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Financial Literacy Flashcards | StudBud
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Financial Literacy
Financial Literacy
30 terms
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financial literacy review
Flashcards
30 cards
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Practice quiz
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Questions
30
Answers
1
Buying a treasury bill (T-bill) is best for investors who are looking for
higher yield on their investment than corporate bonds offer
a secure, low risk investment.
a place to invest between $100-$500
an investment that matures in 10-30 years.
2
A person's debt ratio shows the relationship between debt & net worth. The lower the ratio the
less liquid assets the person has.
more liquid assets the person has
better off financially the person
worse off financially the person is
3
Before the Kiss Corporation can issue stocks or bonds, it must register the issue with:
Its Board of Director
The World Bank
The Securities and Exchange Commission (SEC)
The Federal Reserve
4
The purpose of Insurance is NOT to:
Protect assets
Diversify an investment portfolio
Share risk with other policy holders & the insurance company
Protect against potential losses
5
Who benefits the most from inflation?
Persons on fixed incomes
Lenders
Long-term fixed rate borrowers
The government
6
A blank endorsement on a check:
Cancels the check
Has no effect on the check
Creates a check that can be cashed by anyone
Restricts the use of the check
7
The phrase used for putting money into a savings account is:
Balancing the account
Making a deposit
Verifying the account
Making a withdrawal
8
Money received today is worth more than the same amount of money received in the future is:
Investing
The rule of 72
Not true
The time value of money
9
Can Cathy withdraw money from her IRA savings account?
Money cannot be withdrawn from an IRA before age 59
There is a 50% penalty if she doesn't withdraw money at 59
She can take out money at any time since she made deposits
There is a 10% penalty on money she takes out before age 59
10
You can continue to charge purchases on your credit card when:
You can afford the monthly repayments.
The amount you owe on the card is above your credit limit.
The amount you owe on the card is below your credit limit.
Your payments are always received by the due date.
11
Financial plans need to:
include income but not expenses
to be approved by an accountant
be changed during different stages in life
include income and eliminate risk
12
The interest earned on United States Series EE Savings Bonds is
paid in lump sum at the time the face value bond is reached.
deducted at the time of the bond's purchase.
equal to the money paid to purchase it.
exempt from state and local taxes.
13
The only type of life insurance that does not develop a cash value is:
Variable universal life insurance
Term life insurance
Whole life insurance
Universal life insurance
14
Generally, the higher the deductible on an insurance policy, the
more frequently the premium has to be paid
greater the premium
lower the premium
less frequently the premium has to be paid
15
When the market has a steady decline in stock prices over a period of time, it is known as a:
Fluctuating market
Bear market
Risky market
Bull market
16
Predatory lending practices generally include:
Responsible financial advisers
Very high interest rates and fees
An interest rate based on the borrowers credit history
Repayment terms that the consumer can afford
17
Which career would be possible choices for someone interested in money and finance?
Psychologist
Insurance actuary
Social worker
Musician
18
Which of the following lenders charge the highest interest rate?
Bank
Credit union
Finance company
Pawn shop
19
The amount a lender charges to borrow money is called the:
Annual Percentage Rate (APR)
Finance charge
Principal
Loan balance
20
If you have a managed health care plan, it means that you:
Can apply for 80% reimbursement of amount paid to the doctor
Can go to any doctor at any time
Will be responsible for $100 of a doctor bill
Must first meet with your primary health care physician
21
If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the
Federal Deposit Insurance Corporation. (FDIC)
State Banking Commission
US Treasury Department
Federal Reserve Board
22
The National Credit Union Administration (NCUA) insures accounts in:
Credit unions
Savings banks
Brokerage firms
Commercial banks
23
The annual percentage rate (APR) is:
Required by the Comptroller of the Currency
Required by the Securities Exchange Commission
Always expressed in dollars
true cost of credit that must be disclosed on loan agreement
24
Which of the following is considered to be open-end credit?
Installment loans
Department store charge cards
A car loan
A mortgage
25
When a person brings an item to a pawnshop to obtain cash, the transaction is considered
a collateralized loan
a sales agreement
a custodial payment
an unsecured loan
26
Interest earned on interest is known as:
Variable interest
Simple interest
True interest
Compounded interest
27
Which financial product typically pays the highest rate of interest?
Certificate of deposit
Savings account
Common stock
Money market account
28
Another term for the dollar amount of your paycheck after taxes and other withholdings is:
Discretionary income
Net income
Adjusted gross income
Gross income
29
The phrase "don't put all your eggs in one basket" describes which investment strategy?
Diversification
Pooling
Liquidity
Return on investment
30
Meinna took out a $50,000 life insurance policy. The $50,000 amount of coverage is called the:
Cash value
Annuity value
Premium value
Death benefit or face value
