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Financial Literacy Test Review Exam Questions with Complete Solutions

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  • Course
  • Financial Literacy
  • Institution
  • Financial Literacy

60, 20, 10, 10 Rule - Answer-60% for Spending, 20% for Savings, 10% for Investing, 10% Charitable Contributions $1,000 - Answer-Minimum amount for an emergency/opportunity fund. First Priority of a Budget. 401K - Answer-Employers can allow employees to contribute from their salary on a post-t...

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  • October 13, 2024
  • 8
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

Subjects

  • financial literacy test review exam questions with
  • rule answer 60 for spending 20

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  • Financial Literacy
  • Financial Literacy

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Financial Literacy Test Review Exam
Questions with Complete Solutions
60, 20, 10, 10 Rule - Answer-60% for Spending, 20% for Savings, 10% for Investing,
10% Charitable Contributions

$1,000 - Answer-Minimum amount for an emergency/opportunity fund. First Priority of a
Budget.

401K - Answer-Employers can allow employees to contribute from their salary on a
post-tax and/or pretax basis.

Employers may match employee contributions.

Earnings accrue on a tax-deferred basis.

403 (b) - Answer-A U.S. tax-advantaged retirement savings plan available for public
education organizations, some non-profit employers (only Internal Revenue Code
501(c)(3) organizations), cooperative hospital service organizations, and self-employed
ministers in the United States.

529 Plans - Answer-Tax-advantaged savings plan designed to encourage saving for
future education costs that are sponsored by states, state agencies, or educational
institutions.

Advertising - Answer-To call public attention to, especially by pointing out desirable
qualities so as to create a desire to buy or do business with.

Amortization Table/Schedule - Answer-A schedule of payments showing the amounts of
principal and interest that make up each payment.

Annual Percentage Rate (APR) - Answer-The annual rate that is charged for borrowing
(or made by investing), expressed as a single percentage number that represents the
actual yearly cost of funds over the term of a loan. This includes any fees or additional
costs associated with the transaction.

Bankruptcy - Answer-A legal proceeding involving a person or business that is unable to
repay outstanding debts. It begins with a petition filed by the debtor (most common) or
on behalf of creditors (less common).

Beneficiary - Answer-A person who benefits or is expected to benefit from something;
the person who receives the insurance money when policy funds are dispersed.

Budget - Answer-A financial plan used to forecast and track income and expenses.

, Career - Answer-Profession or field of employment for which one trains, such as
financial services or medicine.

Charitable Contributions - Answer-In general, money is given to a charitable
organization that exists to benefit society as a whole rather than to enrich individual
owners or shareholders.

Closing Costs - Answer-Closing costs are fees paid at the closing of a real estate
transaction. This point in time called the closing is when the title to the property is
conveyed to the buyer. Closing costs are incurred by either the buyer or the seller.

Co-Signer - Answer-The act of signing for another person's debt which involves a legal
obligation made by the cosigner to make a payment on the other person's debt should
that person default. Having a cosigner is way for individuals with a low income or
poor/limited credit history to obtain financing.

College Grant - Answer-Free money to pay for school. Doesn't need to be repaid.

Comparison Shopping - Answer-Examining different brands or models of a product (to
learn about variations in quality, size, etc.), or the prices charged by different sellers (to
learn about possible cost-savings), before deciding what to buy.

Compound Intrest - Answer-Interest paid or to be paid both on the principal and on
accumulated unpaid interest.

Not covered by Federal & State Consumer Protection Laws - Answer-Overpaying for
items

The result of paying bills on time - Answer-Increasing your credit score

Credit - Answer-A contractual agreement in which a borrower receives something of
value now and agrees to repay the lender at some date in the future, generally with
interest. The term also refers to the borrowing capacity of an individual or company.

Credit Card Bureaus - Answer-Credit Card Bureaus - Company that collects information
about your credit history and sells it to lenders. Equifax, Trans Union, Experian

Credit Report - Answer-A record of your credit history that includes information about
your identity, existing credit, public record, and inquiries about you.

Credit Score - Answer-Trustworthiness with money based on prior history; a general
qualification for borrowing, illustrated as a number generated by FICO.

Character - Answer-Determines Credit Worthiness (C's of Credit.) Somewhat
determined by your Credit history

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