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Duplicate of Financial Literacy Final Exam Review Flashcards | StudBud
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Duplicate of Financial Literacy Final Exam Review
Duplicate of Financial Literacy Final Exam Review
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Answers
1
By law you can get your credit report
never, you must pay for that service
once a year from annualcreditreport.com
twice a year from whocares.com
2
What information on a Schumer Box should you focus on when choosing a credit card?
Fees
Annual Percentage Rate (APR)
Grace Period
The term of the credit card
3
How are credit cards and debit cards different?
Some debit cards say VISA on them; credit cards don't
A credit card can offer perks such as purchase protection
They're both linked to a checking account in different ways
With a credit card, you are borrowing from yourself
4
How can you protect your checking account when using online and mobile banking?
Connect to a secure WiFi network
Use a strong password
Opt-out of alerts to notify you of unusual activity
Share your pin # with only 1 person in case you forget it
5
Why is financial literacy important?
to understand how to build wealth
to know the basics of personal fiance and money management
to better understand credit scores, risk, interest rates
All of the above
6
Aisha wants to improve her credit utilization rate. Which of the following can she do?
Make several payments in the month instead of a large one
Spread her spending among her 3 credit cards
Keep her credit utilization rate to 55%
Keep her spending all to 1 card; don't use the other 2
7
Employees prefer direct deposits because:
Direct deposits earn a higher rate of interest
The danger of losing a paycheck is slightly reduced
The money is deposited sooner than it would be in person
There is a small fee for the service
8
How do you avoid paying interest on your credit card (or any other loan for that matter)?
Pay the principal 1st, then pay what you can on interest
Pay interest 1st, then pay what you can on leftover balance
Always make the minimum payment on time
Always make the full payment on time
9
Where can you get a free copy of your credit report?
freecreditreport.com
annualcreditreport.com
creditreport.gov
getmycreditreport.com
10
equal credit opportunity supports all types of....
race and age
gender and race
age race gender and height
age and race including gender
11
What information can you find on a credit report?
Your parents' and siblings' contact information
Your education level
Inquiries you've made on new lines of credit
Your medical insurance information
12
What is a credit score?
Number that is used to process your credit findings
Number that represents how well you pay your bills
Number that you use to project future earnings
13
A shorter auto loan term means ____ monthly payments & ____ total interest you'll pay.
higher, more
lower, more
higher, less
lower, less
14
What qualifies as needs for budgeting?
Water
Electricity
Food
iPhone X
15
What Influences your financial decisions
Dankness of memes
Values, Needs, Wants
How spicy your mayonaise is
Dryness of pepper
16
A federal law that prohibits discrimination in credit transactions?
Equal Credit Opportunity Act
Regulation X
Regulation Z
RESPA
17
What information can you find on a credit report?
Your education level
Your medical insurance information
Your parents' and siblings' contact information
Inquiries you've made on new lines of credit
18
Which of the following are credit agencies?
Transfax
Equifax
TransUnion
Experian
19
T/F: A negative credit event (bankruptcy) can have a WORSE impact on a higher credit score.
False
True
20
Define Direct Deposit
receiving 24 paychecks per year
a set amount for each hour employee works
pay day fall on the same day of the week
Paycheck automatically deposited electronically bank account
21
How can you build a positive credit history as a college student?
Become an authorized user on an adult's card
Make only the minimum payment each month
Get a credit card but don't use it to avoid more debt
Spend up to your credit limit each month
22
A checking account is best used for...
Placing money you earn
Investing money
Saving money
Storing money to spend
23
How are a credit score and credit report related?
Credit reports are less important than your credit score
A credit score is determined by the factors in your report
They're not related at all
A credit report is determined by the factors in your score
24
Behavioral finance means
the input of psychology to make financial decisions
the application of psychology to make financial decisions
the complexity of psychology to make financial decisions
the output of psychology to make financial decisions
25
What is budgeting?
Tracking income and expenditure
Financial management
A financial plan
All of the above
26
An excellent credit score would be
800-850
300-579
740-799
27
People who are unbanked are most likely to...
Incur lots of fees at Check Cashers to access their money
Receive a monthly statement of their transactions
Deposit their checks at the ATM
Use a mobile banking app
28
Which of the following is TRUE about a credit report?
You can get a credit report only when you're 21 years old
Credit reports are maintained by the 5 main credit bureaus
You can get a copy of your credit report for free
It is a complete history of one type of credit you have
29
Have a credit score of 0 means
You have no debt
You never pay your bills on time
Means you have zero of nothing
30
You put $500 in a savings act that earns 9%, by following the rule of 72, what will you EARN?
$40
$545
$45
$500
31
What is the first step of the budgeting process?
write down an estimated cost
List expenses in order of importance
record income for the budgeted time
make changes to the budget if neccesary
32
What is interest?
The price paid for using someone else's money
A place to buy on credit
Dictates whether a bank will service you in any matter
How much you like your money
33
The biggest difference between a debit card and a credit card is:
A debit card can't be used to rent cars
You can't make online purchases with a debit card
A debit card only allows you to use money you already have
A debit card doesn't proves you are responsible with money
34
Using the debt snowball method, you make...
minimum payments on large loans; pay extra on small loans
one large payment on one loan
minimum payments on all of your loans
minimum payments on small loans; pay extra on large loans
35
What does the Rule of 72 determine?
the interest rate needed to compound your money
how long it takes to double an investment
how long it takes to pay off a debt
the interest rate needed to triple your money
36
Zero based budgeting is
Justifying all expenses completely
Not considering the previous year's figure
All of the above
Starting the budget from base zero
37
The purpose of the Federal Deposit Insurance Corporation (FDIC) was to...
insure bank depoists of individual citizens
ensure Americans in poverty had money when they retired
inspect the financial transactions of important businesses
increase governmental control over the economy
38
What makes up your credit score?
Credit formula is done through a formula
Credit Bureaus determine your score through your credit report
Credit score is done through the FDIC
39
Overdraft protection...
can keep you from overdrawing but charges a high fee.
is a service offered only for premium checking accounts.
brings in a few hundred dollars each year to banks.
is a fee-free service that prevents you from overdrawing.
40
A shorter auto loan term means ____ monthly payments & ____ total interest you'll pay.
lower, less
higher, more
higher, less
lower, more
41
Your ___________________ _______________ helps determine whether or not you get credit.
Credit Score
Hourly Wage
Years Worked
Annual Salary
42
All of the following are benefits of having a good credit score EXCEPT
Higher interest rate on credit cards and loans
Better car insurance rates
Easier approval for rental apartments and houses
You can get a higher return on your Retirement fund
43
How does the 50/30/20 rule of thumb for budgeting allocate your income?
50% Needs, 30% Savings & Debt Repayment, 20% Wants
50% Needs, 30% Wants, 20% Savings & Debt Repayment
50% Savings & Debt Repayment, 30% Wants, 20% Needs
50% Wants, 30% Needs, 20% Savings & Debt Repayment
44
To improve an UNFAVORABLE credit rating, a person should
increase the number of payroll deductions
open a checking account
pay bills on time
apply for more credit
45
Net worth is the same as
Wealth
Cash
Financial Position
Income
46
Saving accounts differ from checking accounts in that...
Checking accounts offer higher interest rates
Saving accounts come with more fees than checking accounts
Saving accounts let you withdraw $ an unlimited # of times
Money in a saving account can be used to fund a bank's loans
47
How much money is insured by the FDIC?
$1,000,000
$200,000
$250,000
$150,000
48
Your net worth...
is what you own minus what you owe
is your liabilities - your assets
is your assets - your liabilities
is what you owe minus what you own
49
The best advice for managing your credit card debt is to:
Cease all payments and hide from your creditors
Pay off the highest interest debts first
File for bankruptcy
Make only the minimum monthly payments
50
assets=$20,000 liabilities=$50,000 what is the net worth ?
-30,000
80,000
30,000
-80,000
51
What is the benefit(s) of direct deposit?
You don't have to spend time and energy depositing a check.
Any overdraft fees are waived.
The funds from your paycheck are available 3-5 days later
You get a tax benefit from the Federal government.
52
Wants, needs, and ______________________ contribute to the financial decisions you make.
money
values
school
football
53
How would you organize your debts in the debt snowball method?
Pay them all off at once
Smallest Debt to Largest debt
Largest debt to smallest debt
Throw snow at your paperwork
54
What does the Rule of 72 determine?
the interest rate needed to triple your money
how long it takes to double an investment
how long it takes to pay off a debt
the interest rate needed to compound your money
55
How do you avoid paying interest on your credit card (or any other loan for that matter)?
Pay interest 1st, then pay what you can on leftover balance
Pay the principal 1st, then pay what you can on interest
Always make the full payment on time
Always make the minimum payment on time
56
When you use a credit card, you
buy now, pay now
pay in cash
buy now, pay later
pay interest on purchases
57
All of the following may access your credit report EXCEPT...
Colleges and universities
A future employer
Insurance companies
A landlord
58
Joe moved money from his checkings to savings account. What type of transaction did he make?
Transfer
Deposit
Withdrawal
Interest
59
Credit cards are directly linked to your bank account
true
false
60
Which of the following does NOT contribute to your credit score?
Length of credit history
Your payment history
Which banks issued your credit cards
Your debt-to-credit ratio
