HR Block Budget Challenge ALL

When asked "How much should I borrow in student loans?" the CFPB (Consumer Financial Protection Bureau) said this.

A.) With loan consolidation more affordable than ever, borrow as much as you can get approved for
B.) try not to accumulate more total student debt than you expect to earn as a starting annual salary when you leave school
C.) borrow as much money for college as you need as long as you are sure about your major and career
D.) None of the answers. The CFPB is not involved with financial matters.

B.) Try not to accumulate more total student debt than you expect to earn as a starting annual salary when you leave school

Which of the following types of financial assistance does not need to be paid back?

A.) Subsidized Loan
B.) Unsubsidized Loan
C.) Grant
D.) Private Loan
E.) None of the answers are correct

C.) Grant

What is the likely impact of filing bankruptcy on a student loan?

A.) The loan repayment schedule will be adjusted longer
B.) The loan repayment amount will be adjusted lower
C.) The loan amount will stay the same, but the balance will stop accruing interest
D.) None of the answers are correct

D.) None of the answers are correct

Which of the following financial packages has the lowest total cost to the student?

A.) 50% academic scholarship, 50% subsidized loans
B.) 25% academic scholarship, 50% Grants, 25% subsidized loans
C.) 25% athletic scholarship, 25% Grants, 50% subsidized loans

B.) 25% academic scholarship, 50% Grants, 25% subsidized loans

Why is a subsidized student loan more advantageous than a non-subsidized loan?

A.) This is not true. Subsidized loans do not provide any advantages over non-subsidized loans.
B.) Subsidized loans usually have lower interest rates
C.) Subsidized loans usually have a period of time after graduation where payments are not required.
D.) Subsidized loans do not have to be paid back
E.) Subsidized loans usually have lower interest rates and a period of time after graduation where payments are not required

E.) Subsidized loans usually have lower interest rates and a period of time after graduation where payments are not required

Which event will have the greatest impact (positive or negative) on one’s net worth after one month?

A.) Buy a new car at market value for $15,000. Car depreciates 20% upon transfer of ownership.
B.) Buy a used car at market value for $15,000
C.) Lease a $15,000 car on a 3 year lease. The monthly payment is $199 and all lease payments are required in the lease.
D.) None of these events will impact the net worth of an individual

C.) Lease a $15,000 car on a 3 year lease. The monthly payment is $199 and all lease payments are required in the lease.

If a home mortgage has a term of 15 years and a payment of $1,000, what is the loan amount? (assume that there are no interest-free mortgages)

A.) $180,000
B.) Less than $180,000
C.) $200,000
D.) $360,000

B.) Less than $180,000

If a home buyer puts 20% down on a $200,000 house and uses a mortgage to borrow the rest, how much will the mortgage be (excluding any closing costs)?

A.) $160,000
B.) $200,000
C.) $180,000
D.) $240,000

A.) $160,000

Which of the following will increase your net worth the most?

A.) Purchase of house valued at $150,000 with $25,000 down and a mortgage of $125,000
B.) Purchase a used car valued at $7,000 with an Auto Loan for $7,000
C.) Sell a bike valued at $75 for $75 cash
D.) All of these increase net worth
E.) None of these increase net worth

E.) None of these increase net worth

Sub-prime lending rates are 1) __________ than prime lending rates and are for people with 2)__________ credit.

A.) 1) lower 2) good,
B.) 2) higher 2) good
C.) 1) lower 2) poor
D.) 1) higher 2) poor

D.) 1) higher 2) poor

Which loan type isn’t secured with collateral?

A.) Mortgages (home loans)
B.) Subsidized student loans
C.) Auto loans
D.) Small business loans
E.) All of the answers are correct
F.) None of the answers are correct

B.) Subsidized student loans

Which are tax deductible?

A.) Community service hours
B.) Student loan payments
C.) Medical Bills totaling $200
D.) 401k gains
E.) None of the answers are correct
F.) All of the answers are correct

E.) None of the answers are correct

Select what would happen to your 1) taxable income and 2) tax liability when you are able to claim a deduction such as student loan interest?

A.) 1) lower 2) lower
B.) 1) higher 2) higher
C.) 1) higher 2) lower
D.) 1) lower 2) higher

A.) 1) lower 2) lower

John earned $2,500 as a life guard over the summer. This was his only job and income taxes were deducted from his paychecks by his employer. For filing a tax return, what should John do?

A.) John should not file a tax return. John is legally not required to file because his income is less than the minimum requirement for filing.
B.) John should file a tax return. He can then get all of his taxed money refunded.
C.) John should report this income on his parents tax return since he is still living at home.
D.) John should send a check for $50 to the IRS in case the employer didn’t take out enough taxes.

B.) John should file a tax return. He can then get all of his taxed money refunded.

Assume your employer provides health care insurance and deducts your portion of the premiums from your paycheck with pre-tax dollars. Are your health insurance premiums federally tax deductible?

A.) Yes
B.) No

B.) No

Having one password for all accounts is an easy way to remember passwords, but it will expose you to what risk?

A.) If one of the websites/databases you use gets hacked, then all of your accounts at other sites are much more vulnerable
B.) Using the same password in multiple places will make them expire more frequently
C.) There are no risks of using the same password on all accounts as long as the password is strong
D.) All answers are correct

A.) If one of the websites/databases you use gets hacked, then all of your accounts at other sites are much more vulnerable

What is important for an internet user to know about https:// ?

A.) Is the plural of http://
B.) It should be contained in the website URL if you’ll be providing any personal information
C.) It is a faster version of http://
D.) As long as you keep your browser up-to-date and install good anti-virus software, it doesn’t matter if you use http:// or https://
E.) All answers are correct

B.) It should be contained in the website URL if you’ll be providing any personal information

One of the most common types of consumer fraud/scams is ‘Phishing’. Which are forms of Phishing?

A.) You receive an email that asks you for some additional bank information so that your direct deposit can be processed
B.) You receive a request for a cash donation in the mail for a charity that doesn’t exist
C.) You receive a suspicious pop-up page while using the internet that asks to verify your account information
D.) You receive an email regarding an incorrect charge on your credit card with a link to log into your account, but the link doesn’t look like your credit card’s website,
E.) All answers except the request for a cash donation are forms of Phishing
F.) All answers are forms of Phishing

E.) All answers except the request for a cash donation are forms of Phishing

Which of the following are true about your maximum liability when your debit card is lost or stolen?

A.) Your maximum loss is $0 if you report the card missing/stolen before any unauthorized charges are made B.) Your maximum loss is $50 if you report the card lost/stolen within 2 business days of learning of the card being lost/stolen
C.) Your maximum loss is $500 if you report the card lost/stolen more than 2 business days after you learn about the loss or theft, but less than 60 calendar days after your statement is sent to you
D.) Your maximum loss could be greater than $500 if you report the card lost/stolen more than 60 calendar days after your statement is sent to you
E.) All answers are correct

E.) All answers are correct

True or False: If your credit card number is stolen, but not the card, you are not liable for unauthorized use.

True

Select the scenario most likely to build your credit (improve your credit score).

A.) Borrow 10%-30% of the credit limit on a credit card and make the minimum payment on time every month
B.) Use a debit card instead of a credit card
C.) Borrow 10%-30% of the credit limit on a credit card and pay the full balance on time every month
D.) Borrow more than 50% – 100% of the credit limit to show that you can handle more credit.

A.) Borrow 10%-30% of the credit limit on a credit card and pay the full balance on time every month

If Troy’s credit card utilization is 35% and his current balance is $455, what is the credit limit on his only credit card?

A.) $1,300
B.) $1,000
C.) $159.25
D.) $1,900
E.) $900

A.) $1,300

After your loan application is submitted, who decides if you get approved for the loan?

A.) Credit agency
B.) Loan Underwriter
C.) Loan Undertaker
D.) Credit bureau

B.) Loan Underwriter

Which of the following are fast ways of improving your credit score (within 60 days)?

A.) Dispute any errors on credit reports
B.) Settle up any delinquent accounts with creditors and ask them to report the account as Paid As Agreed
C.) Check credit limits in credit report for accuracy and make sure that they are not listed lower than they actually are
C.) Cancel all credit cards
D.) All answers can quickly improve credit score
E.) All answers except cancelling credit cards can quickly improve credit score

E.) All answers except cancelling credit cards can quickly improve credit score

Whose responsibility is it to identify credit report errors?

A.) Federal Government
B.) Credit reporting agencies
C.) It is your responsibility to identify mistakes and report them
D.) There are 3 reporting agencies to make sure that there are no errors on credit reports

C.) It is your responsibility to identify mistakes and report them

If the interest rate on a savings account is 0.01%, approximately how much money do you need to keep in this account for 1 year to earn enough interest to cover a single $9.99 Below-Minimum-Balance Fee?

A.) $100
B.) $1,000
C.) $10,000
D.) $100,000

D.) $100,000

The three main types of banks (Traditional, Credit Union, Online or Online-Only) have many tradeoffs with respect to technology, convenience, personal experience, fees and savings rates. For this question, put aside all of the trade-offs and look only at savings rate offered on savings accounts. Rank the following from HIGHEST to LOWEST on the interest rates they offer to consumers on savings accounts.

Credit Union, Traditional Bank, Online Bank

Online Bank, Credit Union, Traditional Bank

For most people, the most effective way to save is:

A.) Deposit extra money into a saving account
B.) Transfer money from a checking account into a saving account
C.) Use a budget to determine how much you can save, then transfer that amount into a savings account
D.) Use a budget to determine how much you can save, then automate the savings by direct depositing that amount from each paycheck

C.) Use a budget to determine how much you can save, then transfer that amount into a savings account

True or False: you can never save too much.

False

Assume you have just started a new job, have a car loan, and have a student loan. You have just received a cash gift of $1,000 from a relative, which of the following is the best use of this money?

A.) Deposit into an unfunded emergency fund
B.) Invest for your retirement in an IRA
C.) Deposit into a 529 savings account for college
D.) Deposit into a CD earning 2% interest

A.) Deposit into an unfunded emergency fund

Select the most likely consequence of making credit card payments late.

A.) Fees and paying the default interest rate on the balance
B.) Fees and paying the introductory interest rate on the balance
C.) Paying higher interest rates
D.) None of these answers are correct

A.) Fees and paying the default interest rate on the balance

Zach is an authorized user on his parents credit card. What may happen if Zach doesn’t use the card in a responsible way?

A.) Zach’s credit may be damaged
B.) Zach’s parents credit may be damaged
C.) Zach and Zach’s parents credit may be damaged
D.) None of these answers are correct

C.) Zach and Zach’s parents credit may be damaged

If interest rates rise, what will happen to the prices of bonds?

A.) Increase
B.) Decrease
C.) No change
D.) Interest rates and bond prices are not related

B.) Decrease

If the typical balance on Lucy’s credit card is $500 and the interest rate on her credit card is 16%, how much in interest would you expect Lucy to be charged in a typical month?

A.) About $6.67
B.) About $16.00
C.) About $51.74
D.) About $80.86

A.) About $6.67

What happens if you don’t pay your insurance premium for your car?

A.) The insurance claim isn’t processed and your car doesn’t get fixed
B.) You are driving illegally
C.) You are not insured
D.) Your are not insured and are driving illegally
E.) Your car payments will increase

D.) Your are not insured and are driving illegally

What happens if you don’t pay your insurance deductible for your car?

A.) The insurance claim isn’t processed and your car doesn’t get fixed
B.) You are driving illegally
C.) You are not insured
D.) Your are not insured and are driving illegally
E.) Your car payments will increase

A.) The insurance claim isn’t processed and your car doesn’t get fixed

John, Alyson and Jared all selected identical new cars at the same price. John bought the car with some of his own money and the rest a car loan. Alyson bought the car with cash. Jared leased the car. What is true about their options for car insurance?

A.) John and Alyson are able to reduce the cost of insurance by selecting legal minimum coverage
B.) Alyson is able to reduce the cost of insurance by selecting legal minimum coverage
C.) John, Alyson and Jared are all able to select legal minimum coverage if they choose
D.) Alyson and Jared are able to reduce the cost of insurance by selecting legal minimum coverage

B.) Alyson is able to reduce the cost of insurance by selecting legal minimum coverage

William pays $300 every 6 months for automobile insurance and his deductible is $750. William caused a minor accident that resulted in $800 of damages to his car and $1,100 of damages to the other car. How much will William pay to have both cars fixed?

A.) $300
B.) $750
C.) $800
D.) $1,100
E.) $1,500

B.) $750

Which of the following can help reduce the risks associated with unexpected bills?

A.) Auto insurance
B.) Emergency fun
C.) Renter’s Insurance
D.) Health Insurance
E.) All answers are correct

E.) All answers are correct

What are some of the potential consequences of driving without auto insurance?

A.) Suspension of driver’s license
B.) Traffic fines ranging from $100 to $1,000
C.) Increased insurance rates
D.) Points added on your license
E.) Community service hours
F.) All answers are correct

F.) All answers are correct

Why was this invoice sent to John Hill?

A.) Because John needs to pay the money to Lots of Watts Energy.
B.) Because Lots of Watts needs to pay the money to John. C.) Because Lots of Watts has paid the money to John.

Because John needs to pay the money to Lots of Watts Energy

How much is the total amount due to Lots-O-Watts Energy?

A.) $89.70
B.) $68.85
C.) $50.00

C.) $50.00

How do Credits and Adjustments impact what John owes on his current bill?

A.) John was credited $18.85 on his last bill so he owes an additional $18.85 on his current bill.
B.) John was credited $18.85 on his last bill so he owes $18.85 less on his current bill.
C.) John was credited $18.85 on his last bill making no impact on his current bill.

B.) John was credited $18.85 on his last bill so he owes $18.85 less on his current bill.

How much has Lots-O-Watts Energy charged for energy this billing cycle?

A.) $89.70
B.) $68.85
C.) $50.00

B.) $68.85

Why was this paycheck summary sent to John?

Because John needs to pay the money to Widget Engineering and Design., Because Widget Engineering and Design needs to pay the money to John., Because Widget Engineering and Design has paid John., I do not know.

…

Increasing your 401k deduction will ________ your federal taxes in the current year.

A.) Increase
B.) Decrease
C.) Not change

B.) Decrease

Increasing your 401k deduction will _____ your gross pay.

A.) Increase
B.) Decrease
C.) Not change

C.) Not change

If the interest rate at the bank for a savings account is 0.03%, how much money would you need to leave in the account for one year in order to earn $10 in interest?

A.) $500
B.) $1,500
C.) $8,000
D.) Over $30,000

D.) Over $30,000

The fee the bank charges the issuer of a bad check is a…

A.) Returned check fee
B.) Non-sufficient funds fee (NSF)
C.) Below minimum balance fee
D.) Monthly account charge

B.) Non-sufficient funds fee (NSF)

The fee the recipient of the bad check issues the originator of the check for giving them a bad check is a…

A.) Returned check fee
B.) Non-sufficient funds fee (NSF)
C.) Below minimum balance fee
D.) Monthly account charge

A.) Returned check fee

Which of the following payday frequencies provides employees with the smoothest cash flow?

A.) Weekly
B.) Biweekly
C.) Semi-Monthly
D.) Monthly

A.) Weekly

Suppose you have $100 in a savings account earning 2 percent interest a year. After five years, would you have

A.) more than $102
B.) exactly $102
C.) less than $102

A.) More than $102

Imagine that the interest rate on your savings account is 1 percent a year and inflation is 2 percent a year. After one year, would the money in the account buy

A.) more than it does today
B.) exactly the same
C.) less than today

C.) less than today

If interest rates rise, what will typically happen to bond prices?

A.)Rise
B.) fall
C.) stay the same
D.) there no relationship

B.) fall

True or False: A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage but the total interest over the life of the loan will be less.

True

True or False: Buying a single company’s stock usually provides a safer return than a stock mutual fund.

False

On the Budget Challenge Cash Flow Spreadsheet (CFS), what column should interest earned from her checking account be entered?

A.) Balance
B.) Deposits
C.) Bank Fees
D.) Withdrawals

B.) Deposits

Why is it important to review your personal information for accuracy when you receive an invoice?

A.) To ensure your social security number is correct
B.) To ensure you are being charged the correct amount for services
C.) To ensure you have received the correct invoice
D.) To ensure your contract has not expired

C.) To ensure you have received the correct invoice

Why are there additional scoring penalties in Budget Challenge?

A.) To highlight behaviors that can cause damage to credit score
B.) To penalize mistakes so that students can learn from them without losing real money
C.) To accelerate longer-term real world consequences so that they are experienced inside the short simulation window
D.) All of the answers are correct

D.) All of the answers are correct

In order to represent a complete household budget in Budget Challenge, many typical day-to-day purchases that could be made with cash (such as groceries, gas, and clothing) are made using this:

A.) Debit Card
B.) Credit Card
C.) Savings
D.) Membership card

B.) Credit Card

Which of the following choices will be ‘locked’ when the simulation launches (starts)?

A.) 401k contribution percent
B.) Bank account type
C.) Vendor selections (Cable, Cell, Auto Loan, Auto Ins, Student Loan, Utilities, Credit Card)
D.) 401k contribution percent and Bank account type
E.) None of the answers are correct

C.) Vendor selections (Cable, Cell, Auto Loan, Auto Ins, Student Loan, Utilities, Credit Card)