Financial Literacy Quiz

Question 1

What is a charge card?

Accepted Answer

Requires full payment monthly

Question 2

True or false: APR includes fees.

Accepted Answer

True

Question 3

What is compound interest?

Accepted Answer

Interest on interest

Question 4

How is simple interest calculated?

Accepted Answer

I = P x r x t, Principal times rate

Question 5

How is amortization defined?

Accepted Answer

Regular loan payments, Paying off loans

Question 6

What is the formula for future value?

Accepted Answer

A = P(1 + r/n)^(nt), Future value formula

Question 7

What is an ARM?

Accepted Answer

Variable interest mortgage, Adjustable-Rate Mortgage

Question 8

When are installment loans paid?

Accepted Answer

Fixed payments over time, Set payment schedule

Question 9

Why is a cosigner helpful?

Accepted Answer

Reduces lender risk, Helps secure loan

Question 10

Which type of credit requires collateral?

Accepted Answer

Secured credit

Question 11

What is an example of revolving credit?

Accepted Answer

Credit cards, HELOCs

Question 12

Which loans typically use compound interest?

Accepted Answer

Credit cards, Mortgages

Question 13

What does credit limit mean?

Accepted Answer

Maximum borrow amount, Borrowing cap

Question 14

What is a benefit of secured credit?

Accepted Answer

More favorable terms, Lower interest rates

Question 15

Which loans have fixed payments?

Accepted Answer

Personal loans, Auto loans

Question 16

What does unsecured credit mean?

Accepted Answer

Higher interest rates, No collateral needed

Question 17

Complete the sentence: Simple interest is...

Accepted Answer

Interest on principal only, Used for short-term loans

Question 18

How often is interest compounded?

Accepted Answer

Varies by loan, Depends on terms

Question 19

Where is the principal amount found?

Accepted Answer

Amount borrowed, Before interest added

Questions 19