Chapter 4

Question 1

What is the largest purchase most consumers make that goes down in value?

Answer 1

A new car

Question 2

Who is the number one target of credit card companies?

Answer 2

Teens

Question 3

What is the most successfully marketed product in history?

Answer 3

Debt

Question 4

MYTH: If I ____ I am helping a friend or relative

Answer 4

Loan money to a friend or relative

Question 5

TRUTH: If you loan money to a friend or relative what will happen?

Answer 5

The relationship will be strained or destroyed

Question 6

What is co-signing?

Answer 6

Agreeing to pay the debt if the debtor doesn’t pay

Question 7

What is the problem with payday loans?

Answer 7

They have extremely high interest

Question 8

What is the lottery?

Answer 8

A tax on the poor and on people who can’t do math

Question 9

What is the best way to minimize the money lost on things that go down in value?

Answer 9

Buy slightly used

Question 10

Never take out more than a ____ fixed rate mortgage

Answer 10

15-year

Question 11

ARM stands for

Answer 11

Adjustable Rate Mortgage

Question 12

What is an Adjustable Rate Mortgage?

Answer 12

A mortgage with an interest rate that changes based on market conditions

Question 13

Why are ARMs bad?

Answer 13

If your rate adjusts higher or you lose your job, your payment can quickly become too much for you to afford

Question 14

MYTH: You need a ____ to rent a car or make a purchase online or by phone

Answer 14

Credit card

Question 15

TRUTH: A ____ does whatever a credit card does

Answer 15

Debit card

Question 16

Why is it a bad idea to use a credit card with the intention to pay it off?

Answer 16

1. When you use cash you spend 12-18% less

2. You may not be able to pay it off

Question 17

What is the largest wealth-building tool?

Answer 17

Your income

Question 18

Debt Snowball

Answer 18

Listing you debts in order from smallest to largest. Pay minimum payments on all your debts except for the smallest one, and attack that one with intensity

Question 19

What is the fastest growing white-collar crime?

Answer 19

Identity theft

Question 20

Annual Percentage Rate

Answer 20

Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan

Question 21

Depreciation

Answer 21

A decrease or loss in value

Question 22

Loan Term

Answer 22

Time frame that a loan agreement is in force, and before or at the end of which the loan should either be repaid or renegotiated for another term

Question 23

Credit card

Answer 23

Type of card issued by a bank that allows users to finance a purchase

Question 24

T or F: You must establish credit in order to buy a house

Answer 24

False

Question 25

T or F: If you are a victim or identity theft, you are only responsible for paying back half of the debt

Answer 25

False

Question 26

What cannot be done with a debit card but can be done with a credit card?

Answer 26

Go into debt

Question 27

What are forms of free money that aren't repaid?

Answer 27

Scholarships and grants

Question 28

Work Study

Answer 28

A program that allows students to work part time while continuing their studies

Question 29

Associate's Degree

Answer 29

An undergraduate academic degree awarded by colleges upon completion of a course of study lasting two years

Question 30

FAFSA

Answer 30

A form that is completed annually by current and prospective college students to determine their eligibility for financial aid

Question 31

Student loans are known by some people as

Answer 31

"Good Debt"

Question 32

T or F: A four-year degree is necessary regardless of what career you're pursuing

Answer 32

False

Question 33

Types of Product Positioning

Answer 33

1. Brand Recognition 2. Color 3. Shelf Positioning 4. Packaging

Question 34

What is a significant purchase?

Answer 34

Over $300

Question 35

Buyer's Remorse

Answer 35

When you wake up the next day and regret your purchase

Question 36

Opportunity Cost

Answer 36

Consider spending your money on something else

Question 37

Inflation

Answer 37

The persistent increase in the cost of goods and services or the persistent decline in the buying power of money

Question 38

Financing

Answer 38

To buy an item with credit; paying over time

Question 39

Latin term for "Buyer Beware"

Answer 39

Caveat Emptor

Question 40

What are needs?

Answer 40

1. Food 2. Clothing 3. Shelter 4. Utilities 5. Transportation