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Financial Literacy Unit Test Flashcards | StudBud
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Financial Literacy Unit Test
Financial Literacy Unit Test
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1
A federal law that prohibits discrimination in credit transactions?
Equal Rights for All Act
RESPA
Regulation Z
Equal Credit Opportunity Act
2
Overdraft protection...
brings in a few hundred dollars each year to banks.
can keep you from overdrawing, but charges a high fee.
is a service offered only for premium checking accounts.
is a fee-free service that prevents you from overdrawing.
3
A checking account is best used for...
Investing money
Saving money
Placing money you earn
Storing money to spend
4
The purpose of the Federal Deposit Insurance Corporation (FDIC) was to...
insure bank deposits of individual citizens
inspect the financial transactions of important businesses
ensure Americans in poverty had money when they retired
increase governmental control over the economy
5
Assets=$30,000. Liabilities=$70,000. What is the net worth ?
40,000
-40,000
70,000
-70,000
6
How are a credit score and credit report related?
Credit reports are less important than your credit score
They're not related at all
A credit score is determined by the factors in your report
A credit report is determined by the factors in your score
7
Which of the following are credit agencies?
TransUnion
Experian
Transfax
Equifax
8
Equal credit opportunity supports all types of....
gender and race
age race gender and height
age and race, including gender
race and age
9
Having a credit score of 0 means
You never pay your bills on time
You have no history of debt
You are eligible for better loan rates
Means you have zero of nothing
10
One key feature of a 401(k) is that
you pay tax at the time of your investment
it is offered by employers
it enables you to connect to a secure WiFi network
it is a Roth IRA
11
You put $500 in a savings acct earning 9%, following the Rule of 72, how long will it take your money to grow to $1000?
7
72
9
8
12
What is a credit score?
Number that is used to process your credit findings
Number representing how trustworthy you are to pay back debt
Number that you use to project future earnings
13
How would you organize your debts in the debt snowball method?
Smallest Debt to Largest debt
Largest debt to smallest debt
Pay them all off at once
Throw snow at your paperwork
14
The main difference between a 401(k) and a 403(b) is
a 401(k) is a Roth IRA, while a 403(b) is not
a 403(b) pays a higher rate of interest
a 403(b) is offered by nonprofit organizations
in a 401(k), you pay taxes at the time of your investment
15
Assets=$100,000. Liabilities=$63,000. What is the net worth ?
-37,000
37,000
163,000
63,000
16
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
Always make the minimum payment on time
Always make the full payment on time
Pay interest 1st, then pay what you can on the leftover balance
17
By law you can get your credit report
Never. You must pay for that service
Once a year for free from annualcreditreport.com
made private
Twice a year from whocares.com
18
A shorter auto loan term means ____ monthly payments & ____ total interest you'll pay.
higher, less
lower, more
lower, less
higher, more
19
P=$12,000, r=7%. How much simple interest will you earn in 20 years?
$1,680,000
$14,680
$16,800
$12,000
20
An excellent credit score would be
anything above an 800
700
impossible to attain
an indication that your are not trustworthy
21
Your ___________________ _______________ helps determine whether or not you get credit.
Credit Score
Annual Salary
Years Worked
Hourly Wage
22
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
23
What is the first step of the budgeting process?
make changes to the budget if neccesary
write down an estimated cost
List expenses in order of importance
record income for the budgeted time
24
Savings accounts differ from checking accounts in that...
they generally pay a higher rate of interest
savings accounts come with more fees than checking accounts
checking accounts pay a higher rate of interest
savings accounts let you withdraw $ an unlimited # of times
25
The biggest difference between a debit card and a credit card is:
A debit card can't be used to rent cars
A debit card only allows you to use money you already have
A debit card proves you are responsible with money
You can't make online purchases with a debit card
26
Credit cards are directly linked to your bank account
false
true
27
Employees prefer direct deposits because:
The money is deposited sooner than it would be in person
Direct deposits earn a higher rate of interest
The danger of losing a paycheck is slightly reduced
There is a small fee for the service
28
P=$9,000. r=11%. How much simple interest will you earn in 7 years?
$6,930
$693,000
$9,711
$7,000
29
What is interest?
A place to buy on credit
The price paid for using someone else's money
Dictates whether a bank will service you in any matter
How much you like your money
30
The best advice for managing your credit card debt is to:
Make only the minimum monthly payments
Pay off the highest interest debts first
Cease all payments and hide from your creditors
File for bankruptcy
31
You put $500 in a savings acct that earns 9%, by following the Rule of 72, what will you EARN in the end?
$545
$500
$40
$45
32
Define Direct Deposit
a set amount for each hour employee works
pay day falls on the same day of the week
Your paycheck is automatically deposited electronically into your account
You receive a paper check from your employer
33
People who are unbanked are most likely to...
Incur lots of fees at check cashers to access their money
Use a mobile banking app
Receive a monthly statement of their transactions
Deposit their checks at the ATM
34
Wants, needs, and ______________________ contribute to the financial decisions you make.
values
money
school
football
35
When you use a credit card, you
buy now, pay now
pay interest at the time of your purchases
pay in cash
buy now, pay later
36
All of the following are benefits of having a good credit score EXCEPT
Easier approval for rental apartments and houses
Lower interest rate on credit cards and loans
You gain access to investments that are otherwise unavailable
Better auto and homeowners insurance rates
37
Joe moved money from his checkings to savings account. What type of transaction did he make?
Withdrawal
Deposit
Transfer
Interest
38
All of the following may access your credit report EXCEPT...
Colleges and universities
Insurance companies
A landlord
A future employer
39
To improve an UNFAVORABLE credit rating, a person should
open a checking account
pay bills on time
increase the number of payroll deductions
apply for more credit
40
How can you build a positive credit history as a college student?
Become an authorized user on an adult's card
Spend up to your credit limit each month
Make only the minimum payment each month
Get a credit card but don't use it to avoid more debt
41
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
42
How does the 50/30/20 rule of thumb for budgeting allocate your income?
50% Needs, 30% Savings & Debt Repayment, 20% Wants
50% Wants, 30% Needs, 20% Savings & Debt Repayment
50% Needs, 30% Wants, 20% Savings & Debt Repayment
50% Savings & Debt Repayment, 30% Wants, 20% Needs
43
Why is financial literacy important?
to understand how to build and maintain wealth
to better understand credit scores, risk, and interest rates
All of the above
to know the basics of personal finance and money management
44
Net worth is the same as
Financial Position
Cash
Wealth
Income
45
What information can you find on a credit report?
Your parents' and siblings' contact information
Inquiries you've made on new lines of credit
Your medical insurance information
Your education level
46
One key feature of Roth IRAs is that they
allow for your employer to match your contributions
tax you when you withdraw funds
tax you at the start of your investment
offer perks such as airline miles and cash back
47
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 small loans; pay extra on large loans
minimum payments on all of your loans
48
Your net worth...
= assets - your liabilities
is your liabilities - your assets
is what you owe minus what you own
is what you own minus what you owe
