Financial Literacy Quiz

Funds in checking accounts are called demand deposits because:

• They can be withdrawn at any time without prior notice.

• They earn a high interest rate.

• They are only available for a fixed term.

• They require a minimum balance.

What is the premium in terms of insurance?

• The amount paid for coverage

• The total coverage amount

• The deductible amount

• The claim amount

A supporter of the progressive tax system in the United States would justify it as opposed to a flat tax because:

• It ensures that those with higher incomes pay a larger share of their income in taxes.

• It simplifies the tax code and makes it easier to understand.

• It reduces the overall tax burden on all citizens.

• It encourages economic growth by lowering taxes for everyone.

Interest charges on loans are:

• A fee paid for borrowing money

• A type of loan

• A government tax

• A savings account feature

A credit score represents:

• A person's financial health

• The amount of money in a bank account

• The number of credit cards a person has

• A person's annual income

An overdraft fee on a checking account is:

• A fee charged when you withdraw more money than you have in your account

• A monthly maintenance fee for keeping the account open

• A fee for using an ATM outside of your bank's network

• A fee for transferring money between accounts

What is "collateral" referencing when determining a person's credit worthiness?

• A person's income

• A person's employment history

• Assets that can secure a loan

• A person's credit score

Establishing and maintaining good credit is important because:

• It allows you to qualify for loans with better interest rates.

• It has no impact on your financial opportunities.

• It is only necessary for large purchases.

• It is irrelevant in today's economy.

When making a new purchase that requires financing, which option would cause the lowest total interest payments?

• 15 year loan length; 8% interest rate (APR)

• 30 year loan length, 8% interest rate (APR)

• 15 year loan length; 5% interest rate (APR)

• 30 year loan length; 5% interest rate (APR)

A person investing a one time lump sum towards retirement would receive the highest total return by:

• investing it from age 45 to 65; receiving 9% compound interest (ROI)

• investing it from age 25 to 65; receiving 9% compound interest (ROI)

• investing it from age 45 to 65; receiving 5% compound interest (ROI)

• investing it from age 25 to 65; receiving 5% compound interest (ROI)