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