Financial Literacy 23/24 S2 Final.

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1. Which of the following is true about fixed and adjustable-rate mortgages?

• Fixed-rate mortgages have a constant payment every month, but an interest rate that increases throughout the term of the loan
• Fixed-rate mortgages have a fixed interest rate for a few years, after which time the interest rate fluctuates according to general market conditions
• Adjustable-rate mortgages have a fixed interest rate for a few years, after which time the interest rate fluctuates according to general market conditions
• The two mortgages work the same way but are called different names depending if they come from a bank or a credit union

2. Credit card disclosure: "Your due date is at least 25 days after the end of the billing cycle. We will not charge you interest on new purchases provided that you have paid your previous balance in full by the due date each month." Identify the true statement.

• If you make the minimum payment on your card within the 25 day period, the credit card company will not charge you interest
• If you pay your previous balance in full after the due date, the credit card company will not charge you interest
• 25 days is an exceptionally long period without paying a credit card bill
• The 25 days after the end of the billing cycle is referred to as the grace period

3. Which of the following statements is true about this Schumer Box?

• Depending on your creditworthiness, the APR for a borrower will always either be 8.99%, 10.99% or 12.99%
• There is an introductory APR that is valid only for 1 year, but then the permanent APR is lower than that at 8.99%.
• You will never be charged an APR higher than 14.99%
• A 28.99% APR may be applied to your account for late payment

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

• Making a mistake will disqualify you from receiving future refunds
• 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

5. 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 taxes?

• W-4
• W-2
• I-9
• 1040

6. Which statement correctly describes taxable income?

• Taxable income is the sum of all income a person earns
• Taxable income is always equal to or greater than a person's gross income
• Taxable income is gross income minus deductions and exemptions
• Taxable income includes all personal expenses and investments

7. 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?
• What state do you live in?
• Are you claimed as a dependent on anyone else's tax return?