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CH. 2 Test Review
Test Description: Test Review
Instructions: Answer all questions to get your test result.
1) Which of the following steps is the First Foundation?
A
Pay cash for your car
B
Save $500 emergency fund
C
Get out of debt
D
Build wealth and give
2) Instead of borrowing money for large purchases, you should set money aside in a __________ over time and pay with cash.
A
Sinking fund
B
Emergency fund
C
Mortgage fund
D
Credit card fund
3) What does it mean to have a negative savings rate?
A
Having a fully funded emergency fund
B
Spending more money than you make and acquiring debt
C
Having no savings at all
D
Saving for something that is a want instead of a need
4) The saving habits of Ben and Arthur best illustrate which participate of saving?
A
The amount of the initial investment is the key.
B
Both A and C
C
The length of time money is invested matters.
D
Rate of return matters.
5) This principle suggest that a certain amount of money today as different buying power than the same amount of money in the future.
A
Time value of money
B
Interest fund
C
Opportunity cost
D
Inflation
6) For which of the following should you save?
A
Purchases
B
Wealth buliding
C
All of the above
D
Emergency fund
7) Using the sinking fund approach, how much do you save each month to buy a $4,800 car one year from now?
A
$500
B
$400
C
$275
D
$300
8) At your age, a fully funded emergency fund should be:
A
$100
B
$1,000
C
$500
D
$5,000
9) Which of the these is not a key to saving money?
A
Making saving a habit and a priority
B
Focus
C
Discipline
D
Your income
10) Which of the following is a reason that people don't save money?
A
They do not live on a budget
B
All of the above
C
They lack focus
D
They lack discipline
11) Which of the following is not one of the three basic reasons for saving money?
A
Large purchases
B
Have money available to lend to friends
C
Build wealth
D
Emergency fund
12) Which of the following is not a reason your emergency fund should be kept in a separate savings account away from your spending money?
A
So that your emergency fund savings can earn a lot of interest.
B
So that it is not too easy for access.
C
So that you do not get your spending and saving money confused.
D
So that it is clear what money is only to be used for emergencies.
13) Why is having funded emergency fund so important when it comes to your financial well-being?
A
The purpose of an emergency fund is to have money set aside for large purchases, like vacations.
B
None of the above
C
As long as you have a good-paying job, you really don't need an emergency fund.
D
Emergency funds are to are to set money aside for unexpected financial emergencies.
14) Saving is about:
A
Making more money and discipline
B
Pride and greed
C
Contentment and earning more money
D
Contentment and emotion
15) Why should interest earned not be a factor with your emergency fund?
A
Inflation can eat up the interest earned.
B
None of the above
C
The emergency fund is not intended to grow wealth.
D
Interest-bearing accounts at banks earn a high rate of interest, therefore, interest is not a concern.
16) The first thing you should save for is your retirement fund.
A
False
B
True
17) Your income level greatly affects your saving habits.
A
True
B
False
18) Americans typically maintain a very high savings rate.
A
True
B
False
19) You should save money for three basic reasons: emergency fund, purchases and wealth building.
A
True
B
False
20) When it comes to saving money, the amount you save is determined by how much you have left at the end of the month once all of your spending is done.
A
True
B
False
*select an answer for all questions
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