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 Mr. WestCivics and EconomicsPersonal Finance Literacy Quiz Questions and AnswersThese were the possible quiz questions and answers associated with them. Make sure you know the why the answers are what they are. Note: This is not all inclusive. You will have to study the modules on your own.Module 1: Savings1. Interest is: the amount owed for borrowing money 2. Anthony is deciding between different savings accounts at his bank. He has four options, based on how frequently interest compounds. Which should he choose if he wants the best rate of return on his interest? Daily Compounding 3. To earn as much interest as possible, you should open a savings account that earns _______ interest and has the ______ interest rate. compound; highest 4. What is the typical relationship between time and interest rate? Longer time period usually equals higher interest rates. 5. John just opened a savings account and wants to maximize the amount of interest he earns. Which of the following actions would enable him to earn MORE interest? a. Selecting an account with a high interest rate. b. Leaving his money in the account for long period of time. Both A & B 6. Tamara has $500 she is looking to save for a class trip. She wants to earn the most possible interest and will not need access to her money for a full year. Which type of savings account will be best for Tamara? Certificate of Deposit (CD) 7. You are opening a savings account that earns compound interest. Which compounding frequency will earn you the MOST money? Compounding daily 8. Which of the following is considered a "need"? a. Food b. Pizza c. Gatorade d. Fruit 9. Which of the following is a type of savings vehicle? a. Certificate of Deposit b. Money Market Account Both A & B 10. Which type of account typically has very high liquidity, low or no interest, and low minimum balance? Checking Account 11. Which of the following is generally true about savings vehicles? b. People should evaluate different forms of savings vehicles based on their needs. 12. Which of the following is the most important consideration when planning your budget? Budget for your needs before your wants.. 13. Which of the following savings vehicles usually requires a high minimum balance? Certificate of Deposit (CD) 14. Which of the following is considered a "want"? a. A warm winter coat b. Shoes c. Designer Sneakers d. Socks 15. Which of the following accounts will give you the LEAST access to your money? Certificate of Deposit (CD) 16. Your friend is overspending and in need of a budget. What type of expense should they reduce next month? Going to the movies with friends. 17. The purpose of a budget is to: help you plan how you will spend the money you earn or receive. 18. Jorge has $300 for work he performed. He expects to spend the money in the next few weeks to buy a new bike. Which type of account will be best for Jorge? Checking Account 19. When it comes to saving money, what is a good rule of thumb? Put aside money for savings each month 20. Joy is taking out a car loan which she will pay back with interest. Which option will require her to pay the lowest amount in interest? Annual Compounding Module 2: Banking:1. Which of the following is NOT one of the responsibilities of the Federal Reserve? Establishing the federal budget 2. Which type of financial institution typically has membership requirements? Credit Union 3. Which type of account is typically the MOST liquid? Checking account 4. Which of the following is a primary responsibility of the Federal Reserve Bank? Establish monetary policy 5. Savings accounts usually offer _________ interest rates than checking accounts. It is _________ to access your money in a savings account than in a checking account. higher; harder 6. Which type of account will typically have the highest interest rate? Certificate of Deposit (CD) 7. The three parts of the Federal Reserve System are the Reserve Banks, the Federal Open Market Committee (FOMC), and the: Board of Governors 8. Which of the following fees would likely be the highest? Overdraft fee 9. Which of the following is a unique feature of credit unions? a. Credit unions are typically owned and run by their members. b. Credit unions limit membership to certain people or groups. d. Both A & B 10. The numbers on the bottom of a typical check represent all of the following EXCEPT? a. Social Security Number 11. What part of a check is the LEAST important?Memo line 12. How often should you typically monitor your checking account? Daily 13. Which of the following represent typical account fees? a. ATM fee b. Service fee c. Minimum balance fee d. All of the above 14. Which of the following is not a type of bank? Payday Lender 15. What's the best strategy for avoiding ATM fees? Only use ATMs in your bank’s network 16. Which of the following is NOT a core component of the Federal Reserve Bank? Department of the Treasury 17. What’s the purpose of balancing or monitoring your checking account? To help you calculate how much money you have in your account 18. Which type of account typically has low liquidity? Certificate of Deposit (CD) 19. The best way to ensure the accuracy and safety of your accounts is to: Monitor your online accounts regularly 20. With a traditional savings account, you could be charged a fee if: a. You withdraw money too oftenModule 3: Payment Types1. Which of the following payment types require you to pay upfront? a. Money order b. Cashier's check c. Pre-paid card d. All of the above 2. Which of the following is true? Checks and Debit Cards both withdraw money directly from a bank account. 3. Which of the following statements comparing debit cards to credit cards is TRUE? Debit cards allow you to draw funds directly from your checking account. 4. Which of the following is NOT true of credit cards? They are the best payment type to use when trying to stick to a budget. 5. Which payment method typically charges the highest interest rates? Payday loans 6. Which of the following tells you how much your credit card interest will be if you only pay the minimum balance each month? Annual Percentage Rate 7. Which payment type can help you stick to a budget? Debit cards 8. Which of the follow will happen if you miss a monthly credit card payment? a. You will be charged a late fee 9. If you are planning to carry a large balance on your credit card, which of the following credit card features should you look for? a. Low APR 10. What is a credit limit? c. The maximum amount you can charge each billing cycle. 11. The annual percentage rate on a credit card determines _______. a. the amount of interest you are charged on credit card purchases 12. What is the amount of money you still owe to their credit card company called? Credit Card Balance 13. Making a credit card minimum payment: Means you are paying a small portion of your total credit card debt 14. Which of the following is true of both paying with a check and paying with a debit card? When used, both take money directly out of a bank account. 15. Which of the following can increase your credit card’s APR? Missing a credit card payment 16. The amount of money you can charge to a credit card is called: Credit Limit 17. What is a credit card balance? The amount of money you still owe to the credit card company 18. Which of the following are true if you pay only the minimum amount each month towards your credit card bill? Both A and B are true. 19. Which of the following is NOT a common credit card fee? Minimum payment fee 20. Which payment type is best if you are trying to stick to a budget? Debit CardModule 4: Credit Scores 1. Which of the following statements about credit scores is TRUE? a. Credit scores reflect how likely individuals are to repay their debts. b. Credit scores range from the low 300’s to the mid 800’s. c. Each person has three credit scores. d. All of the above. 2. Which of the following is NOT true of credit scores? The more money you make, the higher your credit score. 3. Having a good credit score is important because: It can impact your ability to be approved for bank loans4. Which action can hurt your credit score? I. Paying your phone bill late. II. Taking the bus to work. III. Maxing out several credit cards. IV. Using the internet to pay your bills I and III 5. All of the following make up the big three credit reporting agencies EXCEPT: Federal Reserve 6. Jose wants to be sure he maintains a high credit score as he is planning to buy a new car soon. What should he do to ensure his score stays high, allowing him to buy his dream car? a Pay off his credit card balance each month. 7. Which of the following actions can NEGATIVELY impact your credit score? You forgot to pay the cable bill. 8. Which is true of someone with a low credit score? I. They probably make on time payments. II. They may not be able to rent the apartment they want. III. They are more likely to miss a payment than someone with a high credit score. II and III 9. Which of the following actions has NO impact on your credit score? a. You inquire about a credit card charge. 10. What can you do it make sure you have a healthy credit report? a. Review your credit report each year. b. Make sure everything on your credit report is correct. c. Dispute any errors you find on your report with your credit agency. d. All of the above. 11. Which of the following MOST influences your credit score? Payment History 12. Which best explains what a credit score represents? A numerical rating that expresses how likely you are to repay your debts. 13. Which of the following actions would improve your credit score? b. Paying off your credit card bill 14. Which of the following is true of a person with a high credit score? a. They are more likely to pay bills on time.15. Which action is LEAST important to maintaining a healthy credit score? now your exact credit score 16. In which of the following situations is having a good credit score important? a. Buying a car. b. Applying for a loan at a bank. c. Renting an apartment. d. All of the above. 17. How many free credit reports are you legally entitled to each year? One credit report from each credit bureau 18. If your credit reports show different scores, what should you do? Get in touch with credit bureaus to see if they have different or inaccurate information on your credit history. 19. Having a low credit score can make it more difficult to: a. Obtain a car loan b. Open a new credit card c. Secure an apartment lease d. All of the above 20. Which behaviors might lead someone to have a low credit score? a. Missing a car payment 21. What can a person do to help increase their credit score? Use only a small percentage of your credit limit. Module 5: Higher Education1. The return on investment (ROI) from education is typically the highest for: Someone with a 4-year (Bachelor’s) degree 2. Select the answer that best describes why the return on investment (ROI) for higher education is high even though the cost of college is increasing. a. You have the potential to earn more money in the future when you continue your education past high school.3. Your sister is starting 9th grade next year and is thinking about going to college. What step would you recommend she take first? Look for school clubs & organizations she’s interested in 4. Your brother is starting 9th grade next year and is thinking about going to college. What steps would you recommend he take? a. Meet his guidance counselor. b. Join a club or sports team. d. Both A & B 5. Which of the following loans will typically offer the lowest interest rate? Federal Student Loan 6. Which type of loan requires that you pay the interest accumulated during college? Unsubsidized federal loan 7. When referring to student loans, what is a grace period? The period after graduating or leaving school before you must begin paying back student loans 8. Which of the following statements about the Federal Application for Student Aid (FAFSA) is TRUE? c. The IRS Data Retrieval Tool allows you to view and transfer your tax information directly into your FAFSA form. 9. Which loan type requires you to make loan payments while you’re attending school? a. Unsubsidized federal loan 10. Which education level has the highest return on investment (ROI)? Bachelor's Degree (4 years of college)11. Which of the following statements about federal student loans is TRUE? a. The interest rate on your loan will be fixed over time. 12. When planning for college, you should consider: a. Visiting colleges during your junior year. b. Speaking with your school's college advisor. c. Joining an after school club or sports team. d. All of the above. 13. Using the FAFSA form, you can apply for: a. Federal student loans b. The federal work-study program d. Both A & B 14. Which answer best describes an unsubsidized federal loan? a. You are responsible for paying all the interest that accumulates on your loan. 15. The Federal Application for Student Aid (FAFSA) form: can be submitted on online or by mail 16. The Federal Application for Student Aid (FAFSA) form: c. Is the free application for federal student aid. 17. After you send in your FAFSA form, what will you receive back? a. Your Student Aid Report 18. On average, someone with a Bachelor's degree is estimated to earn ____ times more than someone with a high school diploma. 1.6 19. You are looking for ways to pay for your higher education costs. Which of the following options will require you to pay back any money you receive? Federal student loans 20. Which of the following types of financial aid do not require you to pay the money back? a. GrantsModule 6: Renting vs. Owning1. Renting provides _________ flexibility but can lead to _________ costs in the long-term. greater; higher 2. Owning provides _________ flexibility but can lead to _________ costs in the long-term. less; lower 3. Which of the following statements about renting & owning is CORRECT? An owner has complete responsibility and control over the property. 4. Typically homes ___________ over time and cars ______________ over time. a. appreciate; depreciate 5. A _________ is generally considered an appreciating asset because it will _________ in value over time. c. house; increase 6. What is a lease? a. A contract outlining the terms under which a landlord agrees to rent property to a tenant. 7. One reason to buy a home instead of rent a home is: a. Homes have the potential to appreciate in value over time. 8. Which combination of factors would result in the lowest monthly mortgage payment? a. Big down payment, a longer term loan, and low interest rate 9. John would like to move from the suburbs into the city, but the rent in the city is very high. John has found an apartment he really likes, but he can only afford about 60% of the monthly rent. What is the best housing option for John? Rent the apartment with a roommate.10. John would like to move from the city into the suburbs and has been saving up a large down payment for a home. Which is the most cost effective way for John to buy a house in the suburbs? Finish the term of his apartment lease in the city and find a new home to purchase simultaneously. 11. What is a mortgage? A type of loan used to buy property 12. Jim is in the market for a car that will last for the next 10 years and has saved up some money for the purpose of a car. What’s the best transportation option for Jim? Utilizing his saving as a down payment and buying the car using an auto loan. 13. All of the following components are commonly found in rental housing agreements EXCEPT: What type of renter’s insurance the renter must buy 14. Which best describes the benefits of renting a home? a. Renting can cost more upfront. b. Renting is less flexible than owning a home. c. Renting has a lease that cost money to break. d. None of the above. 15. Someone may choose to own a car instead of leasing because: a. The car can be resold later to make some money back. 16. Depreciating assets: b. Become less valuable over time. 17. Jim wants to buy a car, but he’ll probably only need it for a couple of years. He has a short commute to work, so he won’t be putting many miles on his vehicle. What’s the best transportation option for Jim? Lease the car 18. Select the statement that is NOT a component of a standard housing lease. Purchasing homeowner's insurance. 19. Which of the following is NOT a cost typically associated with owning a car? Wear & Tear fees 20. The biggest factor in determining the price of a mortgage is: a. The total cost of the home. Module 7: Insurance and Taxes1. Insurance can help you: financially protect against unexpected accidents 2. Which of the following would likely be covered under homeowners insurance but NOT by renter's insurance? A tree branch breaks your bedroom window during a storm. 3. Jan pays $70 each month for her auto insurance policy. This regular payment is called a: premium 4. If you cause a car accident, which type of insurance will require you to pay the least out of pocket? Low deductible plan 5. In which of the following scenarios will you be entitled to pay the least amount of money out-of-pocket for a medical expense? You have health insurance with a $500 deductible. 6. Tax that you pay when making a profit from selling a house is an example of: Capital Gains Tax 7. Your auto insurance policy has a $200 monthly premium and $700 deductible. What is the maximum amount you will have to pay out-of-pocket for a car accident before your insurance covers your costs? $700 8. On a pay stub, what is the difference between "Net Pay" and YTD Net Pay"?Net Pay is how much you've made during a pay period, YTD Net Pay is how you've made this year. 9. You have an insurance policy with a $300 premium and a $500 deductible. How much should you expect to pay the insurance company each month for coverage? $300 10. Why might you complete a 1040 instead of a 1040EZ? a. You own a home. 11. Which of the following typically have the highest auto insurance premiums? a. Young, inexperienced drivers 12. The person who receives financial protection from a life insurance plan is called a: a. Beneficiary 13. When you purchase an item in a store, you may be charged __________. sales tax 14. If you are in a car accident caused by someone else who also has insurance, which type of insurance plan will not require you to pay out of pocket costs? a. High deductible plan b. Low deductible plan c. Either A or B 15. Which of the following statements about taxes is FALSE? Taxes at the local, state and federal level are all equal 16. The amount you owe in state income tax is based on: Your yearly earnings 17. Which of the following are NOT deducted on a typical paystub: Sales tax 18. Which is an example of a withholding you might see on your pay stub? a. Health Insurance b. Retirement Savings c. Both A and B 19. When starting a new job, the form you complete to determine how much tax to withhold from your paycheck is called the _______. W-4 20. Under which circumstance might you receive a tax refund from the IRS? a. When your total of previous payments and applicable credits is more than the tax you owe. Module 8: Consumer Protection1. Which of the following is the BEST way to protect against identity theft? Change online account passwords frequently. 2. Consumer protection laws might result in: a. Fewer unwanted telemarketing calls. 3. Identity thieves can use your personal information to: a. Open a credit card b. Sign up for electricity service c. Get a cell phone contract d. All of the above 4. Which of the following scenarios might indicate that you have been a victim of identity theft? a. Your credit report displays accounts you did not open. 5. What is the safest way to dispose of old bank account statements? b. Shred them in a paper shredder. 6. Which new password is the strongest alternative to the weak password: "ilovedogs"? a. $iL0V3dGs6! 7. The safest action to take if someone claiming to be from your bank calls you to ask for account information is to: b. Hang up and call back using the bank’s official phone number. 8. What is a way to protect your social security number and other sensitive information from identity theft?b. Limit how many credit cards you carry. 9. The best way to investigate fraudulent transactions on your credit card is to: a. Review your recent credit card statements. 10. After a suspected identity fraud case has been resolved, you should: a. Continue to monitor your credit reports and accounts. b. Keep all copies of relevant documentation. c. Both A and B 11. Which document puts you at the LEAST risk of identity theft? a. Cash receipts 12. The primary goal of the Consumer Financial Protection Bureau is: c. To protect consumers by regulating financial products and services. 13. It is generally safe to provide your Social Security Number to: b. Verified trusted sources that need it.14. Where could an identity theft access your personal information? a. While on public WiFi at your neighborhood coffee shop. b. From stored password data on your cell phone. Both A and B 15. Which action will be least helpful if you’ve been the victim of identity theft? Withdraw your money from all accounts.16. Which type of password would be considered secure? a. Your social media handle and current age. b. A line from your favorite song. c. Your birthdate and the name of the street where you grew up. d. None of the above. 17. What is the FIRST action you should take if you suspect there has been a fraudulent charge on your credit card? Contact the credit card company to report the fraudulent charge. 18. What activities might require you to provide your social security number? a. Starting a new job. 19. Consumer protection laws are meant to: Prevent unfair or deceptive business practices. 20. If you've been a victim of identity theft, what should you do after contacting the company that reported the suspicious charge and issuing a credit fraud report? Order a credit report.Module 9: Investing1. How can investors receive compounding returns? By investing their earnings back into their original investment 2. What are dividends? A distribution of a small percentage of profits to shareholders. 3. When you buy a ____ , you are loaning money to an organization. b. Bond 4. What happens when a bond becomes due? b. The issuer will pay you back, plus interest. 5. Which best describes the difference between stocks and bonds? Stocks allow investors to own a portion of the company; bonds are loans to the company. 6. Generally speaking, the _______ the risk, the _______ the potential return or loss. higher; higher 7. What is the primary reason to issue stock? To raise money to grow the company 8. Which type of portfolio might a young investor who is not afraid of risk choose? a. A portfolio of with a high percentage of stocks. 9. When it comes to investing, what is the typical relationship between risk and return? The greater the potential risk, the greater the potential return. 10. If an employer does not offer a retirement plan, what might be another way to save for retirement? a. Traditional IRA b. Roth IRA d. Both A and B 11. Which of the following correctly orders the investments from LOWER risk to HIGHER risk? Treasury bond ? Diversified mutual fund – Stock 12. ________ are typically comprised of a mix of ________ and ________. c. Mutual funds; stocks; bonds 13. If an investment is considered “volatile”, it means... the value of the investment may be hard to predict. 14. Why might a town decide to issue bonds? To build new roads or bridges. 15. Diversification is important in investing because... a. It helps you to balance your risk across different types of investments. 16. Why is a high-quality bond typically considered a lower-risk investment than a stock? a. A bond typically pays a fixed, predictable amount of interest each year. 17. Which of the following would be considered the highest risk portfolio? c. A portfolio made up of 60% stocks, 30% mutual funds, and 10% Treasury bonds. 18. Which investment type typically carries the least risk? c. Savings Accounts 19. Which of the following is generally true about 401(k) and 403(b) retirement plans? a. They are plans offered through employers. b. They offer some tax benefits. c. They restrict when you can withdraw your money. d. All of the above 20. When might be the best time to start saving for retirement? At the earliest possible date. ................
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