1. Which of the following statements best describes your right to check your credit history for accuracy?
- You can't see your credit record
Your credit record can be checked at any time for free
If you are turned down for credit based on a credit report, the record can be checked for free
All credit records are the property of the U.S. government and access is only available to the FBI and lenders
2. Which of the following is true about sales taxes?
- The federal government will deduct it from your paycheck
It makes things more expensive for you to buy
You don't have to pay the tax if your income if very low
The national sales tax percentage rate is 6%
3. 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?
- Earnings from savings account interest may not be taxed
Sales tax may be charged on the interest that you earn
Income tax may be charged on the interest if your income is high enough
You cannot earn interest until you pass your 18th birthday
4. Which of the following instruments is NOT typically associated with spending?
- ATM card
Certificate of Deposit
5. Jerry has a good job on the production line of a factory in his hometown. During the past year or two, the state in which Jerry lives has been raising taxes on its businesses to the point that they are much higher than in neighboring states. What effect is this likely to have on Jerry's job?
- He is likely to get a large raise to offset the effect of the higher taxes
Higher business taxes can't have any effect on Jerry's job
Higher business taxes will cause more businesses to move into Jerry's state, raising wages
Jerry's company may consider moving to a lower-tax state, threatening Jerry's job
6. Under which of the following circumstances would it be financially beneficial for you to borrow money to buy something now and repay it with future income?
- When you really need a two-week vacation
When some new clothes you like go on sale
When the interest on the loan is greater than the interest you get on your savings
When you need to buy a car to get a much better paying job
7. If you have caused an accident, which type of automobile insurance would cover damage to your own car?
8. Walter must borrow $10,000 to complete his college education. Which of the following would not be likely to reduce the finance charges rate?
- If his parents co-signed the loan
If his parents took out an additional mortgage on their house for the loan
If the loan was insured by the Federal government
If he went to a state college rather than a private college
9. Tim and Rebecca 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 is likely to have the highest growth over the next 18 years?
- U.S. government bond
10. Many people put aside money to take care of unexpected expenses. If Pedro and Susanna have money put aside for emergencies, in which of the following forms would it be of LEAST benefit to them if they needed it right away?
- Checking account
Invested in a down payment on the house
11. If you are behind on your debt payments and go to a responsible credit counseling service such as the Consumer Credit Counseling Services, what help can they give you?
- They can force those who lent you money to forgive all your debts
They can get the federal government to apply your income taxes to pay off your debts
They can cancel and cut up all of your credit cards without your permission
They can work with those who lent you money to set up a new payment schedule that you can meet
12. Len just applied for a credit card. He is an 18 year-old high school graduate with few valuable possessions and no credit history. If Len is granted a credit card, which of the following is the most likely way that the credit card company will reduce its risk?
- It will charge Len twice the finance charge rate it charges older cardholders
It will require Len to have both parents co-sign for the card
It will make Len's parents pledge their home to repay Len's credit card debt
It will start Len out with a small line of credit to see how he handles the account
13. Jim found a job with a take-home pay of $950 per month. He must pay $400 for rent and $100 for groceries each month. He also spends $100 per month on transportation. If he budgets $50 each month for clothing, $100 for restaurants and $50 for everything else, how long will it take him to accumulate savings of $750?
- 5 months
14. Mike has saved $6,000 for his college expenses by working part-time. He plans to start college next year and needs all of the money he saved. Which of the following is the safest place for his college money?
- Locked in his closet at home
Bank savings account
15. Many savings programs are protected by the Federal government against loss. Which of the following is not?
- Bond issued by one of the 50 states
Certificate of Deposit at the bank
U.S. Treasury bond
U.S. Savings bond
16. 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?
- Federal income tax, sales tax and social security contribution
Federal income tax, property tax, Medicare and social security contributions
Social security and Medicare contributions
Federal income tax, social security and Medicare contributions
17. Which of the following types of investments would best protect the purchasing power of a family's savings in the event of a sudden increase in inflation?
- U.S. Government Savings bond
Certificate of Deposit
25-year corporate bond
House financed with a fixed rate mortgage
18. If you went to college and earned a 4-year degree, how much more money could you expect to earn than if you only had a high school diploma?
- About 10 times as much
A lot more, about 70% more
A little more, about 20% more
No more, I would make about the same either way
19. Bob and Cindy are the same age. At age 25, Cindy began saving $2,000 a year while Bob saved nothing. At age 50, Bob realized that he needed money for retirement and started saving about $4,000 per year while Cindy kept saving her $2,000. Now they are both 75 years old. Who has the most money in his or her retirement account?
- Bob, because he saved more each year
They would each have the same amount because they put away exactly the same
Cindy, because she has put away more money
Cindy, because her money has grown for a longer time at compound interest
20. Which of the following credit card users is likely to pay the GREATEST dollar amount in finance charges per year if they all charge the same amount per year on their cards?
- Barbara who always pays off her credit card bill in full shortly after she receives it
Ellen, who generally pays off her credit card in full but occasionally will pay the minimum when she is short of cash
Nancy, who pays at least the minimum amount each month and more when she has the money
Paul who only pays the minimum amount each month
21. Jack and Ron are young men. Each has a good credit history. They work at the same company and make approximately the same salary. Jack has borrowed $2,500 to buy a car. Ron has borrowed $2,500 to take a foreign vacation. Who is likely to pay the lowest finance charge?
- They will both pay the same because they have almost identical financial backgrounds
Ron will pay less because people who travel overseas are better risks
Jack will pay less because the car is collateral for the loan
They will both pay the same because the rate is set by law
22. Inflation can cause difficulty in many ways. Which group would have the greatest problem during periods of inflation?
- Young couples with no children who both work
Young working couples with children
Older working couples saving for retirement
Older people living on fixed retirement income
23. Which of the following statements is NOT correct about most ATM cards?
- You must have a bank account to have an ATM card
You can generally get cash 24 hours a day
You can generally obtain information concerning your bank balance at an ATM machine
You can get cash anywhere in the world with no fee
24. 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, how much will you be responsible to pay?
25. Retirement income paid by a company is called:
- Social Security
Rents and profits
26. Wendy worked her way through college earning $15,000 per year. After graduation her first job pays $30,000. The total dollar amount Wendy will have to pay in Federal income taxes in her new job will:
- Be lower than when she was in college
Stay the same as when she was in college
Go up a little from when she was in college
Double, at least, from when she was in college
27. Which of the following statements is true?
- Your bad loan payment record with one bank will not be considered if you apply to another bank for a loan
People have so many loans it is very unlikely that one bank will know your history with another bank
Banks and other lenders share the credit history of their borrowers with each other and are likely to know of any loan payments that you have missed
If you missed a payment more than 2 years ago, it cannot be considered in a loan decision.
28. Which of the following best describes the primary sources of income for most people age 20-35?
- Profits from business
Dividends and interest
Salaries, wages and tips
29. Heather and Alexis are employed by the same company and earn the same pay. Heather spends her free time taking work-related classes to improve her computers skills, while Alexis spends her free time socializing with friends and working out at a fitness center. After five years what is likely to be true?
- Alexis will make more because she is more social
Heather and Alexis will continue to make the same money
Heather will make more money because she is more valuable to her company
Alexis will make more because Heather is likely to be laid off
30. If each of the following persons had the same amount of take-home pay, who would need the greatest amount of life insurance?
- A young single woman without children
An elderly retired man with a wife who is also retired
A young married man without children
A young single woman with two young children