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F23(1) - FINANCIAL LITERACY FINAL

Total questions: 63

Worksheet time: 41mins

Name
Class
Date
1.

For most people who are in college, the most important reason to have savings is for:

a)

College

b)

Cars

c)

Vacations

d)

Houses

2.

Which of these is a good place to park your emergency fund:

a)

Savings Account

b)

Stocks

c)

Bonds

d)

Mutual Funds

e)

Index Funds

3.

Which of these do you use if you want to own a piece of one company:

a)

Savings Account

b)

Stocks

c)

Bonds

d)

Mutual Funds

e)

Index Funds

4.

Which of these do use if you want a fund manager to decide what stocks or bonds to invest your money in:

a)

Savings Account

b)

Stocks

c)

Bonds

d)

Mutual Funds

e)

Index Funds

5.

Which of these should you spend your emergency money on:

a)

Vacations

b)

Clothes

c)

Emergencies

d)

The newest iPhone

6.

Which of these is NOT a common emergency that most people need to save for:

a)

Creating an IRA

b)

Medical expense

c)

Mechanical problem with car

d)

Moving in to a new apartment

e)

Moving on to a new job

7.

Returns from stocks normally come from which of these:

a)

Dividend Income

b)

Increases in the market price of the stock

c)

Interest income

d)

Decreases in market interest rates

8.

Generally, the greater the risk, the potential return:

a)

Is greater

b)

Is smaller

c)

Stays the same

9.

Investments are normally better for:

a)

Short term

b)

Long term

c)

Both of these

d)

Neither of these

10.

____ are used to loan money to a company or to state or federal governments.

a)

Stocks

b)

Bonds

c)

Mutual Funds

d)

Index Funds

11.

____ are used when you want your investmets to be based on the S & P 500.

a)

Stocks

b)

Bonds

c)

Mutual Funds

d)

Index Funds

12.

_______ try to "be the market" instead of "beating the market" — buying stocks of every firm listed on an index to mirror the performance of the index as a whole.

a)

Stocks

b)

Bonds

c)

Mutual Funds

d)

Index Funds

13.

Income from bonds comes as ______

a)

Dividends

b)

Interest

14.

If you own stock for less than a year, and the sell the stock for more than you paid for it, the money that you make when you sell it is called _____ .

a)

Ordinary income

b)

Long-term Capital Gain

c)

Short-term Capital Gain

d)

None of these

15.

Which of these is NOT a true statement about taking money out of your 401(k) before your reach retirement age:

a)

You pay taxes on the withdrawal

b)

You pay a penalty on the withdrawal

c)

The money that you take out is no longer earning a return that increases your retirement fund

d)

You can't take money out before retirement age

16.

Which of these is NOT a good place to put your money if you want low risk:

a)

Savings Account

b)

Individual Stocks

c)

Bonds

d)

Mutual Funds

e)

Index Funds

17.

If you buy bonds in a company, the interest is taxed at the _____ _____ tax rates

a)

Ordinary Income

b)

Long-Term Capital Gain

c)

Neither of these

d)

Both of these

18.

If your investment earns a ___ % annual return, it will double in about 7 years.

a)

0

b)

10

c)

90

d)

None of these.

19.

Which of these is a good place to put your money for an emergency fund:

a)

Stocks

b)

Bonds

c)

Savings Account

d)

Investing

20.

Returns from bonds can come from which of these:

a)

Dividend Income

b)

Increases in the market price of the S & P 500

c)

Interest income

d)

Decreases in market interest rates

21.

Match the following

a)

Market cap less than $2 Billion

1.

Small Cap

b)

Market cap b/w $2 and $10 Billion

2.

Mid Cap

c)

Market cap above $10 Billion

3.

Large Cap

d)

Most of what Morgan says in fin lit:

4.

Morgan Cap

e)

Most of what Diego says in fin lit:

5.

Diego Cap

22.

The maximum you can put in each year is $6,500 if you invest in :

a)

An IRA

b)

A 401(k) offered by your employer

c)

A Roth offered by your employer

23.

It is easier to borrow money for a ________ _____ than for a ____ _____ because the government guarantees it will be paid back to the loan company.

a)

Credit Card, Money

b)

Student Loan, Car Loan

c)

Dropout, Graduate

d)

Bankruptcy, Max Out

24.

________ = The cost of college classes.

a)

Opportunity Cost

b)

Tuition

c)

Room

d)

Board

25.

Every year, thousands of dollars in ___________ goes unclaimed.

a)

Grades

b)

Essays

c)

Summer

d)

Scholarships

26.

Which of these statements about two-year colleges is true?

a)

If you start at a two-year college, your degree from the four year university won't even mention the two-year college.

b)

You can start at two-year college and then switch to a four-year universtiy.

c)

Two-year colleges can save you a lot of money

d)

All of these are true

27.

In the award letter from your college, which of these are "free money"

a)

Student loans

b)

Scholarships

c)

Grants

d)

None of these - there is no such thing as free money!

28.

Which of these statements about a subsidized loans is true?

a)

You don't have to pay it back if you graduate college.

b)

You don't have to pay it back if you declare bankruptcy.

c)

Interest starts to run six months after you leave college.

d)

You don't have to pay it back if you don't graduate.

29.

Which of these statements about subsidized student loans is NOT true:

a)

The interest starts to run when you get the money.

b)

The government pays the intrest while you are in college.

c)

Interest starts to run later than on unsubsidized loans

d)

You have to qualify for them, based on need

30.

Your student loans when you graduate should be ____ of your starting salary, or less.

a)

100 %

b)

30 %

c)

15

d)

140

31.

Which of these is a true statement about credit hours in college:

a)

To graduate on time, you need to take 15 hours per semester

b)

If you take 15 credit hours per semester, each week you will spend 15 hours in the classroom

c)

Both of these are true

d)

Neither of these are true

32.

Which of these should you use to calculate your cost of attendance:

a)

Tuition

b)

Books

c)

Room - but only if you wouldn't have to pay for a place to live if you weren't going to college

d)

Board - but only if you wouldn't have to pay for food if you weren't going to college

e)

All of these

33.

Which of these is the equation for ROI:

a)

(R - I / I) * 100 %

b)

(R + I / I) * 100 %

c)

(I - R/R) * 100 %

d)

(I + R/R) * 100 %

34.

_____ is the cost of housing while you are in college .

a)

Opportunity Cost

b)

Room

c)

Board

d)

Tuition

e)

Books

35.

_____ is the cost of classroom supplies that you need for your college classes.

a)

Opportunity Cost

b)

Room

c)

Board

d)

Tuition

e)

Books

36.

If you didn't go to college you would live and eat at home for free, and work full-time making $10 an hour. The tuition for your first year of college is $15,000, you get a $5,000 scholarship, a $5,000 student loan, your room and board is $10,000, and your books are $1,000. What dollar amounts will you use for your Cost of Attendance:

a)

$21,000

b)

$10,000

c)

$31,000

d)

None of these

37.

If your cost of attendance is $21,000 per year , and your opportunity cost is $10,000 per year, your ANNUAL Investment for going to college is ____ per year.

a)

$21,000

b)

$10,000

c)

$31,000

d)

$124,000

38.

When you graduate from college, your student loans should not be more than 100 % of:

a)

Cost of attendance

b)

Opportunity cost

c)

Average lifetime earnings with your degree

d)

Average lifetime earnings of a high school graduate

e)

The salary you will earn the first year aftere earning your college degree

39.

Which TWO of these do you add together to get the "Investment" that you will make if go to college:

a)

Cost of attendance

b)

Opportunity cost

c)

Average lifetime earnings with your degree

d)

Average lifetime earnings of a high school graduate

e)

The salary you will earn the first year aftere earning your college degree

40.

To calculate your _____, subtract what you will make working part-time during college from what you could have made working full-time if you didn't go to college.

a)

Cost of attendance

b)

Opportunity cost

c)

Average lifetime earnings with your degree

d)

Average lifetime earnings of a high school graduate

e)

The salary you will earn the first year aftere earning your college degree

41.

True or False. If you plan on getting a four-year degree, your student loans after your first year in college should be 25% of your starting salary, or less.

a)

True

b)

False

42.

True or False. If your starting salary out of college is $50 thousand, and you take two extra years to graduate, the opportunity cost for not graduating on time is $100 thousand.

a)

True

b)

False

43.

To buy a house, you ususally have to have a credit score of ___ or more

a)

620

b)

740

c)

You don't need a credit score to rent an apartment

d)

You don't need a credit score to buy a house

44.

Which of these should you have before you buy a house:

a)

Credit score - 740 or higher

b)

Emergency Fund

c)

Plan to stay in the house for at least 10 years.

d)

Mortgage payments are 30% or less than monthly net income.

e)

All of thse

45.

After your freshman year in college, your student loans should be __ or less of the annual salary you will earn your first year after graduating college.

a)

100

b)

75

c)

50

d)

25

46.

After your junior year in college, your student loans should be __ or less of the annual salary you will earn your first year after graduating college.

a)

100

b)

75

c)

50

d)

25

47.

Statistically, working about 20 hours a week during college:

a)

Reduces the amount of your student loans

b)

Increases your GPA

c)

Decreases the time it takes to earn your degree

d)

All of these

e)

None of these

48.

Which of these is NOT "free money"?

a)

Grants

b)

Scholarships

c)

Student Loans

d)

None of these are free money

e)

All of these are free money

49.

Which TWO of these deductions reduce the federal and state income taxes that are deducted from your pay?

a)

401(k)

b)

Roth

c)

Medicare

d)

FICA (Social Security)

e)

Premiums for medical insurance

50.

If you use the Standard Deduction, what deductions can you “itemize”

a)

None - if you use the Standard Deduction you can't itemize deductions

b)

Interest you pay on your mortgage

c)

Interest you pay on your car loan

d)

Money that you give away to charities

e)

Interest you pay on your credit cards

51.

Which THREE of these are deducted from gross pay when you calculate net pay

a)

Retirement (401(k) or Roth)

b)

State and Federal income taxes

c)

FICA and Premiums for medical insurance

d)

Unemployment insurance and Workers' Compensation

e)

Standard Deduction

52.

Which TWO of these are optional deductions from your gross pay:

a)

Retirement (401(k) or Roth)

b)

State and Federal income taxes

c)

Premiums for medical insurance

d)

Unemployment insurance and Workers' Compensation

e)

Standard Deduction

53.

You and your employer each pay 1.45% X your gross pay to this:

a)

Workers' compensation

b)

FICA (Social Security)

c)

Unemployment

d)

Medicare

e)

Standard Deduction

54.

Employers pay this into a fund that is used to help employees that are fired or laid off:

a)

Workers' compensation

b)

FICA (Social Security)

c)

Unemployment

d)

Medicare

e)

Standard Deduction

55.

Which TWO of these are paid by your employer, not by you

a)

Workers' compensation

b)

FICA (Social Security)

c)

Unemployment

d)

Medicare

e)

Standard Deduction

56.

If you are single, the Standard Deduction is

a)

$12,400

b)

$24,800

c)

The Standard Deduction isn't available to single taxpayers

d)

The Standard Deduction isn't available to married taxpayer

e)

"Itemized" on your tax return

57.

If you earn $10 per hour, your annual gross income is about:

a)

$20,000

b)

$24,000

c)

$40,000

d)

$48,000

e)

None of these

58.

If you are single, your gross pay is $24,400 and your only deduction is the Standard Deduction, what is your taxable income?

a)

$0

b)

$12,000

c)

$13,000

d)

$14,000

e)

None of these

59.

True or False. Your W-2 lists the payment information that is reported to the IRS by your employer:

a)

True.

b)

False.

60.

If you own this, you will pay personal property tax on it every year : (pick TWO)

a)

Food

b)

Clothing

c)

Car

d)

House

e)

Motorcycle

61.

Which of these are PAYROLL deductions that will reduce the amount of taxes that you owe:

a)

Medical Insurance Premiums

b)

Contributions to your 401(k)

c)

Contributions to Your Roth

d)

Interest expense on your mortgage

e)

Gifts to charities

62.

Which of these are deductions that you can take, even if you use the Standard Deduction:

a)

Medical Insurance Premiums

b)

Contributions to Your Roth

c)

Interest expense on your mortgage

d)

None of these

63.

Match the Deduction With Its Description

a)

This is 6.2% of your gross pay

1.

Social security

b)

This is 1.25 % of your gross pay

2.

Medicare

c)

Income for 501(c)(3) companies

3.

Charitable deductions

d)

Interest on ____

4.

Mortgages

e)

Pretax payroll deductions

5.

Retirement and Medical Insurance Premium

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