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