What is a secured loan?

a loan backed by collateral such as a car

What might be the result of NOT using a budget?

You would be unprepared for an emergency

How can you reduce the total interest you will pay on your loan?

pay extra toward principal each month

What is the grace period on a credit card?

the time between billing and payment due with no interest

scammers trick you into sharing info online through emails or texts

What is the difference between saving and investing?

Savings is generally lower risk; investing is generally higher risk

What is the main difference between debit and credit cards?

Debit uses your money, credit borrows

On an amortized loan, over time:

More of the monthly payment goes to principal

Why do savings account earn interest?

To reward you for storing money

How is Net Price for college calculated?

Sticker Price - Grants and Scholarships

What should you do before taking out a private student loan?

Apply for scholarships and grants

Compound interest means:

that you earn interest on interest

What is one consequence of having a low credit score?

You may get higher interest rates

Why is it risky to use only one type of investment?

you are not protected if that investment fails

Credit scores are used to:

determine loan eligibility and interest rates

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Financial Literacy Final Exam

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Questions 30

Answers

1
SMART goals must be all of the following except:
Measurable
Time-limited
Reactionary
Specific
2
What is an example of a "need"?
Netflix subscription
Designer Shoes
Concert tickets
Rent
3
What is a secured loan?
a loan from a friend
a loan with no credit check
a loan backed by collateral such as a car
a student grant
4
What might be the result of NOT using a budget?
Saving too much money
You would earn more money
Automatically growing wealth
You would be unprepared for an emergency
5
How can you reduce the total interest you will pay on your loan?
pay only the minimum each month
extend the loan by 5 years
pay extra toward principal each month
pay late each month
6
What is inflation?
Extra taxes
Prices rising over time
Stock market growth
Prices going down
7
What percentage of your income should go to savings under the 50/30/20 rule?
10%
50%
30%
20%
8
What is an example of a hard skill?
Time management
Teamwork
Empathy
Coding
9
What is one way to reduce investment risk?
investing only in your friends' businesses
diversification
only invest in tech stocks
buying only one type of stock
10
What is a stock?
a credit rating
ownership in a business
a loan from a business
a savings account
11
What is the grace period on a credit card?
the time it takes to activate a card
the time the card is paused for repairs
the time between billing and payment due with no interest
the expiration date
12
Which of the following is an indirect cost of attending college?
Housing in dorms
Meal Plan
Travel Expenses
Tuition
13
What is "Phishing"?
scammers trick you into sharing info online through emails or texts
going through trash to find personal information
hacking into someones personal computer
using a device on a debit or credit card machine to steal personal info
14
What is an example of a direct college cost?
concert tickets
gas money
tickets to the football game
tuition
15
What is the difference between saving and investing?
They are exactly the same thing
Investing is always safer
Savings is generally lower risk; investing is generally higher risk
Saving always earns more than investing
16
What is the main difference between debit and credit cards?
credit cards cannot be used online
Debit uses your money, credit borrows
debit cards earn points
debit cards improve your credit
17
What type of account is best for frequent spending?
Checking
Savings
Certificate of Deposit
Index Fund
18
On an amortized loan, over time:
interest increases
monthly payments increase
payments become unpredictable
More of the monthly payment goes to principal
19
Why do savings account earn interest?
So you can spend more
To reduce taxes
to encourage you to spend more
To reward you for storing money
20
How is Net Price for college calculated?
Sticker Price - Grants and Scholarships
Sticker Price + Books and Fees
Sticker Price + Meals and Entertainment
Sticker Price - Loans
21
What should you do before taking out a private student loan?
Apply for scholarships and grants
Spend all of your savings first
Skip filling out the FAFSA
Ask your school counselor to co-sign
22
Compound interest means:
that you skip payments on your loan
that you avoid inflation
that you earn interest on interest
that you pay interest on your taxes
23
Where can you get a free credit report annually?
Google.com
FAFSA.com
Annualcreditreport.com
Creditscoresandreports.com
24
What is the main purpose of a budget?
To reduce your taxes
To track income and expenses
To impress your friends
To increase your salary
25
What is an example of a soft skill?
data entry
coding
typing speed
communication
26
What is one way to increase your income when facing a budget deficit?
get a part-time job
cut out all entertainment
skip paying your bills
cancel your checking account
27
What is the best way to improve your credit score?
make on-time payments
spend the full credit limit
never check your credit score
avoid all credit
28
What is one consequence of having a low credit score?
you will get more credit card offers
You will not have to repay your loans
You may get higher interest rates
you will qualify for larger loans
29
Why is it risky to use only one type of investment?
it lowers your credit score
you avoid interest
you will not get dividends
you are not protected if that investment fails
30
Credit scores are used to:
earn cash back
set your GPA
determine loan eligibility and interest rates
calculate taxes

Financial Literacy Final Exam Flashcards | StudBud