Gianna The Goat - Study Guide CFM

  1. You are legally entitled to check your credit report for free when:
    1. You are denied credit/employment, you are a victim of identity theft, you are unemployed and seeking a job, or you receive public assistance.
  2. A credit bureau exists to:
    1. Collect, compile, and maintain consumer credit data to provide credit histories and scores to lenders.
  3. Negative financial information can stay on your credit report for ___7___ years.
  4. A bankruptcy judgment remains on your credit record for _7-10_____ years.
  5. List the Five Cs of Credit:
    1. Character, Capacity, Capital, Collateral, and Conditions.
  6. Are stocks insured? Explain briefly:
    1. No. Unlike bank deposits, stocks are not insured by the FDIC or NCUA. You can lose your principal investment.
  7. One safe practice to avoid identity theft is:
    1. Shredding documents with personal information or creating strong, unique passwords.
  8. If your credit card is stolen and you notify the issuer immediately, the maximum amount you are legally responsible for is $____50_____
  9. Define gross pay:
    1. An employee's total earnings before any taxes, benefits, or other deductions are withheld.
  10. Define net pay:
    1. The amount of money an employee takes home after all taxes and deductions have been subtracted (take-home pay).
  11. A tax exemption is:
    1. A specific amount of money you can subtract from your adjusted gross income, which reduces your taxable income.
  12. Which form should a new employee complete first to ensure correct tax withholding?
    1. IRS Form W-4.
  13. Employers must provide employees with a ______W-2____ form by January 31.
  14. The NCUA is responsible for:
    1. Insuring deposits in credit unions and regulating federal and state-chartered credit unions.
  15. What are the differences between banks and credit unions?
    1. Banks are for-profit corporations owned by shareholders, while credit unions are not-for-profit cooperatives owned by their members. Credit unions typically offer higher savings rates and lower loan rates.
  16. List one advantage and one disadvantage of ATM cards:
    1. Advantage: Convenient access to cash 24/7. Disadvantage: Risk of fees (especially at out-of-network ATMs) or theft of the PIN.

  17. Which type of account is the most liquid?
    1. Checking accounts (or savings accounts).
  18. “Pay Yourself First” means:
    1. Putting money into savings or investments as soon as you get paid, treating savings as a mandatory fixed expense.

  19. Explain the relationship between risk and reward:
    1. Higher potential rewards generally come with higher risk. Safe investments usually offer lower returns.
  20. An important investment principle is _________Diversification_______________, which helps reduce risk.
  21. Mutual funds are:
    1. Investment vehicles made up of a pool of money collected from many investors to invest in securities like stocks and bonds.
  22. Who pays the most in credit card interest over time?
    1. Cardholders who only make the minimum monthly payments.
  23. The best indicator of the total cost of a loan is:
    1. APR
  24. The lowest interest rates on loans usually come from:
    1. Traditional banks and credit unions (for borrowers with excellent credit).
  25. Payday loans are:
    1. Short-term, high-interest loans designed to bridge the gap between paychecks.
  26. Define principal:
    1. The original amount of money borrowed (or the portion of the loan that goes toward paying down the original debt, not including interest).
  27. Define interest rate:
    1. The percentage of the principal charged by the lender for the use of their money.
  28. Define term:
    1. The length of time over which a loan is scheduled to be repaid.
  29. Collateral is:
    1. An asset (like a car or house) pledged by a borrower to a lender as security for a loan.
  30. True or False: Banks share borrower credit histories with one another.
    1. False. They share information with credit bureaus, which then generate reports to share with authorized lenders.
  31. Fixed expenses are expenses that:
    1. Remain the same amount every month (e.g., rent, car note).
  32. Variable expenses are expenses that:
    1. Fluctuate in amount from month to month (e.g., groceries, entertainment).
  33. Bill Smith earns $500 per week and spends money on food and entertainment, plus rent and a car payment. Which expenses are fixed and which are variable? Explain why.
    1. Fixed: Rent and car payment, as these are set costs. Variable: Food and entertainment, as Bill can choose how much or how little to spend on these.
  34. What are the types of car insurance and what do they cover?
    1. Liability (covers damage/injuries you cause to others), Collision (covers damage to your car from a crash), Comprehensive (covers theft, fire, weather damage), Personal Injury Protection (covers medical expenses), and Uninsured Motorist.
  35. A health insurance premium is:
    1. The amount you pay to keep your health insurance policy active, usually paid monthly.
  36. A health insurance deductible is:
    1. The amount you must pay out-of-pocket for covered medical services before your insurance starts paying.
  37. Which factor does NOT affect car insurance premiums?
    1. Your height or eye color (factors like age, driving record, and zip code DO affect them).
  38. What is one advantage of renting an apartment over buying a house? What is one disadvantage?
    1. Maintenance and repairs are the landlord's responsibility.
    2. No equity is built for the renter, and the landlord may raise the rent or end the lease.
  39. What information goes on the resume and what information does not?
    1. Goes on: Contact information, work experience, education, skills, and certifications. Does not go on: Personal demographic details like your height, weight, marital status, or social security number.
  40. What is the purpose of a cover letter?
    1. To introduce yourself to a hiring manager, highlight specific qualifications, explain why you are a good fit, and persuade them to read your resume and grant an interview.
  41. What are the differences between federal student loans and private student loans?
    1. Federal loans are funded by the government, usually offer lower fixed interest rates, and include borrower protections/forgiveness options. Private loans are funded by banks or credit unions, depend on credit scores, and typically lack the same flexible repayment protections.
  42. What are the differences between subsidized loans and unsubsidized loans?
    1. Subsidized loans are based on financial need, and the government pays the interest while you are in school. Unsubsidized loans are not based on financial need, and interest accrues from the moment the loan is disbursed.
  43. What is a grace period?
    1. A set period of time after you leave school or drop below half-time enrollment during which you are not required to make loan payments.
  44. What are my repayment options with federal student loans?
    1. Standard Repayment, Graduated Repayment, Extended Repayment, and Income-Driven Repayment (IDR) plans.
  45. What is the FAFSA?
    1. he Free Application for Federal Student Aid, which is the form students fill out to apply for federal, state, and college-sponsored financial aid.