Name __________________ Consumer Education – Final Exam Study Guide The Consumer Education Final Exam will be taken by all students not earning a 90% ‘A’ average or higher by the end of the first 18 weeks of the semester (1/11/10). The final class assignment will be completion of the final exam study guide. All students, regardless of their current class average, must complete the study guide to exempt from the final exam. The final exam will cover the following topics: 1. Budgeting 2. Savings Account options and calculations 3. Banking and Checking accounts 4. Stock Market Investments 5. Credit & Bankruptcy 6. Government Consumer Protection Agencies 7. Car buying and leasing 8. Property rental and home buying 9. Auto, Property, Life & Health Insurance 10. Economics: forms of economy, supply & demand topics 11. Millionaire Next Door Book 12. Maxed Out Book The final exam review packet will be due at the end of the class period on Friday, January 8. We will work on the packet in class on Friday, January 9th and review as a class on Monday, January 11th. The study guide packet is worth 25 points Consumer Ed-Pitcher Final Exam Review - 1 Directions: Fill in all blanks and circle the correct underlined word(s) for each statement. Millionaire Next Door 1. You need to learn how to live and spend ________ _________ _________. 2. Do not have a mortgage more than ______ _______ your _______ ________. 3. It is suggested that _____ % of your net income be devoted to savings and no more than ____% should be spent on total car-related expenses (payment, gas, maintenance & insurance). 4. The millionaires interviewed believed that ___________ independence is more important than displaying high social status. 5. Parents of most millionaires did/did not provide economic outpatient care. 6. Parents tend to give more/less money to children with poor financial skills than to children with strong financial skills. Maxed Out 7. A ___________ is considered good debt while a __________ is considered bad debt. 8. To avoid PMI, which stands for __________ _______________ _____________, a home buyer should make a down payment of at least ____ %. 9. Many new homeowners cannot afford to purchase the home they are buying so they get a 125% loan which means: 10. Many buyers of homes are not purchasing them with their #1 intention of living in the home but more so looking at the home as an _________. 11. How has the banking industry changed significantly from the 1980’s to today? 12. In the book Maxed Out they described the ideal customer as a person willing to make the _______ payments _________. 13. If a credit card holder only makes the minimum monthly payments they will never pay off their credit card because the minimum payment is calculated as ____% of the ___________ ___________. 14. Credit card companies tend to target high school grads attending college more/less than those of the same age working and living on their own. 15. One of the most vulnerable groups of credit-using Americans are ________ personnel whose credit card debt and ______________ rates are twice the national average. Stock Market 16. NYSE stands for: _____________________; NASDAQ stands for __________________. 17. Each stock has a _________, which is a few letters used to research prices and information. 18. ___________ indicates the number of shares traded. 19. The ___________ is the highest point the stock has reached in the last 52 weeks. The ___________ is the lowest point the stock has reached in the last 52 weeks. 20. The simple philosophy to make money in the stock market is: buy ______, sell _______. 21. A ______ order will purchase an indicated number of shares of stock at a set price that you specify. Consumer Ed-Pitcher Final Exam Review - 2 22. A ______ order purchases the indicated number of shares of stock at the market price. 23. The P/E ratio stands for ______ to ______. The lower/higher the better. 24. Market capitalization indicates how large a company is and is determined by ____________ X Stock Price. 25. To be a publicly traded company you must first issue an IPO, which stands for ___________________. 26. To _______ sell a stock means you are predicting the price will go down. 27. To buy on _________ means you are borrowing money to purchase a stock. You will then have to repay the broker plus commission when you sell the stock. Banking/Savings 28. APY stands for __________ _______________ __________. 29. Most banks charge a _____ for stopping payment on a check. 30. Entries in a checkbook should/should not be made regularly at the time money is deposited and checks written out. 31. If there is a disagreement as the amount of the check written in words and the amount in figures, legally the amount written in words/numbers governs. 32. __________ checks are checks that have been paid by the bank. 33. In reconciling a bank statement, ______________ checks should be subtracted from the checkbook balance. 34. Compound interest will earn an investor more/less money than simple interest. 35. The most common retirement account for employees in corporate America is a ________. 36. A Roth IRA, in which IRA stands for _______________________, was set up by Senator William Roth and provides a tax-free savings option that cannot be withdrawn until age ______. 37. Checks over ___ months old may not be honored by a bank. 38. The more _____ you take with your money, the greater the potential ______ on your money. 39. A certified or cashier’s check is an example of a ___________ form of ___________ whereas a personal check is/is not a guaranteed form of payment. 40. The only way to really make money is to ________ _________ on _______ __________. Budgeting 41. A budget should be based on gross/net income. 42. Your monthly rent would be considered a variable/fixed expense. 43. Groceries and gas for your car are variable/fixed expenses. 44. You have more/less control over your variable expense than your fixed expense. 45. A personal budget should be planned for a specific period of time, such as one _______. 46. As a consumer what 3 things protect you from unexpected expenses? Consumer Ed-Pitcher Final Exam Review - 3 Credit/Bankruptcy 47. APR stands for __________ ____________ __________. 48. APR for credit cards generally has a much higher/lower interest rate than any other type of loan. 49. The 3 C’s of credit are: _____________, _____________ and _______________. 50. Inquiring and pursuing additional credit would _______ your credit rating. 51. Paying bills in full and in a timely manner would ______ your credit rating. 52. If an individual can afford to make only one payment, either their mortgage, car payment or credit card bill, for the purposes of their credit rating they should pay their ________________. 53. If an individual fails to pay their home loan it is referred to as ____________ on the loan and the home becomes ______________. 54. 700 would be considered a good/bad credit score. 55. The Chase freedom and United Mileage credit card are examples of _______ cards. 56. Chapter ______ is known as the wag-earners bankruptcy. 57. Chapter _____ is Liquidation or “straight-bankruptcy” and is for individuals who cannot repay their debt. 58. List 4 non-dischargeable items when filing for bankruptcy: 59. List 3 items that are exempted from repossession during bankruptcy. 60. What are the 4 main reasons people file for bankruptcy? 61. Filing for bankruptcy will remain on your credit report for _____ years. Housing-Buying & Renting 62. The greatest advantage of home ownership is building __________. 63. List 3 different types of homes one could buy? 64. List one advantage and one disadvantage of owning a single-family home? 65. _________ tax and _________ paid on a mortgage are tax-deductible items. 66. ARM stands for _________ _________ __________. The opposite of an ARM is: 67. List 2 items that can appreciate a home’s value and 2 separate items that can depreciate it’s value: 68. The ________ and _________ are the two most important rooms in improving a home’s value. Consumer Ed-Pitcher Final Exam Review - 4 69. When renting a tenant does/does not need any renter’s insurance. 70. The legal document signed between a landlord and renter is called a ______. Cars – Buying and Leasing 71. The MSRP must be stated on all new/used cars. 72. In almost all cases cars appreciate/depreciate in value. 73. List 3 items that cause depreciation in cars. 74. List at least 3 items other than the cost of the car must a buyer have to pay when initially buying the car? 75. People lease cars so they can drive a _____ car ______ often. 76. When leasing a car you will often have to make a down payment to lower the monthly lease payments. This is amount is called ____-___ ________ __________. Insurance – Auto, Home, Life, Health 77. The purpose of any type of insurance is to protect against ___________ loss. 78. The amount paid each month by the policyholder is called the _____________. 79. In the event of an accident if the insured makes a claim they may still need to pay a portion of the loss, which is called the _________. 80. In the event of hail damage or vandalism an insured would use __________ coverage but if your car is struck by another moving vehicle you would use __________ coverage. 81. The terms 50/100/200 for bodily injury & property damage coverage refer to: 82. If a policyholder lowers their deductible it will cause their premium to increase/decrease. 83. Life insurance exists for three reasons: if you live too _____, if you die too _____ or if you become ___________ and can no longer work. 84. Smokers and/or those with a history of medical problems are a greater/lesser risk and will have a higher/lower life insurance premium than those who do not. 85. List 4 items that can lower your automobile insurance premium: 86. For health insurance a ______ policy is cheaper than an individual policy. 87. When making your visit to the doctor’s office many insured still have to make a ___ - ____, which could be, for example, $20. 88. HMO stands for ____________ ______________ __________________. 89. PPO stands for _____________ ______________ __________________. 90. If someone with a ______ policy chooses a doctor or hospital outside the extended preferred provider list, the PPO will still pay up to ____ percent of the expenses. A _____ requires policy holders to only see doctors on the _____ and will not pay for expenses outside its _________ of providers. Consumer Ed-Pitcher Final Exam Review - 5 91. _______ life insurance is expensive: You're paying not only for insurance but also for the investment portion. 92. Purchased for only a stated period of time, such as 20 years, ______ life insurance does not build up cash value and the premium normally increases as the insured gets older. 93. Insurance companies often advertise ______ life as a forced ________ option for retirement planning, although there are many better ways to plan for retirement. Economics/Business info 94. According to the law of demand, if the price of a good rises: 95. According to the law of supply, when the price of a product rises: 96. Competition causes prices to go _______ and product quality to go ______. 97. Price fixing and monopolies are legal/illegal. 98. Tax deductions such as donations to charity and interest paid on student loans and a mortgage will lower your __________ ___________. 99. The U.S. form of economy is one of capitalism/command. 100. _____________ refers to how quickly an asset can be turned into cash. 101. Opportunity cost deals with the best ________ given up when making a decision. 102. According to the law of demand, if the price of a complementary good rises then demand for the original good will _________. This is said to be a(n) inverse/positive relationship. 103. A printer is an example of a complementary good for a ______________. 104. According to the law of demand, if the price of a substitute good rises then demand for the original good will _________. This is said to be a(n) inverse/positive relationship. 105. PowerAde is an example of a substitute good for a ______________. Government Agencies 106. The FDA stands for ________________________________. 107. The Government agency that monitors the stock market and practices of publicly traded companies is list acronym and what it stands for):________________________________________________________. 108. What government agency monitors the airline industry? 109. What government agency enforces economic policies that prohibit monopolies and price-fixing? 110. The supply of _________ and the raising or lowering of __________ rates are determined by the Federal Reserve as part of their fiscal/monetary policy. This is in contrast to the actions of government spending and taxation which are a part of the fiscal/monetary policy.