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Alabama Financial Literacy Test Flashcards | StudBud
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Alabama Financial Literacy Test
Alabama Financial Literacy Test
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1
Which of the following positions can confirm signatures to a contract?
Trustee
Legal signer
Notary Public
Executivve
2
Which of the following is the form employers use to determine how much tax to deduct from a paycheck?
W-4
W-9
I-9
W-2
3
Which of the following practices does not lead to a higher car insurance rate?
receive a speeding ticket
purchase a newer model car
Participate in a defensive driving course
Crash one's car
4
The federal government raises interest rates, which of the following is generally impacted positively for a consumer?
Stock investment
Credit card payment
Savings account
Real Estate investment
5
The following purchasing cards removes funds from one's checking account almost instantly after one makes a purchase?
Debit card
Credit card
Payroll card
Withdrawal card
6
All of the following are advantages of bundling insurance EXCEPT what?
Convenience
Potential saving of money
Less complicated
Increases insurance options
7
Which of the following statements best describes gross pay?
Money one receives from their job before taxes/deductions are taken out
Money one receives from their job after taxes/deductions are taken out
Amount of money one receives from insurance after an illness or accident
Money one earns from their job by overtime, bonuses, and reimbursements
8
Sales tax amounts are generally established by which of the following?
Business and federal rates
Federal and local rates
State and Local Rates
Federal and state rates
9
When one is inspecting a banking or credit statement & discovers several charges they did not make, they are victim of?
unethical sales practices
high service fees
identity theft
preemptive payments
10
The financial institution an individual visits to get money from a check if they do not have a traditional bank account?
Check cashing service
Mortgage Company
Payday lender
Credit union
11
Financial institution receives criticism for targeting people in poverty/other vulnerabilities with high interest rates
Credity Unions
Pawn shops
Check cashing services
Payday lenders
12
Type of insurance assists in covering medical expenses associated with short-term illness and accidents?
Retirement insurance
Disability insurance
Health insurance
Life insurance
13
Mortgage loan that helps people with lower credit scores, little case available for down payment, & 1st home buyer.
Government-insured loan
Fixed-rate loan
Adjustable-rate loan
Jumbo loan
14
If the value of one's house increases, all the following will most likely rise EXCEPT:
Escrow Payment
Property tax
Mortgage principal
House Insurance
15
If a mortgage loan, if an individual cannot make a large down payment, they will most likely have to pay for what?
Risk assessment
Tenant tax
Application fee
Private mortgage insurance
16
When planning one's personal budget, a variable expense is what?
An expense that may change in amount from month to month
An expense that one does not have to make
An expense in which there are many options to choose from
An expense that does not have to be paid immediately
17
When seeking to open a bank account, which of the following is needed?
Government-issued Identification
Blank checks
Recommendation letter
School transcript
18
When one invests in a commodity, they are investing in a what?
Technology
Natural Resource
E-Commerce
Bank
19
Rent-to-own agreements can negatively impact consumers because:
They are limited from purchasing similar items
They can immediately have access to the item
They do not have to pay cash for an item
They will pay a high interest rate on an item
20
If one spends more money than they have in their bank account, they are charged a what?
Reserve fee
Maintenance fee
Overdraft fee
Debt fee
21
What is the term used to describe interest earned on interest gained?
Simple interest
Principal
Capital
Compound interest
22
Which of the following will be paid for as part of the escrow funds included in a mortgage loan?
Prinicpal on home loan
Home Warranty
Car Insurance
Property Tax
23
When choosing between using a bank/credit union, which is an advantage that credit unions have in comparison to banks?
More branches/locations
Advanced online banking technology
Greater variety in services offered
Owned by members, who may vote and elect board of directors
24
Using the simple interest formula I=part , calculate the interest earned on $150 after one year at 6% return rate.
$4
$9
$90
$0.09
25
A financial institution that handles money, including keeping it safe for saving or commercial purposes?
Bank
Payday lender
Pawn Shop
Check cashing service
26
Which of the following practices could negatively affect one's credit score?
Paying bills on time
Reaching the spending limit on one's credit account
Monitoring one's credit report
Protecting against fraud and identity theft
27
Banks offer the service of a safety deposit box, which can be used for what?
Protect personal documents from potential loss.
Prevenent the bank's money from being burned in a fire
Guarantee high interest on money deposits
Reduce the amount owed on late fees
28
The form an employer provides to an employee to inform them of how much money was deducted from paychecks in a year..
W-2
W-9
I-9
W-4
29
Which of the following investments is characterized by the following traits:
Stocks
Real Estate
Commodities
Bonds
30
The purpose of an umbrella insurance policy is best summarized as what?
Groups all insurance policies into one discounted price
Uses one insurance policy to cover each member of a family
Cover cost associated with heavy rain
Protect the holder against liability costs beyond what is covered origonaly
31
Which of the following investments is characterized by the following traits:
Money Market
Exchange-traded fund (ETF)
Traditional savings account
Certificate of Deposit (CD)
32
If one party to a contract does not do what the contract requires, the individual has committed a what of the contract?
Consideration
Treaty
Ratification
Breach
33
At a restaurant, one must consider which of the following additional costs to the price of their meal and sales tax?
Tip
Service fee
Interest fee
Reservation cost
34
A certificate of deposit (CD) differs from a traditional savings account in what way?
CDs include the puchase of stocks
CDs must remain untouched for a fixed period of time
CDs are a riskier investment
CDs have a low interest rate
35
When one receives a product or service now, but pays for it later, it is known as what?
Credit
Deduction
Interest
Debit
36
Which of the following is the typical amount of time in which a borrower must pay off a mortgage loan?
Eight years
Thirty years
Fifty years
Five years
37
Federal income tax brackets can be impacted by which of the following?
Region in which taxpayer resides
Marriage status of taxpayer
Voter registration of taxpayer
Criminal history of taxpayer
38
Which of the following is an advantage of maintaining a good credit score?
Credit card companies offer more points in their rewards system
Greater chance of receiving a loan with a low interest rate
Receive higher interest rates on money in a savings account
Stocks can be purchased at a lower price
39
Which of the following is the term for a person who relies on someone else financially?
Beneficiary
Policyholder
Insurer
Dependent
40
Which of the following investments is characterized by the following traits:
Exchange-traded fund (ETF)
Bonds
Savings account
Mutual Funds
41
Type of insurance helps pay for stays in a nursing home?
Long-term care insurance
Life insurance
Disability insurance
Retirement insurance
42
All the following are examples of installment loans EXCEPT:
Credit card
Mortgage
Car loan
Student loan
43
The phrase "balancing a checkbook" refers to which practice?
Deciding if one has enough money to make a large purchase
Comparing bank statements to withdrawal records to track spending
Operating a checking account that mulitple people use
Opening a checking account for the first time
44
The total money one gets to "take home" from a paycheck after taxes and deductions are taken out is known as?
Gross pay
State Income Tax
Federal Income tax
Net pay
45
The Rule of 72 is used to calculate what?
the amount of credit one needs for a good credit report
the amounf of money one should save by retirement
the amount of taxes owed for every $72 invested
Amount of time it will take for an investment to double in value
46
When one is seeking to purchase a product at a store, what additional cost must be paid in addition to the listed price?
Purchasing fee
Insurance
Sales tax
Interest
47
Which of the following best describes the concept of APR (ANNUAL PERCENTAGE RATE)?
The maximum amount one can charge on their credit card
The credit card insterest rate, calculated on a yearly basis.
Summary of all credit card transactions in one month
The fee charged if a credit card payment is late
48
Type of insurance provides income to people who depend on a wage earner after the wage earner dies?
Automobile insurance
Health insurance
Life insurance
Disability insurance
49
Which allows a customer to pay a deposit on an item, and then not receive the item until the balance is paid in full?
Portion payment
Increment investing
Credit card
Layaway plan
50
Which of the following is the correct sequence in the formation of a contract?
Offer, acceptance, agreement, consideration
Agreement, consideration, offer, acceptance
Offer, acceptance, consideration, agreement
Offer, agreement, acceptance, consideration
