Financial Literacy Quiz

According to the lesson, what is a benefit of saving and paying cash for large purchases early in life?

• It helps in avoiding debt in the future.

• It allows for larger investments in mutual funds.

• It increases the chances of winning a lottery.

• It guarantees a return of $3.6 million in a mutual fund.

Aside from cars, what are some common large purchases that often financing or payment options should be avoided, as mentioned in the lesson?

• Furniture, appliances, smartphones, boats, etc.

• Books, stationery, clothing, and groceries.

• Stocks, bonds, mutual funds, and other investments.

• Vacation packages, gym memberships, and dining out.

What is the main idea of planning ahead for large purchases and saving over time?

• It allows you to avoid paying interest on credit card purchases.

• It ensures that you can buy a car with a 72-month loan.

• It helps you to spend more money on prom dresses.

• It requires you to take out a loan for every large purchase.

What is the advantage of buying your car with cash according to the text?

• You can avoid a high-interest 72-month car loan.

• You can get a stick-haired salesman to lower the price.

• You can pay for the car over a longer period of time.

• You can ensure the car retains 60% of its value after five years.

What does the Third Foundation suggest about car payments?

• Car payments are a necessary part of life.

• Car payments should be avoided if possible.

• Car payments are just part of life and there's nothing you can do about it.

• Car payments are more beneficial than saving up.

According to the text, what is a downside of not saving and instead using credit to make a large purchase?

• You can pay off the purchase sooner.

• You may end up paying more than the item's worth over time.

• You will have more money to spend on other things.

• You will build good credit faster.

What is a key piece of advice given before making a large purchase like a car or a new laptop?

• Always choose the item with the lowest price.

• Make sure to borrow money to cover the full cost.

• Be very intentional any time you plan to drop a serious chunk of change.

• Rush into the purchase to take advantage of a sale.

Why is it important to avoid rushing into a big purchase according to the text?

• You might get a better interest rate if you wait.

• You may end up buying something you don't actually want or need.

• It's easier to negotiate a lower price when you're in a hurry.

• Retailers offer discounts for quick decisions.

What is the disadvantage of zero-interest or '12 months same-as-cash' promotions mentioned in the text?

• They offer a realistic view of the total cost of ownership.

• They require you to pay extra interest rates if you don't pay the entire amount within the promotional period.

• They always provide the best financing option.

• They encourage you to save money before making a purchase.

What is the main advantage of saving up for large purchases instead of borrowing money for them?

• You can buy more items at once.

• You avoid paying interest.

• You can get a discount on the purchase.

• You can make monthly payments.