Money
It is generally a good idea to borrow money and repay the amount borrowed with future income when
A) a person needs a week’s vacation
B) clothing a person likes goes on sale
C) a person needs to buy a car to get a better paying job
D) interest on the loan is higher than savings interest
C) a person needs to buy a car to get a better paying job
Do checking accounts pay interest?
A) All checking accounts do
B) Some checking accounts do
C) Checking accounts never do
D) Only if deposits are weekly
B) Some checking accounts do
If a credit card balance is not paid in full each month, the cardholder will
A) earn bonus points
B) increase credit score
C) pay higher rates on future purchases
D) pay more due to finance charges
D) pay more due to finance charges
Susan gave Marie her debit card and PIN. Marie withdrew more than agreed. Susan
A) can demand bank reimbursement
B) can contact the Fed
C) can contact Marie’s bank
D) cannot recover the money
D) cannot recover the money
The $50,000 coverage on a life insurance policy is called the
A) cash value
B) premium
C) death benefit (face value)
D) deductible
C) death benefit (face value)
The agency that regulates stock and bond trading is the
A) FTC
B) Commerce Department
C) SEC (Securities and Exchange Commission)
D) Federal Reserve
C- SEC
At maturity, a $1,000 corporate bond pays
A) $1,000
B) $1,000 minus interest
C) inflation-adjusted value
D) $1,000 plus final interest payment
D) $1,000 plus final interest payment
The Federal Reserve regulates money supply using
A) Fiscal policy
B) Tax policy
C) Monetary policy
D) Trade policy
C) Monetary policy
Which saying best explains why saving money is beneficial?
A) “A stitch in time saves nine.”
B) “A dollar today is worth more than a dollar tomorrow.”
C) “A bank will lend money if you don’t need it.”
D) “I would rather lose my own money than someone else’s.”
B) “A dollar today is worth more than a dollar tomorrow.”
By moving money from checking into a CD, a person sacrifices
A) earnings for safety
B) safety for liquidity
C) liquidity for earnings
D) dividends for safety
C) liquidity for earnings
A store charge credit card is different because it
A) is issued by payday lenders
B) must be paid in full each month
C) has no fees
D) is easy to get with poor credit
B) must be paid in full each month
Paying less than the minimum payment on a credit card will result in
A) account cancellation
B) balance forgiveness
C) a late fee
D) credit increase
C) a late fee
Whole life insurance costs more than term life because it
A) doubles payouts
B) pays premiums after death
C) has low deductibles
D) accumulates cash value
D) accumulates cash value
The safest investment listed is
A) Preferred stock
B) Corporate bonds
C) Baseball cards
D) U.S. Treasury bills
D) U.S. Treasury bills
Bond prices fall when
A) inflation decreases
B) unemployment rises
C) economy weakens
D) interest rates increase
D) interest rates increase
The FED (Federal Reserve System) stimulates the economy by
A) lowering taxes
B) increasing bank branches
C) federal grants
D) lowering interest rates
D) lowering interest rates
People who are retired and living on limited fixed incomes should
A) make risky investments
B) keep all money in one investment
C) keep money only in checking
D) reduce their exposure to risk
D) reduce their exposure to risk
Which item should NOT be recorded in a checkbook register?
A) Deposits
B) Fees
C) Debit card transactions
D) Dividends earned from securities
D) Dividends earned from securities
A student loan repaid monthly over 10 years is a
A) secured loan
B) adjustable loan
C) diversified loan
D) installment loan
D) installment loan
Cancelling a credit card negatively impacts credit because
A) all cards close
B) fees apply
C) limits drop on other cards
D) available credit decreases
D) available credit decreases
A reason not to report a minor auto insurance claim is that
A) license points increase
B) deductible rises
C) credit score drops
D) premiums may increase
D) premiums may increase
The oldest U.S. financial market is the
A) NASDAQ
B) OTC market
C) New York Stock Exchange
D) FTSE
C) New York Stock Exchange
The SEC’s (Securities and Exchange Commission) role is to ensure investors
A) make profits
B) pay capital gains tax
C) understand selling stocks
D) have accurate investment information
D) have accurate investment information
FINRA (Financial Industry Regulatory Authority) is a
A) government agency
B) state agency
C) for-profit SEC office
D) nonprofit investor protection organization
D) nonprofit investor protection organization
What is the definition of the “time value of money”?
A) Money loses value over time due to inflation
B) Future money is worth more than present money
C) Money today is worth more because it can earn interest
D) Gold prices affect money value
C) Money today is worth more because it can earn interest
A benefit of opting in to overdraft protection is that the
A) account holder avoids all fees
B) bank pays interest monthly
C) bank pays a check when funds are insufficient
D) CD rates increase
C) bank pays a check when funds are insufficient
A car loan paid monthly for five years is a
A) unsecured loan
B) mortgage loan
C) balloon loan
D) secured installment loan
D) secured installment loan
40% of take-home pay going to debt payments means
A) healthy credit use
B) average debt
C) a credit problem
D) room for more borrowing
C) a credit problem
An HMO (Health Maintenance Organization) plan typically requires
A) 100% prescription coverage
B) second opinions
C) spending limits
D) co-pays for in-network doctors
D) co-pays for in-network doctors
Municipal bonds are attractive because they
A) pay higher interest
B) are risk-free
C) are federally tax-exempt
D) guarantee profits
C) are federally tax-exempt
Who benefits from secondary market trading?
A) Corporations
B) Government
C) SEC
D) Investors
D) Investors
A brokerage firm should be a member of
A) SEC – Securities and Exchange Commission
B) IRS – Internal Revenue Service
C) FDIC – Federal Deposit Insurance Corporation
D) SIPC – Securities Investor Protection Corporation
D) SIPC
Which financial product helps create wealth EXCEPT owning
A) property
B) securities with dividends
C) a personal retirement fund
D) health insurance
D) health insuranc
Which is a mandatory federal payroll deduction?
A) 401(k)
B) Union dues
C) 529 Plan
D) Medicare
D) Medicare
The Truth in Lending Act helps consumers by
A) eliminating interest
B) lowering credit limits
C) providing information about credit terms
D) forgiving debt
C) providing information about credit terms
Opting in to over-the-limit purchases results in
A) no fees
B) percentage-based fees
C) monthly privilege fee
D) a fee when the limit is exceeded
D) a fee when the limit is exceeded
A $10,000 whole life policy with $2,000 borrowed pays beneficiaries
A) $10,000
B) $12,000
C) $8,000
D) $3,000
C) $8,000
Which investment guarantees future value?
A) Mutual fund
B) Stocks
C) Corporate bonds
D) Certificate of Deposit
D) Certificate of Deposit
Using the Rule of 72, $10,000 at 8% becomes about
A) $10,800
B) $20,000
C) $24,400
D) $40,000
D) $40,000
Redlining is illegal because it
A) causes health issues
B) enables identity theft
C) extends loan terms
D) is discriminatory
D) is discriminatory
Redlining is an illegal and discriminatory practice in which banks, lenders, or insurance companies deny or limit financial services (such as loans, mortgages, or insurance) to people based on where they live, rather than their individual qualifications.