When determining whether you NEED to file a federal tax return, each of these questions matters EXCEPT…

How much income did you earn this year?

What type of income did you earn this year?

Are you claimed as a dependent on anyone else's tax return?

You are at the checkout counter at the local supermarket and use your debit card to pay for your groceries. Where does the money for this purchase come from?

It is deducted directly from your checking account

Your credit card company covers the cost

Your credit card company provides you with a cash advance to cover the cost

It is deducted from your credit card account

Jocelyn gets a text alert from the bank that her account balance has dropped below $100 after a series of $20 ATM withdrawals. She has not used her ATM in over a week and wonders what she should do. What would you recommend?

Contact your bank immediately as it appears that your account may have been hacked

Wait until your monthly statement arrives so you can check to see if those withdrawals are still there

Wait a week as it is fairly common for the bank to catch mistakes like this

Check your wallet to be sure your debit card has not been stolen. If you still have it, then you should not worry.

Which of the following is a way to access the money in your checking account?

Using your debit card to pay for groceries at the checkout

Taking out cash using your credit card at an ATM machine

Depositing a paycheck at an ATM

Receiving a person-to-person payment from your friend

You deposit a birthday check by using the bank app that you have on your smartphone. What is the standard amount of time that you will need to wait in order to get access to these funds?

Usually 1-7 business days later

Which of the following transactions will REDUCE your checking account balance immediately?

Using your debit card to pay for groceries at the supermarket

Writing your monthly rent check which you will mail tomorrow

Using your credit card to pay for your school books

Depositing a check at a local bank branch

Protection for bank customers’ deposits up to $250,000, guaranteeing their money is still available if the bank goes out of business.

Optional coverage consumers can purchase so that their bank deposits remain safe.

Insurance bank branches can buy to protect their business against fraud and scams.

Required if you want to do online or mobile banking.

When signing up for a new checking account, you answer "Yes" to receive overdraft protection. On this day, you have $10 in your account and go out and use your debit card to buy lunch for $12, a movie ticket for $12 and dinner for $15. What is likely to be the outcome resulting from these transactions?

You will likely be charged an overdraft fee for one or more of the transactions and also will need to repay the bank for the amount overdrawn ($29)

Since you requested overdraft protection, the bank will not allow you to overdraw your account so your debit card will be denied

The bank will provide you five days to add funds to your account to cover the overdraft and no fees will be assessed

Which of these statements about saving is INCORRECT?

It is extremely difficult to open a savings account, as you typically need at least $10,000 for your initial deposit

People often believe they are saving when they buy products at a listed discount, even if they didn't need the product in the first place

Without a separate savings account to pay yourself first, it's more likely that you'll spend all of your income each month

Billions of dollars are spent on marketing to persuade consumers to spend money instead of saving

You are 18 years old, opening your first savings account, and are considering three options: BANK A is not FDIC insured, has an interest rate of 5%, and a minimum deposit of $25. BANK B is FDIC insured, has an interest rate of 0.01%, and a minimum deposit of $50. Bank C is FDIC insured, has an interest rate of 0.02%, and a minimum deposit of $10,000. All three have fees competitive with other banks. Which bank is the best option?

All 3 banks are equally good options

Stanley deposits $1,000 into a savings account that pays 1% interest. At the end of the first year, he's earned $10 in interest and there is $1,010 in the account. If the account has simple interest, the 1% interest for year two would be based off ____________. If the account has compounding interest, the 1% interest for year two would be based off ________________.(NOTE: The first choice goes in the first blank, the second choice goes in the second blank)

The original deposit ($1,000); The year one account balance ($1,010)

The original deposit ($1,000); The year one interest ($10)

The year one account balance ($1,010); The year one interest ($10)

The year one account balance ($1,010); The original deposit ($1,000)

Which of the following is an effective strategy for personal saving?

Save a certain percentage of each paycheck and deposit it directly into a savings account

Wait until the end of the month and save whatever is left in your checking account

Cover all of your wants and needs and save whatever is left over

Take out a payday loan so you can save before you receive your paycheck

Which of the following statements about banks is FALSE?

Historically, savings accounts earn higher returns than investments in the stock market

If it is FDIC-insured, your money is safe even if the bank fails

Many banks pay interest on the money you deposit with them

Money in a bank is usually easy to access via ATM, debit card or check

Which of the following statements below is TRUE?

If the cardholder pays $523.20 by the due date on the bill, she will pay NO interest to the credit card company.

The cardholder is carrying a balance over from the last period.

The cardholder was charged interest on her balances for the last period because she made her payment on time.

If the cardholder makes her minimum payment of $35.00 by the due date, she will NOT be charged interest on her balances.

Which of the following statements comparing credit and debit cards is TRUE?

With debit cards, you're spending your own money at point of sale, while with credit cards, you're promising to pay back the money eventually

Far more businesses accept credit cards than debit cards

Credit cards pull money directly from your bank account, while debit cards get their money from Visa or Mastercard

Credit card companies provide you with a monthly statement, while debit cards do not

Which of these statements best explains why it's often a good idea to pay more than the monthly amount due on an amortized loan?

The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly

Every time you pay extra, the lender will reduce the interest rate they're charging by a small amount

The extra payment will be applied to the interest you owe, which will reduce the overall cost of your loan

Amortized loans typically have much higher interest rates than credit cards, so they're the best place to put your extra cash

If you are having trouble making auto loan payments, and are really following a tight budget, which recommendation below represents the WORST advice?

Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control

Find an extra source of income by taking a second job, working longer hours, asking for a raise, etc

Continue making all payments and call your lenders and see if you can negotiate lower monthly payments, lower interest rates, or longer terms

Reduce spending in some other area of your budget so you can direct more funds toward debt payments

What are the two most important factors in calculating your credit score?

Payment history and amounts owed

Payment history and types of accounts

Amounts owed and length of credit history

Length of credit history and new credit inquiries

Which of the following statements about credit scores does this bar graph support?

It is more difficult for young people to borrow (i.e., get a loan) because they have less payment history for a lender to rely upon

Credit scores tend to drop as you grow older because you are more likely to miss a payment at some point

When young people borrow, they are likely to have lower interest rates because their credit scores are lower

It is easier for young people to get loans at lower interest rates because they are likely to have never been late with a payment

Heather receives a phone call, in which an automated voice states that her credit card has been used fraudulently and that she must enter her 16-digit credit card number, using the keypad of her phone, to clear up the error. What should Heather do next?

Hang up and call her credit card company using the 1-800 number on the back of her card to inquire about the issue or report the attempted phone fraud

Push 0 or say "operator" to speak with a representative from the credit card company instead

Enter the 16-digit card number, but don't enter her PIN or the 3-digit code from the back of the card

Hang up and wait for the end of her credit card billing cycle to see if there really was a fraudulent charge.

All of the following would show up on a credit report EXCEPT...

Payment history of your car loan

Melvin is 19 years old and wants to begin establishing a credit history. Which action should he take to meet that goal?

Ask his parents to cosign a credit card or add him as an authorized user on their credit card

Always say "credit" when asked "credit or debit?" at a store

Any time he borrows money from a friend or family member, be sure to pay it back promptly

Take out some private student loans, even though he doesn't need them because he has grants and scholarships

Which of the following individuals or groups would be the LEAST likely to look at your credit score?

A bank representative who is helping you open a savings account

How does investing in the stock market differ from putting money in a savings account at a bank?

Investing allows you to accumulate wealth for retirement while saving is best for short-term purchases or emergencies

Investing is always a less risky option than saving

Investing is best for short-term situations like emergency funds; saving is best for the long-term

Investing typically earns between 1-2% while saving generally earns between 5-7%

Why is compound interest more advantageous than simple interest?

Compound interest allows you to earn interest not only on the amount you have saved, but also on the interest you've already earned

Compound interest is harder to calculate, so those who use it earn higher profits for their efforts

Compound interest means you have a fund manager who is compounding your returns without charging a fee

Compound interest has lower fees than simple interest

What kinds of cognitive biases and behaviors can prevent people from making smart investing decisions?

Exiting the market because that’s what everyone else is doing

Buying stocks when prices are low and selling them when they’re high

Investing in a diversified portfolio instead of trying to time the market

Your friend Jenny wants to use a robo-adviser to manage her portfolio. What does this mean?

A computer software system is going to adjust her portfolio based on her preferences.

She'll have a human fund manager with advanced technology manage her portfolio.

Jenny will sit down for quarterly investment meetings with a robot.

Jenny can receive investing advice through an online chat service provided through the brokerage firm.

When investing in individual stocks, you should expect that…

Unforeseen company events can have a dramatic impact on the stock price for a company

Stock prices for a company are relatively easy to predict

You will have an informational edge by reading an article about a company you want to invest in

Stock prices for an individual stock will be more stable over the long-term than prices for a diversified index fund

Which of the following statements about Exchange Traded Funds (ETFs) is TRUE?

ETF prices can change throughout the day as they are exchanged on the market.

ETFs are traded once a day after the market closes.

An ETF is a single stock that you can buy in the stock market.

Actively managed ETFs have very low fees.

Which of the statements below BEST describes the relationship between risk and return when considering an investment?

Investors expect to earn a higher return when they invest in a high risk asset like stock in a small company

Investors expect to earn a lower return when they invest in a risky asset

Investors expect to earn a higher return when they invest in a low risk asset, like a bond

Investors do not expect to earn a return on a high risk investment but rather expect to lose their money

What is an insurance premium?

Your monthly payment to your insurer, regardless of whether you use any services

A list of the procedures covered by your insurance carrier

An added cost you pay in order to receive higher-quality services

The amount you pay out-of-pocket for a specific procedure or service

Personal Financial Literacy Final Exam Review

Authored by Ashley Kaigler

Social Studies, Business, Life Skills

9th - 11th Grade

Used 11+ times

Personal Financial Literacy Final Exam Review

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75 questions

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MULTIPLE CHOICE QUESTION

45 sec • 1 pt

Which of the following are the three largest categories of federal government spending?

Infrastructure, Defense, and Science

Health, Military, and Interest on Debt

Veterans, Infrastructure, and Education

Education, Defense, and Food/Agriculture

MULTIPLE CHOICE QUESTION

45 sec • 1 pt

What does the term "withholding" mean in reference to your paycheck?

It is the amount of your paycheck that you are NOT being taxed on.

It is how much is being taken out of your paycheck in taxes.

It is how much you are going to owe the government when you file your annual tax return.

It is how much you earn and includes salary, bonus and commissions.

MULTIPLE CHOICE QUESTION

45 sec • 1 pt

When do you start paying taxes?

When you turn 18

When you make more than the minimum income requirement

When you get a full-time job (part-time does not count)

When you are notified by the IRS that you are required to pay federal income taxes

MULTIPLE CHOICE QUESTION

45 sec • 1 pt

Why is it important to be extremely careful when completing your 1040 form?

Making even one mistake on your federal taxes can result in your being convicted of a crime

The 1040 form determines whether you owe additional taxes or are entitled to receive a refund from the government

Completing the 1040 incorrectly will mean the wrong amount of taxes will be withheld from your paychecks going forward

Mistakes on your 1040 form make you ineligible for employment during the next year

MULTIPLE CHOICE QUESTION

45 sec • 1 pt

Which of the statements below is TRUE about filing your taxes, assuming your only income comes from the salary you earn at BigTech Company?

You need to file your tax return by the end of the calendar year (typically December 31st)

If your employer takes out federal income taxes through payroll withholdings, you do not need to file a tax return

You must file your tax return by April 15th of the following year or request an extension by that date

You do not need to pay any income taxes until April 15th, so you should ask your company to wait until after that date to withhold any money

MULTIPLE CHOICE QUESTION

45 sec • 1 pt

You are starting your first job and you are asked to complete some paperwork on your first day. Which form will determine how much money is withheld from your paycheck for federal and state income taxes?

W-2

W-4

I-9

1040

MULTIPLE CHOICE QUESTION

45 sec • 1 pt

Which of the following paycheck withholdings puts money into a retirement investment fund that you will manage?

Social Security

Medicare

401(k) contribution

Federal income taxes

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