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WorksheetsPersonal Finance Midterm PRACTICE
Total questions: 116
Worksheet time: 1hrs 27mins
What is a budget?
A type of savings account
A way to invest for retirement
A fund for emergencies
A financial plan that defines expenses for a period of time.
What is an emergency fund?
A savings account set aside for unexpected situations.
A way to invest for retirement.
Something most people don't need, because emergencies are rare.
An investment account that can grow over time.
Emergency funds are calculated based on:
Monthly Expenses
Monthly Income
Retirement Planning
Investing for College
How many months of expenses should be set aside for an emergency fund?
3-6 months
6-12 months
12-18 months
1-3 months
Which of the following are characteristics of money used as savings, including emergency funds?
Safe
Accessible
Liquid (in the form of money)
Invested in risky business ventures
What is required for money to be SAFE? (select all that apply)
Only the owner should be able to get it
It can't go greatly down in value.
It can grow in value over time
Anyone can steal it easily
What is meant by money being ACCESSIBLE? (select all that apply)
Anyone can get it easily
The owner can get it quickly
It takes a long time to get the money
The owner can get it easily
What is meant by money being LIQUID? (select all that apply)
It's stored in the form of physical money
It's stored in the form of electronic money
It's invested in something that must be sold to obtain money
It's invested in something that's valuable, but not money
Why should we INVEST instead of SAVE for retirement?
Investing money can make it grow in the long term.
Investing is safer than saving.
Saving is too risky for retirement.
Investing is more fun than saving.
Why shouldn't we invest our emergency fund or other short-term savings?
Investments are risky and can drop in value, especially in the short term.
Investments are safe and can grow in value, especially over the long term.
We should invest all of our money so it can grow quickly and we can become rich.
We should never invest any money because we could lose it all.
Interest is:
A charge for lending money to a bank
The amount owed for borrowing money
The amount added into your savings when you open a bank account
A charge for the convenience of accessing money stored in your bank account
Which should you choose if you want the best rate of return on your interest?
Annual Compounding
Semi-annual Compounding
Monthly Compounding
Daily Compounding
To earn as much interest as possible, you should open a savings account that earns ___ interest and has the ____ interest rate
compound;lowest
compound;highest
simple;lowest
simple;highest
what is the typical relationship between time and interest
Longer time period usually equals higher interest rates
Shorter time period usually equals higher interest rates
Longer time period usually have no effect on interest rates
Shorter time period usually have no effect on interest rates
John just opened a savings account and wants to maximize the account of interest he earns. which of the following actions would enable him to earn more interest?
Selecting an account with the high interest rate
Leaving his money in the account for a long period of time
Transferring money into his checking account each month
Both A and B
Which of the following is not one of the responsibilities of the federal reserve?
Supervising the Reserve banks
Maintaining a stable banking system
Setting the nation's monetary policy
Establishing the federal budget
Which type of financial institution typically has membership requirements?
Credit Union
Online Commercial Bank
Commercial Bank
Federal Reserve Bank
Which type of account is typically the most liquid?
Checking account
Savings account
Certificate of Deposit
Exchange Traded Fund
Which of the following is a primary responsibility of the federal reserve bank?
Establish monetary policy
Write monetary laws
Collect taxes
Print money
Savings accounts usually offer____ interest rates than checking accounts. It is ______ to access your money in a savings account than in a checking account
lower;harder
lower;easier
higher;harder
higher;easier
Which type of account will typically have the highest interest rate?
Checking account
Savings account
Money Market account
Certificate of Deposit
The three parts of the federal reserve system are the reserve banks, the federal open market committee, and the :
Board of Governors
United States Mint
Department of the Treasury
Secretary of State
Which of these fees would likely be the highest
Overdraft fee
Account transfer fee
Monthly service fee
ATM fee
Which of the following is a unique feature of credit unions
Credit unions are typically owned and run buy their members
Credit unions limit membership to certain people or groups
Credit unions offer a wide variety of banking services
Both A&B
The numbers on the bottom of a typical check represent all of the following except
Social Security number
Routing Number
Account Number
Check Number
What part of a check is the least important?
The check number
Signature line
Memo line
Routing number
How often should you typically monitor your checking account?
Monthly
Yearly
Daily
Every three months
Which of the following represent typical account fees?
ATM fee
Service fee
Minimum balance fee
All of the above
Which of the following is not a type of bank?
Credit Union
Online Bank
Payday Lender
Retail Bank
What's the best strategy for voiding ATM fees
Only use ATMs close to your house
Only use ATMs to withdraw cash
Only use ATMs in your banks network
Only use ATMs you have used before
which of the following is not a core component of the Federal Reserve Bank?
Board of Governors
Regional Reserve Banks
Federal Open Market Committee
Department of the Treasury
what is the purpose of balancing or monitoring your checking account?
to find out which checks you have bounced
to help you calculate how much money you have in your account
to keep an estimation of how many checks you right
to stop identity theft from occurring
which type of account typically has low liquidity?
checking account
savings account
money market account
certificate of deposit
the best way to ensure the accuracy and safety of your accounts is to:
monitor your online accounts regularly
shred your paper account statements weekly
call your customer service center daily
balance your checkbook annually
with a traditional savings account, you will be charged a fee if:
you deposit too much money at once
you withdraw money too often
you open an account online
you close the account
Interest is:
a charge for lending money to a bank
the amount owed for borrowing money
the amount added into your savings when opening a bank account
a charge for the convenience of accessing money stored in your bank account
Anthony is deciding between different savings accounts at his bank. He has four options, based on how frequently interest compounds. Which should he choose if he wants the best rate of return on his interest?
Annual Compounding
Semi-Annual Compounding
Monthly Compounding
Daily Compounding
What is the typical relationship between time and interest rate?
Longer time period usually equals higher interest rates.
Shorter time period usually equals higher interest rates.
Longer time periods usually have no effect on interest rates.
Shorter time periods usually have no effect on interest rates.
Tamara has $500 she is looking to save for a class trip. She wants to earn the most possible interest and will not need access to her money for a full year. Which type of savings account will be best for Tamara?
Certificate of Deposit (CD)
Money Market Account
Savings Account
Checking Account
Which type of account typically has very high liquidity, low or no interest, and low minimum balance?
Checking Account
Money Market Account
Certificate of Deposit (CD)
Investment Retirement Account (IRA)
The purpose of a budget is to:
help you plan how you will spend the money you earn or receive.
stop you from spending too much money.
increase the balance of your savings account
tell you how much you owe the government in taxes
Which of the following is not one of the responsibilities of the federal reserve?
Supervising the Reserve banks
Maintaining a stable banking system
Setting the nation's monetary policy
Establishing the federal budget
Which type of financial institution typically has membership requirements?
Credit Union
Online Commercial Bank
Commercial Bank
Federal Reserve Bank
Which of the following is a primary responsibility of the federal reserve bank?
Establish monetary policy
Write monetary laws
Collect taxes
Print money
Which of these fees would likely be the highest
Overdraft fee
Account transfer fee
Monthly service fee
ATM fee
How often should you typically monitor your checking account?
Monthly
Yearly
Daily
Every three months
What part of a check is the least important?
The check number
Signature line
Memo line
Routing number
What's the best strategy for voiding ATM fees
Only use ATMs close to your house
Only use ATMs to withdraw cash
Only use ATMs in your banks network
Only use ATMs you have used before
Which of the following is a variable expense?
Student loan payments
Groceries
Rental payments
Health insurance
the best way to ensure the accuracy and safety of your accounts is to:
monitor your online accounts regularly
shred your paper account statements weekly
call your customer service center daily
balance your checkbook annually
Which of the following is true?
Checks and Debit Cards both withdraw money directly from a bank account
Checks are the most widely accepted form of payment
Debit Cards often have a higher interest rate
Debit Cards offer the highest level of fraud protection
Which of the following payment types require you to pay upfront?
Money order
Cashier's check
Pre-paid card
All of the above
If you are planning to carry a large balance on your credit card, which of the following features should you look for?
Low APR
Low balance transfer fees
Lots of credit card rewards
A large credit limit
What is a credit limit
The required payment to your credit card company
The amount of interest you pay
The maximum amount you can charge each billing cycle
How many credit cards you can own
Which of the following can increase your credit card's APR
Paying the minimum
Missing a credit card payment
Paying off the full balance
Cashing in on rewards points
Which of the following statements about credit scores is TRUE?
a. Credit scores reflect how likely individuals are to repay their debts.
b. Credit scores range from the low 300’s to the mid 800’s.
c. Each person has three credit scores.
d. All of the above.
All of the following make up the big three credit reporting agencies EXCEPT:
Equifax
TransUnion
Experian
Federal Reserve
Which of the following actions has NO impact on your credit score?
a. You inquire about a credit card charge.
b. You use a large percentage of your credit limit.
c. You opened several new credit cards last week.
d. You send in your credit card payment a couple days late.
Which of the following actions has NO impact on your credit score?
a. You inquire about a credit card charge.
b. You use a large percentage of your credit limit.
c. You opened several new credit cards last week.
d. You send in your credit card payment a couple days late.
True or False. Free money. One of the best places to get free money is through grants and scholarships. Since these aren't loans, you can use them to pay for school expenses like tuition without having to pay anyone back.
True
False
Good credit is usually required for which of the following:(Check all that apply)
buying a new car
adopting a new pet
getting a credit card
buying a house
buying used furniture
Which statement is most correct when choosing to rent or buy a home?
Buy a home because it is better than renting one.
Rent a home only until you can afford to buy one.
Rent a home because it is better than buying one.
Buy or rent a home based on your individual circumstance.
Which of the following should you take into consideration when deciding to buy or lease a car? (Check all that apply)
Cost of the car
Car interior and features
Monthly loan payment
Down payment
Your monthly budget
Which form is your employer required to send to you before you file your tax return?
Yearly paycheck stub
1040EZ
W-2
W-4
When referring to student loans, what is a grace period?
The time period between graduating college and starting your first job when you don't have to pay back the loans
The period after graduating or leaving school before you must begin paying back student loans
The amount of time you have to pay back the entire student loan amount
None of these
The regular payment for an insurance policy is called a:
co-payment
deductible
premium
claim
Which of the following provides the best protection against identity theft?
Never use a credit card
Open up a new bank account every year
Pay all bills with cash only
Shred documents that contain personal information
When buying a stock in a company, you are:
diversifying your portfolio
investing in an index fund
loaning money to a company
buying a portion of a company
Which of the following payment types require you to pay upfront?
Money order
Cashier's check
Pre-paid card
All of the above
which of the following statements comparing debit cards to credit cards is true
Debit Cards allow you to draw funds directly from your checking account
Debit Cards typically offer greater fraud protection
Debit cards never require a signature
Debit cards have higher interest rates
Which of the following is not true about credit cards
They offer the highest level of fraud protection
They are the best payment type to use when trying to stick to a budget
You can be charged a fee if you are late making a monthly payment
Some offer rewards, like cash back or airline miles
Which payment method typically charges the highest interest rate
Credit cards
Cashier's check
Pre-paid cards
Payday loans
Which of the following tells you how much your credit card interest will be if you only pay the minimum balance each month
Late fee
Annual membership fee
Balance transfer fee
Annual percentage rate
Which payment type can help you stick to a budget
Credit cards
Debit cards
Payday loans
Cash advances
Which of the following will happen if you miss a monthly credit card payment
You will be charged a late fee
You will lose reward points
Your APR will increase next month
Both A & B
If you are planning to carry a large balance on your credit card, which of the following features should you look for?
Low APR
Low balance transfer fees
Lots of credit card rewards
A large credit limit
What is a credit limit
The required payment to your credit card company
The amount of interest you pay
The maximum amount you can charge each billing cycle
How many credit cards you can own
The annual percentage rate on a credit card determines
the amount of interest you are charged
the amount your credit limit can go up within a year
how many credit cards you own
none of the above
Making a credit card minimum payment
Means you are paying a small portion of your total credit card debt
Is the same thing as making a late payment
Will have a negative effect on your credit score
Will cause your credit card to be cancelled
Which of the following is true of both paying with a check and paying with debit card
Both are accepted by most people and most businesses
A personal identification number must be anytime checks or debit cards are used
When used, both take money directly out of a bank account
Both work like a loan from your bank
The amount of money you can charge to a credit card is called:
Annual percentage rate
Balance transfer
Credit limit
Annual fee
What is a credit card balance?
The amount of interest you are charged on a credit card purchase
The minimum payment
A way to track your purchases
The amount of money you still owe to the credit card company
which of the following are true if you pay only the minimum amount each month
You will be charged interest
Your APR will increase
You may be in debt for a long time
Both A & B
Which is not a common credit card fee
Late fee
Annual membership fee
Balance transfer fee
Minimum payment fee
Which payment type is best if you are trying to stick to a budget
Credit Card
Debit Card
Cash Advance
Payday Loan
Interest can be:
a charge for lending money to the bank
the amount owed for borrowing from the bank
the amount added into your savings account when opening a bank account
a charge for the convenience of accessing money stored in your bank account
Which of the following is a type of savings vehicle?
Certificate of Deposit
Debit Card
Checking Account
Cash
Which financial institution usually charges the highest interest rates on loans?
Savings & Loan Associations
Pay Day Lenders
Commercial Banks
Credit Unions
Which of the following statements comparing debit cards to credit cards is true?
Debit cards allow you to draw funds directly from your checking account
Debits cards typically offer greater fraud protections
Debit cards never require a signature to finalize a purchase
Debit cards charge a high rate of interest
Good credit is usually required for which of the following:(Check all that apply)
buying a new car
adopting a new pet
getting a credit card
buying a house
buying used furniture
The form filed by students to receive federal financial aid for school is known as:
FICO
FAFSA
FIFA
FALALA
Having a good credit score is important because:
a. It can impact your ability to get a driver’s license
b. It can impact your ability to be approved for bank loans
c. It can impact how much you will have to pay the government in taxes
d. It can impact how much you will have to pay for college
Which action can hurt your credit score?
I. Paying your phone bill late.
II. Taking the bus to work.
III. Maxing out several credit cards.
IV. Using the internet to pay your bills
I
I and II
I and III
III and IV
Jose wants to be sure he maintains a high credit score as he is planning to buy a new car soon. What should he do to ensure his score stays high, allowing him to buy his dream car?
a. Open a savings account at the local bank.
b. Pay off his credit card balance each month.
c. Test drive several cars before deciding which to buy.
d. All are things he should do to increase or maintain his credit score.
Which of the following actions can NEGATIVELY impact your credit score?
a. You disputed an item on your credit report.
b. You forgot to pay the cable bill.
c. You pay all your bills in cash.
d. You use a small amount of your available credit.
10. What can you do it make sure you have a healthy credit report?
a. Review your credit report each year.
b. Make sure everything on your credit report is correct.
c. Dispute any errors you find on your report with your credit agency.
d. All of the above.
11. Which of the following MOST influences your credit score?
a. Types of Credit Used
b. Payment History
c. Length of Credit History
d. Amounts Owed
12. Which best explains what a credit score represents?
a. A number showing how likely you are to have more than one credit card.
b. A numerical rating that expresses how likely you are to repay your debts.
c. A numerical rating that shows how much money you have in your bank account.
d. A number expressing your yearly income.
In which of the following situations is having a good credit score important?
a. Buying a car.
b. Applying for a loan at a bank.
c. Renting an apartment.
d. All of the above.
How many free credit reports are you legally entitled to each year?
a. One credit report each year
b. Three credit reports each year
c. One credit report from each credit bureau
d. Three credit reports from each credit bureau
Having a low credit score can make it more difficult to:
a. Obtain a car loan
b. Open a new credit card
c. Secure an apartment lease
d. All of the above
Having a low credit score can make it more difficult to:
a. Obtain a car loan
b. Open a new credit card
c. Secure an apartment lease
d. All of the above
Which behaviors might lead someone to have a low credit score?
a. Missing a car payment.
b. Having a long credit history.
c. Always baying the full balance of a credit card each month.
d. Having a debit card.
Which of following drivers will likely pay the highest auto insurance premiums?
Younger, inexperienced drivers
Older, experienced drivers
Drivers who have a safe driving records
Drivers who travel short distances
Which piece of information is most useful to an identity thief?
Your full name and address
Your full name and date of birth
Your full name and social security number
Your full name and student ID number
The amount owed for borrowing money
Gratuity
Interest
Median
Which compound interest option will require
you to pay the lowest amount in interest on a car loan?
annual
bi-weekly
monthly
A certificate of deposit is
budget
the ease with which an account will allow you to access your cash
a savings certificate that gains interest and has a set time before you can withdraw your money
A type of financial institution that typically requires membership
A shopping club with low interest rates
credit union
Is a record of a person's borrowing and repayment activity
Bank statements
Loan interest rate
Credit History
Three major credit bureaus in the United States, which tracks credit histories, creates credit reports, and calculates credit scores.
Equifax, Experian, & TransUnion
Google, Yahoo, Safari
FICO is
the common abbreviation for Federal Insurance Counselors Operators
The most commonly used credit score in the United States. Fair Issac Corporation.
