WorksheetsWise Financial Literacy Test (Practice Test)
Total questions: 59
Worksheet time: 58mins
A person who has a car can AVOID having the car repossessed by
Having the car serviced
Driving carefully until loan is repaid
Taking a driver's education course
Making payments in full by the due date
A person wrote a check for $800 but only had a balance of $700 in their checking account. The most likely reason the check did not bounce is because he/she has
A debit card from the bank
A certificate of deposit at the bank
Excellent credit
Overdraft Protection
In order to live on a monthly budget, a person should
Invest in the stock market
Be a risk taker and be charitable
Be responsible and use restraint
Use the Rule 72
If a person has a credit score of 780, he/she is more likely to
Be charged a lower interest rate for a loan
Be charged no interest for a loan
Need to have at least 2 credit cards to get a loan
Need proof of home ownership to get a loan
The cost of borrowing money is commonly referred to as the
Rate of inflation
Interest rate
Time value of money
Introductory rate
If a person decides to lend money to a friend, it is strongly advised that the person lending the money
Charge a higher interest rate than banks are charging for a loan
Has a good credit score
Ask the borrower to sign an agreement explaining the terms of the loan
Ask the borrower to not have any unpaid bills
Even though the United States is becoming a "cashless society", it is still important to have some cash at home because:
it is the best way to save for a large purchase
the money will increase in value overtime
the money can be used if ATM's become disabled during a disaster
It is a way to improve a person's credit score or net worth
An advantage of requesting a free annual credit report is that the person can
determine personal net worth
check the report for errors
earn higher interest on savings
use the report to request a salary increase
Why does a corporation issue bonds to the public?
it wants to borrow money and is willing to pay interest on the loan
it wants to lend money and to collect interest on the loan
it wants to decrease the price of its stock
it wants to increase the price of its stock
A recent high school graduate was denied $5,000 car loan. The graduate has a better chance of being approved for a loan by:
applying for a loan from the Federal Deposit Insurance Corporation (FDIC)
applying for a loan from the Securities and Exchange Commission (SEC)
having a person with a good credit score cosign for the loan
requesting a larger loan than is actually needed
To control his spending, a man withdraws $20 from his checking account three times a week using the ATM at his bank. Therefore, this man should expect to pay:
a flat service fee for withdrawals, since multiple transaction s were made within one week
a fee based on the amount of money withdrawn
a fee based on his banks's rate of interest
no fee for the withdrawals since they all took place at his bank
The $25,000 that a person won on a TV game show is considered
windfall income
interest income
dividend income
nontaxable income
If a person has a $1,000 line of credit, the person can charge:
no less than $1,000 a month on the card
up to $1,000 on the credit card
$1,000 at each place that accepts the credit card
$1,000 without having to pay interest on the credit card balances
A person uses his credit card to obtain a cash advance. The interest charge on the amount of the cash advance is likely to be:
the same as the card's monthly late fee
lower than the card's interest rate on the unpaid balances
higher than the card's interest rate on the unpaid balances
the same as the card's annual membership fee
In a managed health care insurance plan, such as health maintenance organization (HMO), the individual member receives:
medical coverage only for hospital care in the emergency room
a specific number of coupons to be used when medical treatment is necessary
medical treatment of a specified co-payment
a bill 100% of the cost to visit a doctor or medical office
When making a list of his assets, a person should include:
a student loan
mortgage payments
stocks
credit card debt
When making a list of your liabilities a person should include:
stock investments
checking account balances
mortgage loan
money market account balance
Which of the following statements is true about a person who owns real estate, bonds and stocks and has a savings account?
he has a diversified financial portfolio
he has a budget with more expenses than income
he should not make nay more investments
he should not take any risk when investing
A person has been hired for a job that pays $300 a week. When the person receives her paycheck, it is for $270. This paycheck is the person's:
net pay
gross pay
vacation pay
hourly pay
Which of the following is an example of a typical deduction taken out of your gross pay?
state and federal income taxes
social security tax
health insurance premium
all of the above
Banks play an important role in the United States economy by:
making loans to businesses
insuring depositors against loss of personal property
advising people when to retire
preventing inflation
A budget should include a person's:
credit score
net income and expenses
investment portfolio
gross income and assets
You've written a check for your power bill and realize you've lost it before even getting it in the mail; if you place a stop payment on the check, you can expect your bank to:
process and pay the check if and when it comes through the bank
close your checking account
charge a minimum fee for the stop payment
ask you to open another account
Sometimes a vendor or creditor may ask you to pay a bill with a certified check; you will have to get a certified check from your local:
grocery store
US post office
western union
bank or credit union
What does the phrase, "pay yourself first," mean?
spend all the money you can
save all the money you can
give away all the money you can
set aside money for savings each month BEFORE paying any other bills
John puts $10,000 down payment on a $100,000 home. Jane puts $20,000 down payment on a $100,000 home. They both have 20-year mortgages at the same fixed-interest rate. Which is a true statement about their mortgages?
John's payment will be lower than Jane's
Jane's payment will be lower than John's
the payments will be the same for John and Jane
John's payment will vary from month to month
High interest rate loans are usually given to persons who:
have a credit score of of 780 or higher
own a home
own a car
have a poor credit score
A college student is planning to take a student loan from the government; payments on most of these loans are:
due one month after a loan is approved
due at the end of each school semester
not due until after the student leaves school or graduates
not required if the student maintains an A or B average
When a college requires that students pay their application fees with money orders, it also benefits students because:
cash can get lost or stolen in the mail
buying a money order requires 2 pieces of personal identification
checks cannot be cancelled by anyone
there is no fee for buying a money order
Money in the form of cash or currency acts as a:
way to equalize income
method to regulate spending
medium of exchange
symbol of democracy
To AVOID being charged a late fee on a credit card bill, a person must pay the payment:
on the day the credit card bill is due
by mail on the date the credit card bill payment is due
so that the payment is received by the credit card company on or before the due date
a week after receiving the bill from the credit card company
What should a person do when they receive a store gift card?
find out if the store is allowed to reduce the value of the store gift card for any reason
apply for the store's credit card to use when making a purchase with the store gift card
exchange the store gift card for cash if this is a store they do not like
avoid using the store gift card so it increases in value by earning interest
One responsibility of the Federal Reserve System (FED) is to:
limit the number of depositors a bank can have
encourage banks to be open on weekends and nights
directly influence interest rates charged by banks
provide loans to individuals that have declared personal bankruptcy
Which of the following is considered a source of personal income?
interest charged on a credit card
capital gains from the sale of stock or real estate
money received from student loans
money borrowed to purchase a car
Car insurance companies are likely to place drivers in the "assigned risk pool" if they:
are over the age of 65
are born outside of the US
have had several recent accidents
have teenage children
The New York Stock Exchange (NYSE) is a:
list of blue chip stocks
place to barter goods and services
marketplace where stocks are bought and sold
government regulatory agency
A person who wants to begin investing part of his salary for retirement should ask his employer if the company has a:
healthcare plan
childcare plan
tuition reimbursement
401(k) plan
A benefit of buying term life insurance as opposed to whole life insurance is that term insurance usually:
offers a greater amount of insurance coverage for a specific period of time at a lower cost
builds more cash value over time for the policy holder
provides lifetime insurance coverage for a fixed cost per year
combines lifetime insurance coverage with an opportunity for building savings at a reasonable cost
A woman is offered two jobs; one with a salary of $27,000 plus benefits and the other at $30,000 with no benefits. It would be a wise financial decision for her to take the:
$27,000 job, if the benefits package is worth more than the $3,000 difference in salary
$27,000 job, because her taxes will be lower
$30,000 job, since she has no need for medical benefits because she is healthy
$30,000 job, because if she is making a higher salary, she is guaranteed quarterly sales increases
Generally, a student who drops out of high school without graduating and who does NOT get additional training or education is:
likely to have fewer job opportunities than a high school graduate
likely to earn more money over a lifetime than a high school graduate
well prepared to take advantage of opportunities for career advancement
well prepared for a professional career
If you have a $500 deductible on your car insurance and you have a wreck that causes $4,000 in damage to your car, how much will the insurance company pay?
$4,500
$4,000
$3,500
$5,000
When you use your debit card to make a purchase, when does the money come out of your account?
immediately
10 days
2 weeks
15 days
Why does the US Treasury change the currency format from time to time?
to make it look better
to make it last longer
to help cut down on sophisticated counterfeiting
to just change things up
If you make a cash deposit for $10,000 or more in your bank account, your bank is obligated to notify:
your bank's home office
the Federal Reserve Bank for your region/district
the US Treasury Dept.
the FDIC
The federal government created the FDIC to protect:
people's homes up to $250,000 in value
people's stock investments up to $250,000
their bank deposits up to $250,000
their bank deposits up to $100,000
When you receive an inheritance or money from a life insurance policy you are the:
receiver
beneficiary
first born
holder
Which of the following is an advantage of a Roth IRA?
earnings are tax free
the annual contributions you make are not tax deductible
you have to wait to make withdrawals w/o tax penalty
you can't make contributions to the Roth after the age of 70
If you have 10 shares of stock with one company and they are paying a declared dividend of $3, you will earn:
$3
$13
$30
$10
Discretionary income is:
gross pay
net pay
windfall money
money left after paying the essential bills
You should never write a check payable to "cash" because:
it is no good
the bank won't accept it
anyone can cash the check
automatically voided
Why should you never sign a blank check?
it is no good
handwriting won't match
automatically voided
anyone can fill out the check for any payee and for any amount
What is the advantage of having your paycheck electronically deposited?
the bank charges a fee for this service
your employer charges a fee for this service
fast, efficient and guaranteed deposit on your designated payday
you cannot access the funds for 24hrs after the deposit is made
When you make an ATM withdrawal, when does the money come out of your account?
within 12 hrs
within 24 hrs
within 48 hrs
immediately
Why must you show identification now when you open a bank account?
every customer is not known personally
you are new to the community
now required by law
will not loan you money without identification
If you and your spouse have another baby, how can you increase your net pay?
hope for a raise
update your W-2
updated your 1099-I
increase the exemptions on your W-4
A good credit score is 780 and above
true
false
High interest rate loans are typically given to people with a poor credit score
true
false
One good reason to use a credit card is to build credit history
true
false
CD's (certificates of deposit) do not require a minimum deposit
true
false
