Financial Literacy Final Exam Study Guide

Medicaid is a government-sponsored health insurance program for senior citizens.

• False

• True

Answer explanation

Medicaid is not exclusively for senior citizens; it provides health coverage for low-income individuals and families, including children and disabled persons. Therefore, the statement is false.

Saving up for retirement is an example of:

• A short term goal

• A budget

• A long term goal

• A personal financial plan

Answer explanation

Saving for retirement is a long term goal because it involves planning and accumulating funds over many years to ensure financial security in the future.

A series of equal annual deposits into a bank account is called a(n) ______________________.

• Annuity

• Equality

• Insolvency

• Direct Deposit

Answer explanation

A series of equal annual deposits into a bank account is known as an annuity. This financial term specifically refers to regular payments made over time, distinguishing it from other options like direct deposit or insolvency.

If you make a mistake while writing a check, what should you do?

• Void the check

• Issue a stop-payment order

• Report it to your bank

• Use white-out

Answer explanation

If you make a mistake while writing a check, the best course of action is to void the check. This ensures that the incorrect check cannot be cashed or deposited, preventing any potential issues.

A meeting of the seller, the buyer, and the lender (or representatives from each party) to complete the transaction.

• equity

• deed

• closing

• mortgage

Answer explanation

The term 'closing' refers to the meeting where the seller, buyer, and lender finalize the transaction, making it the correct answer. Other options like 'equity' and 'mortgage' do not describe this specific event.

How many times a year can you obtain a free credit report?

• Once, from the credit bureau of your choice

• Three, once from each credit bureau

• Unlimited, from the credit bureau of your choice

• Zero, unless you have been denied a loan

Answer explanation

You can obtain a free credit report three times a year, once from each of the three major credit bureaus: Equifax, Experian, and TransUnion. This allows you to monitor your credit regularly.

Which of the following is NOT a disadvantage of credit?

• The temptation to buy more than you can afford

• The potential damage to your credit score

• The option to buy now, pay later

• The cost to borrow

Answer explanation

The option to buy now, pay later is not a disadvantage of credit; it can be a benefit, allowing consumers to make purchases without immediate payment. The other options highlight potential risks associated with credit.

____________refers to looking at prices and characteristics of products with similar features from different brands and sellers.

• Impulse buying

• Price negotiation

• Comparison shopping

• Open dating

Answer explanation

Comparison shopping refers to evaluating prices and features of similar products from various brands and sellers, helping consumers make informed purchasing decisions.

Which of the following is a smart buying strategy?

• Purchasing products past their expiration date

• Timing the purchase based on seasonal offers

• Buying the cheapest product all of the time

• Making only the minimum monthly payment

Answer explanation

Timing the purchase based on seasonal offers is a smart buying strategy as it allows consumers to take advantage of discounts and promotions, maximizing savings. The other options can lead to poor financial decisions.

If you think your credit card was stolen, you:

• Can dispute the charge

• Should take immediate legal action

• Must pay the full amount

• Should close your account immediately

Answer explanation

If you suspect your credit card is stolen, you should close your account immediately to prevent further unauthorized charges. Disputing charges is also an option, but securing your account is the priority.