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Financial Literacy Test Flashcards | StudBud
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Financial Literacy Test
Financial Literacy Test
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1
What is someone investing in when they invest in a COMMODITY?
Natural Resource
E-Commerce
Technology
Bank
2
Technical Term for "Take Home Pay"
Federal Income Tax
State Income Tax
Gross Pay
Net Pay
3
What is NOT an advantage that bundling insurance offers?
Increased insurance options
Less complicated
Reduced cost of coverage
Less complicated
4
APR is....
The maximum amount one can charge on their credit card
The fee charged if a credit card payment is late
The credit card interest rate, calculated on an annual basis
Summary of all credit card transactions in one month
5
This investment is characterized by the following?: Pays dividends, high reward potential, risky, ownership in corp.
Commodities
Real Estate
Bonds
Stocks
6
Who is authorized to confirm signatures of a contract?
Legal signer
Notary public
Executive
Trustee
7
Which of the following is not an example of an installment loan?
Car Loan
Student Loan
Credit Card
Mortgage
8
When one party to a contract doesn't comply with the terms of said contract, what has this person done?
Consideration
Treaty
Breach
Ratification
9
The purpose of an umbrella insurance policy is best summarized as what?
Uses one insurance policy to cover individual family members
Protects holder against liability costs beyond what policies cover
Covers costs associated with strong winds
Groups all insurance policies into one discounted price
10
Who typically establishes sales tax rates?
State and Local Governments
Federal and Local Government
Federal and State Governments
Federal Government and businesses
11
When planning a personal budget, what is a variable expense?
An expense in which there are many options to choose from
An expense that one does not have to make
An expense that may change from month to month
An expense that does not have to be paid immediately
12
This investment has the following traits: FDIC or NCUA insured, Lowest interest rate of investments, unlimited withdraw
Traditional Savings Account
Certificate of Deposit (CD)
Money Market
Exchange-traded fund (ETF)
13
You notice charges on your bank or credit statement that you did not charge, yourself. What could you be a victim of?
Unethical Sales Practices
High Service Fees
Preemptive Payments
Identity Theft
14
The phrase "balancing a checkbook" refers to what practice?
Deciding if one has enough money to make a large purchase
Opening a checking account for the first time
Operating a checking account that multiple people use
Comparing bank statements to withdrawal records to track spending
15
When eating at a restaurant, what additional cost could one incur other than the price of their meal and sales tax?
Interest Fee
Tip
Service Fee
Reservation Fee
16
A Certificate of Deposit (CD) differs from a traditional savings account in what way?
CD's include the purchase of stocks
CD's have a low interest rate
CD's are a riskier investment
CD's must remain untouched for a fixed period of time
17
Why could "rent-to-own" agreements negatively impact the consumer?
Consumers do not have to pay cash for the item
Consumers are limited from purchasing similar items
Consumers can immediately have access to the item
Consumers will pay a high interest rate on the item
18
Federal income tax brackets can be impacted by...
Region in which the taxpayer resides
Voter registration of the taxpayer
Marriage Status of the taxpayer
Criminal history of the taxpayer
19
What allows a customer to pay a deposit on an item, then not receive the item until the balance is paid in full?
Credit Card
Increment investing
Portion Payment
Layaway plan
20
When one receives a product or service now, but pays for it later, is known as....
Interest
Credit
Deduction
Debit
21
What form do employers use to determine how much should be deducted from an employees paycheck for tax purposes?
I-9
W-4
W-9
W-2
22
Which of the following is the correct order of steps in the formation of a contract?
Offer, acceptance, agreement, consideration
Offer, agreement, acceptance, consideration
Agreement, consideration, offer, acceptance
Offer, acceptance, consideration, agreement
23
This investment is typically serves as a loan to a local municipality. It is not FDIC insured but is considered safe.
Bonds
Savings account
Mutual Fund
Exchange-traded fund (ETF)
24
Gross pay is...
Paycheck amount BEFORE taxes and other deductions are removed
Amount of money earned from employer after OT, bonuses and reimbursements
Amount of money received from insurance after an illness or accident
Paycheck amount AFTER taxes or other deductions are removed
25
Which of the following will be paid for as part of the escrow funds included in a mortgage loan?
Property Tax
Home Warranty
Principal on a home loan
Car Insurance
26
Which type of insurance provides income to people who depend on a wage earner after the wage earner dies?
Automobile Insurance
Life Insurance
Health Insurance
Disability Insurance
27
Which financial institution can an a person visit to get money from a check if they don't have a tradition bank account?
Mortgage Company
Check cashing service
Credit Union
Payday lender
28
What types of insurance assist in coverage medical expenses associated with short term illness and accidents?
Disability Insurance
Health Insurance
Retirement Insurance
Life Insurance
29
Which of the following could have a negative effect on a person's credit score?
Monitoring of a credit report
Paying Bills on time
Protecting against fraud and identity theft
Reaching the spending limit on a credit account
30
Which of the following is the term for a person who relies on another person financially?
Insurer
Policy Holder
Beneficiary
Dependent
31
Purchasing card that removes funds from one's checking account almost instantly after one makes a purchase.
Credit Card
Payroll Card
Debit Card
Withdrawal Card
32
Which of the following tends to benefit positively when the federal government raises interest rates?
Credit card payment
Real estate investment
Savings Account
Stock Investment
33
What is the interest earned on $200 after one year at a 6% return rate? (SI= Principal x Rate of return x Time Period)
$120
$54
$12
$1.20
34
What is a safety deposit box used for?
Protect personal documents from potential loss
Guarantee high interest on money deposits
Reduce the amount owed on late fees
Protection of personal documents loss or damage.
35
This financial institution is criticized for charging extremely high interest rates and targeting people in poverty.
Credit Unions
Check cashing services
Pawn Shops
Payday lenders
36
What advantage does a credit union usually have over a bank?
More branches/locations
Advanced online banking technology
Greater variety of services offered
Member owned. Said members get to vote and elect board directors.
37
What term is used to describe "interest earned on interest gained"?
Compound Interest
Simple Interest
Principal
Capital
38
What other costs could a consumer incur if they bought a product from a store, other than the listed price of a product?
Insurance
Purchasing Fee
Sales Tax
Interest
39
If one spends more money than they have in their checking account, they are charged an...
Reserve fee
Debt fee
Overdraft fee
Maintenance fee
40
This tax form is provided to employee by the employer to inform them how much money was withheld from their paycheck.
W-4
I-9
W-9
W-2
41
Which of the following is a standard term for a mortgage loan?
Five Years (5)
Fifty Years (50)
Thirty Years (30)
Eight Years (8)
42
What will an individual probably have to purchase if they cannot put a sizable down payment on a mortgage loan?
Tenant Tax
Private Mortgage Insurance
Risk Assessment
Application Fee
43
What type of insurance helps cover the costs of staying in an assisted living facility
Long-term care insurance
Life Insurance
Retirement Insurance
Disability Insurance
44
What is an advantage of maintaining a good credit score?
Greater chance to receive a loan with a low interest rate
Stocks can be purchased at a lower price
Credit Card companies offer more points in their reward system
Receive higher interest rates on money in a savings account
45
Which of the following is needed to open a bank account?
Government Issued ID
School Transcript
Blank Checks
Recommendation Letter
46
Type of mortgage loan that helps those that may have a low credit score, low liquid cash, or could be a first time buyer
Adjustable-rate loan
Fixed-Rate Loan
Government-insured loan
Jumbo Loan
47
Which of the following does not lead to a higher car insurance rate?
Receiving a citation for speeding
Participating in a driver and traffic safety education course
Purchasing a newer model car
Crashing a car
48
Financial institution that handles money, including keeping it safe for saving or commercial purposes
Check cashing service
Bank
Pawn Shop
Payday Lender
49
If the value of a home increases, which of the following will NOT rise?
Homeowners Insurance
Escrow Payment
Mortgage Principal
Property Tax
50
What is the Rule of 72 used to calculate?
The amount of money that a person should have saved by retirement
The amount of taxes owed for every $72 invested
The amount of time it will take for an investment to double in value
The amount of credit one needs for a good credit report
