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WorksheetsPersonal Financial Literacy Final Exam Review
Total questions: 75
Worksheet time: 56mins
Name
Class
Date
1.
Which of the following are the three largest categories of federal government spending?
a)
Infrastructure, Defense, and Science
b)
Health, Military, and Interest on Debt
c)
Veterans, Infrastructure, and Education
d)
Education, Defense, and Food/Agriculture
2.
What does the term "withholding" mean in reference to your paycheck?
a)
It is the amount of your paycheck that you are NOT being taxed on.
b)
It is how much is being taken out of your paycheck in taxes.
c)
It is how much you are going to owe the government when you file your annual tax return.
d)
It is how much you earn and includes salary, bonus and commissions.
3.
When do you start paying taxes?
a)
When you turn 18
b)
When you make more than the minimum income requirement
c)
When you get a full-time job (part-time does not count)
d)
When you are notified by the IRS that you are required to pay federal income taxes
4.
Why is it important to be extremely careful when completing your 1040 form?
a)
Making even one mistake on your federal taxes can result in your being convicted of a crime
b)
The 1040 form determines whether you owe additional taxes or are entitled to receive a refund from the government
c)
Completing the 1040 incorrectly will mean the wrong amount of taxes will be withheld from your paychecks going forward
d)
Mistakes on your 1040 form make you ineligible for employment during the next year
5.
Which of the statements below is TRUE about filing your taxes, assuming your only income comes from the salary you earn at BigTech Company?
a)
You need to file your tax return by the end of the calendar year (typically December 31st)
b)
If your employer takes out federal income taxes through payroll withholdings, you do not need to file a tax return
c)
You must file your tax return by April 15th of the following year or request an extension by that date
d)
You do not need to pay any income taxes until April 15th, so you should ask your company to wait until after that date to withhold any money
6.
You are starting your first job and you are asked to complete some paperwork on your first day. Which form will determine how much money is withheld from your paycheck for federal and state income taxes?
a)
W-2
b)
W-4
c)
I-9
d)
1040
7.
Which of the following paycheck withholdings puts money into a retirement investment fund that you will manage?
a)
Social Security
b)
Medicare
c)
401(k) contribution
d)
Federal income taxes
8.
When determining whether you NEED to file a federal tax return, each of these questions matters EXCEPT…
a)
How much income did you earn this year?
b)
What type of income did you earn this year?
c)
What state do you live in?
d)
Are you claimed as a dependent on anyone else's tax return?
9.
You are at the checkout counter at the local supermarket and use your debit card to pay for your groceries. Where does the money for this purchase come from?
a)
Your credit card company covers the cost
b)
It is deducted directly from your checking account
c)
Your credit card company provides you with a cash advance to cover the cost
d)
It is deducted from your credit card account
10.
Jocelyn gets a text alert from the bank that her account balance has dropped below $100 after a series of $20 ATM withdrawals. She has not used her ATM in over a week and wonders what she should do. What would you recommend?
a)
Wait until your monthly statement arrives so you can check to see if those withdrawals are still there
b)
Wait a week as it is fairly common for the bank to catch mistakes like this
c)
Check your wallet to be sure your debit card has not been stolen. If you still have it, then you should not worry.
d)
Contact your bank immediately as it appears that your account may have been hacked
11.
Which of the following is a way to access the money in your checking account?
a)
Taking out cash using your credit card at an ATM machine
b)
Using your debit card to pay for groceries at the checkout
c)
Depositing a paycheck at an ATM
d)
Receiving a person-to-person payment from your friend
12.
You deposit a birthday check by using the bank app that you have on your smartphone. What is the standard amount of time that you will need to wait in order to get access to these funds?
a)
Available immediately
b)
Available the same day
c)
Usually 1-7 business days later
d)
30 business days
13.
Which of the following transactions will REDUCE your checking account balance immediately?
a)
Writing your monthly rent check which you will mail tomorrow
b)
Using your debit card to pay for groceries at the supermarket
c)
Using your credit card to pay for your school books
d)
Depositing a check at a local bank branch
14.
Which TWO of the following statements are advantages of online banking?
a)
A & B
b)
B & C
c)
B & D
d)
A & C
15.
FDIC Insurance is...
a)
Optional coverage consumers can purchase so that their bank deposits remain safe.
b)
Insurance bank branches can buy to protect their business against fraud and scams.
c)
Required if you want to do online or mobile banking.
d)
Protection for bank customers’ deposits up to $250,000, guaranteeing their money is still available if the bank goes out of business.
16.
When signing up for a new checking account, you answer "Yes" to receive overdraft protection. On this day, you have $10 in your account and go out and use your debit card to buy lunch for $12, a movie ticket for $12 and dinner for $15. What is likely to be the outcome resulting from these transactions?
a)
Your account would be closed
b)
You will likely be charged an overdraft fee for one or more of the transactions and also will need to repay the bank for the amount overdrawn ($29)
c)
Since you requested overdraft protection, the bank will not allow you to overdraw your account so your debit card will be denied
d)
The bank will provide you five days to add funds to your account to cover the overdraft and no fees will be assessed
17.
How often do customers typically receive a bank statement for their checking account?
a)
Daily
b)
Weekly
c)
Monthly
d)
Annually
18.
Juan saved $1,000 from his summer job cleaning pools. Which of these savings vehicles would work best for him if he doesn't need access to the money for a number of years AND wanted to earn the highest interest rate?
a)
Regular savings account
b)
Money Market account
c)
Checking account
d)
Certificate of Deposit
19.
Which of these statements about saving is INCORRECT?
a)
People often believe they are saving when they buy products at a listed discount, even if they didn't need the product in the first place
b)
It is extremely difficult to open a savings account, as you typically need at least $10,000 for your initial deposit
c)
Without a separate savings account to pay yourself first, it's more likely that you'll spend all of your income each month
d)
Billions of dollars are spent on marketing to persuade consumers to spend money instead of saving
20.
You are 18 years old, opening your first savings account, and are considering three options: BANK A is not FDIC insured, has an interest rate of 5%, and a minimum deposit of $25. BANK B is FDIC insured, has an interest rate of 0.01%, and a minimum deposit of $50. Bank C is FDIC insured, has an interest rate of 0.02%, and a minimum deposit of $10,000. All three have fees competitive with other banks. Which bank is the best option?
a)
Bank A
b)
Bank B
c)
Bank C
d)
All 3 banks are equally good options
21.
When a bank says their savings account earns 1% interest, that typically means you will earn 1% interest over what period of time (Note: this is not referring to the compounding frequency or frequency of interest payment)?
a)
Daily
b)
Monthly
c)
Quarterly
d)
Annually
22.
Stanley deposits $1,000 into a savings account that pays 1% interest. At the end of the first year, he's earned $10 in interest and there is $1,010 in the account. If the account has simple interest, the 1% interest for year two would be based off ____________. If the account has compounding interest, the 1% interest for year two would be based off ________________.(NOTE: The first choice goes in the first blank, the second choice goes in the second blank)
a)
The original deposit ($1,000); The year one account balance ($1,010)
b)
The original deposit ($1,000); The year one interest ($10)
c)
The year one account balance ($1,010); The year one interest ($10)
d)
The year one account balance ($1,010); The original deposit ($1,000)
23.
Which of the following is an effective strategy for personal saving?
a)
Wait until the end of the month and save whatever is left in your checking account
b)
Save a certain percentage of each paycheck and deposit it directly into a savings account
c)
Cover all of your wants and needs and save whatever is left over
d)
Take out a payday loan so you can save before you receive your paycheck
24.
Joelle wants to have an emergency fund to cover 6 months of her expenses. Her monthly gross pay is $4,000 and her monthly expenses are $2,000. If she plans to save 10% of her gross pay each month, how long will it take her to build her emergency fund?
a)
3 months
b)
9 months
c)
24 months
d)
30 months
25.
Which of the following statements about banks is FALSE?
a)
If it is FDIC-insured, your money is safe even if the bank fails
b)
Many banks pay interest on the money you deposit with them
c)
Historically, savings accounts earn higher returns than investments in the stock market
d)
Money in a bank is usually easy to access via ATM, debit card or check
26.
Each of the following financial products will help you build a credit history EXCEPT...
a)
Secured credit card
b)
Debit card
c)
Auto loan
d)
Credit card
27.
Which of the following statements below is TRUE?
a)
The cardholder is carrying a balance over from the last period.
b)
The cardholder was charged interest on her balances for the last period because she made her payment on time.
c)
If the cardholder makes her minimum payment of $35.00 by the due date, she will NOT be charged interest on her balances.
d)
If the cardholder pays $523.20 by the due date on the bill, she will pay NO interest to the credit card company.
28.
Based on her current balance, how much credit does this cardholder have available to use?
a)
0
b)
About $500
c)
About $1,600
d)
2100
29.
Which of the following statements comparing credit and debit cards is TRUE?
a)
Far more businesses accept credit cards than debit cards
b)
Credit cards pull money directly from your bank account, while debit cards get their money from Visa or Mastercard
c)
Credit card companies provide you with a monthly statement, while debit cards do not
d)
With debit cards, you're spending your own money at point of sale, while with credit cards, you're promising to pay back the money eventually
30.
What financial product am I? I am a type of credit card that requires cardholders to make a security deposit equal to the credit limit on their account. Due to this deposit requirement, I am often a good choice for young people looking to establish a credit history.
a)
Standard credit card
b)
Secured credit card
c)
Overdraft credit card
d)
Rewards credit card
31.
Which of the following is most likely to represent a fixed rate, secured debt?
a)
A student loan
b)
A credit card
c)
A loan from a friend
d)
A dealer-financed auto loan
32.
Which of these statements best explains why it's often a good idea to pay more than the monthly amount due on an amortized loan?
a)
Every time you pay extra, the lender will reduce the interest rate they're charging by a small amount
b)
The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly
c)
The extra payment will be applied to the interest you owe, which will reduce the overall cost of your loan
d)
Amortized loans typically have much higher interest rates than credit cards, so they're the best place to put your extra cash
33.
If you are having trouble making auto loan payments, and are really following a tight budget, which recommendation below represents the WORST advice?
a)
Find an extra source of income by taking a second job, working longer hours, asking for a raise, etc
b)
Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control
c)
Continue making all payments and call your lenders and see if you can negotiate lower monthly payments, lower interest rates, or longer terms
d)
Reduce spending in some other area of your budget so you can direct more funds toward debt payments
34.
What are the two most important factors in calculating your credit score?
a)
Payment history and types of accounts
b)
Amounts owed and length of credit history
c)
Payment history and amounts owed
d)
Length of credit history and new credit inquiries
35.
Which of the following statements about credit scores does this bar graph support?
a)
Credit scores tend to drop as you grow older because you are more likely to miss a payment at some point
b)
It is more difficult for young people to borrow (i.e., get a loan) because they have less payment history for a lender to rely upon
c)
When young people borrow, they are likely to have lower interest rates because their credit scores are lower
d)
It is easier for young people to get loans at lower interest rates because they are likely to have never been late with a payment
36.
Heather receives a phone call, in which an automated voice states that her credit card has been used fraudulently and that she must enter her 16-digit credit card number, using the keypad of her phone, to clear up the error. What should Heather do next?
a)
Push 0 or say "operator" to speak with a representative from the credit card company instead
b)
Enter the 16-digit card number, but don't enter her PIN or the 3-digit code from the back of the card
c)
Hang up and wait for the end of her credit card billing cycle to see if there really was a fraudulent charge.
d)
Hang up and call her credit card company using the 1-800 number on the back of her card to inquire about the issue or report the attempted phone fraud
37.
All of the following would show up on a credit report EXCEPT...
a)
Salary of your current job
b)
Payment history of your car loan
c)
Credit card payment history
d)
Student loan activity
38.
Your teacher tells you about the importance of checking your credit report. Which government-run website allows you to download your credit report for free on an annual basis?
a)
creditkarma.com
b)
freecreditreport.com
c)
getcreditreportshere.com
d)
annualcreditreport.com
39.
Your friend confides in you that he has a low credit score. What is the single best way for him to improve his score?
a)
Cancel his credit cards
b)
Make on-time payments
c)
Get a car loan
d)
Check his credit score
40.
Melvin is 19 years old and wants to begin establishing a credit history. Which action should he take to meet that goal?
a)
Always say "credit" when asked "credit or debit?" at a store
b)
Ask his parents to cosign a credit card or add him as an authorized user on their credit card
c)
Any time he borrows money from a friend or family member, be sure to pay it back promptly
d)
Take out some private student loans, even though he doesn't need them because he has grants and scholarships
41.
Which of the following individuals or groups would be the LEAST likely to look at your credit score?
a)
Employers
b)
Credit card companies
c)
Auto insurers
d)
A bank representative who is helping you open a savings account
42.
How does investing in the stock market differ from putting money in a savings account at a bank?
a)
Investing is always a less risky option than saving
b)
Investing is best for short-term situations like emergency funds; saving is best for the long-term
c)
Investing typically earns between 1-2% while saving generally earns between 5-7%
d)
Investing allows you to accumulate wealth for retirement while saving is best for short-term purchases or emergencies
43.
Why is compound interest more advantageous than simple interest?
a)
Compound interest is harder to calculate, so those who use it earn higher profits for their efforts
b)
Compound interest means you have a fund manager who is compounding your returns without charging a fee
c)
Compound interest allows you to earn interest not only on the amount you have saved, but also on the interest you've already earned
d)
Compound interest has lower fees than simple interest
44.
What kinds of cognitive biases and behaviors can prevent people from making smart investing decisions?
a)
Exiting the market because that’s what everyone else is doing
b)
Buying stocks when prices are low and selling them when they’re high
c)
Exiting the market because that’s what everyone else is doing
d)
Investing in a diversified portfolio instead of trying to time the market
45.
Your friend Jenny wants to use a robo-adviser to manage her portfolio. What does this mean?
a)
She'll have a human fund manager with advanced technology manage her portfolio.
b)
A computer software system is going to adjust her portfolio based on her preferences.
c)
Jenny will sit down for quarterly investment meetings with a robot.
d)
Jenny can receive investing advice through an online chat service provided through the brokerage firm.
46.
When investing in individual stocks, you should expect that…
a)
Stock prices for a company are relatively easy to predict
b)
Unforeseen company events can have a dramatic impact on the stock price for a company
c)
You will have an informational edge by reading an article about a company you want to invest in
d)
Stock prices for an individual stock will be more stable over the long-term than prices for a diversified index fund
47.
Which of the following statements about Exchange Traded Funds (ETFs) is TRUE?
a)
ETFs are traded once a day after the market closes.
b)
An ETF is a single stock that you can buy in the stock market.
c)
Actively managed ETFs have very low fees.
d)
ETF prices can change throughout the day as they are exchanged on the market.
48.
You bought 10 shares of stock in StreamingVideoCo for $45 per share. Two months later you sold the 10 shares of stock for $80 per share. What was your profit or loss on StreamingVideoCo stock? Assume that StreamingVideoCo didn't pay a dividend and that you didn't incur any trading fees during that period.
a)
Loss of $800
b)
Gain of $350
c)
Loss of $450
d)
Gain of $800
49.
Which of the statements below BEST describes the relationship between risk and return when considering an investment?
a)
Investors expect to earn a lower return when they invest in a risky asset
b)
Investors expect to earn a higher return when they invest in a low risk asset, like a bond
c)
Investors expect to earn a higher return when they invest in a high risk asset like stock in a small company
d)
Investors do not expect to earn a return on a high risk investment but rather expect to lose their money
50.
What is an insurance premium?
a)
Your monthly payment to your insurer, regardless of whether you use any services
b)
A list of the procedures covered by your insurance carrier
c)
An added cost you pay in order to receive higher-quality services
d)
The amount you pay out-of-pocket for a specific procedure or service
51.
Which term refers to an arrangement where you are responsible for paying a percentage of covered medical expenses after your deductible is met?
a)
Deductible limit
b)
Premium
c)
Out-of-network fees
d)
Co-insurance
52.
Which of these is NOT considered an "out-of-pocket" expense?
a)
Your monthly premium
b)
A copay of $15 to fill a prescription
c)
A $1000 deductible if you're in an auto accident
d)
Excess bills from a car accident once you've gone over your maximum coverage limit
53.
When setting your premium, your car insurance company may consider each of the following EXCEPT...
a)
How many miles you drive per year
b)
Your age
c)
Your driving record
d)
Your height
54.
Insurance companies make money by...
a)
Refusing to pay out claims to policyholders
b)
Collecting money from the government
c)
Collecting more in premiums than they need to pay out each year
d)
Keeping costs low with minimal advertising
55.
Which of the following statements is TRUE about auto insurance premiums?
a)
If you have an auto insurance policy and don't get into a car accident or file any claims for a year, you get your premiums back from the insurance company.
b)
If you have an auto insurance policy and get into multiple accidents within one year, your premium amount will decrease.
c)
Auto insurance premiums are a fixed price across all insurance companies.
d)
Auto insurance premiums can vary from company to company, therefore, it is important to comparison shop for the best price and coverage.
56.
Your renter's insurance policy costs $20/month and has a $1,000 deductible. A thief breaks into your apartment and steals your $800 TV set. How much would your insurance company pay?
a)
0
b)
200
c)
800
d)
1000
57.
Why would someone choose to get long term disability insurance even if they already have health insurance?
a)
Long term disability only covers medical bills, while health insurance will help compensate for lost work with 40-60% of their income.
b)
Long term disability insurance plans can also extend coverage to family members and pets.
c)
Health insurance only covers regular check ups, while long term disability insurance also covers emergencies.
d)
Health insurance only covers medical bills, while long term disability will help compensate for lost work with 40-60% of their income.
58.
Which of these costs would be the MOST difficult to adjust if you were looking to reduce your expenses?
a)
Dining out at local restaurants
b)
Loan payment on a new car
c)
Expenses for new clothes
d)
Postponing a purchase for a big-screen TV
59.
You earn a salary of $40,000 per year and decide to save 20% of your gross pay. You then set a goal of creating a $16,000 emergency fund. How long will it take for you to achieve your goal?
a)
6 months
b)
1 year
c)
2 years
d)
3 years
60.
Which of the following is a sign that you have a budget deficit?
a)
Your savings account balance grows every month.
b)
You overdraw your checking account on a consistent basis (with a $34 cost per overdraft).
c)
Your checking account balance grows every month.
d)
You pay more than the minimum monthly loan payment towards your student loans.
61.
Leila just graduated from college and is comparing a few different cities to move to. Which of these factors is the LEAST important thing for her to consider right now?
a)
Average rent for an apartment
b)
Food and grocery store options in the area
c)
Employment opportunities
d)
Average cost of Uber, Lyft, or taxi fare
62.
Greg is trying to decide whether he needs a car or not when he moves to the city. Which of the following would convince Greg to get a car rather than use public transportation?
a)
There are several public transportation routes between Greg's apartment and work.
b)
The cost of public transportation is less than Greg’s monthly car payment.
c)
Greg’s company covers half the cost of his monthly public transportation pass.
d)
Using public transportation, Greg’s commute to work one-way is two hours.
63.
Which of these boxes of cereal has the LOWEST unit price?
a)
Cereal A, which costs $3.20 for a 16 oz. box
b)
Cereal B, which costs $5.00 for a 32 oz. box
c)
Cereal C, which costs $2.50 for a 10 oz. box
d)
Cereal D, which costs $4.50 for an 8 oz box
64.
Isaiah works for the summer at a technology company and has a salary for the summer of $3,000. After Federal and state taxes, Social Security, and Medicare are deducted, his take-home pay is $2,500. Which of the statements below is correct?
a)
His gross pay is $2,500 and net pay is $3,000.
b)
His gross and net pay are $3,000.
c)
His gross and net pay are $2,500.
d)
His gross pay is $3,000 and net pay is $2,500.
65.
You are putting together your first post-graduation budget. Your take-home pay will be $2,500 per month. You estimate your monthly costs to be rent of $900, car related expenses to be $550, entertainment of $200, food expense of $250, cable bill of $75, mobile phone of $100, student loan payment of $400 and other expense of $150. How would you describe your budget after analyzing all of your income and expenses?
a)
You have a surplus of $125.
b)
You have a deficit of $125.
c)
You have a deficit of $2,625.
d)
You have a surplus of $2,500.
66.
You are interested in renting an apartment after graduating college. You meet with the landlord, complete the application and after checking your credit background and references, the landlord approves your application. In most cases, you will need to provide the landlord with ___________________ at the time you sign the lease in order to get the apartment.
a)
First month's rent
b)
First and last month's rent
c)
$1,000 security deposit to cover any damages to the apartment
d)
First and last month's rent + a security deposit to cover any damages to the apartment
67.
What is a benefit of going to college and having a college degree?
a)
Lower lifetime earnings
b)
Expanded professional and social network
c)
Lower interest rates on future loans
d)
Guaranteed starting salary of $50,000 after graduation
68.
All of the following are costs of going to college EXCEPT...
a)
Tuition and fees
b)
Room and board
c)
Textbooks and school supplies
d)
Scholarships and grants
69.
Why should you file the FAFSA as early as possible?
a)
Aid is given out on a first-come, first-serve basis
b)
You'll get a lower interest rate on federal student loans
c)
It can help your chances of being accepted into schools
d)
You're guaranteed to get more merit-based scholarships
70.
How do scholarships and grants differ?
a)
Scholarships are need-based; grants are merit-based
b)
Grants are private forms of aid; scholarships are federal
c)
Grants are need-based; scholarships are merit-based
d)
They're not different; they are one and the same
71.
When looking at a financial aid award letter, which type(s) of aid would you have to pay BACK?
a)
Federal Pell Grant
b)
Direct Subsidized Loan
c)
Merit Scholarship
d)
Federal Work-Study
72.
In what order should you accept different types of financial aid?
a)
Work-study, scholarships, federal loans, private loans
b)
Private loans, scholarships, work-study, federal loans
c)
Scholarships, work-study, federal loans, private loans
d)
Scholarships, work-study, private loans, federal loans
73.
What do you need to file your FAFSA if you're a dependent?
a)
Just your tax forms
b)
Your high school student ID number
c)
Your and your parents' tax forms from 2 years priors
d)
A pay stub if you had a job in the past year
74.
Which is TRUE about the FAFSA?
a)
You only need to file the FAFSA 1x in your college career
b)
Your parents must earn below a set amount for you to apply
c)
You need to file it at the start of every quarter/semester
d)
There is no cost to file the FAFSA
75.
Which of the following is TRUE about federal and private student loans?
a)
Private loans may be subsidized; federal ones are not
b)
Both types offer the same repayment plans
c)
Private loans always offer fixed interest rates
d)
Fed. loans don't have prepayment penalties; private ones may
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