Financial Literacy Final Exam Study Guide

In the future, the cost of things you buy doubles. How much will you be able to buy in the future in comparison to today?

• Less
• The same
• More

In the future, the cost of things you buy doubles AND your salary doubles. How much will you be able to buy in the future in comparison to today?

• Less
• The same
• More

A friend from college is thinking about applying to the same company where you work. She asks you for information about the business’s compensation package. She is asking about…

• The starting salary you were offered compared to what you earn now
• How much you will pay in taxes for the year
• Your health and dental insurance premiums
• The total salary, insurance, retirement, and other benefits the company offers

Which best describes future earnings potential?

• Comparison of entry-level and median salaries in the field

• How much the CEOs of the top three companies in this industry earn
• 1. The global workforce size in his chosen field

• 1. The number of local colleges offering relevant courses

Which statement below best describes the difference between gross income and net income?

• Gross income is what you earn if you work full-time, and net income is what you earn if you work part-time
• Gross income is how much every employee earned during that pay period, and net income is how much you earned during that pay period
• Gross income is the total amount you earned, and net income is your earnings minus taxes and other deductions
• Gross income is reported by the federal government, and net income is reported by the state government

Which form do you need to complete and submit to the IRS to file taxes?

• I-9
• W-4
• 1040
• 2080

At the federal level, how are income taxes determined?

• Equal for everybody

• based on income brackets

• they're optional

• only for households earning over $40k

Which item would most likely go in the “fixed expenses” category of a budget?

• going out to a movie with friends

• receipts from clothes shopping

• cell phone payment

• eating out at restaurants

Which statement is most accurate about Roth IRAs and mutual funds?

• a Roth IRA is guaranteed to retire with more money

• Roth IRA is riskier but will possibly lead to more money at retirement

• Mutual funds are guaranteed to retire with more money

• Mutual fund’s savings will match the rate of inflation

One way to minimize risk when investing is...

• Invest in a brand new company you think will perform well

• Make sure your portfolio is diversified over multiple asset classes

• Attempt to time the market by buying all her shares on one day and then selling them all another day
• Only invest in international companies