Unit 1 (chapters 1-3) Dave Ramsey (Multiple choice)
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1: The savings habits of been in Arthur best illustrate which principle of savings
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Rate of return matters AND the length of time money is invested matters
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1: what is the most sensible way to buy a $4000 car
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Use the sinking fund approach and save $400 a month for 10 months
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1: which is the correct order of priorities for your money
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Give, Save, Pay bills
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1: what are the keys to saving money
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Making savings a habit and a priority, discipline, focus
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1: what is not a reason to save
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Paying off debt
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1: how much money should Lisa and Joe have in their emergency fund if they have a $3000 credit card bill and a mortgage
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$1000
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1: even though we savings account is fine when you were just beginning to save why is a money market a better place to keep your emergency fund
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1 A savings account is a bit too easy to access, 2 typically money markets average a higher interest rate then a savings account, 3 a money market is accessible in general he has check writing privileges if needed
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1: A good way to build discipline and get into the habit of saving is ____
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Pre-authorized checking
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1: baby steps can best be described as
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1 A systematic process for getting out of a financial mess, 2 a series of seven sequential steps that help you plan save and manage money, 3 a series of steps that will work in good times and in bad times
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1: for most people a fully funded emergency fund will be about:
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$10,000 - $15,000
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1: if you invest $1000 at 12% interest, how much money will be in the account after two years, compounded annually?
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$1254.40
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1: savings is about
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Emotion and contentment
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1: what should you save for
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1 Wealth building, 2 emergency fund, 3 purchases
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1: what is true about the concept of savings
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You must pay yourself first
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1: A sinking fund approach means
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Saving and paying cash
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1: what is true about a one time investment for 40 years
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The annual interest rate does matter when making a one time investment
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1: when can you negotiate a better deal
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When you pay with cash
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1: what is the next step after you have a fully funded emergency fund
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Invest 15% of your income into Ross IRAs and pretax retirement plans
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1: when using the sinking fund approach how much do you have to save to buy a $5000 car next year
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$416.66 a month into savings
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1: how much money should you have in your's emergency fund if you are working on baby step 2 (pay off all debt)
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$500 or $1000 depending on your current income
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2: what should you do about investments
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Always invest only for tax savings purposes
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2: The risk return ratio says
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When the rest goes up, the return generally will go up
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2: what is true about investing in single stocks
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There is a high degree of risk
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2: what is not a good investment
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Gold, commodities, viaticals
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2: A collection of money from different investors, which is used to purchase stocks, bonds, or other investments, managed by a fund manager:
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Mutual funds
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2: The KISS rule of investing teaches
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Keep things simple and never buy something you don't understand
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2: what is a type of annuity
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Variable, fixed
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2: The most aggressive mutual funds can tend to be firm:
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Companies that are a little younger and growing
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2: your piece of ownership in a company is called:
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Share of stock
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2: what fund is the most risky
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Aggressive growth
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2: what should you do if you begin losing money in your mutual fund
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Leave it alone, and continue to invest money in the fund
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2: aggressive growth funds
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Small-cap
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2: growth funds
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Mid-cap
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2: growth and income funds
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Large-cap
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2: what risk should you consider when investing
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You could lose all your money, inflation, your money is not liquid
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2: [[Rank in order of average rate of return (1 being the lowest)]] __ Mutual fund __ C.D. __ Bond
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3> Mutual fund 2> C.D. 1> Bond
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2: what is not a risky investment
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Annuities
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2: what is true about liquidity
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The more liquid and investment is, the less return
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2: [savings or investing] : you want to start a college fund for your newborn son
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Investing
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2: [savings or investing] : your daughter has a wedding next year
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Saving
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2: [savings or investing] : you want to buy a car in two years
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Saving
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2: [savings or investing] : you want to open a Roth IRA
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Investing
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2: [savings or investing] : you want to buy a house within the next five years
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Saving
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2: [savings or investing] : your daughters prom is in six months
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Saving
