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WorksheetsFinancial Literacy Review
Total questions: 41
Worksheet time: 21mins
A budget can help you reach a final goal by
Showing you how you can earn more income
Allowing you to see where you can cut back on spending
Giving you tools to change your fixed expenses
All of the answers
Money in your emergency fund could be wisely used
to pay for a vacation
to pay a down payment on a new car
to pay for an unforseen health expense
All of the answers
A value can be described as:
Something basic for your survival
Something you desire to make your lie more comfortable
A willingness to give up something now in exchange for a future benefit
A belief or idea you consider important or desirable
Overdraft protection on a checking account
Is always a free service provided by banks
Is like a credit card you don't use until your checking account balance gets below a zero balance
Is always a waste of money because people don't bounce checks anymore
Should be bought by everyone, even if they always keep a significant amount of money in their account.
Identity theft is important to be aware of because once your identity is stolen:
You must pay for all of the purchases that were made on your account that you didn't make
It is impossible for you to ever have a good credit rating again
It can be fraudulently sold, and other people can use your credit rating to obtain credit cards and loans in your name
All of the answers
The basic rule of a risk to return relationship in investing is that the
Lower the risk, the higher the rate of return
Higher the risk, the higher the rate of return
Higher the risk, the lower the rate of return
Risks and returns on investments are not related
Zero liability credit card protections means
If you are unable to pay your credit card bill one month during a year, you can pay $0 and you will not be charged a fee for not making your monthly credit card payment
Only members of your family are authorized to make purchases using your credit card
There is no limit on the cost of purchases you can charge to your credit card account each month
You are not responsible for fraudulent charges to your credit card account (purchases you didn't authorize)
A good password
is an easily remembered number such as your phone number or Social Security nunmber
should be written down in your wallet so you have it with you wherever you go
includes a combo of letters and numbers
should be the same for all your online accounts
An example of an investment that is convenient, professionally managed, and allows for diversification is called a(n):
Certificate of Deposit
Stock
U.S. Savings Bond
Mutual Fund
Which of the following statements relates to the universal default clause?
If you miss one car loan payment, your car can be repossed
If you are late with any loan payment, all of your credit card companies may increase your interest rate.
Someone who files bankruptcy must still pay any student loans
A minor may need an adult to co-sign a loan
Mary wants to move into her own apartment after graduating from high school, but she is worried that she won't be able to rent an apartment without significant credit history. What can Mary do to start using credit wisely?
Apply for a store credit card
Apply for several major credit cards
Close her checking account to avoid bouncing a check
Rent an apartment with a friend who will sign the lease
The maximum amount you can charge on a credit card is called the
Capacity
Collateral for the card
Credit limit
Credit ratio
Of the following items, which is the best strategy to reduce excessive debt?
Make regular minimum payments on each loan and credit card until the balances are paid
Pay off loans with the highest interest rates first
Use one large loan to pay off all of your other debts
File Chapter 7 bankruptcy
A business that gives you a loan is:
A creditor
A credit counseling agency
A credit bureau
A debt collection agency
You need to deposit money into an account to use all of the following services except
Credit card
Debit card
Savings account
Checking account
After you write your signature on a check to pay a bill as the drawer, who can legally cash the check?
You and the payee
The bank or credit union of the drawer
The drawee
The payee
Which of the following is the best definition of a minimum payment on a credit card?
The smallest payment that will keep a credit card holder in good standing with the lender
A fee that must be paid whether the card is used or not
Only the interest on the purchases that were made on the credit card
A low introductory payment, offered for the first few months until the card holder establishes good credit
If you "bounce" a check when you make a purchase at a clothing store, what could happen?
You will be charged a fee by the store
You will be charged a fee by the bank
Your bank may take away your debit card privileges
You will be charged a fee by BOTH the store and the bank
Writing "For Deposit Only" and then your signature below those words is an example of a ______________ endorsement
Blank
Restrictive
Deposit
Special
Why is it important to write the numerical and written amounts to the left of the assigned space on a check?
So the check looks neat
So the bank won't get confused
So other numbers can't be added to increase the amount of the check
None of the answers; you should write the amount in the middle of the assigned space
Your FICO score:
Depends mostly on the amounts you owe and your payment history
Only includes debt that you have accumulated in the past year
Is better if you have not had credit accounts for a long period of time
Depends on amounts you owe, payment history, and only includes debt accumulated in the past year
This type of insurance pays to fix damages that you cause, but does not cover your own car:
No-fault
Collision
Liability
Comprehensive
This number helps you compare loans:
GNP
APR
FICO
GPA
Purchasing a car rather than leasing a car will usually cause a person's monthly loan car payments to be:
Lower
Higher
Be higher only for the first 5 months
It doesn't matter if you purchase or lease a car, the monthly payments are exactly the same
If a person in your household was bitten by a dog, which type of insurance would you be covered under?
Comprehensive insurance
Health insurance
Homeowner's insurance
Disability insurance
An insurance deductible is
the discount you receive from your premium
the amount that is deducted when you buy a policy
the discount received by the person whose car you damage
the amount of the loss you pay
Social Security replaces what percent of most people's pre-retirement income?
25%
40%
50%
100%
When should you begin saving for retirement?
Twenty-five years before you plan to retire
Thirty-five years before you plan to retire
When you begin earning at least $85,000 a year
As soon as you enter the workforce
The Dow Jones Industrial Average is a collection of:
Stock from 25 corporations in New York City
Stock from 30 corporations in the U.S.A.
Stock from 30 corporations in Europe
None of the answer choices
U.S. savings bonds:
are risky investments
have the same investment rates as stocks
are purchased at face value
are worth face value at maturity
Inflation is:
the rise in the cost of purchasing everyday goods
the annual rate of return on a savings account
the reason most people get ahead by saving money under their mattress
always 5% per year
A bear market
is when people rush to buy stocks
is when interest rates are not as attractive as the growth
is when long-term investors sell their stock
is an opportunity for long-term investors to buy stocks of major corporations at lower prices
Net pay is
money earned before taxes are deducted
money earned after taxes have been deducted
another term used for social security taxes
another term used for NJ state taxes
An amount of money spent to buy something or do something that is the exact same amount every month is a
Fixed expense
Flexible expense
Periodic expense
Term expense
By law, you are entitled to a free credit report from each of the main credit reporting agencies once every 5 months.
True
False
The higher the interest rate, the lower the total amount you pay to buy something on credit that you will pay off over a period of two years.
True
False
The two most important factors for determining your credit score are payment history and amounts owed.
True
False
In New Jersey, comprehensive auto insurance is not required by law if you do not owe any more money for the purchase of your automobile.
True
False
When you use a debit card, you give the bank permission to immediately remove money from your checking account.
True
False
Online banking is available every day except for Sunday
True
False
Credit Unions and Banks provide the same types of financial services such as savings and checking accounts, debit and credit cards, and loans.
True
False
