Banking and Finance Quiz

What is the purpose of a checking account?

• Long-term savings

• Everyday transactions and general spending

• Investment growth

• Loan repayment

Name two features most checking accounts come with.

• Credit card and loan

• Debit card and checkbook

• Savings bond and stock options

• Mortgage and insurance

What happens if you withdraw more money than is in your checking account?

• You earn interest

• You receive a bonus

• You risk overdraft fees or having a bounced check

• Your account is closed

What is one benefit and one drawback of a savings account?

• Benefit: High risk, Drawback: No interest

• Benefit: Earn interest, Drawback: Limited withdrawals

• Benefit: Unlimited withdrawals, Drawback: No interest

• Benefit: No fees, Drawback: High risk

What is a credit limit?

• The minimum payment required

• The maximum amount of money you can spend on a credit card account

• The interest rate on a loan

• The amount of cash back you earn

What is the difference between a fixed-rate and variable-rate loan?

• Fixed-rate loans have fluctuating interest rates, while variable-rate loans are constant

• Fixed-rate loans have constant interest rates, while variable-rate loans can fluctuate

• Both have the same interest rate

• Fixed-rate loans are only for short-term, variable-rate for long-term

What is the purpose of an amortization table?

• To show investment growth over time

• To display loan payment division between principal and interest over time

• To calculate tax deductions

• To track credit card rewards

What happens if you default on a loan?

• Your credit score drops, and the lender can take legal action or repossess assets.

• Your credit score improves, and you receive a bonus.

• The lender forgives the loan, and you owe nothing.

• You automatically qualify for another loan.

How does a co-signer help someone qualify for a loan?

• A co-signer guarantees the loan, reducing the lender's risk.

• A co-signer pays off the loan immediately.

• A co-signer increases the interest rate.

• A co-signer eliminates the need for a credit check.

What is the highest credit score range?

• 800–850 (Exceptional).

• 600–650 (Average).

• 700–750 (Good).

• 500–550 (Poor).