Personal Finance Literacy DECA (17-18)

1. What kind of insurance protects you from loss if you let someone drive your car and that person has an accident?

Liability

2. Michelle wants to take Saturday night off, but her boss wants her to work. Michelle agrees to work because she thinks this might give her more leverage when she asks for time off in a few weeks. What negotiating style is Michelle using?

Accommodating

3. A problem on a drilling platform in the Gulf of Mexico has affected the amount of oil that is extracted and refined in the region. Because it is the summer travel season, the demand for gasoline is increasing; however, there is less gasoline available, and the prices for gasoline spike. What economic condition does this situation best describe?

Scarcity

Bob has failed to pay his child support payment for three months in a row. Because of this, the government has put a claim on his home to satisfy the debt. This is called a

lien

When evaluating the reliability of a journal article that addresses a complex issue or topic, it is important to consider the author's 

 expertise and knowledge

Which of the following is a financial want rather than a financial need:

Education

What is an ideal investment if you have a need for liquidity?

Money market account

Chris wants to open a small business, and he has a very good business plan that is likely to succeed. He is more likely to go to a(n) __________ for a loan.

local bank

Which of the following statements is true regarding business plans:

  Owners often use business plans as a tool to help them achieve their objectives.

Which of the following is a benefit of using a debit card instead of a credit card:

 There is no risk of going into debt. 

One type of economic risk that a business usually experiences is

competition

Which of the following is an investment option that provides tax advantages to parents who want to help their children cover their future college expenses:

 Education savings account 

Which of the following things should you do when preparing your résumé:

 Have a trusted friend or colleague proofread it. 

Individuals completing employment applications often are asked to answer questions about

 which days and hours they can work

One reason it is important to verify that credit agencies have current information about your credit history is because incorrect data can affect your ability to

obtain a bank loan

Employees who look for meaningful clues about what customers want and why they want it work in

marketing research

Sammy received one share of stock in Nike, Inc. as a gift. He wondered how much of the company's profit went to his single share, so he divided net income by the number of outstanding shares of common stock. What common ratio did Sammy calculate?

Earnings per share

Which of the following is the most effective way to avoid excessive credit card debt:

Pay off your balance each month

Too much diversification in a financial portfolio can

dilute the value of big gains on an individual stock.

Federal health insurance regulations can protect against the risk that employers will

shift insurance costs to employees.

Which of the following do businesses often expect employees to make on their own:

Routine decisions

Which of the following forms of income would be considered unearned income:

Interest from a savings account

What can a potential investor determine about a stock by analyzing its price range in a 52-week period?

Stock volatility

Emily has decided to use all of her savings to buy a new car instead of a used one. What are the opportunity costs of that decision

The benefits she could have received by using the additional cost of a new car another way

Jorge is considering whether to invest $100 at his bank, but first, he wants to know what his $100 will be worth in a year. To figure this out, Jorge needs to know the

interest rate

How can insurers combat the risk of insurance fraud?

Develop a list of red flags that signal fraud

Ali is borrowing $275,000 from a bank. So that Ali understands the terms of the loan, the bank outlines the terms in a formal agreement and requires Ali to sign it. This is an example of a financial

contract

What type of order restriction lets a broker know the order will be canceled if not filled immediately?

Fill or kill 

Which of the following is an example of a payroll deduction:

Health insurance

One reason that the balance on your bank statement would be higher than your checkbook register would be that

you've written checks after the covered period

Paula is thinking about purchasing stock in the IHM Steel Corporation. Which of the following resources is most likely to contain the financial information she needs to guide her decision-making:

IHM's most recent annual report

What is good advice to follow to avoid excessive debt?

Think long term and be realistic about income and expenses.

While reviewing his credit report, Isaiah saw an inaccurate entry regarding a bank loan that he had obtained. The first step that Isaiah should take to correct the mistake is to

contact the appropriate credit bureau.

When Aaron receives what looks like an email from his bank asking him to verify his account information, he replies with his account number, phone number, and social security number. However, Aaron soon finds out that the email wasn't from his bank at all-it was from a scammer. Aaron is the victim of

phishing.

Besides having a clear understanding of what you want from negotiation, it is important to also know

what the other person wants

Carla has written to several businesses about a job even though the businesses have not advertised positions available. Carla's letters are examples of __________ letters of application.

unsolicited

Martin keeps money in a special savings account to cover his living expenses for three months in case he loses his job or gets sick and can't work. Martin has set up a(n)

emergency fund

Which of the following exemplifies the time value of money:

Rachel placed $250 in a savings account and accumulated $12.50 in interest.

Banks must clearly communicate loan terms to the loan applicants, and loan applicants must be honest and provide accurate information about their finances to the bank during the application process. What concept does this situation describe?

Doctrine of Utmost Good Faith

When should you obtain life insurance?

When you have people who are dependent on you

Today, you invest $5,000 in an account that earns 6% compound interest and $15,000 in an account that earns 9% interest. How much money will you have in five years?

$29,770

An investment scam that involves hyping up small, unheard-of stocks is a(n)

pump-and-dump scheme.

When selecting a qualified financial planner, it is important to consider his/her

education and licensure.

For a school project, Megan needs to calculate her net worth. Using the following information, help Megan determine her net worth.

Car value = $6,000
Savings account = $250
Credit card debt = $500
Computer value = $100

$5,850

Consumers can borrow against future income to make current purchases by making use of

credit

A business that decides to lease its current building instead of buying it is transferring risk through

contractual agreement

A 401(k) is an example of a

defined contribution plan.

One way to reduce the risk of identity theft is by

shredding old bank statements.

Buying drinks from the local coffee shop is a variable expense because

the amount spent varies from month to month

50. Determine personal net worth if you own and owe the following:

Own:
Car                                                          $ 8,000
Engagement ring                                  $ 3,500
Investments                                         $45,000
Savings account                                 $12,500
Grandmother's antique china             $ 2,500

Owe:
Student loan                                        $35,000
Monthly apartment rental                     $ 600
Credit card balance                             $ 2,750
Utilities                                                     $ 250

$33,750

One of the aims of regulating the insurance industry is to

reduce the risk of gaps in coverage.

William's car is damaged. To fix the car, the repairs will cost $1,789. If William's insurance deductible is $750, how much will the insurance company pay for the repairs?

$1,039 

What is an example of good debt?

Having your children take out loans for college

When using exploratory interviews to identify occupational interests, you should try to interview someone who

holds the kind of job you want

A legally binding contract comes into being

whenever someone promises to do something in exchange for something.

When preparing a personal income tax form, parents report some of their childcare expenses to receive

tax deductions.

One of the most important benefits of setting goals is

achieving success in life

Anita's monthly credit card statement shows a previous balance of $1,742.56. It also indicates that during the past month, she charged $320.23 worth of purchases to the card and made a $680 payment to the credit card company. Her monthly interest rate is 2.25% on the first $1,200 and 1.25% on amounts over $1,200. Her finance charge is calculated on the previous balance before new charges and payments on the account are made. What is Anita's new balance?

$1,416.57

For which of the following items would you save (rather than invest):

Spring break

Which of the following actions is least likely to help you achieve a goal:

Asking your friends if the goal is worthwhile

Which type of inflation is harmful to the economy?

Hyperinflation

Which of the following is a measurable financial goal:

I want to save $3,000 for a new truck

Blue Diamond Co. attracts the best salespeople because it offers a generous commission structure, a well-rounded benefits package, flexible work hours, and opportunities for professional development. Blue Diamond Co. has

a total rewards system. 

By developing a personal budget, individuals will be able to review their

spending patterns.

What type of financial statement includes an accounting of the shareholders' equity for a company?

Balance sheet 

When a producer changes from an expensive resource to one that is less expensive, this is an example of

finding an alternative resource.

Why is it important to read and reconcile bank statements?

To balance an account

The credit plan that does not charge interest for the privilege of using monthly credit is a(n) __________ credit plan.

regular

When Matthew receives a check four times a year for income he has earned on his stock investments, he is receiving

dividends

When providing product information to clients, finance professionals should use

simple explanations

What type of investment involves several people pooling their money to purchase stocks and bonds?

Mutual funds

Arden's roof was damaged during a thunderstorm. What type of insurance claim should she file?

Homeowners

An important advantage of using a stock screener is the ability to

refine your search.

A communication firm's employee suspects a problem with an invoice s/he received for computer supplies. The employee might be able to verify the invoice's accuracy by comparing it with the

shipment's packing slip.

Which of the following is a reason that you might file an automobile insurance claim:

You accidentally ran a red light and hit another vehicle.

Which of the following is one way for a person to identify a tentative career interest:

Take ability assessment tests

If you are covered under your parents' health insurance, you

are considered a dependent.

Roger was fooled by an investment scammer who claimed to be a part of his religious group. What type of investment scam is this?

Affinity fraud 

Writing a letter of application is often an important part of applying for jobs

online

The most common headings on a stock table include the 52-week high and low, the stock symbol, the estimated dividend per share, the yield percentage/rate of return, the volume/sales for the day, the closing price for the day, the net change, and the

price-earnings ratio

Tom and Samantha worked with their attorney to create a will just after they got married. Now, two years later, they have a new baby daughter. Which of the following will need to be added to their will:

A guardian

What is an important consideration when selecting a financial-services provider?

Fee structure

Which of the following is a characteristic of debtor-creditor relationships:

Regulated by various laws 

Which of the following would indicate that a job applicant is more likely to make mistakes on the job:

The résumé contains misspelled words.

Glenn has committed to investing $100 each month to buying shares of his favorite stock, Microsoft. Last month, when the stock price was $22, he bought 4.54 shares. This month the stock price is $25, so he bought just 4 shares. This strategy is called

dollar cost averaging.

Melissa is thinking about setting up her growing business as a corporation. Which of the following online sources is most likely to have relevant information about how to establish a corporation:

Nolo Legal Encyclopedia

What does diversification by cap-size help investors to do?

Spread out the growth rates of their investments

What is the first step you should take when planning for your retirement?

Determine your retirement income needs

Which of the following is a tool that often helps individuals organize and manage their mortgage, utility, and insurance bills:

Monthly payment schedule

Why is it a good idea to take a small dictionary with you when completing a job application form?

To create a positive impression by spelling words correctly

What type of order restriction lets a broker know the order will expire at the end of the trading day?

Day order

Which of the following records that contains information about their investments should individuals keep:

Purchase

Which of the following are types of lending investments:

Money market accounts, certificates of deposit, and bonds

Employees who work in certain professions are required to pass an examination and obtain a

license

As Vanessa walked into the library, Jeremy and Sam were just closing a drawer on the librarian's desk. Later, Vanessa described the incident to the librarian-and included her own conclusion that the boys had probably stolen something. Vanessa's account is an example of which of the following:

Framing

The ZRB Company promises to ship LST Inc. 200 units of product by a certain date, and LST Inc. promises to pay ZRB $25,000 for the product within 14 days of receipt. This is an example of a(n)

bilateral contract.

All the efforts to safeguard consumers from any kind of injury they might suffer in the process of purchasing and/or using consumer products is known as consumer

protection

You've just won the lottery! You have to choose between receiving $10,000 today or $50,000 in 20 years. Using a present value table, you find that the present value of $1 received 20 years from now with an interest rate of 10% is $.149. What is the present value of the $50,000?

Less than $10,000

What is the primary responsibility of a financial planner?

To provide appropriate financial guidance

Kendra's financial goal is to build wealth over time by making diversified investments. Which of the following financial services providers is most likely to help Kendra achieve her goal:

Asset-management firm