A process by which a private company goes "public" by selling stock

Which statement best describes the liquidity of most CDs (certificates of deposit)?

You can access funds early but you will pay an early withdrawl penalty

What best describes the difference between stocks and bonds?

Bonds are loans; stocks represent a portion of ownership in company

Which statement best describes the risks of credit cards?

Revolving debt and high interest rates means debt can accumulate quickly

Why are bond prices and market interest rates inversely related?

Bonds sell at fixed interest rates. If market rates change, so will price

The tax advantage of a ROTH IRA is?

You pay taxes today but contributions grow tax free

What is the difference between an insurance deductible and an insurance premium?

Must meet deductible before insurance pays; premium is a monthly bill

What is a cliff vestment schedule?

You become fully vested after a set number years of service

You can only open an HSA (health savings account) when

You have a high deductible health insurance plan

What tax advantages do 401K(s) have?

They are both tax deferred and tax deductible

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Financial Literacy Review

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Questions 12

Answers

1
What is an IPO?
A process by which a private company goes "public" by selling stock
A merger of two publicly traded companies
None of these
A process by which a private company sells bonds
2
Which statement best describes the liquidity of most CDs (certificates of deposit)?
None of these options
Your money is inaccessible for the term of the CD
You can access funds immediately without penalty
You can access funds early but you will pay an early withdrawl penalty
3
What best describes the difference between stocks and bonds?
Bonds are loans; stocks represent a portion of ownership in company
Bonds are loans; stocks represent ownership in real estate
Bonds represent a portion of ownership in a company; stocks are loans
None of these options
4
Which statement best describes the risks of credit cards?
There are no risks associated with credit card use
Revolving debt and moderate interest rates means debt can accumulate fast
Revolving debt and high interest rates means debt can accumulate quickly
Installment debt and low interest rates means debt can accumulate quickly
5
Why are bond prices and market interest rates inversely related?
Bonds sell at fixed interest rates. If market rates change, so will price
Bonds sell at variable rates. If market rates change, so will price
Bonds sell at fixed interest rates and market interest rates never change
There is no relationship between bond prices and market interest rates
6
What is the general rule of thumb for emergency reserves?
3-6 months of living expenses
3-4 months of living expenses
1-2 months of living expenses
A year of living expenses
7
What is the current 401(k) annual contribution limit?
$6,000
$23,500
$15,000
$10,000
8
The tax advantage of a ROTH IRA is?
You pay taxes when you withdraw and contributions grow tax free
You pay taxes today and you pay taxes when you withdraw
You pay taxes today but contributions grow tax free
You pay taxes on withdraw; you receive a tax deduction for contributions
9
What is the difference between an insurance deductible and an insurance premium?
Deductible is a monthly bill; premium is what you pay before insurance pays
Must meet deductible before insurance pays; premium is a monthly bill
A premium is what you for specific service; deductible is a monthly bill
None of the above
10
What is a cliff vestment schedule?
You earn ownership of employer 401(k) contributions slowly overtime
You own your employer's contributions to your 401(k) immediately
You become fully vested after a set number years of service
You never earn your employer's contributions
11
You can only open an HSA (health savings account) when
You have a high deductible health insurance plan
You have a high premium plan but low deductible
You have a low deductible health insurance plan
None of these options
12
What tax advantages do 401K(s) have?
You get tax free growth after paying taxes on initial contributions
They are tax-deferred but not tax deductible
They are not tax-deferred but are tax deductible
They are both tax deferred and tax deductible

Financial Literacy Review Flashcards | StudBud