Unit 1 (chapters 1-3) Dave Ramsey (Multiple choice)

1: The savings habits of been in Arthur best illustrate which principle of savings
Rate of return matters AND the length of time money is invested matters
1: what is the most sensible way to buy a $4000 car
Use the sinking fund approach and save $400 a month for 10 months
1: which is the correct order of priorities for your money
Give, Save, Pay bills
1: what are the keys to saving money
Making savings a habit and a priority, discipline, focus
1: what is not a reason to save
Paying off debt
1: how much money should Lisa and Joe have in their emergency fund if they have a $3000 credit card bill and a mortgage
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1: even though we savings account is fine when you were just beginning to save why is a money market a better place to keep your emergency fund
1 A savings account is a bit too easy to access, 2 typically money markets average a higher interest rate then a savings account, 3 a money market is accessible in general he has check writing privileges if needed
1: A good way to build discipline and get into the habit of saving is ____
Pre-authorized checking
1: baby steps can best be described as
1 A systematic process for getting out of a financial mess, 2 a series of seven sequential steps that help you plan save and manage money, 3 a series of steps that will work in good times and in bad times
1: for most people a fully funded emergency fund will be about:
$10,000 – $15,000
1: if you invest $1000 at 12% interest, how much money will be in the account after two years, compounded annually?
1: savings is about
Emotion and contentment
1: what should you save for
1 Wealth building, 2 emergency fund, 3 purchases
1: what is true about the concept of savings
You must pay yourself first
1: A sinking fund approach means
Saving and paying cash
1: what is true about a one time investment for 40 years
The annual interest rate does matter when making a one time investment
1: when can you negotiate a better deal
When you pay with cash
1: what is the next step after you have a fully funded emergency fund
Invest 15% of your income into Ross IRAs and pretax retirement plans
1: when using the sinking fund approach how much do you have to save to buy a $5000 car next year
$416.66 a month into savings
1: how much money should you have in your’s emergency fund if you are working on baby step 2 (pay off all debt)
$500 or $1000 depending on your current income
2: what should you do about investments
Always invest only for tax savings purposes
2: The risk return ratio says
When the rest goes up, the return generally will go up
2: what is true about investing in single stocks
There is a high degree of risk
2: what is not a good investment
Gold, commodities, viaticals
2: A collection of money from different investors, which is used to purchase stocks, bonds, or other investments, managed by a fund manager:
Mutual funds
2: The KISS rule of investing teaches
Keep things simple and never buy something you don’t understand
2: what is a type of annuity
Variable, fixed
2: The most aggressive mutual funds can tend to be firm:
Companies that are a little younger and growing
2: your piece of ownership in a company is called:
Share of stock
2: what fund is the most risky
Aggressive growth
2: what should you do if you begin losing money in your mutual fund
Leave it alone, and continue to invest money in the fund
2: aggressive growth funds
2: growth funds
2: growth and income funds
2: what risk should you consider when investing
You could lose all your money, inflation, your money is not liquid
2: [[Rank in order of average rate of return (1 being the lowest)]]
__ Mutual fund
__ C.D.
__ Bond
3> Mutual fund
2> C.D.
1> Bond
2: what is not a risky investment
2: what is true about liquidity
The more liquid and investment is, the less return
2: [savings or investing] : you want to start a college fund for your newborn son
2: [savings or investing] : your daughter has a wedding next year
2: [savings or investing] : you want to buy a car in two years
2: [savings or investing] : you want to open a Roth IRA
2: [savings or investing] : you want to buy a house within the next five years
2: [savings or investing] : your daughters prom is in six months