1. The first step for financial planning is:

2. Rita must choose between two job offers. She wants to select the job with a salary that will afford her the higher standard of living for the next few years. Job A offers a 3% raise every year, while Job B will not provide a raise for the next few years. If Rita chooses Job A, she will live in City A. If Rita chooses Job B, she will live in City B. Rita finds that the price of goods and services today are about the same in both areas. Prices are expected to rise, however, by 4% in City A every year, and stay the same in City B. Based on her concerns about standard of living, what should Rita do?

3. Because of an error in the pricing bar code, everyone who bought a pair of jeans at a nationwide clothing store last month was overcharged by three dollars. The legal action that would be most appropriate in this case would be:

4. David’s new job offers a 401(k). His employer provides a 50% match up to $2,000. How much should David invest at least in order to obtain the maximum amount of money from the employer match?

5. The _____ endorsement on a paycheck is the safest for the consumer.

6. Earning a degree at a four-year college is a _____ goal for a high school sophomore.

7. In general, investments that are riskier tend to provide higher returns over time than investments with less risk.

8. Suppose you put $1,000 in an account that earns 5% interest per year, every year. You never invest additional money and you never withdraw money or interest payments. So in the first year, you earn $50 in interest. In Year 4, how much will this account earn?

9. The _____ is the legally established ownership of a home.

10. Which of the following is a true statement?

11. This year, Marge’s salary is $100,000 and she contributes $10,000 of her salary to a traditional 401(k) offered by her employer. Her current tax rate is 28%. In 40 years, when Marge retires, the money will have grown to $160,000. Her tax rate during retirement will fall to 20%. Which of the following is true?

12. When you invest in an employer's retirement savings plan such as a 401(k), your contributions are taxed:

13. What is the time value of money?

14. Suppose you invest $2,500 and earn 7% per year on this investment. How many years will it take for your total investment to be worth $5,000?

15. Consider the following scenario: Jack and Jill are twins. At the age of 20, Jack started contributing $20 a month to a savings account. After 20 years, at the age of 40, he stopped adding to his savings, but he left the money in the account. Jill didn’t start to save until she was 40. Then, she saved $20 a month until she retired 20 years later at age 60. Suppose both Jack and Jill earned 6% interest per year on their savings. When they both retired at age 60, who had more money?

16. Which of the following statements are true?

17. The sales tax is an example of which type of tax?

18. Both Irene and her employer contribute every year to her employer-­‐sponsored 401(k) plan. Irene has worked at the company for twenty years, and is fully vested in her plan. Suppose Irene leaves her job or gets fired. Which of the following statements is true?

19. Alice wants to invest $1,000 for retirement this year. Her new employer will fully match her 401(k) contributions, up to $10,000 per year. All else being equal, which of the following options will give Alice the highest total amount at the end of the year?

20. Pam is deciding between 2 options: Option A: Invest $1,000 in a certificate of deposit that earns 5% interest. Pam would not add or remove any money from this investment for the next 30 years. Option B: Invest $1,000 in a savings account that earns 5% interest. Move the interest earned on this account every year into a safe at home. Pam would not add or remove any other money from the savings account or the safe for the next 30 years. At the end of 30 years, which of these options would provide the most money?

21. ______ is not a commodity sold on the futures market.

22. Suppose you are a member of a stock investment club. This year, the club has about $200,000 to invest in stocks and the members prefer not to take a lot of risk. Which of the following strategies would you recommend to your fellow members?

23. Suppose that by the year 2020 your income has doubled and prices of all goods have doubled too. In 2020, how much will you be able to buy with your 2020 income?

24. ______ can solve a sudden need for cash with a pre-established amount that can be borrowed on demand with no collateral.

25. One example of non-taxable income is: