I have to set aside an amount of monthly savings equal to...

10% - 15% of my monthly income.

Which of the following will help to create discretionary income?

Spending less than total income each month.

I live from paycheck to paycheck. So I...

Should seek immediate help in my personal financial planning.

Banks and other companies are willing to issue credit cards because these financial institutions:

Make money on the interst they charge on unpaid balances.

A loan and bill payment history.

When an employee is vested in his retirement plan, it means that the employee is now entitled to...

All the money contributed by the employer to the pension.

Which of the following is generally considered a tax deduction and may reduce a person's federal income taxes?

A donation to a charitable organization

A person's credit report includes their:

History of loans and credit activities.

Which of the following is an advantage of people increasing their personal savings?

People are better able to afford items such as future down payment on home.

What is the difference between a stock and a bond?

Stockholders have voting rights and bondholders do not.

One example of using credit responsibly is...

Charging a expensive item on sale for 1 day when cash is availble next week

The ability to turn assets into cash.

The result of 4% inflation on the value of money when bank interest rates are 2% is that:

consumers will have less money for spending.

The best way to manage credit card debt is...

To pay the full amount owed for that month.

A suggested amount of savings in order to pay for emergencies is:

3 to 9 months of living expenses

If I have just started working, the first thing I should do is...

Build up an Emergency Fund account.

To take up a financial plan and be commited to it, it is...

Not really important and can do without.

A person received a free copy of their credit report and found inaccurate information. What should they do?

Write to the credit reporting agency about the mistake.

Which of the follwoing is an advantage of opening a Roth IRA as a young person with a full time job?

Some of the money can be used for buying a qualified first-time home.

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Financial Literacy Center

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Questions 26

Answers

1
I have to set aside an amount of monthly savings equal to...
20% - 30% of my yearly income.
A percentage based on how many dependants I have.
The balance after paying off my bills etc.
10% - 15% of my monthly income.
2
Which of the following will help to create discretionary income?
Having payroll taxes deducted from each paycheck.
Paying credit card bills at the end of each month
Contributing to an emergency savings account.
Spending less than total income each month.
3
I live from paycheck to paycheck. So I...
Leave it to my spouse/parents to acquire financial plans for me.
Don't think I can take up any financial plans.
Have to start financial planning later on.
Should seek immediate help in my personal financial planning.
4
In terms of credit, what does APR stand for?
Annual Payoff Rate
Annual Penalty Rate
Annual Payment Rate
Annual Percentage Rate
5
Banks and other companies are willing to issue credit cards because these financial institutions:
Make money on the interst they charge on unpaid balances.
Are required by recent laws to make money available.
Are responsible for keeping inflation low.
Own credit counseling agencies.
6
A credit report is:
Your credit line with your financial institution.
Your monthly credit card statement.
A loan and bill payment history.
A list of your financial assets and liabilities
7
When an employee is vested in his retirement plan, it means that the employee is now entitled to...
Contribute any amount of income to the pension.
Begin to collect pension checks in 10 years.
All the money contributed by the employer to the pension.
Only the money that they contributed to the pension.
8
Which of the following is generally considered a tax deduction and may reduce a person's federal income taxes?
Insuarance premiums
A donation to a charitable organization
The fees credit card company charge
Heating expense
9
A person's credit report includes their:
Retirement and savings account balances.
History of loans and credit activities.
Medical history and driving record.
Cost of insurance premiums and amount of federal tax refunds.
10
Which of the following is an advantage of people increasing their personal savings?
The government benefits from taxes on savings.
The economy grows faster when people save money rather than spend it.
Banks can use the money from deposits to make profit on loans to the public
People are better able to afford items such as future down payment on home.
11
A financial consultant is like a:
Monster
Best friend
Personal secretary in finance
Cockroach
12
What is the difference between a stock and a bond?
Bondholders own part of the company and stockholders do not.
Stocks can be sold if owned for 30 days and bonds cannot.
Stockholders have voting rights and bondholders do not.
Interest is paid on bonds daily and on stocks quarterly.
13
One example of using credit responsibly is...
Paying less than the minimum balance on a monthly bill
Buying a leather coat with the intention of paying the cost over 4 years
Charging a expensive item on sale for 1 day when cash is availble next week
Charging wanted items by purchaisng them online.
14
"I pay my credit card bill in full 5-7 days before the due date each month!" Someone who does this is likely to have:
an excellent credit score
adequate insurance coverage
monthly dividends from bonds
a very high interest rate
15
What is liquidity?
The ability to turn assets into cash.
The ability to turn cash into assests.
A statement that predicts cash flow.
The melting point of a business.
16
Negative financial information (excluding bankruptcy) can stay on your credit report for:
10 years
2 years
7 years
5 years
17
The result of 4% inflation on the value of money when bank interest rates are 2% is that:
consumers are able to buy more than they did last year.
the value of the money increases at a faster rate.
consumers will have less money for spending.
the value of money doubles at a faster rate.
18
The best way to manage credit card debt is...
Not pay every month but pay lump sum using my bonus at the end of the year.
To consistently pay part of the amount owed every month.
To take up a personal bank loan to pay the credit card debt in full.
To pay the full amount owed for that month.
19
A suggested amount of savings in order to pay for emergencies is:
3 to 9 months of living expenses
10% of assets.
2 to 3 months of fixed expenses
1 month of variable expenses.
20
If I have just started working, the first thing I should do is...
Build up an Emergency Fund account.
Set aside money for my dream vacation.
Start a Savings account.
Shop for office clothes.
21
Which of the following investments provides the greatest amount of liquidity?
Collectibles
Certificate of Deposit (CD)
Mutual funds
Real estate
22
To take up a financial plan and be commited to it, it is...
A compulsory because government say so.
A burden to my finances.
Not really important and can do without.
A necessity to me and my family.
23
The "Rule of 72" tells you how long it will take to double your money.
False
True
24
Income can be earned or unearned. Which of the following is an example of unearned income?
Tips from customers.
Paid vacation days from work.
Money from a part-time second job.
Interest from bank accounts.
25
A person received a free copy of their credit report and found inaccurate information. What should they do?
Contact her employer about the mistake.
Send a letter to Internal Revenue Service (IRS) about their problem.
Inform the Consumer Financial Protection Bureau (CFPB).
Write to the credit reporting agency about the mistake.
26
Which of the follwoing is an advantage of opening a Roth IRA as a young person with a full time job?
The money in the account can be used to pay income taxes.
Money can be used to pay credit card debt if monthly expenses are high.
It is a convenient way to save money for a vacation.
Some of the money can be used for buying a qualified first-time home.

Financial Literacy Center Flashcards | StudBud