WHO WANTS TO BE FINANCIALLY LITERATE?

Personal Finance

Exam Review

Under which of the following circumstances would it be financially beneficial to you to borrow money to buy something now and repay it with future income?

A. When the interest on the loan is greater than the interest you get on your savings

B. When some clothes you like go on saleC. When you really need a two-week vacationD. When you need to buy a car to get a much

better paying job

Under which of the following circumstances would it be financially beneficial to you to borrow money to buy something now and repay it with future income?

A. When the interest on the loan is greater than the interest you get on your savings

B. When some clothes you like go on saleC. When you really need a two-week vacation

D. When you need to buy a car to get a much better paying job

Marie has just applied for a credit card. She is an 18 year old high school graduate with few valuable possessions and no credit history. If Maria is granted a credit card, which of the following is the most likely way that the credit card company will reduce ITS risk?A. It will start Marie out with a small line of credit to see

how she handles the account

B. It will charge Marie twice the finance charge rate it charges older cardholders

C. It will require Marie to have both parents co-sign for the card

D. It will make Marie’s parents pledge their home to repay Maria’s card debt

Marie has just applied for a credit card. She is an 18 year old high school graduate with few valuable possessions and no credit history. If Maria is granted a credit card, which of the following is the most likely way that the credit card company will reduce ITS risk?

A. It will start Marie out with a small line of credit to see how she handles the account

B. It will charge Marie twice the finance charge rate it charges older cardholders

C. It will require Marie to have both parents co-sign for the card

D. It will make Marie’s parents pledge their home to repay Maria’s card debt

Ron and Molly are the same age. At age 25 Rob began saving $2,000 a year while Molly saved nothing. At age 50, Molly realized that she needed money for retirement and started saving $4,000 per year while Rob kept saving $2,000. Now they are both 75. Who has the most money in his or her retirement account?

A. Molly, because she saved more each year

B. Ron, because he has put away more money

C. Ron, because his money has grown for a longer time at compound interest

D. They would each have the same amount because they put away exactly the same

Ron and Molly are the same age. At age 25 Rob began saving $2,000 a year while Molly saved nothing. At age 50, Molly realized that she needed money for retirement and started saving $4,000 per year while Rob kept saving $2,000. Now they are both 75. Who has the most money in his or her retirement account?

A. Molly, because she saved more each year

B. Ron, because he has put away more money

C. Ron, because his money has grown for a longer time at compound interest

D. They would each have the same amount because they put away exactly the same

If you had a savings account at a bank, which of the following would be correct concerning the interest that you would earn on this account?

A. You cannot earn interest until you pass your 18th birthday

B. Income tax may be charged on the interest if your income is high enough

C. Sales tax may be charged on the interest that you earn

D. Earnings from savings account interest may not be taxed

If you had a savings account at a bank, which of the following would be correct concerning the interest that you would earn on this account?

A. You cannot earn interest until you pass your 18th birthday

B. Income tax may be charged on the interest if your income is high enough

C. Sales tax may be charged on the interest that you earn

D. Earnings from savings account interest may not be taxed

Hector and Maria just had a baby. They received money as baby gifts and want to put it away for the baby’s education. Which of the following tends to have the highest growth over periods of time as long as 18 years?

A. A U.S. savings bond

B. stocks

C. A savings account

D. A checking account

Hector and Maria just had a baby. They received money as baby gifts and want to put it away for the baby’s education. Which of the following tends to have the highest growth over periods of time as long as 18 years?

A. A U.S. savings bond

B. stocks

C. A savings account

D. A checking account

Which of the following instruments is NOT typically associated with spending?

A. Credit card

B. cash

C. Certificate of deposit

D. Debit card

Which of the following instruments is NOT typically associated with spending?

A. Credit card

B. cash

C. Certificate of deposit

D. Debit card

Which of the following statements best describes your right to check your credit history for accuracy?

A. Your credit record can be checked at any time for free

B. If you are turned down for credit based on a credit history, the record can be checked for free

C. All credit records are the property of the U.S. government and access is only available to the FBI and Lenders

D. You cannot see your credit record

Which of the following statements best describes your right to check your credit history for accuracy?

A. Your credit record can be checked at any time for free

B. If you are turned down for credit based on a credit history, the record can be checked for

free

C. All credit records are the property of the U.S. government and access is only available to the FBI and Lenders

D. You cannot see your credit record

Many people put aside money to take care of unexpected expenses. If Susan and Joe have money put aside for emergencies, in which of the following forms would it be of LEAST benefit of them if they needed it right away?

A. Savings account

B. Invested in a down payment on the house

C. stocks

D. Checking account

Many people put aside money to take care of unexpected expenses. If Susan and Joe have money put aside for emergencies, in which of the following forms would it be of LEAST benefit of them if they needed it right away?

A. Savings account

B. Invested in a down payment on the house

C. stocks

D. Checking account

If you went to college and earned a 4 year degree, how much more money could you expect to earn then if you only had a high school diploma?

A. No more, I would make about the same either way

B. About 10 times as muchC. A lot more, about 70% moreD. A little more, about 20% more

If you went to college and earned a 4 year degree, how much more money could you expect to earn then if you only had a high school diploma?

A. No more, I would make about the same either way

B. About 10 times as muchC. A lot more, about 70% more

D. A little more, about 20% more

If your credit card is stolen and the thief runs up a total of $1,000, but you notify the issuer of the card as soon as you discover it is missing, what is the maximum amount that you can be forced to pay according to Federal law?

A. none

B. $50

C. $1,000

D. $500

If your credit card is stolen and the thief runs up a total of $1,000, but you notify the issuer of the card as soon as you discover it is missing, what is the maximum amount that you can be forced to pay according to Federal law?

A. none

B. $50

C. $1,000

D. $500

Inflation can cause difficulty in many ways. Which group would have the greatest problem during periods of high inflation that last several years?

A. Older, working couples saving for retirement

B. Older people living on fixed retirement income

C. Young couples with no children who both work

D. Young working couples with children

Inflation can cause difficulty in many ways. Which group would have the greatest problem during periods of high inflation that last several years?

A. Older, working couples saving for retirement

B. Older people living on fixed retirement income

C. Young couples with no children who both work

D. Young working couples with children

Your take home pay from your job is less than the total amount you earn. Which of the following best describes what is taken out of your total pay?

A. Federal income tax, property tax, and Medicare and social security contributions

B. Medicare and social security contributions

C. Federal income tax, and Medicare and social security contributions

D. Federal income tax, sales tax, and social security contributions

Your take home pay from your job is less than the total amount you earn. Which of the following best describes what is taken out of your total pay?

A. Federal income tax, property tax, and Medicare and social security contributions

B. Medicare and social security contributions

C. Federal income tax, and Medicare and social security contributions

D. Federal income tax, sales tax, and social security contributions

Which is a disadvantage of credit cards?

A. Card is big and heavy

B. High interest

C. It’s safer than cash

D. All of the above

Which is a disadvantage of credit cards?

A. Card is big and heavy

B. High interest

C. It’s safer than cash

D. All of the above

What is collateral?

A. A movie with Tom Cruise

B. A special type of credit card payment

C. Property that a creditor will take away if you do not make payments

D. A high interest rate

What is collateral?

A. A movie with Tom Cruise

B. A special type of credit card payment

C. Property that a creditor will take away if you do not make

payments

D. A high interest rate

An example of a retail store for credit:

A. Target

B. Bank of America

C. Pawn shop

D. MasterCard

An example of a retail store for credit:

A. Target

B. Bank of America

C. Pawn shop

D. MasterCard

The average debt in the American household is:

A. $2,000

B. $4,000

C. $7,600

D. $8,500

Who is considered to be the Father of Linear Programming?

B. George Foreman

C. Curious George

The average debt in the American household is:

A. $2,000

B. $4,000

C. $7,600

D. $8,500

Prime rate is set by:

A. Your local bank

B. Your state

C. Federal reserve bank

D. Visa

Prime rate is set by:

A. Your local bank

B. Your state

C. Federal Reserve Bank

D. Visa

Who is a broker?

A. A person who lends money

B. A loan shark

C. A person who buys/sells stocks for others

D. A pawn shop owner

Who is a broker?

A. A person who lends money

B. A loan shark

C. A person who buys/sells stocks for others

D. A pawn shop owner

If I use my credit card and don’t pay my bill, I am:

A. Breaking the legal contract

B. stealing

C. Hurting my credit rating

D. All of the above

If I use my credit card and don’t pay my bill, I am:

A. Breaking the legal contract

B. stealing

C. Hurting my credit rating

D. All of the above

What is a bull market?

A. Market is going up

B. Market is going down

C. Market is going left

D. Market is staying the same

What is a bull market?

A. Market is going up

B. Market is going down

C. Market is going left

D. Market is staying the same

A young company with little or no history is known as:

A. Growth stock

B. Blue chip stock

C. Speculative stock

D. Cyclical stock

A young company with little or no history is known as:

A. Growth stock

B. Blue chip stock

C. Speculative stock

D. Cyclical stock

The basic reasons why people buy stock, include:

A. Earn dividends

B. Possible appreciation in the price

C. Both a and b

D. None of the above

The basic reasons why people buy stock, include:

A. Earn dividends

B. Possible appreciation in the price

C. Both a and b

D. None of the above

The stock exchanges in which stocks are traded, include:

A. NASDAQ

B. AMEX

C. NYSE

D. All of the above

The stock exchanges in which stocks are traded, include:

A. NASDAQ

B. AMEX

C. NYSE

D. All of the above

The total interest earned on $200 for two years at 3% (compounded annually) would be:

A. $6.00

B. $12.00

C. $6.18

D. $12.18

The total interest earned on $200 for two years at 3% (compounded annually) would be:

A. $6.00

B. $12.00

C. $6.18

D. $12.18

A company announces a 2-to-1 stock split. The split doubles the:

A. Number and value of the shares

B. Number of shares but does not affect the total value

C. Value of shares but does not affect their number

D. Number of stockholders

A company announces a 2-to-1 stock split. The split doubles the:

A. Number and value of the shares

B. Number of shares but does not affect the total value

C. Value of shares but does not affect their number

D. Number of stockholders

How long would it take you to double your money in account that paid 5% interest?

A. Need more information to figure out

B. 14.4 years

C. 6.9 years

D. 21.3 years

How long would it take you to double your money in account that paid 5% interest?

A. Need more information to figure out

B. 14.4 years

C. 6.9 years

D. 21.3 years

A growth stock:

A. Pays dividends

B. Has inconsistent or no earnings

C. Reinvests earnings into the company

D. Is well-established in the industry

A growth stock:

A. Pays dividends

B. Has inconsistent or no earnings

C. Reinvests earnings into the company

D. Is well-established in the industry

A check that cannot be covered by the funds in your account is known as a(n):

A. Canceled check

B. overdraft

C. Stop payment

D. float

A check that cannot be covered by the funds in your account is known as a(n):

A. Canceled check

B. overdraft

C. Stop payment

D. float

Personal FinanceTAXES

Review Questions

Who has the power to levy taxes?

• U.S. Congress

Can you file a 1040EZ if you are married with one child and your combined

income is $75,000?

• NO

• You cannot have dependents to file 1040EZ

Who does the responsibility of

preparing and filing tax returns rest with?

• The taxpayer

• This is known as voluntary compliance

What is your tax liability and where do you look

this information up?

• How much you owe

• Based on your taxable income, you can find your tax liability up on the Tax Tables

Is college tuition a tax deduction or a tax

credit?

• Both

• If you meet the criteria for a credit, it is better to take the credit

What is the IRS?

• Agency of the Dept. of Treasury

What type of tax pays for the majority of your public education?

• Property taxes

How does a graduated tax system work?

• The more money you make, a higher tax rate is applied to your income

Why would you complete a 1040A

instead of a 1040EZ?

• Incurred expenses that you can either deduct from your income or take to credit from your tax liability

• Tuition

• Childcare

• IRA contributions

Which tax form do you have to file if you have

gambling gains or losses?

• 1040

What is the life cycle of a paycheck? (Make a chart on the board)

W - 4

Paycheck

Paycheck

Paycheck

W - 2 1099

Interest & Dividends

TAX RETURN

Due April 15

LIFE OF A PAYCHECK

Deductions and Credits throughout

the year

1040A or 1040

WHO KNOWS HOW TO FILE A TAX RETURN? (II)

Personal Finance

The tax form used by most teenagers is the 1040:

A. EZ Form

B. Shorty Form

C. Cinchy Form

D. Dopey Form

The tax form used by most teenagers is the 1040:

A. EZ Form

B. Shorty Form

C. Cinchy Form

D. Dopey Form

If you rely on your parents for support, then you are considered a:

A. liability

B. boarder

C. dependent

D. delinquent

If you rely on your parents for support, then you are considered a:

A. liability

B. boarder

C. dependent

D. delinquent

If you didn’t pay tax last year, and you don’t expect to this year, you should claim ________ on yourW-4:

A. 0

B. 1

C. exempt

D. ignorant

If you didn’t pay tax last year, and you don’t expect to this year, you should claim ________ on yourW-4:

A. 0

B. 1

C. exempt

D. ignorant

How old are you before you can receive a refund?

A. 12

B. 16

C. 18

D. any age

WHO KNOWS HOW TO FILE A TAX RETURN? (II)

Personal Finance

Mrs. Burdick

The tax form used by most teenagers is the 1040:

A. EZ Form

B. Shorty Form

C. Cinchy Form

D. Dopey Form

The tax form used by most teenagers is the 1040:

A. EZ Form

B. Shorty Form

C. Cinchy Form

D. Dopey Form

If you rely on your parents for support, then you are considered a:

A. liability

B. boarder

C. dependent

D. delinquent

How old are you before you can receive a refund?

A. 12

B. 16

C. 18

D. any age

How old are you before you can receive a refund?

A. 12

B. 16

C. 18

D. any age

Which of the following abbreviations indicates a type of payroll tax?

A. FILA

B. FEMA

C. FICA

D. FIFA

Which of the following abbreviations indicates a type of payroll tax?

A. FILA

B. FEMA

C. FICA

D. FIFA

Your employer reports your total wages and tax withheld for the year on a _____ form:

A. W-4

B. W-2

C. Schedule A

D. 1099

Your employer reports your total wages and tax withheld for the year on a _____ form:

A. W-4

B. W-2

C. Schedule A

D. 1099

The amount of money left on your paycheck after all taxes are deducted is called:

A. gross income

B. net income

C. soft income

D. unearned income

The amount of money left on your paycheck after all taxes are deducted is called:

A. gross income

B. net income

C. soft income

D. unearned income

Which of the following circumstances would prevent you from using a 1040EZ form?

A. You received dividends of $10

B. You received savings account interest of $350

C. You received tips of $400 that were reported on your W-2

D. You had wages of $40,000

Which of the following circumstances would prevent you from using a 1040EZ form?

A. You received dividends of $10

B. You received savings account interest of $350

C. You received tips of $400 that were reported on your W-2

D. You had wages of $40,000

The deadline for filing a tax return is:

A. January 31

B. March 15

C. April 15

D. April 30

The deadline for filing a tax return is:

A. January 31

B. March 15

C. April 15

D. April 30

How much of Montville’s town budget is spent on education?

A. 20%

B. 40%

C. 60%

D. 80%

How much of Montville’s town budget is spent on education?

A. 20%

B. 40%

C. 60%

D. 80%

Who levies federal income taxes?

A. Congress

B. IRS

C. Dept. of Treasury

D. President

Who levies federal income taxes?

A. Congress

B. IRS

C. Dept. of Treasury

D. President

Which of the following is an unlawful purpose of a credit report? (a) mailing list

information, (b) credit application, (c) employment application, (d) insurance

Return to Board

Who are credit reports issued by?

Return to Board

How often are credit files updated?

Return to Board

Return to Board

What is the monthly rate on 23% APR?

Return to Board

As a credit card holder, which payment method is better: previous

balance or adjusted balance?

Return to Board

What is the monthly finance charge on a credit card with 18% APR and a $300 balance? (Simple Interest)

Return to Board

Rank these in order from best to worst finance charges: credit union,

pawn broker, bank, finance company

Return to Board

What is collateral and when do you need it?

Return to Board

Name TWO examples of installment loans.

What is the difference between open-ended and close-ended credit?

Return to Board

What are THREE advantages of credit?

Return to Board

How can credit help our economy and how can it hurt our economy?

Return to Board

What is an example of a service credit?

Return to Board

Where might someone just starting out find their first source of credit?

Return to Board

Explain how pawnbrokers work.

Return to Board

Why do finance companies charge higher interest rates on their loans?

Return to Board

Name TWO examples of revolving credit agreements.

Return to Board

How many credit cards should one person have?

Return to Board

What is a grace period and is it always offered?

Return to Board

Which is NOT one of the 5 C’s of credit? (a) character, (b) capacity,

(c) cooperation, (d) collateral

Return to Board

What is the average credit card debt of a college student? An average

American household?

Return to Board

In order to receive an Excellent credit score, how do you have to

pay your bills?

Return to Board