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Understanding Financial Terms

Total questions: 25

Worksheet time: 13hrs 30mins

Name
Class
Date
1.

What is interest? (Chapter 1)

a)
Interest is the amount of money saved.
b)
Interest is a type of savings account.
c)
Interest is the cost of borrowing money or the return on investment.
d)
Interest is a fee for using a credit card.
2.

What is a down payment? (Chapter 1)

a)
A down payment is an initial payment made towards the purchase of an asset.
b)
A down payment is a fee paid for a service.
c)
A down payment is a tax on property sales.
d)
A down payment is a loan taken to buy an asset.
3.

What is “principal” in financial terms? (Chapter 1)

a)
The interest accrued on a loan.
b)
The total amount paid back over time.
c)
The fees associated with borrowing money.
d)
The original sum of money borrowed or invested.
4.

What does APR stand for? (Chapter 1)

a)
Annual Percentage Rate
b)
Adjusted Payment Rate
c)
Average Percentage Rate
d)
Annual Payment Rate
5.

How much money would you have if your $100 increased by 7%? (Chapter 1)

a)
$97
b)
$110
c)
$120
d)
$107
6.

What are three things you will generally need to open a bank account? (Chapter 2)

a)
Birth certificate, utility bill, monthly salary
b)
Social security number, employment history, bank statement
c)
Identification, proof of address, initial deposit
d)
Credit score, personal references, online banking access
7.

What are maintenance fees? (Chapter 2)

a)
Maintenance fees are charges for the upkeep of shared property or facilities.
b)
Maintenance fees are discounts for early lease renewals.
c)
Maintenance fees are penalties for late payments.
d)
Maintenance fees are taxes on property ownership.
8.

What does FDIC stand for and what does it mean if a bank is FDIC insured? (Chapter 2)

a)
FDIC stands for Federal Deposit Insurance Company; it means loans are guaranteed up to $250,000.
b)
FDIC stands for Federal Deposit Insurance Corporation; it means deposits are insured up to $250,000.
c)
FDIC stands for Federal Deposit Insurance Corporation; it means deposits are insured for any amount.
d)
FDIC stands for Federal Deposit Insurance Corporation; it means savings accounts are protected up to $500,000.
9.

How can overdraft protection end up costing you money? (Chapter 2)

a)
You earn interest on your overdraft balance.
b)
It provides a safety net for all transactions.
c)
Overdraft protection can cost you money through overdraft fees and accumulated charges.
d)
Overdraft protection guarantees no fees will apply.
10.

What is a certificate of deposit (CD)? (Chapter 2)

a)
A certificate of deposit (CD) is a checking account that offers unlimited withdrawals.
b)
A certificate of deposit (CD) is a time deposit account that earns interest over a fixed term.
c)
A certificate of deposit (CD) is a loan that must be repaid immediately.
d)
A certificate of deposit (CD) is a type of savings account with no interest.
11.

What is the Free Application for Federal Student Aid? (Chapter 3)

a)
The FAFSA is a loan application for private lenders.
b)
FAFSA is a scholarship program for high school students.
c)
The Free Application for Federal Student Aid is a tax form for parents.
d)
The Free Application for Federal Student Aid (FAFSA) is a form used to apply for financial aid for education.
12.

What are college grants? (Chapter 3)

a)
College grants are non-repayable financial aid for students.
b)
College grants are scholarships based on athletic performance.
c)
College grants are financial aid for graduate students only.
d)
College grants are loans that must be repaid.
13.

What is Federal Work-Study? (Chapter 3)

a)
Federal Work-Study is a scholarship for high-achieving students.
b)
Federal Work-Study is a loan program for students.
c)
Federal Work-Study is a program that provides part-time jobs for students with financial need.
d)
Federal Work-Study is a grant for international students.
14.

What are two reasons that a person should consider attending a community college? (Chapter 3)

a)
Affordability and personalized education.
b)

More support services and large class sizes.

c)
Inflexible schedules and minimal career guidance.
d)
Limited course variety and high tuition fees.
15.


  1. As of 2020, how much student debt did the average student leave school with? (Chapter 3)

a)

$37,584

b)

$15,600

c)

$45,485

d)

$25,226

16.

What is the 50/30/20 rule? (Chapter 4)

a)
A guideline that recommends dividing income into 50% for debt repayment, 30% for groceries, and 20% for entertainment.
b)
A budgeting rule that divides income into 50% needs, 30% wants, and 20% savings.
c)
A financial plan that suggests spending 50% on leisure, 30% on bills, and 20% on charity.
d)
A savings strategy that allocates 50% to savings, 30% to investments, and 20% to expenses.
17.

In 2019, what was the average cost of vehicle ownership per month? (Chapter 4)

a)
$650
b)

$901.25

c)

$773.50

d)

$813.55

18.

How much does the average commercially prepared meal cost? (Chapter 4)

a)

$13

b)

$20

c)

$12

d)

$10

19.

How much does the average meal prepared at home cost? (Chapter 4)

a)

$4 per person

b)

$3 per person

c)

$7 per person

d)

$2 per person

20.

What is an emergency fund? (Chapter 4)

a)
An emergency fund is a type of investment account.
b)
An emergency fund is a savings account for unexpected expenses.
c)
An emergency fund is a loan for urgent needs.
d)
An emergency fund is a retirement savings plan.
21.

What is a credit report? (Chapter 5)

a)
A credit report is a detailed record of an individual's credit history.
b)
A credit report is a list of all loans taken by a person.
c)
A credit report is a summary of an individual's bank account.
d)
A credit report is a document showing a person's employment history.
22.

What is a Credit Score? (Chapter 5)

a)
A credit score is a numerical value that indicates a person's creditworthiness.
b)
A credit score is a summary of a person's bank account balance.
c)
A credit score is a rating of a person's spending habits.
d)
A credit score is a measure of a person's income level.
23.

What is the relationship between your credit score and the interest rates you will be offered?

(Chapter 5)

a)
Interest rates are fixed regardless of credit scores.
b)
Credit scores have no impact on interest rates.
c)

Lower credit scores result in lower interest rates.

d)
Higher credit scores generally lead to lower interest rates.
24.

What are the 4 lines of credit? (Chapter 5)

a)

Savings Accounts, Credit union loan, Secured loan, Unsecured credit

b)

Personal loan, Savings account, Investment account, Checking accounts

c)

Certificate of Deposit, Home equity line of credit, Business line of credit, Credit card

d)

Auto loan, Student loan, Mortgage loan, Credit Cards.

25.

What is the range of credit scores? (Chapter 5)

a)
100 to 900
b)
400 to 800
c)
250 to 750
d)
300 to 850

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