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WorksheetsWise Financial Literacy Test Prep (Part 2 of 4)
Total questions: 25
Worksheet time: 13mins
Name
Class
Date
1.
26. When the amount of income on a budget is greater than the amount actually spent on expenses, the person has a
a)
A. surplus.
b)
B. deficit.
c)
C. balanced plan.
d)
D. new liability.
2.
27. When interest is computed once on a dollar amount (the principal), it is
a)
A. simple interest.
b)
B. principal interest.
c)
C. the APY.
d)
D. compound interest.
3.
28. A person decided to have six months of income in an emergency savings account. Is this a good decision?
a)
A. No, because he should place the money in a diversified portfolio.
b)
B. No, because emergency accounts are no longer advisable.
c)
C. Yes, because the money can be used as a down payment when buying a used car.
d)
D. Yes, because the money in the emergency account can be used if he loses his job.
4.
29. Students applying for financial aid to attend college usually need to
a)
A. complete a Free Application for Federal Student Aid (FAFSA) form.
b)
B. obtain a transcript.
c)
C. write an essay.
d)
D. send a credit report from one of the three credit reporting agencies.
5.
30. A person choosing a mortgage usually selects a fixed-rate loan because she knows that
a)
A. the interest rate remains the same for the life of the mortgage.
b)
B. her income will increase within the next three years.
c)
C. the interest rates are going down.
d)
D. her homeowners insurance premiums will be lower.
6.
31. Why does a bank pay interest to a depositor?
a)
A. The bank is able to use deposits to earn profits.
b)
B. It is a requirement of the Federal Deposit Insurance Corporation (FDIC).
c)
C. It helps the bank invest in the local community.
d)
D. It is a benefit of having a bank credit card.
7.
32. It is generally better for a person to buy a home that she can afford than to rent an apartment because she will
a)
A. build equity.
b)
B. have fixed insurance needs.
c)
C. have a lower debt to credit ratio.
d)
D. avoid bankruptcy.
8.
33. Which of the following would be considered an asset?
a)
A. Credit card account.
b)
B. Checking account.
c)
C. Car loan.
d)
D. Student loan.
9.
34. “Paying yourself first” is a strategy to
a)
A. revise goals.
b)
B. make impulse purchases.
c)
C. create a budget.
d)
D. build savings.
10.
35. What kind of income can a person earn from savings accounts at a commercial bank?
a)
A. Wage.
b)
B. Dividend.
c)
C. Interest.
d)
D. Capital gains.
11.
36. Sally won a $200 cash prize at the school science competition. She wants to save the money for her senior trip in three years. It is best for her to save the money during the three years in a
a)
A. checking account, because it is easy to withdraw funds.
b)
B. drawer at home, because it would be safe.
c)
C. savings account, because it would earn interest.
d)
D. certificate of deposit (CD), because it generally earns higher interest.
12.
37. John needs $3,000. He is withdrawing the money today from a $3,000 certificate of deposit (CD) which will reach maturity in six months. It is likely that he will have to
a)
A. pay the Internal Revenue Service (IRS) a penalty.
b)
B. pay the bank a penalty for early withdrawal.
c)
C. pay both the IRS and the bank a penalty.
d)
D. wait for the CD to mature.
13.
38. When a check is returned due to insufficient funds, the check is said to have
a)
A. been postdated.
b)
B. been voided.
c)
C. bounced.
d)
D. cleared.
14.
39. A form of payment that is guaranteed to be as good as cash is a
a)
A. personal check.
b)
B. bank check.
c)
C. credit card charge.
d)
D. promissory note.
15.
40. Deposits in bank savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to
a)
A. $ 50,000.
b)
B. $100,000.
c)
C. $150,000.
d)
D. $250,000.
16.
41. Which one of the following statements is the most accurate about the use of ATM cards?
a)
A. A person can generally get an interest free loan at any bank ATM with no fee.
b)
B. A person can always charge a purchase using an ATM card.
c)
C. A person can get cash anywhere in the world using an ATM with no fee.
d)
D. A person must have a bank account to have an ATM card.
17.
42. Which of the following financial products is good to have so that a person can cover cash needs today?
a)
A. Bonds.
b)
B. Individual Retirement Account (IRA).
c)
C. Life insurance.
d)
D. Regular checking account.
18.
43. A person writes a check for more money than he has in his checking account. In order for the check to be paid by the bank, he needs to have
a)
A. overdraft protection.
b)
B. credit insurance.
c)
C. a joint account.
d)
D. a credit history.
19.
44. Many companies offer a service to electronically deposit an employee’s net pay into his designated bank account. This service is known as
a)
A. barter.
b)
B. amortization.
c)
C. automatic savings.
d)
D. direct deposit.
20.
45. When a person cashes a $300 check and only receives $285, she most likely went to a/an
a)
A. investment bank.
b)
B. check cashing store.
c)
C. savings bank.
d)
D. credit union.
21.
46. A debit card allows a person to
a)
A. pay for purchases directly from a checking or savings account.
b)
B. build wealth.
c)
C. borrow money for a short term.
d)
D. spend more money than deposited in a checking or savings account.
22.
47. The highest interest rate on a loan is charged by a
a)
A. savings bank.
b)
B. credit-card company.
c)
C. pawnshop.
d)
D. investment bank.
23.
48. Electronic banking allows customers to
a)
A. access accounts only during business hours six days a week.
b)
B. perform transactions with the help of a teller during business hours.
c)
C. stop the need to reconcile checking accounts.
d)
D. perform transactions 24 hours a day.
24.
49. When a person asks her bank not to honor a specific check, it is called
a)
A. an overdraft.
b)
B. a stop-payment order.
c)
C. a cancellation.
d)
D. a limit order.
25.
50. What can a person expect as a customer of a credit union?
a)
A. Higher account fees and lower interest rates on loans than a commercial bank offers.
b)
B. Higher account fees and higher interest rates on loans than a commercial bank offers.
c)
C. Lower account fees and higher interest rates on loans than a commercial bank offers.
d)
D. Lower account fees and lower interest rates on loans than a commercial bank offers.
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