Question 2: Personal Finance
Jordan's net worth and emergency fund
- Unit 3
- 3 points
- About 13 minutes
You can use a calculator on this question, just like on exam day.
A short scenario about a person's or household's money, with numbers and goals: you read the data (for example, total assets versus total liabilities), describe a challenge or opportunity, and explain an action that would help them reach a goal. On the exam: Question 2 of 4, Section IIB (Questions 2–4 share 65 minutes); suggested time 12–13 minutes, 5% of the score. Assesses Skill Categories 1 and 3. Section II has 4 free-response questions in 90 minutes (40% of the score). The exam is fully digital in Bluebook, and only a 4-function calculator is allowed (handheld or the built-in Desmos 4-function calculator).
The question and its sources
Respond to parts A, B, and C. Jordan has come to you, a financial advisor, for guidance.
Jordan's situation
Jordan, 24, works as a medical lab assistant. After college, Jordan moved into a shared apartment and bought a used car with a loan.
Jordan's take-home pay is $3,100 a month. Monthly expenses, including rent, food, gas and the minimum payments on all loans and the credit card, total $2,750. That leaves $350 a month that Jordan can put toward savings or extra debt payments.
Jordan has two goals: build an emergency fund equal to three months of expenses ($8,250), and pay off the credit card, which charges 25% annual interest (APR).
Jordan's assets and liabilities are listed in Table 1.
Source: Hypothetical person and figures written for this practice question
Table 1. Jordan's assets and liabilities
| Item | Type | Amount |
|---|---|---|
| Checking account | Asset | $1,350 |
| Savings account | Asset | $2,400 |
| Car (current market value) | Asset | $9,500 |
| Laptop and furniture | Asset | $1,800 |
| Student loan balance | Liability | $18,600 |
| Car loan balance | Liability | $6,200 |
| Credit card balance (25% APR) | Liability | $2,350 |
Source: Hypothetical data written for this practice question
Suggested time: 13 minutes
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Part (A)
1 pointUsing data from the scenario, calculate Jordan's net worth. Show your work.
0 / 2,500 characters
Part (B)
1 pointDescribe one financial challenge or opportunity in the scenario that is affecting Jordan's ability to achieve these goals right now.
0 / 2,500 characters
Part (C)
1 pointExplain how one specific step Jordan could take would help Jordan achieve one of these goals.
0 / 2,500 characters
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