Financial Literacy Final Exam Review

Colleen is trying to sell her 2007 Toyota Camry, which she's owned for many years.  The car has over 150,000 miles on it and isn't in the best condition.  According to the car valuation website Kelley Blue Book, her Camry is worth about $2,000.  Colleen, who is sentimentally attached to her car and can't imagine giving it away for such a low price, decides to list her car online for $10,000.  She is shocked when no one responds to her ad.  Colleen is likely experiencing ___________.

• confirmation bias

• the sunk cost fallacy

• herd mentality

• FOMO

• the endowment effect

When Michael received an unexpected $200 gift from his grandma, he was pretty happy. Later that day, when Michael got a $200 speeding ticket, he was emotionally destroyed. Michael's experience is an illustration of which psychological phenomenon?

• herd mentality

• the endowment effect

• the sunk cost fallacy

• confirmation bias

• loss aversion

Alfonso watched the first three episodes of season 1 of Better Call Saul before he realizing that he wasn't that into the show. But because he didn't want the time he spent watching those episodes to have been wasted, he watched the remaining seven episodes of season 1 and every episode of seasons 2 through 6. Alfonso has succumbed to ________.

• overconfidence

• the endowment effect

• the sunk cost fallacy

• FOMO

• confirmation bias

Brielle decided to skip college and move to Los Angeles to pursue an acting career. Despite having no prior experience, training, or industry connections, she is confident she’ll become a famous movie star within a year because she's always been told she has "star quality." Brielle might be a victim of ______

• herd mentality

• loss aversion

• the status quo bias

• overconfidence

• the endowment effect

Camille is a high school senior who is leaning towards attending Baylor University in the fall, but wants to make sure she's making the right choice. If she wants to avoid letting confirmation bias influence her decision, she should ________.

• ask her fellow seniors who have chosen to attend Baylor to tell her why they chose it

• actively seek out information that might contradict her prior belief that Baylor is the best college for her

• read information on Baylor's website touting all of the benefits of attendance

• try to avoid reading any information that might challenge her assumption that Baylor is the best choice for her

• ask friends who currently attend Baylor to tell her what they like about it

Due to the hedonic adaptation, what would you expect to happen to Derrick's level of happiness after buying a new Nintendo Switch 2?

• it would decrease initially, then rise to a baseline level

• it would never change

• it would increase in initially, then fall to baseline level

• it would increase constantly

• it would decrease constantly

Herd mentality may explain why ______.

• Wanda focused too much on the potential benefits of going to medical school and less on the potential downsides

• Marlon spent $100 at an expensive sushi restaurant even though he hates sushi, only because several of his closest friends were going and he felt pressured to join them.

• Viola kept doing jiu jitsu even though she hated it because she's already spent 10 years doing it and doesn't want those 10 years to have been wasted

• 0% of professional money managers think that they have "below average" investing skills compared to their peers in the field, even though - by definition - 50% of them have below average investing skills compared to other professionals.

• Wesley has much stronger memories of the tennis matches he lost than those that he won.

Which of the following factors regarding one's college attendance generally has the greatest impact on one's post-college financial success?

• The total enrollment of the college or university one attends

• The selectivity of the college or university one attends

• The major one chooses and whether they actually graduate

• The location of the college or university one attends

Which of the following is the largest indirect cost of college attendance for most people?

• The total cost of tuition

• The total cost of room and board

• The total cost of textbooks

• The income one could have earned if they had worked instead

Which of the following formulas correctly calculates the net price of college attendance?

• Sticker price – student loans = net price

• Sticker price – grants and scholarships = net price

• Grants and scholarships + student loans = net price

• Sticker price + grants and scholarships = net price

• Sticker price × financial aid = net price