Consumer Finance - Quiz 1

Whats the difference between a W2 Form and W4 form?

• A W2 is a summary of your earnings and withholdings for the year and is provided by your employer.

• A W4 is a summary of your earnings and withholdings for the year and is provided by your employer.

• W2 Form is a form an employee fills out that tells an employer how much federal income tax to withhold from paychecks.

• All of the above

What is a certificate of deposit?

• The amount of money you earn on the money you deposit or leave in the bank account, NOT on any interest earned during the year

•  Electronic funds that are deposited directly into your bank account rather than through a paper check.

• A deposit in a savings institution that earns a fixed interest rate for a set period of time.

• A deposit for which the interest rate changes over time.

What is a 401K Plan?

• A retirement plan offered by one’s employer.

• A tax-deferred retirement savings account

• An individual retirement account allowing a person to set aside after-tax income up to a specified amount each year

• The ability to borrow money in return for a promise of future repayment.

What is a Money Market Account?

• The amount of money you earn on the money you deposit or leave in the bank account, NOT on any interest earned during the year

• Electronic funds that are deposited directly into your bank account rather than through a paper check.

• A deposit in a savings institution that earns a fixed interest rate for a set period of time.

• A deposit for which the interest rate changes over time.

What's a traditional IRA?

• A retirement plan offered by one’s employer

• A tax-deferred retirement savings account

• An individual retirement account allowing a person to set aside after-tax income up to a specified amount each year

• All of the above.

What is a bond?

• Acts like a loan that you must pay back monthly.

• A written promise by to pay back a debt by a specified date, plus interest

• The monthly fee paid to the insurer to be covered under specified terms

• A record of your past borrowing and repayments

What is a Roth IRA?

• A retirement plan offered by one’s employer.

• A tax-deferred retirement savings account

• An individual retirement account allowing a person to set aside after-tax income up to a specified amount each year

• All of the above

Credit is

•  The ability to borrow money in return for a promise of future repayment.

• A record of your past borrowing and repayments.

• A company that collects information about a consumers’ credit history and sells it to lenders.

• The maximum amount you are allowed to charge.

What is the difference between insurances: homeowners insurance, disability insurance, and life insurance

• Homeowner’s Insurance combines property and liability insurance into one policy to protect a home from damage costs due to perils. Life Insurance replaces lost income when you cannot work because of an accident or illness. Disability Insurance pays out a sum of money on the death of the insured person.

• Homeowner’s Insurance combines property and liability insurance into one policy to protect a home from damage costs due to perils. Disability Insurance replaces lost income when you cannot work because of an accident or illness. Disability Insurance pays out a sum of money on the death of the insured person.

• Disability Insurance – insurance that pays out a sum of money on the death of the insured person.

• Life Insurance replaces lost income when you cannot work because of an accident or illness.

A Credit Bureau

• Is a company that collects information about a consumers’ credit history and sells it to lenders.

• Tells lenders about your creditworthiness and has a number rating between 300 and 850.

• Is a record of your past borrowing and repayments.

• Acts like a loan that you must pay back monthly.