WorksheetsFinancial Literacy Questions
Total questions: 54
Worksheet time: 27mins
Which of these factors influences the cost of car insurance?
Driving record of the car owner.
Expertise of the car salesperson.
Amount of money owed on the car.
How often the car is serviced.
Most experts recommend having an emergency fund to cover at least:
one to two months of living expenses.
three to six months of living expenses.
one to two years of living expenses.
two to four years of living expenses.
Before buying a certificate of deposit (CD), a person needs to:
be sure that funds can be withdrawn from the CD by writing a check.
find out which bank offers the best interest rates on CDs.
have a savings account in the bank which offers the CD.
obtain an ATM card from the bank which offers the CD.
An important characteristic of a SMART financial goal is that the goal:
has a specific time frame.
is approved by a financial planner.
is the same as for other people in the person's age group.
can be achieved at no cost.
A blue chip stock is a share of a public company that has a reputation for:
making innovative products and creating the latest technology
operating profitably and having a long record of stable growth
having a stock price that fluctuates
hiring college graduates
A person's earning potential is generally based on:
family size and values.
skills and education.
height and weight.
religion and ethnicity.
The reason an employed person buys disability insurance is to be protected from the loss of income if the person:
becomes unemployed for more than three months.
needs to stay home to take care of a sick child.
earns a salary that does not cover monthly fixed or variable expenses.
is unable to work due to a serious illness or injury.
It is important to distinguish between needs and wants to:
spend money wisely.
avoid phishing.
eliminate risk.
ensure liquidity.
Which of the following is a true statement about term life insurance?
It provides insurance during a person's entire life.
It is insurance that has a cash value.
It is insurance coverage on a person for a limited period of time.
It is insurance coverage that includes health care.
Financial advisors distinguish between "good debt" and "bad debt." Generally, an example of "good debt" is a:
unpaid balance on a credit card.
vacation loan with a high interest rate.
home mortgage.
installment loan for jewelry.
A major benefit of a Roth Individual Retirement Account (Roth IRA) is that:
it is restricted to full-time employees who are more than 65 years old.
money can be withdrawn from the account tax-free after age 59½.
it eliminates the need for a person to have a will.
money in the account doubles each year.
When taking a loan from a bank, it is most important to know the:
interest rate paid on savings accounts.
annual percentage rate (APR) on the loan.
number of years the bank has been in business.
number of loans approved by the bank each month.
A person on a tight budget received a 2% salary increase this year. If the price of food increases by 5%, what should he try to do first?
Reduce his variable expenses to increase his food expenses.
Withdraw funds each month from savings in order to buy food.
Use a credit card to buy food.
Shop for food once a week.
Net pay is a different dollar amount than gross pay due to the:
rate of inflation.
deductions for taxes.
cost of living expenses.
age of the employee.
Which budget item can be reduced immediately to help a person reach his goal of having $50 to invest each month?
Entertainment
Rent
Insurance
Taxes
Which of the following is typically paid every month?
Car loan payments.
Insurance premiums.
Entertainment expenses.
Mortgage payments.
A person will have a capital gain when she:
sells stock that increased in value above the purchased price.
buys mutual funds from a financial advisor.
buys an item with a debit card.
has shares of a profitable company that pays quarterly dividends.
What is the first action a person should take when her debit card is stolen?
Deposit money into her bank account to cover all charges.
Have her bank notify the Federal Deposit Insurance Corporation (FDIC).
Change the Social Security number used with her bank debit card.
Report the theft to her bank within the specified time limit.
The Duval Drug Company has just received approval to sell a new treatment for cancer. The most likely outcome of this news is that investors will:
buy shares of Duval causing the price of the stock to increase.
sell Duval shares causing the price of the stock to decline.
not react causing the price of Duval's stock to remain about the same.
buy a competitor's stock to balance any decline in Duval's stock price.
A person wrote a check for $1,000 but only had a balance of $600 in her checking account. The most likely reason that the check did NOT "bounce" is because she has:
a debit card from that bank.
a certificate of deposit (CD) from that bank.
excellent credit.
overdraft protection.
A person who declares personal bankruptcy this year will NOT be able to:
join the military.
open a savings account without a co-signer.
vote for a seven year period.
get loans or other forms of credit at low interest rates.
A person with a low credit score will likely:
have to buy everything with cash.
get low-interest loans.
have difficulty getting a low interest loan.
get an interest-free loan.
It is difficult for many families to save for their children's college education. One way to save for college is to have a spending plan that:
has higher fixed expenses.
has lower income.
includes savings for retirement.
includes a contribution to a 529 plan.
The main purpose of buying insurance is to:
have financial protection in case of a loss.
eliminate the risk of having a loss.
guarantee a high credit score.
save for major purchases such as a home.
The reason that a person needs to have a will is to:
diversify the person's investment portfolio.
prevent the person from losing personal property.
lower the cost of premiums on the person's life insurance policy.
have assets distributed upon death according to the person's wishes.
A person makes a $350 purchase using a credit card. It is advisable for the person to completely pay the balance when the bill arrives because:
it helps avoid paying interest charges.
it increases the credit card limit immediately.
it guarantees a higher credit score instantly.
it allows for more reward points on the purchase.
What is the advantage of paying $350 over three months rather than over six months?
The person will pay less sales tax on the item.
The person will pay less interest on the balance owed.
The person will have his line of credit lowered.
The person will receive discounts on future items charged.
One advantage of joining a credit union is that credit unions:
are not required to follow bank regulations.
are not required to give information to their customers.
give lower interest rates for loans to their members.
allow their members to have interest-free loans.
A person's computer is stolen from her apartment. Which insurance policy will cover this loss?
Renters or homeowners insurance.
Whole life or term insurance.
Liability insurance.
Comprehensive insurance.
Saving for retirement should start:
when a person begins her first full time job.
five years before retirement age.
when a person has children.
when an employee has ten years of work experience.
When a person owns common stock, that person has:
an investment with a guaranteed interest rate.
made a loan to a local or state government.
an investment with no risk.
a share of ownership in a corporation.
What should a person do when he receives a retail store gift card?
Find out if the value of the card can be reduced for any reason.
Apply for the store's credit card in order to use the card.
Use the card to pay utility bills.
Keep the card for more than one year so it earns interest.
Which of the following best describes a person's net worth?
Assets and Liabilities.
Liabilities and Debt.
Expenses and Income.
Assets and Spending.
Which of the following terms have a similar definition
Assets and Liabilities.
Liabilities and Debt.
Expenses and Income.
Assets and Spending.
According to the statement, which question will help a person who has $1,000 determine whether or not to invest?
How long will it take him to save $1,000?
Where did the $1,000 come from?
Can he afford to lose any of the $1,000?
Is $1,000 enough money?
The purpose of having a diversified investment portfolio is to:
lower the amount of money needed for an investment.
eliminate the need for working with a professional.
lower the investment risk.
avoid paying income taxes.
An ATM fee may be charged if a withdrawal is made from an ATM:
at the person's own bank branch.
at another branch of the person's bank.
that is owned by a local fast food restaurant.
that is owned by the person's bank that is located in a shopping mall.
A $1,000 savings account will grow the most if the interest is compounded:
annually.
quarterly.
daily
The reason corporations issue bonds is to:
encourage Americans to save.
increase their employee salaries.
borrow money from investors.
increase the number of their customers.
A bank is offering free checking if a minimum balance of $1,000 is kept in the account. This account does NOT earn interest. What is an important question to answer before opening a checking account at this bank?
How long does the $1,000 need to remain in the account?
Are the advantages of free-checking greater than the loss of interest on the $1,000?
Does opening a free checking account include a supply of checks?
Does the bank return cancelled checks to the account owner each month?
It is important for a person to review her free annual credit report from each of the three credit reporting bureaus:
to check for incorrect information.
to increase her collateral.
because it is required by law.
because anyone can review her information.
Savings and checking accounts are known for being:
risky.
expensive.
liquid.
illegal.
The DISADVANTAGE of taking a loan for the maximum number of years allowed is that the longer the period of time of the loan, the greater the:
amount of collateral required.
risk of defaulting on the loan.
equity after five years.
total cost of the loan.
Colleges often request that an application fee be paid with a bank cashiers check or credit card instead of a personal check. If a bank cashiers check is requested, it is because it:
is a guaranteed form of payment.
will not need to be endorsed.
has been approved by the Federal Reserve System (Fed).
What is a credit counselor likely to recommend to a person with several credit cards that have high unpaid balances?
A savings account.
A consolidation loan.
Diversification of investments.
Garnishment of income.
The Rule of 72 helps a person determine the:
amount of money needed to pay for emergencies.
amount of life insurance needed for income to protect a person's family.
yearly inflation rate.
number of years it takes to double money at a given interest rate.
Banks are considered safe places to keep savings because they generally are:
regulated by the Internal Revenue Service (IRS).
well-respected institutions in the community.
located in more than one neighborhood in the state.
members of the Federal Deposit Insurance Corporation (FDIC).
Which of the following people will be most likely to pay the lowest health insurance rate?
A person who takes medication for high blood pressure.
A person who is a nonsmoker for more than 10 years.
A person with diabetes who exercises regularly.
A person with high cholesterol who eats organic food.
A person should prepare and use a budget to:
convince a credit reporting agency to raise her credit score.
obtain a lower car insurance premium.
prove to her employer that she needs a salary increase.
avoid spending more than she can afford.
A person decides to make a $20,000 instead of a $10,000 down payment on a house. What effect will the higher down payment have on the monthly mortgage payments for a 30-year fixed-rate mortgage?
It will increase the monthly payment.
It will cancel the monthly payment.
It will lower the monthly payment.
There will be no effect on the monthly payment.
A potential problem when a check is made out to "cash" is that:
if the check was written over 7 days ago, it cannot be cashed.
if the check is lost, it can be cashed by anyone.
the check cannot be deposited in a savings account.
the check can only be cashed at a check-cashing store.
The U.S. Department of the Treasury is responsible for:
training financial advisors.
preparing tax returns.
printing money.
clearing checks.
What is a feature of predatory loans?
A great deal of collateral is required in order to be approved for the loan.
Extremely high interest rates and fees are charged
They are only available to people with perfect credit scores.
They are government-subsidized loans.
Fill in the blank: A high __________ score is required in order to be approved for the loan.
credit
height
weight
speed
