Which description should you give her? 

• 1. A. When something goes wrong at your apartment, you pay one premium to open a renters insurance policy and ask the insurance company to cover your losses

• 1. B. Your rent payments go to the building’s owner, and that person covers your losses if anything goes wrong at your apartment

• C. You pay monthly premiums into a savings account, and if something goes wrong, you can withdraw the money to pay your claims

• 1. D. You pay monthly premiums to buy a policy, and then you file a claim to have the insurance company cover your losses if something goes wrong

In order to qualify for financial aid, prospective college students must submit their _______.

• 1. A. Financial aid letter

• 1. FAFSA

• 1. PSAT, SAT, or ACT scores

• 1. Parent's credit score

1. Which of the following best describes the amount of money you'll have if you put $1000 into a CD earning 2% annual compound interest for 10 years?

2. You can ignore the impact of inflation in this question.

• 1. A. The same $1000 you started with

• 1. B. Exactly $1200

• 1. C. Slightly more than $1200

• D. $2000

1. Which of the following can be found in your credit report?

• A. Your checking and savings account balances

• 1. B. How long you’ve been a member of a bank or credit union

• 1. C. Your credit payment history

• D. A list of items you’ve purchased using credit