WorksheetsFinancial Literacy Final Exam
Total questions: 55
Worksheet time: 28mins
When should a person begin contributing to a retirement plan?
Before deciding to start a family
As young as possible
At age 50
Upon collecting Social Security
Fixed Expenses include
Food
Vacations
Entertainment
Rent
An important feature of a good financial goal is that the goal
Has a specific time frame
Is appropriate for the person's age
Can last throughout the person's life
Will take at least ten years for the person to achieve
Mandatory deductions from a person's paycheck include
School taxes and contributions to a retirement account
Federal withholding tax and FICA
Regressive taxes and employee automatic
Property taxes and employee benefits
A college student has to live on a tight budget. Before making a decision to buy the newest cell phone, which question should he ask himself first?
Is the new cell phone cheaper than the one being used?
Is the new cell phone on sale?
Is the new cell phone a need or a want?
Will my friends like the new cell phone?
Comparison Shopping for a car is necessary because
Each dealer sells cars with different colors
Lenders want to be sure consumers get the best price
It is a requirement to qualify for car insurance
The price for the car can very a great deal
A person who dies will have his assets distributed as he wanted as long as he has
A doctor
A will
An accountant
A financial plan
In order to get spending under control, a person should first
Seek help on investing from a financial planner
Consult a credit counseling service
Create a budget of current income and expenses
Subscribe to financial newsletters and magazines
The U.S. government agency responsible for the collection and enforcement of federal taxes is know as
Consumer Financial Protection Bureau (CFPB)
U.S. Internal Revenue Service (IRS)
Securities and Exchange Commission (SEC)
Federal Reserve System (Fed)
A person has assets worth $15,000.00 and Loans totaling $5,000.00 Her net worth is
$5,000.00
$15,000.00
$20,000.00
$10,000.00
Which of the following is the source of income for most people aged 20-35?
Wages/Salary
Dividends
Rent
Mortgage payments
Don and Bill work together in the finance department of the same company and earn the same salary. Bill spends his free time taking work-related classes to improve his computer skills. Don spends his free time socializing with friends or watching Tv. After 5 years, what is most likely to be true?
Don will make more because he is more physically fit
Don will make more because Bill is likely to become over qualified
Bill will likely make more money because his more valuable to his company
Don and Bill will continue to make the same amount of money
When simple interest is computed once on a dollar amount (the principle), it is
Simple interest
Principal interest
The APY
Compound interest
A person choosing a mortgage usually selects a fixed-rate loan because she knows that
Her income will increase within the next three years
The interest rates are going down
Her homeowners insurance premiums will be lower
The interest rate remains the same for the life of the mortgage
Which of the following is an example of a long-term debt?
A debt card purchase
A student loan
A term life insurance policy
A stock portfolio
A person strongly feels that going into debt is wrong. This is an example of the influence of
Age and stage of life
Values on decisions
Marketing and advertising
General economic conditions
Students applying for financial aid to attend college usually need to
Complete a Free Application for Federal Student Aid (FAFSA) form
Obtain a transcript
Write an essay
Send a credit report from one of the 3 credit reporting agencies
Which of the following describes what happens during a depression?
Businesses produce more goods and services
More individuals are buying homes
Very few individuals are having financial problems
Unemployment is extremely high
A person earned a salary of $70,000.00 last year. Additionally, he had $1,000.00 in interest income and $2,000.00 in dividend income. His total income for this year is
$70,000.00
$71,000.00
$72,000.00
$73,000.00
Which of the following would be considered an asset?
Checking account
Credit card account
Car loan
Student loan
Why does a bank pay interest to a depositor?
The bank is able to use deposits to earn profits
It is a requirement of the Federal Deposit Insurance Commission (FDIC)
It helps the bank invest in the local community
It is a benefit of having a bank credit card
"Paying yourself first" is a strategy to
Revise goals
Make impulse purchases
Create a budget
Build savings
When a check is returned due to insufficient funds, the check is said to have
Been postdated
Bounced
Been voided
Cleared
It is generally better for a person to buy a home that she can afford than to rent an apartment because she will
Have fixed insurance needs
Have a lower debt to credit ratio
Avoid bankruptcy
Build equity
A form of payment that is guaranteed to be as good as cash is a
Personal check
Credit card charge
Bank Check
Promissory note
John needs $3,000.00 He is withdrawing the money today from a $3,000.00 certificate of deposit (CD) which will reach maturity in 6nmonths. It is likely that he will have to
Pay the Internal Revenue Service (IRS) a penalty
Pay the bank a penalty for early withdrawal
Pay both the IRS and the bank a penalty
Wait for the CD to mature
Electronic banking allows customers to
Access accounts only during business hours 6 days a week
Perform transactions with the help of a teller during business hours
Stop the need to reconcile checking accounts
Perform Transactions 24 hours a day
Deposits in bank savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to
$250,000.00
$150,000.00
$100,000.00
$50,000.00
Many companies offer a service to electronically deposit an employee's net pay into his designated bank account. This service is know as
Barter
Amortization
Automatic savings
Direct deposit
A debt card allows a person to
Build wealth
Borrow money for a short term
Pay for purchases directly from a checking or savings account
Spend more money than deposited in a checking or savings account
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
Credit Insurance
A joint checking account
A credit history
Overdraft protection
When a person cashes s $300.00 check and only receives $285.00, she most likely went to a/an
Check cashing store
Investment bank
Savings bank
Credit union
What type of information is NOT found on a consumer's credit report?
Criminal records
Employment History
Personal medical information
Current and past addresses
One reason investors purchase stock is to
Borrow money
Increase wealth
Earn interest
Balance a budget
Profit from the sale of stocks, bonds, or real estate is called
Capital gains
Equity capital
Gift income
Tax-free money
Choose the best suggestion for building and maintaining a good credit score.
Have money in savings and protect against identity theft
Keep debt low and pay bills on time
Make safe investments and set clear financial goals
Comparison shop and follow a budget
Hillary and Stephanie have both borrowed $15,000.00 from the same bank to buy the same model of a new car. Hillary's credit score is 732 and Stephanie's credit score is 588. Who is likely to pay a lower finance charge?
They will pay the same because they used the same bank
They will pay the same because they bought the same car
Stephanie
Hillary
It is generally a good idea to borrow money and repay the amount borrowed with future income when
A person needs to buy a car to get a much better paying job
A person really needs a week's vacation
Clothing a person likes goes on sale
The interest rate on the loan is greater than interest being earned on savings
An example of identity theft is when an individual
Uses a parent's charge account to buy lunch for friends
Notifies a credit reporting agency of an unpaid debt
Uses another person's information to open an account
Has the same name as another person in the same state
An arrangement to receive cash, goods, or services now and pay for them in the future is called
Liquidity
Collateral
Net income
Credit
If a person is behind on his debt payments and goes to a responsible credit counseling service, what help is likely to be offered?
They can cancel and cut up his credit cards without his permission
They can work with those who loaned him money to set up a realistic payment schedule
They can force those who loaned him money to forgive his debts
They can get the federal government to apply his income taxes to pay off his debts.
A loan can be denied by a lender because of a person's
Health
Credit history
Gender
Education
The rate imposed by the lender for the borrower to pay on a loan is know as
Money Market Rate (MMR)
Annual Percentage Rate (APR)
Effective Annual Rate (EAR)
Debit Card Rate (DCR)
Which of the following individuals has financial problems?
A person who is unable to pay his rent
A person who is borrowing money to buy a house
A person who has a loan for colleage
A person who uses a credit card to make most purchases
When applying for a loan, borrowers will probably need to provide information regarding their
Work Experience
Health record
Assets
Financial plan
Which of the following helps to build a strong credit history?
Using an ATM several times a month
Having a steady employment record
Being a responsible driver
Reporting a lost credit card within 24 hours
A company that keeps files and records on people who apply for and use credit is called a
Credit union
Commercial bank
Finance company
Credit reporting agency
One difference between a debit card and a credit card is that
A debit cards can only be used when the person makes a large transaction
Debit card payments are immediately deducted from the person's bank account
Debit cards provide better consumer protection than credit cards
Debit cards generate unsecured debt
Car insurance is more expensive for teenage males than females because studies have shown that
Female teenagers do not drive often
Female teenagers frequently own their cars
Male teenagers have a greater number of accidents than female teenagers
More male teenagers take driver education classes than female teenagers
If a driver receives several traffic tickets, the cost of the car insurance will probably
Increase
Decrease
Stay the same
Be billed montly
Two types of life insurance policies are
Term and whole life (permanent)
General and fixed
Valuable and indemnified
Annual and tax exempt
What type of financial aid needs to be repaid?
Grant
Scholarship
Work-study
Loan
The purpose of life insurance is to
Pay a person's outstanding credit card bills
Provide investment income to pay expenses during retirement
Help meet the financial needs of dependents upon a person's death
Protect against financial loss during a person's lifetime
A person had an Apple computer that was destroyed in a fire. She was able to buy a new Apple computer because her insurance policy had the following benefit
Actual cash value
Replacement value
Limited risk
Unlimited claim
Which of the following financial products has the highest risk?
Checking accounts
Certificates of deposit (CDs)
Savings accounts
Stocks
