WorksheetsFinancial Literacy Quiz Spring 2024 #2
Total questions: 1
Worksheet time: 24mins
Which type of account would be most suitable for Juan who wants to save $1,000 from his summer job without needing immediate access and aims to get the highest interest rate?
Regular savings account
Money Market account
Checking account
Certificate of Deposit
Joelle is planning to save for an emergency fund that covers 6 months of expenses. If her monthly expenses are $2,000 and she saves 10% of her $4,000 monthly income, how many months will it take to reach her goal?
3 months
9 months
24 months
30 months
When planning a savings strategy, which set of goals is an example of short-, medium-, and long-term objectives?
Retirement, a house down payment, college tuition
A new cell phone, college tuition, a house down payment
A new cell phone, dinner with friends this weekend, a new bike
Retirement, college tuition, a vacation
Which statement is true regarding the financial preparedness of most Americans for emergencies and retirement?
The majority of Americans have an adequate emergency fund
The majority of Americans have sufficient amounts of money saved for retirement
The majority of Americans have an adequate emergency fund, but do NOT have sufficient amounts of money saved for retirement
The majority of Americans do NOT have an adequate emergency fund or sufficient amounts of money saved for retirement
Which statement best describes a savings account?
This account offers a convenient way to pay bills and access cash from an ATM
This account pays you interest on money you have put away for later to help your money grow
This account is automatically debited when you use a debit card
This account typically allows an unlimited number of transactions per month
What is FDIC Insurance primarily designed to provide?
Optional coverage consumers can purchase so that their bank deposits remain safe
Insurance bank branches can buy to protect their business against fraud and scams
Protection for bank customers’ deposits up to $250,000, guaranteeing their money is still available if the bank goes out of business
Required if you want to do online or mobile banking
What is likely to happen if you have overdraft protection and your account goes negative?
Your account will be closed
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
Since you requested overdraft protection, the bank will not allow you to overdraw your account so your debit card will be denied
The bank will provide you five days to add funds to your account to cover the overdraft and no fees will be assessed
What is likely to happen if you do not have overdraft protection and your account goes negative?
Your account will be closed
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
Since you declined overdraft protection, the bank will not allow you to overdraw your account so your debit card will be denied
The bank will provide you five days to add funds to your account to cover the overdraft and no fees will be assessed
Fill in the blanks: Direct deposit typically refers to your ______ sending your ______ electronically to your bank account.
employer, bills
employer, paycheck
parents, allowance
state government, taxes
Which of the following is an effective strategy for personal saving?
Save a certain percentage of each paycheck and deposit it directly into a savings account
Take out a payday loan so you can save before you receive your paycheck
. Save a certain percentage of each paycheck and deposit it directly into a savings account
Wait until the end of the month and save whatever is left in your checking account
Which of the following statements comparing credit and debit cards is TRUE?
With debit cards, you're spending your own money at point of sale, but with credit cards, you're getting a loan that you need to pay back later
Far more businesses accept credit cards than debit cards
Credit card companies provide you with a monthly statement, while debit cards do not
Credit cards pull money directly from your bank account, while debit cards get their money from Visa or Mastercard
You want to pay your credit card balance. Which of these credit payback strategies would lead to the HIGHEST overall cost?
Making the minimum payment (3% of your credit card balance) every month on time
Paying off your credit card bill in full every month
Paying 20% of your credit card balance every month on time
Making the minimum payment (3% of your credit card balance) every month with an occasional late payment
Taylor is considering different options for her car down payment to maintain low monthly payments. What is her best strategy if she wants to keep her monthly payments as low as possible?
Put in $0 for your down payment, and choose a loan with a short term length
Put in $2500 for your down payment, and choose a loan with a short term length
Put in $3500 for your down payment, and choose a loan with a long term length
Put in $5000 for your down payment, and choose a loan with a long term length
When reviewing a credit card's APR range, which statement is accurate?
Most cardholders pay the lowest rate listed
Your APR depends on your credit history
You should choose the highest APR because you'll earn more in this case
All cardholders are charged the highest APR in the range
How does the term length of a loan affect the monthly payments and total interest paid?
A shorter term length results in higher monthly payments and less total interest
A shorter term length results in higher monthly payments and more total interest
A shorter term length results in lower monthly payments and less total interest
A shorter term length results in lower monthly payments and more total interest
Which statement best describes a characteristic of a credit card?
You owe the same payment every month
You must have money deposited into a checking account to use the credit card for purchases
Making full payments on-time every month is the only way to avoid interest charges
They do not charge interest
What is the closest average APR (interest rate) for a payday loan?
5%
10%
23.99%
400%
How can an excellent credit score assist you when financing a car?
Bargaining for a great sales price
Receiving a large down payment
Qualifying for a low interest rate
Having a wide selection of term lengths
Which of the following is NOT a recommended strategy for a young adult to build credit?
Open a credit card with your parent or guardian as a cosigner
Take out a payday loan
Become an authorized user on a credit card used by your parent or guardian
Open and use a secured credit card
What is one disadvantage of renting a home compared to buying?
Renting does not require as much money up front as buying
Renting means you are not responsible for maintenance and repairs
Renting does not build equity like buying does
Renting typically includes internet and other amenities
What are the two most crucial factors in calculating your credit score?
Payment history and types of accounts
Amounts owed and length of credit history
Payment history and total debt
Length of credit history and new credit inquiries
What should Marcos, a 19-year-old, do to start building a credit history?
Always say "credit" when asked "credit or debit?" at a store
Apply for multiple credit cards at once
Use cash for all transactions to avoid debt
Become an authorized user on a family member's credit card
What is the best strategy to improve your credit score when using a credit card for small purchases?
Use less than 30% of the credit limit and pay it off in full every month by the due date
Use up to 90% of the credit limit and make minimum payments
Frequently exceed your credit limit and pay the total balance every two months
Avoid using the credit card and pay with cash instead
Frank and Jasmere are each getting a $20,000 car loan. If Frank has a credit score of 730 and Jasmere has a score of 600, whose monthly payment will be higher?
Frank's monthly payment will be higher
Jasmere's monthly payment will be higher
Both will have the same monthly payment
It cannot be determined from the information provided
Which of the following could have a NEGATIVE impact on your credit score if done in a short period of time?
Paying your bills on-time
Paying down balances on your credit card accounts
Decreasing your utilization of credit
Applying for multiple credit cards
What would be a benefit you receive by taking out a loan with a cosigner?
You don’t get penalized for late payments
You get a discount on future loans after this one is paid off
You have a better chance of getting approved and getting a lower interest rate if the cosigner has good credit
You automatically get the same credit score as the cosigner once the loan is paid off
Which response best completes the sentence "It's best to begin establishing credit when you're young because _____"?
Accessing credit only becomes more expensive as you get older
Negative marks on your credit report go away faster for younger borrowers
Credit scores are free for anyone under the age of 25
You will likely need a credit history to rent your first apartment, finance your first car, or open an unsecured credit card
The amount you can charge to a secured credit card is limited by what?
Your credit score
The amount of money you deposit into an account as collateral
The total amount of money across all your bank accounts
How long you’ve had an account with the bank
How can your credit score affect your financial life?
Only consumers with high scores are approved for credit
Consumers with low scores get lower interest rates on loans than those with high scores
Consumers with high scores get lower interest rates on loans than those with low scores
All consumers are treated equally regardless of their credit score
Which of the following is NOT typically included in a credit report?
Salary of your current job
Payment history of your car loan
Credit card payment history
Student loan activity
What is an insurance premium?
Your monthly payment to your insurer, regardless of whether you use any services
A list of the procedures covered by your insurance carrier
An added cost you pay in order to receive higher-quality services
The amount you pay out-of-pocket for a specific procedure or service
Which term best describes the medical expenses you are responsible for paying after your deductible is met?
Deductible limit
Premium
Out-of-network fees
Co-pay
If your renter's insurance policy has a $1,000 deductible and a thief steals your $800 TV, how much would your insurance company pay?
$0
$200
$800
$1,000
Which statement is true regarding an employer-sponsored health insurance plan?
You can only see doctors who are also employees of the same company
Your health insurance premiums will be paid directly from your paycheck, pre-tax
Health insurance is optional for all employees
Coverage is the same for all types of medical procedures
Why is it considered a risky idea for Bruce to rely solely on his emergency fund for potential health issues instead of purchasing insurance?
Insurance payments are tax deductible, thus reducing annual tax liability.
An accident or illness can be expensive, and the emergency fund may not be sufficient.
Health insurance is required by law, and not having it results in legal penalties.
Insurance companies provide investment options that can grow the emergency fund.
What type of health insurance plan is most suitable for a very healthy individual who does not take any prescription medications and only visits the doctor annually?
A low deductible plan with a high monthly premium
A high deductible plan with a low monthly premium
A plan that includes alternative medicine coverage
A comprehensive plan with low copayments for all services
If your health insurance plan has a $20 copay for covered prescription medications and the list price of the medication is $75, how much would you pay at the pharmacy?
$0
$20
$55
$75
When setting your car insurance premium, which of the following factors is typically NOT considered by insurance companies?
How many miles you drive per year
Your age
Your driving record
Your height
Which statement is TRUE regarding auto insurance premiums?
If you don't file any claims for a year, you get your premiums back.
Multiple accidents in one year will decrease your premium.
Premiums are the same across all insurance companies.
Multiple accidents in one year will increase your premium.
Which statement correctly uses the terms premium, deductible, and out-of-pocket maximum in the context of health insurance?
You pay a monthly deductible and share costs with your insurance after meeting your out-of-pocket maximum.
Your insurance covers a specific percentage of costs up to an out-of-pocket maximum, after which you pay fully.
You pay a monthly premium, and after your out-of-pocket maximum is met, you only cover copays.
You pay a monthly premium, and your insurance covers everything after the deductible is met.
Mandatory government spending includes which of the following?
Infrastructure and science
Social Security and Medicare
Healthcare and military
Education and agriculture
What does the term "withholding" mean in reference to your paycheck?
The amount of your paycheck that you are NOT being taxed on
How much you are going to owe the government when you file your annual tax return
How much you earn and includes salary, bonus and commissions
How much is being taken out of your paycheck for things like taxes, employer sponsored health insurance, and retirement
When you complete your 1040 form, if you overpaid your taxes and the government owes you money, that is called a (a) .
If a taxpayer fills out their W-4 and it results in not withholding enough money to cover their tax, what is the most likely outcome after they file their taxes?
They will receive a refund
They will owe additional taxes
They will not need to file a tax return
They will be audited by the IRS
After moving back to California and starting a full-time job, what tax returns must Akshay file if he worked part of the year in Massachusetts and part in California?
Only a federal tax return
A federal tax return and a state tax return for Massachusetts
A federal tax return and state tax returns for both Massachusetts and California
A federal tax return this year and file state returns the following year
You bought 10 shares of StreamingVideoCo at $45 per share and sold them at $80 per share two months later. What was your profit?
Loss of $800
Profit of $350
Loss of $450
Profit of $800
Why is diversification a recommended investment strategy?
It guarantees that you won’t lose money with your investments
It results in lower fees charged by fund managers
It helps reduce risk
It guarantees a high return
How can someone make money from investing in a stock?
By selling the stock for a lower price than what they bought it for
By selling the stock for a higher price than what they bought it for
By holding the stock indefinitely without selling
By buying more shares of the stock at a higher price
Why are Index Funds such a popular investing option?
They are a mix of 2-3 individual stocks that can help you diversify your portfolio
They provide a low-cost, diversified investment option that closely matches the overall return of a given index, such as the S&P 500
They are actively managed by a fund manager
They are managed by robo-advisors that guarantee higher returns than the overall stock market
What kinds of behaviors can PREVENT people from making smart investing decisions?
Staying calm when the market is experiencing a downturn
Buying stocks when prices are low and selling them when they're high
Exiting the market because that’s what everyone else is doing
Investing in a diversified portfolio instead of trying to beat the market
What are the primary factors of production in an economy?
Land, labor, and capital
Government, technology, and resources
Money, goods, and services
Demand, supply, and equilibrium
What determines the equilibrium price and quantity in a market?
Government regulations
Consumer preferences
Producer costs
Supply and demand interactions
What primary purpose do markets serve?
Markets exist to ensure everyone has access to goods and services.
Markets exist due to government intervention.
Markets exist to provide exchanges between buyers and sellers.
Markets exist solely to maximize profits for producers.
When there is an increase in demand for a particular good, what is likely to happen to its price and quantity supplied?
Price decreases, quantity supplied decreases
Price decreases, quantity supplied increases
Price increases, quantity supplied decreases
Price increases, quantity supplied increases
How do changes in consumer preferences impact the market system?
They have no effect on production and distribution.
They lead to increased competition among producers.
They influence the types and quantities of goods produced and distributed.
They cause inflation in the economy.
Which economic system is characterized by government ownership of resources and central planning?
Capitalism
Socialism
Communism
Mixed economy
In a market economy, what role do institutions play in ensuring property rights and the rule of law?
Institutions ensure equal distribution of wealth among citizens.
Institutions enforce regulations to limit individual property rights.
Institutions protect individuals' property rights and uphold the rule of law.
Institutions prioritize government ownership of all property.
Which of the following is an example of a trade union?
A group of producers that collude to fix prices
A group of workers that negotiate collective bargaining agreements with employers
A government agency that regulates financial markets
A group of consumers that advocate for consumer rights
Which economic indicator measures the total value of goods and services produced within a country within a given period of time?
Gross Domestic Product (GDP)
Consumer Price Index (CPI)
Unemployment rate
Inflation rate
How do individuals' property rights contribute to economic growth in a market economy?
By limiting access to resources for certain groups
By encouraging investment, innovation, and entrepreneurship
By promoting government control over all economic activities
By ensuring equal distribution of wealth among citizens
Which economic indicator provides insights into the overall level of prices for goods and services in an economy over time?
Gross Domestic Product (GDP)
Consumer Price Index (CPI)
Unemployment rate
Inflation rate
In a market economy, what role does the rule of law play in ensuring fair competition and market efficiency?
It restricts competition to favor certain firms
It encourages monopolies to dominate the market
It ensures that all market participants abide by the same set of rules
It allows for discrimination against certain groups in the market
Which of the following is an example of a fixed expense?
Groceries
Rent
Entertainment
Clothing
Which of the following is an example of a variable expense?
Rent
Groceries
Utilities
Insurance premiums
What is the purpose of a personal budget?
To track income and expenses
To regulate international trade and finance
To enforce antitrust laws and prevent monopolies
To provide financial assistance to struggling industries
