Fiveable
💼AP Business with Personal Finance
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💼AP Business with Personal Finance

FRQ 2 – Personal Finance
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Unit 3: Personal Saving and Borrowing / Business Finance and Accounting
FRQ Types & Units

Each FRQ type tests specific skills taught in particular units. Here's why certain units appear for each question type:

This mapping reflects College Board's exam structure - each FRQ type tests specific skills that are taught in particular units.

Practice FRQ 1 of 161/16

2. Priya has come to you, a financial advisor, for guidance regarding her financial situation.

After completing her nursing degree, Priya was hired as a registered nurse at a local hospital with an annual salary of $75,000. To transition into her new career, Priya used a combination of savings and borrowing to purchase a reliable used SUV, furnish her rented townhome, and buy necessary medical scrubs and equipment.

Currently, after Priya pays her planned monthly expenses, including rent, utilities, and minimum payments on her car and student loans, she has a budget surplus of $950 left over. She wants to use this surplus to pay off her high-interest credit card debt as quickly as possible and build a larger emergency fund.

Priya also wants to begin saving for retirement using the hospital's 403(b) retirement program. For every 1% of her salary that Priya contributes to the program, her monthly net pay will decrease by about $55, but her retirement savings will increase by $125, thanks to tax savings and a dollar-for-dollar employer match. If she contributes 5% of her salary, her employer’s matching contribution would add $3,750 in free savings each year.

Priya’s assets include her used SUV worth $22,000, furniture and electronics worth $3,500, and a savings account balance of $1,500, for total assets of $27,000. Her liabilities consist of a student loan balance of $35,000, a car loan balance of $18,000, and credit card debt of $6,000, for total liabilities of $59,000.

Figure 1. Priya’s Assets and Liabilities

Table 1
A.

Using data from Figure 1, identify a difference between Priya’s total assets and her total liabilities.

B.

Describe a financial challenge or opportunity indicated in the scenario that is currently impacting Priya’s ability to achieve her financial goals.

C.

Explain how a specific action taken by Priya could help her achieve one of her financial goals.

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FRQ Directions
Free Response Question Practice

This practice environment simulates the AP AP Business with Personal Finance Free Response Questions section. Here are some guidelines:

  • Read each question carefullybefore responding. Pay attention to command verbs like "identify," "explain," "analyze," or "evaluate."
  • Use the timer to practice time management. You can pause, restart, or hide the timer as needed.
  • Mark for Review if you want to come back to a question later.
  • Your responses are saved automatically as you type. You can also use the drawing tool for questions that require diagrams or graphs.
  • Use the toolbar for formatting options like bold, italic, subscript, and superscript.
  • Navigate between questions using the Previous and Next buttons at the bottom of the screen.

Tip: Answer all parts of each question. Partial credit is often available, so even if you are unsure, provide what you know.