WorksheetsFinancial Literacy and Cognitive Bias Quiz
Total questions: 51
Worksheet time: 26mins
What is the best way to look at your spending habits?
Only track your expenses
Analyze your spending patterns
Set a budget based on your financial goals
Combine tracking expenses, analyzing patterns, and setting a budget
How much should be in an emergency fund?
1-2 months of expenses
3-6 months of expenses
At least $500
At least $2,000
What is a cognitive bias?
A conscious decision-making process
A subconscious error in thinking
A logical reasoning skill
A financial planning strategy
What is the sunk cost fallacy?
The tendency to search for confirming information
The tendency to make decisions based on past investments
The tendency to fear missing out
The tendency to value owned items more
Which bias involves the tendency to feel anxiety about missing out on events?
Overconfidence bias
Herd mentality
FOMO
Endowment effect
When budgeting, should you use gross pay or net pay?
Gross pay for more savings
Net pay for a more accurate financial plan
Gross pay for better investment
Net pay for higher expenses
Which of the following is a way to access money in your checking account?
Credit card payments
Direct deposit
Stock investments
Real estate transactions
Why might your paycheck be less than the amount you actually earned?
Due to receiving bonuses
Due to deductions like taxes and benefits
Due to working overtime
Due to receiving a promotion
What is the primary purpose of a debit card?
To earn interest on savings
To access funds directly from your bank account
To apply for loans
To invest in stocks
How much money does the FDIC insure for account holders per depositor, per insured bank?
$100,000
$250,000
$500,000
$1,000,000
What is the largest source of fees for checking accounts?
Maintenance fees
Overdraft fees
ATM fees
Transfer fees
What does the 50/20/30 rule suggest for income allocation?
50% to savings, 20% to needs, 30% to wants
50% to wants, 20% to savings, 30% to needs
50% to needs, 30% to wants, 20% to savings and debt repayment
50% to investments, 30% to savings, 20% to needs
What is a characteristic of an "unbanked" individual?
Has a savings account
Uses credit cards frequently
Relies primarily on cash for transactions
Has access to online banking
How is compound interest calculated?
By adding a fixed amount annually
By multiplying the principal by the interest rate
By adding the accumulated interest to the principal and recalculating
By subtracting the interest from the principal
What is the term used to describe the original amount of money borrowed, separate from interest or fees?
Term
Principal
Interest rate
Mortgage
Which of the following defines the rate charged for borrowing money, usually expressed as a percent of the amount borrowed?
Term
Principal
Interest rate
Mortgage
What is a loan called that is taken by individuals and businesses to make real estate purchases without paying the entire value of the purchase upfront?
Term
Principal
Interest rate
Mortgage
What is another term for open-end credit?
Secured credit
Unsecured credit
Revolving credit
Fixed credit
Which type of loan is backed by collateral?
Secured loan
Unsecured loan
Revolving credit
Personal loan
What is the cost of borrowing on a credit card if you don’t pay the whole balance off each month?
Annual Percentage Rate (APR)
Principal
Interest rate
Term
What happens to the principal and interest with the amortization of an installment loan over time?
The principal decreases while the interest increases.
The interest decreases while the principal increases.
Both principal and interest remain constant.
Both principal and interest increase.
What is the definition of an annual percentage rate (APR)?
The total amount borrowed on a loan.
The cost you pay each year to borrow money, including fees, expressed as a percentage.
The minimum payment required on a credit card.
The maximum amount that may be borrowed on a credit card.
What is the minimum payment on a credit card?
The total balance owed on the card.
The smallest amount a credit card holder must pay during a billing cycle to remain in good standing.
The interest rate charged on the card.
The maximum amount that can be borrowed on the card.
What is the effect of term length on interest paid for loans?
Lower rates for longer terms and higher rates for shorter terms.
Higher rates for longer terms and lower rates for shorter terms.
Interest rates remain constant regardless of term length.
Interest rates are only affected by the principal amount.
What information is found on your credit report?
Only your current credit card balances.
A summary of your personal and financial information related to credit, including payment history and inquiries.
Only your employment history.
Only your bank account details.
Which of the following is a way to reduce the amount of interest you pay on a credit card?
Pay less than the minimum.
Make payments more frequently.
Increase your credit limit.
Ignore the interest rate.
What are some advantages of using credit?
Credit building, Cash Back, Convenience and Security.
Only credit building.
Only cash back.
Only convenience.
Which factors affect your credit score the most?
The amount of debt you owe and the length of your credit history.
The number of credit cards you have.
The interest rates on your loans.
The amount of cash in your savings account.
Which are the three main credit bureaus?
Equifax, Experian, and TransUnion.
Visa, MasterCard, and American Express.
Bank of America, Chase, and Wells Fargo.
PayPal, Venmo, and Zelle.
What is the difference between sticker price and net price for college?
Sticker price includes scholarships; net price does not.
Sticker price is the total expense; net price is after grants and scholarships.
Net price includes room and board; sticker price does not.
Net price is the published price; sticker price is the actual cost.
What does FAFSA stand for?
Federal Application for Student Aid
Free Application for Federal Student Aid
Financial Aid for Students and Families Application
Federal Aid for Students Application
Which type of loan requires the student to pay interest while in school?
Direct subsidized loan
Direct unsubsidized loan
Perkins loan
PLUS loan
What is the purpose of a grace period for student loans?
To reduce the loan amount
To allow time to find a job
To pause payments after graduation
To increase the interest rate
What is a resume?
A document listing your references
A short document describing your education and skills
A letter of recommendation
A detailed biography of your life
What is renters insurance?
A type of health insurance for renters
A form of property insurance that covers losses to personal property
Insurance for rental cars
Insurance for landlords
How do you calculate the insurance payment after a deductible?
Add the deductible to the claim amount
Subtract the deductible from the total claim amount
Multiply the deductible by the claim amount
Divide the claim amount by the deductible
What does bodily injury liability insurance cover?
Only vehicle repairs
Medical and other expenses for injuries to others
Damage to your own vehicle
Theft of personal property
What is the relationship between deductible and premium?
Higher deductible, higher premium
Higher deductible, lower premium
Deductible does not affect premium
Lower deductible, lower premium
How do insurance companies primarily make money?
By selling cars
By charging premiums and investing them
By offering loans
By providing free services
What is the primary purpose of taxes?
To provide revenue for federal, local, and state governments
To increase the wealth of citizens
To fund private businesses
To reduce government spending
Which government agency is responsible for collecting taxes in the United States?
Federal Reserve
Internal Revenue Service (IRS)
Department of Treasury
Social Security Administration
What is the significance of April 15 in the context of taxes?
It is the deadline for filing annual income tax returns
It is the start of the fiscal year
It is the date when tax refunds are issued
It is the date when property taxes are due
What is the purpose of a W-4 form?
To report annual wages and taxes withheld
To verify an employee's eligibility to work in the U.S.
To indicate an employee's tax situation to the employer
To file annual income tax returns
How can investing help achieve long-term goals?
By providing immediate financial returns
By building a cushion for short-term needs
By helping achieve long-term goals like retirement
By reducing the need for savings
What is the definition of risk in investing?
The guarantee of financial gain
The possibility of something bad, unpleasant, or dangerous happening
The assurance of investment returns
The certainty of no financial loss
What is Social Security?
A private insurance program
A federal program providing retirement benefits and disability income
A state-run healthcare system
A tax deduction for employees
What is the main difference between fixed expenses and variable expenses?
Fixed expenses change frequently, while variable expenses remain the same.
Fixed expenses are optional, while variable expenses are mandatory.
Fixed expenses remain the same in price and frequency, while variable expenses can change regularly.
Fixed expenses are always higher than variable expenses.
Which of the following is a strategy to reduce monthly expenses?
Increase spending on luxury items.
Avoid tracking your spending.
Use a cash-back credit card strategically.
Ignore discounts and coupons.
What does "pay yourself first" mean in budgeting?
Spend all your income before saving.
Prioritize your own financial needs by saving a portion of your income before other expenses.
Pay all your bills first before saving.
Invest all your money in the stock market.
What is one advantage of having a budget?
It makes it harder to control your expenses.
It allows you to ignore your income.
It helps you plan, save, and control your expenses.
It increases your expenses automatically.
How is a budget defined?
A random list of expenses.
A financial plan outlining expected income and expenses for a specific period.
A document listing only income sources.
A plan to spend all available money.
