Exam: 02.00 It All Begins With You Pre-Assessment Essay

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A lender may view a large down payment from a borrower to be a
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reduction of risk
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Faisal, Age 24 Has a large amount to invest Can make regular, large deposits Does not need easy access Willing to accept moderate to high risk Does not want a set interest rate Torie, Age 28 Has a small amount to invest Can make regular, small deposits Does not need easy access Willing to accept low to moderate risk Does not want a set interest rate Faisal and Torie each want to make an investment, but they have different needs. Based on the information, which investment options would best suit the needs of both Faisal and Torie?
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The answer is NOT Money market and savings accounts
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You earn $30,000 per year, and the federal tax rate is 10 percent. Your gross income is
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The answer is NOT 27,000
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When deciding whether to offer a loan, a lending institution would look less favorably upon a borrower who
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already has a high debt-to-credit ratio
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Keesha has just taken a job in a neighboring city. She needs to purchase a car, but she has limited cash. Which type of credit is she most likely to use to buy a car?
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The answer is NOT Unsecured credit card
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The winter music program at Love to Learn Daycare has grown to twice its size this year, raising the program cost for the month of December to 20 percent of budget. How can the day care best balance its budget?
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Avoid miscellaneous expenses
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Which item is strictly a want?
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Car
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What happens as your level of education increases?
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Earnings potential increases
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Your expenses exceed your income. You should cut back your
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variable cost
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After she creates the budget above, Zoe moves in with a roommate so she can save money for a car. Her rent is now 25 percent of her salary. Which of these should she do to buy a car quickly?
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The answer is NOT Increase savings to 30 percent
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Julia is borrowing some money to help her get supplies to complete her art degree. She would like to keep her payments low but pay off the loan before she graduates in three years. Which option would allow her to meet both these goals quickly?
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The answer is NOT 24 months
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Why might a mattress store choose to advertise new mattresses, worth $1,000, as $50 per week for 22 weeks?
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$50 looks more attractive to customers, and the store makes money in interest
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How is a proportional tax different from a progressive tax?
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A proportional tax is the same percentage for all, but a progressive tax increases with income level.
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Reading left to right, which list shows investments increasing in risk level?
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CD, mutual fund, stock
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Credit Card 1 Secured Limit $1,000 Fixed interest rate 10% No rewards Credit Card 2 Unsecured Limit $1,000 Fixed interest rate 8% No rewards Credit Card 3 Unsecured Limit $2,000 Variable interest rate, starting at 6.5% Rewards The chart above compares credit card offers. Which option for Credit Card 3 should make consumers the most cautious?
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Variable interest rate
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What is the first step in setting up a budget?
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The answer is NOT Determine your gross income for the year
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It is most important to account for factors like warranties and durability when purchasing a
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Durable good
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A bank offers a credit plan that lists 2% interest for the first year of a loan. This rate might increase in future years if the loan has a(n)
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Adjustable rate
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Marie values the complete protection of her new smartphone more than the $50 per month it would cost her to purchase a comprehensive insurance plan. What should she do?
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Purchase the plan because the benefit to her outweighs the cost.
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Matthew decides to buy expensive designer jeans. Less expensive jeans are available, but the added cost of the designer brand is worth it to Matthew most likely because
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He prefers designer brands.
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Marlon wants to save money over a long period of time. He does not need to have easy access to the money, and he is worried about losing his investment. He would like to know the interest rate up front. Which of the following options would best suit his needs?
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Bonds
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Who would pay the least as a percentage of income under a progressive tax?
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Grill master earning $10,000 per year
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Which of the following actions would likely lower life insurance premiums?
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Being a non-smoker
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Column A water clothing food Column B Energy drink celebrity magazines sushi meal What label is appropriate for column A?
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Need
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Look at the graph. What kind of tax does the first half (lowest 20 percent to fourth 20 percent) of the graph illustrate?
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Progressive
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Interest is the
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rate charged for a loan
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Rowena has a $150,000 homeowner’s insurance policy with a $1,000 deductible on her house. Her premium payment is $100 per month. If she makes a $5,000 claim on the policy, how much will she have to pay for this claim?
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$1,000

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