Which of the following best defines the term beneficiary?

Person named on the insurance policy to receive the benefits from the policy

Person named on the insurance policy that is covered by the policy

Insurance company that is protecting the policyholder against a loss

Professional salesperson who acts for the insurer in negotiating an insurance policy

What is the relationship between risk and return in investing?

Higher risk gives the potential for higher return

Higher risk indicates the potential for lower return

Lower risk indicates the potential for higher return

There is no relationship between risk and return

How is liquidity best defined?

How quickly and easily an asset can be converted into cash

Amount of money needed for necessities and comforts

Measurement of how much a person owns after debt is subtracted

The amount of savings available for a person

While borrowing with a mortgage loan is costly, which of the following is an ADVANTAGE of home ownership?

Increase in time and energy commitment

Over the past six years Sean has been able to save $400 a month from his job with the goal of one day using the money for a down payment to purchase a home. He has saved $32,256 (including interest) over this period. Which of the following options will best help Sean reach his goal of owning a home?

Sean should make a 20% down payment on a $90,000 two bedroom house in a safe neighborhood with a monthly payment of $550

Sean should stay in his apartment and continue to save his money because it’s a better investment

Sean should use all his savings to make a 10% down payment on a $320,000 five bedroom, three-bath house in an upscale suburban neighborhood

Sean should invest in a money market account making 1% interest and put his goal on hold

Which of the following individuals is a good candidate to purchase life insurance?

35-year-old married man, with 2 dependents and a mortgage

80-year-old widower, who owns his home and has no dependents

50-year-old single man, with no debt and no dependents or family

21-year-old single woman, with no debt and no dependents

When taking advantage of the time value of money, which of the following will most likely result in the largest return?

Invest as long as possible and at the highest interest rate possible

Invest a small amount of money for a short period at the lowest risk possible

Invest at a high interest rate because interest is the only factor that affects return

Invest a large principal of money and make no additional investments

In a mortgage, the principle is...

the legal limit of how much you can borrow

Mitchell just got his first job and moved out of his parents home. He has never had a bank account before and doesn't know what kind of account to open. What would you recommend to Mitchell?

Open a checking account and a savings account. A checking account will be helpful to pay bills and rent, while the savings account will earn some interest.

Open just a savings account. He wants to earn as much interest as possible and really only needs to access the money 6 times a month for essential bills.

Open just a checking account. Because Mitchell doesn't have much money now, he doesn't really need a savings account.

Mitchell doesn't need a bank account. He can just cash his checks at 7-11 and pay for everything in cash

What is the purpose of a budget?

To limit spending and track income and expenses

To borrow money from friends or family

When you get paid, which of the following should you do third with your money?

Put some of the money in savings

Put half the money towards bills

Put some of the money towards fuel costs

Give some of the money to charity

Real World Scenario: Sarah wants to buy a new bike. She has $50 and her mom gave her $20 as a gift. How can Sarah use her plan for spending and saving to decide if she can buy the bike?

Compare the cost of the bike to her savings

Which of these outcomes become more likely for someone with strong personal finance skills? Check all that apply.

A person can be more prepared to meet basic needs.

A person can spend money thoughtfully to accumulate assets.

A person can spend wisely to avoid financial problems.

A person can avoid opportunity cost.

A person can avoid financial decision-making

Personal Financial Decision Making

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11th Grade

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Donna Woods

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What is the definition of a major decision?

Which THREE of the following does a career plan include? (Choose 3)

Sarah is going away to college and she needs to open a bank account to help her manage her everyday expenses and purchases. She will have monthly expenses of rent, utilities, food and entertainment. Which account would be the BEST choice for Sue?

What are important considerations when making a purchase? (Choose 4)

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