PSY2553 W32 Psy. of Personal Adjustment (2254), Financial Literacy TEST (SSA)
Approximately how many years would it take your money to double if you are receiving an annual compound interest rate of 6 percent? 11 9 10 12
12
If the equity you have at the time of purchase is less than ____ percent of the market value of the house, you may be required to purchase private mortgage insurance (PMI). 20 25 15 10
20
In ________, banks and other credit card issuers began introducing chip cards to fight credit card fraud. 2014 2016 2015 2013
2015
A guidleline is that PITI should not exceed ____ percent of your gross income and that your total debt should not exceed ____ percent of your gross income. 30; 36 28; 36 25; 30 20; 30
28; 36
________ takes place at the point where you pay for goods or services with your credit card. A cash advance An installment loan Revolving credit A point-of-sale transaction
A point-of-sale transaction
Which of the following is an example of a charge card? Discover MasterCard Visa American Express
American Express
With ________, you borrow one lump sum and you have a fixed number of payments. The payments are usually the same amount each month. A cash advance Revolving credit An installment loan A point-of-sale transaction
An installment loan
The ________ is an annualized rate for most of the charges you are paying on the mortgage. Allowed percentage rate (APR) Annual payment rate (APR) Annual percentage rate (APR) Adjustable percentage rate (APR)
Annual percentage rate (APR)
Which of the following is not considered monetary compensation? Profit sharing Bonuses Tips Benefits
Benefits
Which of the following is not a way to withdraw money from a checking account? Perform an electronic debit Write a check Use an ATM Call the bank
Call the bank
You can use your credit card to get cash from an ATM or bank. This is called a(n) ________. Cash advance Point-of-sale transaction Installment loan Convenience check
Cash advance
A ________ is a promissory note issued by a bank or credit union that promises to pay a certain amount of interest after a certain time period. Money market account IRA Savings account Certificate of deposit (CD)
Certificate of deposit (CD)
A(n) ________ is similar to a credit card, except you are required to pay the balance in full each month or you have to pay penalties. Secured credit card Charge card Unsecured credit card Debit card
Charge card
When balancing your checkbook, the first step is to ________. Compare the adjusted balance to your register balance Check off transactions Subtract outstanding checks, debits, or ATM transactions Add outstanding deposits to the ending balance
Check off transactions
________ typically do not offer high interest and some may charge fees based on the amount deposited in the account or the number of checks written on the account. Checking accounts CDs Money markets IRAs
Checking accounts
________ are expenses that you incur, over and above the purchase price, when you complete a real estate transaction. Credit costs Closing costs Charge costs Checking costs
Closing costs
When you earn interest on savings, the interest is added to the original amount and then you earn interest on the interest. This is called ________. Augmenting Manifolding Compounding Diversifying
Compounding
A card issued by a bank that gives you the ability to borrow money to pay for things is called a ________. Credit card Transaction card Purchase card Debit card
Credit card
Federal rules give you more protection against fraud if debit card transactions are run as ________. Credit transactions Debit transactions
Credit transactions
The budgeting process is a(n) ________ process. The process starts over again with the new month when the budget for the next month is created. Annual Automatic Infrequent Cyclic
Cyclic
Pension plans and 401(k) plans are examples of ________. Gross compensation Deferred compensation Nonmonetary compensation Net compensation
Deferred compensation
A checking account is sometimes called a ________ account or a ________ account. Draft; Trade Claim; Requisition Inquiry; Petition Demand; Transactional
Demand; Transactional
The ability to electronically transfer your net pay from your employer's bank account into your bank account is called ________. Direct deposit Online banking Credit transfer Deferred deposit
Direct deposit
________ income is the amount of income that is left after taxes and necessary expenses have been paid. Discretionary Monetary Actual Disposable
Discretionary
________ income is the amount of money you have to spend or save during the month. Monetary Net Disposable Discretionary
Disposable
The rule of 72 is a method for estimating how long it will take for your money to ________ at a given compound interest rate. Triple Double Grow
Double
Balancing your checkbook is important because it enables you to ________. Transfer money into your savings account Deposit your paycheck Ensure your statement is accurate Ensure your bills are paid on time
Ensure your statement is accurate
The Social Security and Medicare tax that you and your employer pay is called ________ tax. FICA FHA FDA FAA
FICA
True or False: A pension is a fixed, regular payment that begins at retirement, and it is very common. False True
False
True or False: Defaulting on a loan means paying the loan back in the agreed upon manner. False True
False
True or False: In general, private student loans have lower interest rates than federal loans and are available to students who may not have a credit history. True False
False
True or False: Investments sold by banks or credit unions are considered deposits and are insured by the FDIC or the NCUSIF. True False
False
True or False: MasterCard and Visa issue credit cards, not banks or other financial institutions. True False
False
True or False: Money markets are the most liquid assets. True False
False
True or False: Savings accounts usually pay more interest than money market accounts. False True
False
True or False: With a zero-based budget, the total expenses should never equal the total income. False True
False
The deposits in a bank are insured by the FDIC, which stands for ________. Federal Deposit Insurance Corporation Federal Direct Insurance Corporation Federal Deposit Investment Corporation Free Deposit Insurance Corporation
Federal Deposit Insurance Corporation
Section 125, or cafeteria plans, are ________ plans in which the employer offers a "menu" of benefits for the employee to choose from. Long term disability Flexible benefit Benefit enrollment Deferred compensation
Flexible benefit
A bank is a ________ business that offers financial services, such as checking accounts, savings accounts, and automated teller machines (ATMs). For-profit Not-for-profit
For-profit
A mortgage is a loan that is used to buy a house or other real property. If you default on the loan, ________ is a legal process where the lender takes ownership of the property. Repossession Foreclosure
Foreclosure
________ is how much you are paid during a pay period before taxes and other deductions. Gross pay Net pay
Gross pay
If you do not pay the balance of a credit card off by the due date, you are charged ________. Interest Application fees Over limit fees Annual fees
Interest
The card issuer calculates the average daily balance over the days of the billing cycle and then multiplies that number by the ________ for the month. Miniumum payment Interest rate Grace period Rule of 72
Interest rate
Banks are owned by ________. The Federal Reserve Bank employees Investors Anyone who deposits funds into the bank
Investors
By tracking your spending, you can control, evaluate, and adjust your budget. Which of the following is not a method for tracking spending? Keeping a spending diary Keeping a running total in your head Keeping receipts Reviewing online banking resources
Keeping a running total in your head
________ is the degree to which an asset can be quickly bought or sold in the market without affecting the asset's price. Lucidity Liquidity Validity Superfluity
Liquidity
What is the first step in creating a budget? Evaluate the budget Plan spending by category Compare income to expenses List disposable income
List disposable income
A(n) ________ is an amount of money that is provided by a lender to a borrower for a period of time with a promise that it will be paid back by the borrower. Investment APR Loan Fixed-rate
Loan
When you have a ________ interest rate, your mortgage payments are lower and the total amount you have to pay is lower. Lower Higher
Lower
The ________ is the lowest amount of money you can pay toward your credit card bill. Rule of 72 Minimum payment Point-of-sale Grace period
Minimum payment
________ compensation is the money you are paid for the work you do. Net Nonmonetary Monetary Deferred
Monetary
A ________ is an interest bearing account that you can write a limited number of checks on, however, they usually require a higher balance than a savings account. Certificate of deposit (CD) Savings account Checking account Money market account
Money market account
In the area of personal finance, budgets are usually created ________. Annually Monthly Semi-annually Weekly
Monthly
You should balance your checkbook ________. Weekly Semi-monthly Monthly Bi-weekly
Monthly
The National Credit Union Administration (NCUA) is a federal agency that monitors credit unions and runs the ________, which insures the deposits at all federal credit unions. National Checking and Savings Insurance Fund (NCSIF) National Credit Union Share Insurance Forum (NCUSIF) National Credit Union Share Insurance Fund (NCUSIF) National Credit Union Insurance Forum (NCUIF)
National Credit Union Share Insurance Fund (NCUSIF)
________ is also called take home pay. Gross pay Net pay
Net pay
Compensation that is in some form other than cash, such as free sodas, paid time off, and tuition reimbursement is called ________. Nonmonetary compensation Gross compensation Deferred compensation Monetary compensation
Nonmonetary compensation
Credit unions are ________ financial cooperatives that offer financial services, similar to banks. For-profit Not-for-profit
Not-for-profit
When using a convenience check, you will pay interest starting ________. On the day you write the check The day the current billing cycle ends The date the next billing cycle begins On the day the check is cashed
On the day the check is cashed
A ________ loan is a loan that parents take out on behalf of the undergraduate student. Approval requires a good credit history. Perkins PLUS Stafford Subsidized
PLUS
When writing a check, the ________ is the person or merchant that you are paying. Payor Payee
Payee
The ________ loan program provides low-interest student loans to undergraduate and graduate students who have exceptional financial need. Subsidized Stafford PLUS Perkins
Perkins
In a 401(k) plan, you contribute money to an account on a ________ basis. After tax Pretax
Pretax
The ________ of a loan is the amount of money you borrow. Term Interest Advance Principle
Principle
Which of the following is not a function of an automated teller machine (ATM)? Checking your account balance Transferring money between accounts Printing a statement Withdrawing cash
Printing a statement
An automobile loan is used to buy a car, truck, or other vehicle. If you default on the loan, ________ is the process of taking the vehicle to pay the debt. Foreclosure Repossession
Repossession
With ________, the loan amount can be withdrawn, paid back, and then withdrawn again. Revolving credit An installment loan A fixed loan A cash advance
Revolving credit
The ________ number is a unique number that identifies your bank or credit union. Check Checking account Savings account Routing
Routing
You can use the ________ to estimate how long it will take a debt to double at a given compound interest rate. Miniumum payment Grace period Rule of 72 Revolving credit
Rule of 72
A credit card that is backed by a savings account is called a(n) ________. Secured credit card Debit card Charge card Unsecured credit card
Secured credit card
Which of the following is a disadvantage of using a credit card? You can make purchases over the internet. You can buy things with the swipe of a card. Some people buy on credit without thinking about the actual cost. You don't have to carry cash.
Some people buy on credit without thinking about the actual cost.
The most common types of federal student loans are the ________ loans. Stafford Subsidized PLUS Perkins
Stafford
With a(n) ________ student loan, the government pays the interest until six months after you leave school. Subsidized Unsubsidized Jenkins Kennedy
Subsidized
The ________ is the length of time you have to pay back the loan. Extension Interest Principle Term
Term
If there is not enough money in your account to pay a check that you have written, and you do not have overdraft protection, ________. The bank will cover the shortfall The check is returned to the payee's bank unpaid The check is sent to the payor's bank unpaid The check is sent to the payee unpaid
The check is returned to the payee's bank unpaid
The amount of equity you have in a home or other property is ________. The sum of the market value of the property and the unpaid mortgage balance The unpaid mortgage balance times the APR The difference between the market value of the property and the unpaid mortgage balance The market value of the property times the APR
The difference between the market value of the property and the unpaid mortgage balance
The average daily balance is the balance averaged over ________. The number of days in the duration of the loan The number of days in the billing cycle Three months One year
The number of days in the billing cycle
What is the first step in cashing a check? Money is debited from your account. The payee presents the check to his or her bank. An electronic file is sent to a clearinghouse. The payee endorses the check.
The payee endorses the check.
One advantage of a cash envelope system is that ________. There is a clear boundary line for when you have spent the budgeted amount You have to go to the bank frequently The money for all expenses is in one envelope You can use it to pay your mortgage payment
There is a clear boundary line for when you have spent the budgeted amount
An escrow account is an account where a ________ party receives money from one party and disburses it to a ________ party. Second; third Third; fourth Third; second Second; first
Third; second
MasterCard and Visa are payment technology companies that process card transactions and payments to merchants. True False
True
True or False: A budget is a forecast of income and expenses by category for a specific period or timeframe. False True
True
True or False: A checking account is an account held at a financial institution that allows withdrawals and deposits. True False
True
True or False: A convenience check is a check linked to your credit card account. False True
True
True or False: A grace period is the time between when the item is purchased and when the payment is due. True False
True
True or False: Credit card issuers can charge you various fees which may include applicaion fees, annual fees, late payment fees and over limit fees. True False
True
True or False: Deferred compensation is the monetary compensation that is earned now but paid to you at a later date. True False
True
True or False: Savings accounts earn interest, though the amount of interest is typically very small. False True
True
True or False: Some banks and credit unions offer investments, such as mutual funds, brokerage accounts for buying stocks and bonds, individual retirement accounts, and insurance. True False
True
True or False: There are two categories of student loans available: federal loans and private loans. False True
True
True or False: Tuition reimbursement usually comes with requirements that employers expect from employees such as staying with the company for a certain period of time. True False
True
True or False: Using mobile banking, you can use your phone to pay for items at a retailer. False True
True
True or False: When using your debit card to track your spending, you should also use your bank's online banking system to keep a running total. True False
True
True or False: You can easily take money from a money market account. True False
True
True or False: You should choose a bank that has the lowest possible fees, is convenient to your work or home, and is a member of the FDIC or NCUA. False True
True
With a(n) ________ student loan, you must pay the interest, however, the interest payments can be deferred until after you leave school. Subsidized Jenkins Unsubsidized Kennedy
Unsubsidized
Which of the following is not a source of disposable income? Utilities Tips Rental income Bonuses
Utilities
Which of the following is not an example of an expense? Cell phone bill Mortgage Wages Entertainment
Wages
When making a point-of-sale transaction, what happens right after you use your credit card to make the purchase? The merchant submits authorized transactions for payment. The transaction is completed. The merchant is paid for the transaction. Your bank authorizes the transaction.
Your bank authorizes the transaction.
When every dollar of income is allocated to a spending category, you are working with a(n) ________. Unbalanced budget Discretionary budget Disposable budget Zero-based budget
Zero-based budget
