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Financial Literacy
Unix X - Final
| Question | Answer |
|---|---|
| What is the process of putting money into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit? | Investing |
| Which term describes the act of using money to purchase goods and services? | Spending |
| What do you call the state of having consistent income and financial resources that ensure you can cover your expenses and withstand financial emergencies? | Financial Stability |
| Which term refers to any resource owned by an individual or corporation that is expected to provide future economic benefits? | Asset |
| What term describes a person who purchases goods and services for personal use? | Consumer |
| Which of the following scenarios best illustrates the concept of investing? | Jacob deposits $500 into a high-yield savings account expecting it to grow over time. |
| Financial stability can be compromised by which of the following factors? | Incurring high levels of unsecured debt with fluctuating interest rates |
| The percentage charged on borrowed money or paid on savings is known as: | Interest |
| Payments made by a corporation to its shareholders from its profits are referred to as: | Dividends |
| A fixed annual amount of money paid to an employee, typically irrespective of hours worked, is known as: | Salary |
| The amount of money an individual earns after all deductions, such as taxes, have been subtracted is known as: | Net income |
| Why is understanding interest rates important for managing personal finances? | It helps you understand the cost of borrowing and the return on savings |
| What is a key difference between a salary and an hourly wage? | A salary is a fixed annual amount, while an hourly wage is based on hours worked |
| How does income fluctuation affect financial planning? | It requires more careful budgeting and saving to manage periods of lower income |
| What are taxes collected by the U.S. federal government to fund national programs like defense and healthcare? | Federal taxes |
| Which term describes income ranges that determine the rate of income tax applied to a taxpayer's income? | Tax brackets |
| What is the total amount of money an employee earns before any deductions? | Gross pay |
| What is a document that details an employee’s earnings and deductions for a given pay period? | Paystub |
| What is the name of the federal agency responsible for collecting taxes and enforcing tax laws in the U.S.? | IRS |
| What reduces the amount of tax owed, often applied to specific situations like education or renewable energy? | Tax credits |
| What is a review of a taxpayer’s return by the IRS to ensure compliance with tax laws? | Audit |
| What is a financial plan that outlines income and expenses over a period of time? | Personal budget |
| What type of goal is considered Specific, Measurable, Achievable, Relevant, and Timebound? | S.M.A.R.T. goal |
| What is a fund set aside to cover unexpected expenses or income changes? | Emergency fund |
| What is a promise from the manufacturer to repair or replace a product if it breaks within a certain period? | Product warranty |
| A service plan that provides additional protection beyond the manufacturer’s standard warranty is called a(n) _____. | Extended warranty |
| What do you call a non-essential expense that you could choose to avoid, like spending money on vacations or dining out? | Discretionary expense |
| What is a financial institution? | A company that offers financial services such as managing money, loans, and investments |
| Banks typically provide all of the following services EXCEPT: | Selling groceries |
| A checking account is typically used for: | Daily transactions like paying bills and making purchases |
| Financial planning services help individuals with: | Depositing checks |
| To balance a checkbook means to: | Ensure your record of transactions matches the bank’s records |
| Which type of expense remains the same every month, such as rent or car payments? | Fixed expense |
| What type of expense changes from month to month, such as groceries or utilities? | Variable expense |
| What type of spending is considered non-essential, such as entertainment or dining out? | Discretionary expense |
| If you plan to save $100 per month to reach $1,200 by the end of the year for a vacation, this is an example of a(n) _____. | S.M.A.R.T. goal |
| Which tool helps individuals or businesses weigh the advantages and disadvantages of a decision before making it? | Cost-benefit analysis |
| Which of the following best describes a credit card? | A card that allows you to borrow money for purchases, to be paid back later with interest |
| Debit cards: | Borrow money from the bank for purchases |
| The Truth in Lending Act requires lenders to: | Disclose all loan terms, including interest rates and fees, to borrowers |
| The Fair Debt Collection Practices Act (FDCPA) helps consumers by: | Limiting how third-party debt collectors can interact with consumers |
| Which law regulates how consumer information is handled in credit reports? | Fair Credit Reporting Act (FCRA) |
| Which of the following is true about a credit union? | It is focused on serving its members, often offering better rates than banks |
| The FDIC was created to: | Protect consumer deposits in case of bank failure |
| What is the term for the total value of all your assets minus your liabilities? | Net Worth |
| Which of the following is a high-risk investment? | Stocks |
| What type of account allows you to pool money with other investors to buy a diversified portfolio of stocks and bonds? | Mutual Fund |
| A Certificate of Deposit (CD) is best described as: | A savings product with a fixed interest rate and fixed term |
| What is an example of a low-liquidity investment? | Real Estate |
| Diversification in investing means: | Spreading investments across various assets to reduce risk |
| In which market are stock prices generally rising and investor confidence is high? | Bull Market |
| A Bear Market is characterized by: | Falling stock prices and investor pessimism |
| Which type of retirement account allows tax-deferred contributions from your paycheck, often with employer matching? | 401(k) |
| What is the primary difference between a Traditional IRA and a Roth IRA? | Traditional IRA contributions are tax-deductible, but Roth IRA withdrawals in retirement are tax-free. |
| What is an advantage of a mutual fund compared to investing in individual stocks? | Mutual funds spread risk through diversification. |
| Which type of investment vehicle locks in your money for a fixed period in exchange for a higher interest rate? | Certificate of Deposit (CD) |
| What is debt? | Money that is borrowed and must be repaid |
| Credit refers to: | The ability to borrow money and pay it back later |
| What is collateral in a loan? | An asset or property pledged as security for the loan |
| Which of the following is an example of an appreciating asset? | Real estate |
| A depreciating asset is an asset that: | Loses value over time |
| A credit score is: | A numerical representation of a person’s creditworthiness |
| Which of the following is the role of a credit bureau? | Maintaining and collecting credit information |
| What does equity in a home refer to? | The portion of the home you own, after subtracting the mortgage owed |
| Which of the following is an example of revolving credit? | A credit card |
| Predatory lending refers to: | Unethical lending practices with high fees and interest rates |
| What is an unsecured loan? | A loan backed by an asset |
| How does credit affect your ability to borrow money? | The higher your credit, the more likely you are to be approved for loans |
| How does interest affect the total amount paid on a loan? | It increases the amount you pay over the loan term |
| Which type of insurance policy provides a payout to beneficiaries upon the policyholder’s death? | Life Insurance |
Created by:
Tyra Taylor
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