Ch Mountain America Credit Union Quiz
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If you have just started working, the first thing you should do is
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Start a Savings account
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Shop for office clothes
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Set aside money for your dream vacation
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Build up an emergency Fund account
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The CH Mountain America Credit Union Quiz assesses knowledge on starting savings accounts, budgeting income, understanding financial commitments, and comparing financial decisions. It's aimed at enhancing personal financial literacy and decision-making skills.
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- 2.
I have to set aside an amount of monthly savings equal to
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10%-15% of your monthly income
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20%-30% of your yearly income
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The balance after paying off your bills
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A percentage based on how many departments you have
Correct Answer
A. 10%-15% of your monthly incomeExplanation
The correct answer is to set aside 10%-15% of your monthly income as monthly savings. This is a common recommendation in personal finance to ensure that individuals save a portion of their income for future needs or emergencies. By setting aside this percentage, individuals can build a savings cushion and work towards their financial goals.Rate this question:
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- 3.
Taking up a financial plan and being committed is
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A burden to my finances.
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Not really important.
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A necessity to my family and I.
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Compulsory because the government says so
Correct Answer
A. A necessity to my family and I.Explanation
The correct answer is "a necessity to my family and I." This answer implies that having a financial plan and being committed to it is important for the well-being and financial stability of the individual's family. It suggests that without a financial plan, the person's finances may be at risk, and therefore, it is necessary to have a plan in place to ensure the financial security of their family.Rate this question:
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- 4.
Matt and Eric are young men. Each has a good credit history. They work at the same company and make approximately the same salary. Matt has borrowed $6,000 to take a foreign vacation. Eric has borrowed $6,000 to buy a car. Who is likely to pay the lowest finance charge?
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Matt will pay less because people who travel overseas are less of a risk
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They will both pay the same because they have almost identical financial background
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Eric will pay less because the car is collateral for the loan
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They will both pay the same beacuase the rate is set by the law
Correct Answer
A. Eric will pay less because the car is collateral for the loanExplanation
Eric will pay less because the car is collateral for the loan. When a loan is secured by collateral, such as a car, it reduces the lender's risk. If the borrower defaults on the loan, the lender can repossess the car and sell it to recover their money. This lower risk for the lender often results in lower interest rates and finance charges for the borrower. Since Matt's loan for the vacation does not have collateral, he is considered a higher risk borrower and will likely have a higher finance charge.Rate this question:
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- 5.
If you went to college and earned a 4-year degree, how much more could you expect to earn than if you only had a high school diploma?
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A little more; about 20% more.
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A lot more; about 70% more.
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About ten times as much.
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No more, you make the same either way.
Correct Answer
A. A lot more; about 70% more.Explanation
Earning a 4-year degree from college generally leads to higher earning potential compared to having only a high school diploma. The answer "a lot more; about 70% more" suggests that individuals with a college degree can expect to earn approximately 70% more than those with just a high school diploma. This indicates that obtaining a college degree significantly increases the likelihood of higher income and career opportunities.Rate this question:
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- 6.
Credit Unions typically offer lower rates.
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True
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False
Correct Answer
A. TrueExplanation
Credit unions typically offer lower rates compared to traditional banks because they are not-for-profit organizations owned by their members. This means they can prioritize providing competitive rates and fees to benefit their members rather than generating profits for shareholders. Additionally, credit unions often have lower operating costs and can pass on these savings to their members in the form of lower interest rates on loans and higher interest rates on savings accounts. This can make credit unions an attractive option for individuals looking for better rates and lower fees.Rate this question:
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- 7.
The best way to manage credit card debt is
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To consistently pay part of the amount owed every month
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To not pay every month but pay lump sum using my bonus at the end of the year
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To pay the full amount owed for that month
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To take up a personal bank loan to pay the credit card debt in full
Correct Answer
A. To pay the full amount owed for that monthExplanation
Paying the full amount owed for that month is the best way to manage credit card debt because it helps to avoid accumulating interest charges and potential late fees. By paying the full amount, it ensures that the debt is being paid off in a timely manner and reduces the overall balance owed. This approach also promotes responsible financial habits and helps to maintain a good credit score.Rate this question:
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- 8.
Suppose you have $100 in a savings account earning 2% interest a year. After five years, how much would you have?
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More than $102
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Exactly $102
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Less than $102
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Option 4
Correct Answer
A. More than $102Explanation
If you have $100 in a savings account earning 2% interest a year, after five years, the interest earned would be $10. Therefore, the total amount in the savings account would be $110, which is more than $102.Rate this question:
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- 9.
The interest rate on your savings account is 1% a year and inflation is 2% a year. After one year, would the money in the account buy more than it does today, exactly the same or less than today?
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More
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Same
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Less
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Option 4
Correct Answer
A. LessExplanation
The interest rate on the savings account is lower than the inflation rate. This means that the value of the money in the account will not increase as much as the cost of goods and services, resulting in a decrease in purchasing power. Therefore, the money in the account will be able to buy less than it does today.Rate this question:
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- 10.
Justin just found a job with a take-home pay of $2,000 per month. He must pay $800 for rent and $200 for groceries each month. He also spends $200 per month on transportation. If he budgets $100 each month for clothing, $150 for restaurants, and $250 for everything else, how long will it take him to accumulate savings of $900?
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1 month
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2 months
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3 months
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4 months
Correct Answer
A. 3 monthsExplanation
Justin's total monthly expenses can be calculated by adding up all the expenses mentioned: $800 (rent) + $200 (groceries) + $200 (transportation) + $100 (clothing) + $150 (restaurants) + $250 (everything else) = $1,700.
To calculate how much he can save each month, we subtract his total expenses from his take-home pay: $2,000 - $1,700 = $300.
Since Justin wants to accumulate savings of $900, we divide the savings goal by the amount he can save each month: $900 / $300 = 3 months.
Therefore, it will take him 3 months to accumulate savings of $900.Rate this question:
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- 11.
A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage but the total interest over the life of the loan will be less.
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True
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False
Correct Answer
A. TrueExplanation
A 15-year mortgage typically requires higher monthly payments because the loan is being paid off in a shorter period of time. However, the total interest over the life of the loan will be less because the loan is being paid off more quickly, resulting in less time for interest to accumulate. This means that the borrower will save money on interest payments in the long run.Rate this question:
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- 12.
Buying a single company's stock usually provides a safer return than a stock mutual fund.
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True
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False
Correct Answer
A. FalseExplanation
Buying a single company's stock does not usually provide a safer return than a stock mutual fund. This is because investing in a single company's stock exposes an individual to a higher level of risk, as the performance of that one company can significantly impact the investment. On the other hand, a stock mutual fund offers diversification by investing in a portfolio of stocks from different companies, which helps to spread the risk and potentially provide a more stable return. Therefore, the statement is false.Rate this question:
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- 13.
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?
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Vera, who always pays off her credit card bill in full shortly after she receives it.
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Jessica, who only pays the minimum amount each month.
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Megan, who pays at least the minimum amount each month, and more if she has the money
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Erin, who generally pays off her credit card in full but, occasionally, will pay the minimum when she is short of cash.
Correct Answer
A. Jessica, who only pays the minimum amount each month.Explanation
Jessica, who only pays the minimum amount each month, is likely to pay the greatest dollar amount in finance charges per year. This is because by only paying the minimum amount, she is carrying a balance on her credit card and accruing interest on that balance. Over time, the interest charges can accumulate and result in a higher overall dollar amount paid in finance charges compared to the other users who pay off their credit card bills in full or make additional payments.Rate this question:
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- 14.
Which of the following statements is true?
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Your bad loan payment record with one bank will not be considered if you apply to another bank for a loan.
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If you missed a payment more than 2 years ago, it cannot be considered in a loan decision.
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Banks and other lenders share credit history of their borrowers with each other and are likely to know of any loan payments that you have missed.
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People have so many loans it is very unlikely that one bank will know your history with another bank.
Correct Answer
A. Banks and other lenders share credit history of their borrowers with each other and are likely to know of any loan payments that you have missed.Explanation
Banks and other lenders share credit history of their borrowers with each other and are likely to know of any loan payments that you have missed. This means that if you have a bad loan payment record with one bank and apply to another bank for a loan, they will be aware of your past missed payments and it may affect their decision to approve your loan.Rate this question:
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- 15.
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?
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A 25-year corporate bond
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A house financed with a fixed-rate mortgage
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A 10-year bond issued by a corporation
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A certificate of deposit at a bank
Correct Answer
A. A house financed with a fixed-rate mortgageExplanation
A house financed with a fixed-rate mortgage would best protect the purchasing power of a family's savings in the event of a sudden increase in inflation. This is because the fixed-rate mortgage locks in the interest rate, so the monthly mortgage payment remains the same regardless of inflation. As inflation increases, the value of the house and the rental income it generates are likely to increase, providing a hedge against inflation and preserving the purchasing power of the family's savings.Rate this question:
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- 16.
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?
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When some clothes you like go on sale.
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When the interest on the loan is greater than the interest you get on your savings.
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When you want to go on a week vacation.
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When you need to buy a car to get a much better paying job.
Correct Answer
A. When you need to buy a car to get a much better paying job.Explanation
Borrowing money to buy a car in order to get a much better paying job can be financially beneficial. Although borrowing money means taking on debt, it can be justified in this scenario because the increased income from the better job can offset the cost of the loan. In the long run, the higher salary earned from the better job can help repay the loan and potentially lead to greater financial stability and savings.Rate this question:
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- 17.
Lindsay has saved $12,000 for her collegee expenses by working part-time. Her plan is to start college next year, and she needs all of the money she saved. Which of the following is the safest place for her college money?
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Corporate bonds
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A bank savings acccount
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Locked in her closet
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Stocks
Correct Answer
A. A bank savings acccountExplanation
A bank savings account is the safest place for Lindsay's college money because it offers security and protection for her funds. The money in a bank savings account is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000, which means that even if the bank were to fail, Lindsay would still be able to access her money. Additionally, a bank savings account provides easy access to her funds when she needs them for college expenses.Rate this question:
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- 18.
Doug must borrow $12,000 to complete his college education. Which of the following would NOT be likely to reduce the finance charge rate?
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If his parents took out an additional mortgage on their house for the loan.
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If the loan was insured by the Federal Government.
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If he went to a state college rather than a private college.
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If his parents cosigned the loan.
Correct Answer
A. If he went to a state college rather than a private college.Explanation
Choosing to attend a state college rather than a private college would not likely reduce the finance charge rate. The finance charge rate is determined by the terms of the loan and the borrower's creditworthiness, not by the type of college attended. Therefore, this option is unrelated to reducing the finance charge rate.Rate this question:
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- 19.
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?
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Sales tax may be charged on the interest that you earn.
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You cannot earn interest until you pass your 18th birthday.
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Earnings from savings account interest may not be taxed.
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Income tax may be charged on the interest if your income is high enough.
Correct Answer
A. Income tax may be charged on the interest if your income is high enough.Explanation
The correct answer states that income tax may be charged on the interest if your income is high enough. This means that if you earn a significant amount of interest from your savings account, you may be required to pay income tax on that interest. The other options are incorrect because they either mention sales tax, age restrictions, or state that earnings from savings account interest may not be taxed, which is not true in most cases.Rate this question:
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- 20.
Which of the following is true about sales taxes?
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You don't have to pay the tax if your income is very low.
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It makes things more expensive for you to buy.
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The national sales tax percentage rate is 6%.
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The federal government will deduct it from your paycheck.
Correct Answer
A. It makes things more expensive for you to buy.Explanation
Sales taxes are additional charges imposed on the purchase of goods and services. These taxes are added to the final price of the product, making it more expensive for the buyer. The other statements are incorrect because sales taxes are not based on income level, the national sales tax percentage rate can vary across different countries or states, and sales taxes are typically not deducted from an individual's paycheck by the federal government.Rate this question:
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- 21.
Which of the following statements best describes your right to check your credit history for accuracy?
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All credit records are the property of the U.S. Government and access is only available to the FBI and Lenders.
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You can only check your record for free if you are turned down for credit based on a credit report.
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Your credit record can be checked once a year for free.
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You cannot see your credit record.
Correct Answer
A. Your credit record can be checked once a year for free.Explanation
Your credit record can be checked once a year for free. This means that individuals have the right to access their credit history annually without any cost. This allows them to review their credit information and ensure its accuracy. It is important to regularly check credit records to identify any errors or discrepancies that may negatively impact creditworthiness.Rate this question:
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- 22.
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?
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Federal income tax, social security, and Medicare contributions
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Federal income tax, sales tax, and social security contributions
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Social security and Medicare contributions
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Federal income tax, property tax, and Medicare / social security contributions
Correct Answer
A. Federal income tax, social security, and Medicare contributionsExplanation
The correct answer is Federal income tax, social security, and Medicare contributions. When calculating take-home pay, various deductions are made from the total earnings. In this case, federal income tax is deducted based on the individual's tax bracket. Additionally, social security and Medicare contributions are taken out to fund these government programs. Sales tax and property tax are not typically deducted from an individual's paycheck.Rate this question:
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- 23.
Many people put aside money to take care of unexpected expenses. If John and Jenny 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?
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Stocks
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Savings account
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Invested in a down payment on the house
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Checking account
Correct Answer
A. Invested in a down payment on the houseExplanation
If John and Jenny needed money right away, it would be of least benefit to them if it was invested in a down payment on the house. This is because the money invested in a down payment is typically tied up in the property and not easily accessible. On the other hand, stocks, savings accounts, and checking accounts are more liquid and can be readily accessed in case of emergencies.Rate this question:
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- 24.
Which of the following statemetns is NOT correct about most ATM cards?
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You can get cash anywhere in the world with no fee.
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You must have a bank account to have an ATM Card.
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You can generally get cash 24 hours a day.
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You can generally obtain information concerning your bank balance at an ATM machine.
Correct Answer
A. You can get cash anywhere in the world with no fee.Explanation
The statement "You can get cash anywhere in the world with no fee" is not correct about most ATM cards. While ATM cards allow you to withdraw cash from ATMs, there are often fees associated with international withdrawals. These fees can vary depending on the bank and the location of the ATM. Therefore, it is not accurate to say that you can get cash anywhere in the world with no fee using most ATM cards.Rate this question:
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- 25.
Maria worked her way through college earning $20,000 per year. After graduation, her first job pays $40,000. The total dollar amount Maria will have to pay in Federal Income taxes in her new job will:
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Stay the same as when she was in college.
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Be lower than when she was in college.
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Double, at least, from when she was in college.
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Go up a little from when she was in college.
Correct Answer
A. Double, at least, from when she was in college.Explanation
As Maria's income has doubled after graduation, her federal income taxes will also increase. Generally, higher income leads to a higher tax bracket, resulting in a larger tax liability. Therefore, the total dollar amount Maria will have to pay in Federal Income taxes in her new job will be at least double compared to when she was in college.Rate this question:
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- 26.
Karen 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 Karen is granted a credit card, which of the following is the most likely way that the credit card company will reduce ITS risk?
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It will charge Karen twice the finance charge rate it charges older cardholders.
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It will start Karen out with a small line of credit to see how she handles the account.
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It will make Karen's parents pledge their home to repay Karen's credit card debt.
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It will require Karen to have both parents co-sign for the card.
Correct Answer
A. It will start Karen out with a small line of credit to see how she handles the account.Explanation
The credit card company will reduce its risk by starting Karen out with a small line of credit to see how she handles the account. This is because Karen is young, has no credit history, and few valuable possessions, making her a higher risk borrower. By giving her a small line of credit, the credit card company can assess her creditworthiness and responsible behavior before granting her a higher credit limit. This helps to mitigate the risk of potential default or delinquency on her part.Rate this question:
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- 27.
Many young people receive health insurance benefits through their parents. Which of the following statements is true about health insurance coverage?
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Young people don't need health insurance because they are so healthy.
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You continue to be covered by your parents' insurance as long as you live at home, regardless of your age.
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You are covered by your parents' insurance until you marry, regardless of your age.
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If your parents become unemployed, your insurance coverage may stop, regardless of your age.
Correct Answer
A. If your parents become unemployed, your insurance coverage may stop, regardless of your age.Explanation
The correct answer is that if your parents become unemployed, your insurance coverage may stop, regardless of your age. This is because many young people receive health insurance benefits through their parents, and if their parents lose their jobs and their health insurance coverage, the young person's coverage may also be affected. Age is not a determining factor in this situation.Rate this question:
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- 28.
Kelly and Pete 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?
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A U.S. Government savings bond
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A savings account
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A checking account
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Stocks
Correct Answer
A. StocksExplanation
Stocks tend to have the highest growth over long periods of time, such as 18 years. While U.S. Government savings bonds, savings accounts, and checking accounts may provide some level of interest or return on investment, they typically offer lower rates compared to the potential gains from investing in stocks. Stocks have historically shown higher returns on investment over the long term, although they also come with higher levels of risk and volatility. Therefore, investing in stocks can potentially provide the highest growth for Kelly and Pete's baby's education fund over an 18-year period.Rate this question:
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- 29.
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?
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They can work with those who loaned you money to set up a payment schedule that you can meet.
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They can force those who loaned you money to forgive all your debts.
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They can cancel and cut up all of your credit cards without your permission.
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They can get the federal government to apply your income taxes to payoff your debts.
Correct Answer
A. They can work with those who loaned you money to set up a payment schedule that you can meet.Explanation
A responsible credit counseling service such as the Consumer Credit Counseling Services can help individuals who are behind on their debt payments by working with the lenders to establish a payment schedule that is manageable for the individual. This means that the credit counseling service can negotiate with the lenders to come up with a plan that allows the individual to repay their debts in a way that fits their financial situation. This can help the individual to avoid further financial difficulties and work towards becoming debt-free.Rate this question:
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- 30.
Which of the following best describes the primary sources of income for most people age 20-35?
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Profits from business
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Rents
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Dividends and interest
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Salaries, wages, and tips
Correct Answer
A. Salaries, wages, and tipsExplanation
The primary sources of income for most people age 20-35 are salaries, wages, and tips. This is because individuals in this age group are typically starting their careers and are more likely to be employed in entry-level positions that pay a fixed salary or hourly wage. Additionally, they may also rely on tips if they work in service industries such as restaurants or hospitality. Profits from business, rents, and dividends and interest are less common sources of income for individuals in this age group, as they are more commonly associated with individuals who are older and have had more time to accumulate wealth or invest in businesses or properties.Rate this question:
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Current Version
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Oct 29, 2024Quiz Edited by
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Jan 29, 2015Quiz Created by
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