Financial literacy Test

Insurance that pays benefits if the insured is incapable of working.

Disability

What is the most secure method for an employer to pay his/her employees? A. Receiving in-store credit. B. Physically providing the paycheck with payroll stub to the employee. C. Having the paycheck directly deposited into an account D. Having the paycheck deposited onto a payroll card.

C. Having the paycheck directly deposited into an account

which economic system has the least government involvement in what, how, and for whom goods are produced? A. Command B. Mixed C. Market D. Planned

C. Market

Which type of fraudulent offer depends upon the new investor recruiting more people to earn commissions? A. Bait and Switch B. Chain letters C. Ponzi Scheme D. Deceptive advertising

C. Ponzi Scheme

Which of the following refers to the payment to the insurance company for an insurance policy? A. Co-payment B. Disbursement C. Premium D. Deductible

C. Premium

What is the primary purpose of an IRA? A. Creates a savings account for health-care B. Eliminates the requirement to pay social security C. Provide a tax advantage plan to save for retirement D. Allows employers options to pay benefits.

C. Provide a tax advantage plan to save for retirement

Sarah is changing the tax withholding allowance on her w-4 from 2 allowances to 6 allowances. What will happen to the amount of money being withheld from her paycheck for taxes? A. Will drop to 0 taxes taken out. B. Will increase taxes taken out. C. Will decrease amount of taxes taken out. D. The amount of taxes will stay the same.

C. Will decrease amount of taxes taken out.

Which of the following is a priority when setting a budget? A. Buying a new car B. Planning a vacation C. Building credit history D. Create an emergency fund

D. Create an emergency fund

Which type of lending institution will issue a short=term, high interest rate loan for $100 and then automatically withdraw about $130 from your checking account when the loan is due? A. Leverage B. Liquidity C. Hedging D. Diversification

D. Diversification

Which of the following best defines compound interest? A. Earning interest on principal only B. Earning a higher than market rate of interest C. Earning interest on someone else's money D. Earnings interest on interest

D. Earnings interest on interest

What is the term for the total amount of money an employee earns in a pay period? A. Sales B. Net pay C. Payroll D. Gross earnings

D. Gross earnings

Terrie was recently involved in an automobile accident. Why is her insurance company requiring her to pay the first $500 of the repair bill? A. The cost of the repairs is higher than what her policy covers. B. She will be reimbursed by the insurance company later. C. She did not call her agent and report the accident immediately. D. It is the amount of the deductible on her policy.

D. It is the amount of the deductible on her policy.

Most states have consumer protection laws. These laws protect buyers from which of the following? A. impulse buying and overspending B. Students loan debt C. Credit card debt D. Predatory services and products

D. Predatory services and products

What concept is used to determine how long it will take to double your investment? A. Amortization B. 80/20 Rule C. Risk tolerance D. Rule of 72

D. Rule of 72

Group the following responsibilities and benefits of owning vs. renting a home: Gain from investment, Major repairs, Short-term commitment, Regularly renew contract, Greater stability, Greater mobility, Fluctuation in monthly payment, Property taxes.

OWNING RENTING Gain from investment Short-term commitment Major Repairs Fluctuation in monthly payment Greater stability Greater mobility Property taxes Regularly renew The American dream

Insurance that covers damage to home and land which covers, fire, flood, or earthquakes.

Property

What is income share?

a contract which a student receives upfront money for college in exchange for a fixed percentage of their future income.

What is a work study?

A student works for the college to help pay for education expenses.

How long can a bankruptcy remain on a credit report? A. 7-10 years B. 12-15 years C. 2-3 years D. 4-5 years

A. 7-10 years

Brian has a bad credit score as a result of missing payments on his car loan. Which of the following are the most likely consequences of having a bad credit score. (choose 2) A. Denied credit in future applications B. Higher interest rates on future loans C. IRS may audit his taxes D. Stock broker may not sell him shares of stock E. Employer may drop his health insurance plan

A. Denied credit in future applications B. Higher interest rates on future loans

Which of the following are included in a traditional home loan amortization? (choose 2) A. Interest B. Home repair allowance C. Income tax D. Principal loan amount E. Landscaping

A. Interest D. Principal loan amount

What is an employee required to complete when they begin a new job? A. Net wages B. Gross wages C. Disposable wages D. Fixed wages

A. Net wages

What is the term used for take-home pay? A. Net wages B. Gross wages C. Disposable wages D. Fixed wages

A. Net wages

What term refers to the fee charged when you spend more than is what is in your bank account? A. Overdraft fee B. Late fee C. Service fee D. Deposit fee

A. Overdraft fee

Which term refers to the original amount of a loan on which interest is paid? A. Principal B. Premium payment C. Down payment D. Equity

A. Principal

Which 4 characteristics most commonly affect the cost of automobile insurance? Religion Ethnicity Age Gender Personality Credit Score Grades Income

Age Gender Credit score Grades

What is a FASFA

An application to get student loans from the federal government.

What is a Pell Grant?

Awarded to undergraduate students who have a financial need.

Maria wants to buy new living room furniture. The local furniture store had a special to purchase items "90 day, same as cash." Maria decided to decline the special and save money each month for the purchase. Maria's purchasing decision is an example of which of the following? A. Social pressure B. Delayed gratification C. Instant satisfaction D. Impulse buying

B. Delayed gratification

What is the purpose of the Federal Deposit Corporation (FDIC)? A. Protect stock market investors from possible loss. B. Insure federally chartered commercial banks against loss. C. Provide insurance protection for Credit Unions. D. Distribute interest earnings to depositors.

B. Insure federally chartered commercial banks against loss.

Which of the following is true regarding a credit score? A. It determines the length of the loan B. It influences the interest rate of loans C. It shows how many credit cards your qualify for D. It shows personal income

B. It influences the interest rate of loans

Which of the following would cause a reduction in the monthly spending of Maria's budget? A. She gets a promotion, and her salary increases. B. She cuts back on her hours to take care of dependent. C. Her company adds an employee sponsored health insurance plan. D. Her office location is changed, and her commute time decreases

B. She cuts back on her hours to take care of dependent.

On average, which one of the following is the least expensive type of college? A. Private B. State Resident C. State nonresident

B. State resident

Which investment opportunity represents an ownership interest in a company? A. US Treasury Bond B. Stock C. Savings account D. Money Market account

B. Stock

Why would someone typically use a checking account? A. to increase the need to carry large amounts of cash. B. To keep track of where money is spent C. To make paying bills more difficult D. All of the above

B. To keep track of where money is spent

Insurance against loss by illness, covers hospital and doctor bills

Health

Insurance that pays a beneficiary in the event of a death.

Life