Can You Pass This Hardest Finance Test? Trivia Quiz
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Can you pass this most challenging finance test? For this quiz, you will be expected to know how to define a need, how goals are accomplished, and what financial planning is. Can you identify an action statement, what do individuals with more formal training usually have, and how does the government use money collected from taxes? If you are searching for a way to test your financial intelligence, look no further than this quiz.
- 1.
Which of the following has the least influence on an individual’s values?
- A.
Media
- B.
Family
- C.
Religious affiliations
- D.
Grade average
Correct Answer
D. Grade averageExplanation
An individual's grade average is a measure of their academic performance, which is primarily determined by their effort and abilities in school. While it may affect their future opportunities and career prospects, it has the least direct influence on their personal values. Values are typically shaped by factors such as family upbringing, cultural background, religious beliefs, and societal influences, including media.Rate this question:
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- 2.
A need is best defined as:
- A.
The end result of something a person intends to acquire, achieve, do, reach, or accomplish in the near or distant future.
- B.
Something thought to be a necessity or essential items required for life.
- C.
A fundamental belief or practice about what is desirable, worthwhile, and important to an individual.
- D.
Something unnecessary but desired or items that increase the quality of living.
Correct Answer
B. Something thought to be a necessity or essential items required for life.Explanation
A need is best defined as something thought to be a necessity or essential items required for life. This definition implies that a need is something that is crucial for survival or maintaining a basic standard of living. It suggests that needs are essential for human well-being and are considered to be vital for an individual's physical, emotional, and social needs.Rate this question:
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- 3.
Kaylee will save her allowance of $25 per month to purchase a $150 mp3 player in six months. This is an example of what type of goal?
- A.
Short-term goal
- B.
Long-term goal
- C.
Education Goal
- D.
This is not an example of a goal
Correct Answer
A. Short-term goalExplanation
This is an example of a short-term goal because it can be achieved within a relatively short period of time, which is six months. Kaylee has a specific target, which is to save her allowance of $25 per month, and she has a specific item she wants to purchase, which is the $150 mp3 player. This goal does not require a long-term commitment or a significant amount of time to achieve.Rate this question:
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- 4.
One element of a financial goal is missing in the example below. Which one is it? “I will save $150 each month to go on a vacation in one year.”
- A.
Time Bound
- B.
Specific
- C.
Attainable
- D.
Measurable
Correct Answer
D. MeasurableExplanation
The missing element in the given financial goal example is "Time Bound." While the goal specifies the amount to be saved each month and the purpose of the savings, it does not mention a specific deadline or timeframe for achieving the goal. A measurable financial goal should include a clear timeline or deadline to provide a sense of urgency and structure for achieving the goal.Rate this question:
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- 5.
Goals are most likely to be accomplished if an individual:
- A.
Lets his/her parents set their goals.
- B.
Lets their friends set their goals.
- C.
Writes their goals down.
- D.
Thinks about their goals often.
Correct Answer
C. Writes their goals down.Explanation
Writing down goals helps individuals to clarify their objectives and increases the likelihood of achieving them. When goals are written down, they become more tangible and can be easily referenced and reviewed. This process also helps individuals to organize their thoughts and create a plan of action. Additionally, writing down goals serves as a constant reminder, keeping individuals focused and motivated. It allows for better tracking of progress and provides a sense of accountability. Ultimately, individuals who write down their goals are more likely to stay committed and take the necessary steps to accomplish them.Rate this question:
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- 6.
What is financial planning?
- A.
A fundamental belief or practice about what is desirable and worthwhile.
- B.
A process used to achieve financial success based upon financial goals and plans.
- C.
An investment plan that includes stocks, bonds, and mutual funds.
- D.
A set of financial documents including net worth, a will and insurance policies.
Correct Answer
B. A process used to achieve financial success based upon financial goals and plans.Explanation
Financial planning is a process used to achieve financial success based upon financial goals and plans. It involves creating a comprehensive strategy to manage one's finances and make informed decisions about saving, investing, and spending money. By setting financial goals and developing a plan, individuals can effectively allocate their resources, reduce debt, save for retirement, and achieve long-term financial stability. This process helps individuals make the most of their financial resources and work towards their desired financial outcomes.Rate this question:
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- 7.
Chance is 25 years old, single, and has no children. He has just graduated from college and has accepted a job as a mechanical engineer. These are examples of Chances:
- A.
Life cycle conditions
- B.
Life cycle crisis
- C.
Financial needs
- D.
Goals
Correct Answer
A. Life cycle conditionsExplanation
The given examples of Chance's age, marital status, lack of children, graduation from college, and new job as a mechanical engineer all indicate different stages or conditions in his life cycle. These factors are likely to impact his financial needs, goals, and overall life circumstances. Therefore, the correct answer is life cycle conditions.Rate this question:
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- 8.
Action statements should be used when writing a résumé. Which of the following is a properly written action statement?
- A.
Supervised daily operations of 4 employees.
- B.
I saved money from a part-time job to finance the purchase of a new car.
- C.
I participated in the Family Career, and Community Leaders of America (FCCLA) as a member in a chapter of 32 students.
- D.
Speech and Drama Team.
Correct Answer
A. Supervised daily operations of 4 employees.Explanation
The given answer "Supervised daily operations of 4 employees" is a properly written action statement because it clearly states a specific task that the person performed in their previous job. It is concise, specific, and focuses on a relevant skill that is applicable to potential employers.Rate this question:
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- 9.
In order to make an informed career decision, a high school student will want to:
- A.
Commit to a profession that requires a college degree.
- B.
Choose a career that offers the amount of money desired.
- C.
Develop personal goals, complete an interest inventory, and research careers.
- D.
Choose a training program that will guarantee employment after the course work is completed.
Correct Answer
C. Develop personal goals, complete an interest inventory, and research careers.Explanation
Developing personal goals, completing an interest inventory, and researching careers are all important steps for a high school student to make an informed career decision. By developing personal goals, the student can identify what they want to achieve in their career and what is important to them. Completing an interest inventory helps the student understand their interests and passions, which can guide them towards a career that aligns with their interests. Researching careers allows the student to explore different options, understand the requirements and opportunities in each field, and make an informed decision based on their goals and interests.Rate this question:
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- 10.
Lora is a high school computer and technology teacher. She enrolls in a computer class at least twice per year to stay current on recent technology changes and updates. By continuing her education, Lora is investing in her:
- A.
Salary
- B.
Human capital
- C.
Family
- D.
Interest inventory
Correct Answer
B. Human capitalExplanation
Lora's decision to enroll in computer classes to stay current on technology changes and updates shows that she is investing in her human capital. Human capital refers to the skills, knowledge, and abilities that individuals possess, which can be improved through education and training. By continuously updating her skills, Lora is enhancing her value as a teacher and increasing her potential for career advancement and higher earning potential.Rate this question:
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- 11.
Individuals with more formal educational training usually have:
- A.
Higher estimated lifetime earnings.
- B.
Lower personal satisfaction.
- C.
Greater amounts of leisure time.
- D.
More comfortable work environments.
Correct Answer
A. Higher estimated lifetime earnings.Explanation
Individuals with more formal educational training usually have higher estimated lifetime earnings because education provides individuals with the necessary skills and knowledge to secure higher-paying jobs. Higher education often leads to better job opportunities, promotions, and career advancements, which ultimately result in higher earnings over a lifetime. Additionally, individuals with formal education are more likely to possess specialized skills that are in demand in the job market, allowing them to command higher salaries.Rate this question:
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- 12.
Susan is currently working in Kansas City, MO earning $30,000 a year. She is offered a position in Indianapolis, IN earning $32,000 a year. If Kansas City’s index is 100 and Indianapolis’ index is 115, which is true? (Index 2/Index 1) * Salary City 1
- A.
Susan will have more spending power if she moves to Indianapolis.
- B.
Susan will have more spending power if she stays in Kansas City.
- C.
Susan will have the same spending power in Indianapolis as she has in Kansas City
- D.
There is not enough information to decide.
Correct Answer
B. Susan will have more spending power if she stays in Kansas City.Explanation
The cost of living index is higher in Indianapolis (115) compared to Kansas City (100). This means that goods and services are more expensive in Indianapolis. Even though Susan's salary in Indianapolis is slightly higher, the higher cost of living would offset the increase in salary, resulting in less spending power compared to Kansas City. Therefore, Susan will have more spending power if she stays in Kansas City.Rate this question:
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- 13.
The government uses money collected from taxes to:
- A.
Finance the Internal Revenue Service.
- B.
Encourage private enterprise.
- C.
Establish food networks.
- D.
Provide goods and services to the public.
Correct Answer
D. Provide goods and services to the public.Explanation
The government uses money collected from taxes to provide goods and services to the public. This includes funding for various public services such as healthcare, education, infrastructure development, social welfare programs, and defense. By utilizing tax revenue, the government aims to meet the needs of the public and ensure the well-being and progress of the society as a whole.Rate this question:
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- 14.
A dependent is a person who:
- A.
Relies on the taxpayer for financial support.
- B.
Relies on the government for their Social Security benefit check.
- C.
Pays the taxes for all the members of the family.
- D.
Depends on their job for needed financial support to pay their expenses.
Correct Answer
A. Relies on the taxpayer for financial support.Explanation
A dependent is a person who relies on the taxpayer for financial support. This means that the taxpayer is responsible for providing the necessary funds to meet the dependent's financial needs. The taxpayer may provide support for various expenses such as housing, food, education, healthcare, and other necessities. The dependent is not financially independent and relies on the taxpayer's income to cover their expenses.Rate this question:
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- 15.
Bob is working for a bank. He earns $8.00 an hour, works 40 hours a week, and gets paid every 2 weeks. He pays $63.08 into federal withholdings, $33.21 into state withholdings, and $42.05 into FICA. What is Bob’s gross pay on his paycheck?
- A.
$181.66
- B.
$363.32
- C.
$576.92
- D.
$640.00
Correct Answer
D. $640.00Explanation
Bob earns $8.00 an hour and works 40 hours a week. So, his weekly gross pay is 8 * 40 = $320. Since he gets paid every 2 weeks, his bi-weekly gross pay is 320 * 2 = $640. Therefore, Bob's gross pay on his paycheck is $640.00.Rate this question:
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- 16.
Bob is working for a bank. He earns $8.00 an hour, works 40 hours a week, and gets paid every 2 weeks. He pays $63.08 into federal withholdings, $33.21 into state withholdings, and $42.05 into FICA. What is Bob’s net pay on his paycheck?
- A.
$501.66
- B.
$320.00
- C.
$576.92
- D.
$640.00
Correct Answer
A. $501.66Explanation
Bob's gross pay can be calculated by multiplying his hourly rate ($8.00) by the number of hours he works in a week (40), which equals $320.00. Since he gets paid every 2 weeks, his gross pay for a pay period is $320.00 multiplied by 2, which equals $640.00.
To calculate his net pay, we need to subtract the withholdings from his gross pay. The total amount withheld from his paycheck is $63.08 (federal withholdings) + $33.21 (state withholdings) + $42.05 (FICA), which equals $138.34.
Therefore, Bob's net pay on his paycheck is $640.00 - $138.34, which equals $501.66.Rate this question:
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- 17.
A spending plan is affected by which of the following factors?
- A.
Needs
- B.
Values
- C.
Wants
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
A spending plan is affected by all of the above factors because needs, values, and wants all play a role in determining how money is allocated and spent. Needs refer to essential expenses such as food, shelter, and healthcare, which must be prioritized in a spending plan. Values influence spending decisions based on personal beliefs and priorities. Wants are non-essential items or experiences that individuals desire but can live without. All three factors need to be considered when creating a spending plan to ensure that money is allocated appropriately and aligns with an individual's financial goals and priorities.Rate this question:
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- 18.
If expenses were to exceed income on a spending plan, what would be a financially smart solution?
- A.
Decrease expenses
- B.
Use a credit card more often
- C.
Earn less income
- D.
Increase purchases
Correct Answer
A. Decrease expensesExplanation
If expenses were to exceed income on a spending plan, the financially smart solution would be to decrease expenses. By reducing the amount spent, it would help to align the spending with the available income and prevent further financial strain. This could involve cutting back on non-essential items or finding more cost-effective alternatives. Using a credit card more often or increasing purchases would only exacerbate the situation, while earning less income would not address the issue of expenses exceeding income.Rate this question:
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- 19.
Depository Institutions offer a wide variety of services including:
- A.
Checking and savings accounts.
- B.
Loans and investments.
- C.
Financial counseling.
- D.
All of the above.
Correct Answer
D. All of the above.Explanation
Depository institutions, such as banks and credit unions, offer a wide range of services to their customers. These services include checking and savings accounts, where individuals can deposit and withdraw money, loans and investments, which allow customers to borrow money or invest their funds, and financial counseling, where individuals can seek advice and guidance on managing their finances. Therefore, the correct answer is "All of the above" as depository institutions offer all of these services.Rate this question:
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- 20.
Funds deposited in a federally insured account (FDIC) are protected against loss for up to:
- A.
$50,000.00
- B.
$1,000,000.00
- C.
$250,000.00
- D.
$10,000.00
Correct Answer
C. $250,000.00Explanation
Funds deposited in a federally insured account (FDIC) are protected against loss for up to $250,000. This means that if the bank fails, the depositor will be reimbursed up to $250,000 of their deposit. This protection is provided by the Federal Deposit Insurance Corporation (FDIC) and applies to individual accounts, joint accounts, and certain retirement accounts held at FDIC-insured banks. It is important for individuals to ensure that their deposits do not exceed the FDIC insurance limit in order to fully benefit from this protection.Rate this question:
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- 21.
Electronic banking allows the consumer to:
- A.
Eliminate the need to reconcile their bank account.
- B.
Correct fraud or identity theft as soon as it occurs.
- C.
Have 3-4 days of float time after a check is written.
- D.
Have 24/7 access to banking transactions.
Correct Answer
D. Have 24/7 access to banking transactions.Explanation
Electronic banking allows consumers to have 24/7 access to their banking transactions. This means that they can check their account balance, transfer funds, pay bills, and perform other banking activities at any time of the day or night, without having to visit a physical bank branch. This convenience is one of the major advantages of electronic banking, as it provides flexibility and accessibility to consumers, allowing them to manage their finances more efficiently and conveniently.Rate this question:
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- 22.
When comparing and contrasting debit and credit cards, it could be said that:
- A.
Debit cards allow for overspending and credit cards are limited to the amount in the designated bank account.
- B.
A debit card withdraws money from a designated bank account for immediate payment instead of making purchases on credit
- C.
Credit cards are not widely accepted by stores but debit cards are.
- D.
Debit cards and credit cards function in the same manner.
Correct Answer
B. A debit card withdraws money from a designated bank account for immediate payment instead of making purchases on creditExplanation
Debit cards allow individuals to make immediate payments by withdrawing money directly from their designated bank account, unlike credit cards which allow individuals to make purchases on credit. This means that when using a debit card, the individual must have sufficient funds in their bank account to cover the cost of the purchase, whereas with a credit card, they can borrow money from the credit card issuer and pay it back later. Therefore, the statement accurately describes the difference between debit and credit cards.Rate this question:
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- 23.
In order to use online banking safely when making a purchase or when paying a bill, a person should make sure to:
- A.
Make the transaction using their personal e-mail account.
- B.
Use an online banking account that is password protected
- C.
Make sure that the bank website uses https in the URL and the closed pad lock icon.
- D.
B and c only
- E.
A, b, and c
Correct Answer
D. B and c onlyExplanation
To use online banking safely, a person should make sure to use an online banking account that is password protected. This adds an extra layer of security to prevent unauthorized access. Additionally, they should make sure that the bank website uses https in the URL and the closed padlock icon. This indicates that the website has a secure connection and any information entered will be encrypted and protected from potential hackers. Using their personal email account is not necessary for safe online banking, so option a is not correct. Therefore, the correct answer is b and c only.Rate this question:
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- 24.
When comparing and contrasting savings and investing, which of the following is true?
- A.
Savings is used to pay for long-term goals, while investing is used to pay for emergencies.
- B.
Savings are less liquid than investing.
- C.
Savings provide the foundation for financial security while investing is used to pay for long-term goals, such as retirement.
- D.
All of the above
Correct Answer
C. Savings provide the foundation for financial security while investing is used to pay for long-term goals, such as retirement.Explanation
Savings provide the foundation for financial security while investing is used to pay for long-term goals, such as retirement. This means that savings are typically used to build a safety net and cover unexpected expenses, while investing involves putting money into assets that have the potential to grow and generate returns over a longer period of time. By saving, individuals can create a stable financial base, while investing allows them to grow their wealth and achieve long-term financial goals.Rate this question:
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- 25.
Shelley’s net income is $1500 per month and her total expenses equal $1200. What is the minimum amount of money Shelley should keep in the form of liquid assets that are not used to pay for current consumption?
- A.
$3600
- B.
$4500
- C.
$7200
- D.
$14,400
Correct Answer
C. $7200 -
- 26.
What does “pay yourself first” mean?
- A.
An individual should save whatever money is left over after paying monthly bills.
- B.
An individual should pay all fixed expenses before paying flexible expenses.
- C.
An individual should consider savings to be a fixed expense.
- D.
An individual should consider savings to be a flexible expense.
Correct Answer
C. An individual should consider savings to be a fixed expense.Explanation
"Pay yourself first" means that an individual should prioritize saving money by considering it as a fixed expense. This means that before spending money on other expenses or bills, the individual should set aside a portion of their income for savings. By treating savings as a fixed expense, it ensures that saving money becomes a regular and non-negotiable part of the individual's financial routine. This approach helps individuals build a savings habit and ensure that they are consistently setting aside money for their future financial goals.Rate this question:
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- 27.
Which of the following statements correctly describes the security level of savings tools?
- A.
Savings tools are not secure because they have a high risk of losing money.
- B.
Savings tools are secure because they are protected by the U.S. government against loss.
- C.
Savings tools are very secure because there are no risks involved with saving or investing.
- D.
None of the above is true. It would be safer to keep the money at home in a shoe box.
Correct Answer
B. Savings tools are secure because they are protected by the U.S. government against loss.Explanation
Savings tools are considered secure because they are protected by the U.S. government against loss. This means that even if the institution holding the savings tools were to fail, the government would provide insurance coverage to ensure that the money is not lost. This provides a level of security for individuals who choose to save or invest their money in these tools.Rate this question:
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- 28.
How liquid is a savings account?
- A.
More liquid than cash.
- B.
Less liquid than mutual funds.
- C.
More liquid than stocks and bonds.
- D.
All of the above.
Correct Answer
C. More liquid than stocks and bonds.Explanation
A savings account is considered to be more liquid than stocks and bonds because it allows for easy and quick access to funds. Unlike stocks and bonds, which may require selling or waiting for a specific time period to access the money, a savings account allows for immediate withdrawals. This makes it a more convenient and flexible option for individuals who may need to access their funds quickly.Rate this question:
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- 29.
Hannah needs a savings tool to help her manage her everyday purchases. The savings tool needs to be very liquid and accessible. Which of the following savings tools should Hannah choose?
- A.
Certificate of deposit.
- B.
Checking account.
- C.
Money market deposit account.
- D.
Any of the above savings tools would help Hannah.
Correct Answer
B. Checking account.Explanation
Hannah should choose a checking account as her savings tool because it is very liquid and accessible. Unlike a certificate of deposit, which has a fixed term and penalties for early withdrawal, or a money market deposit account, which may have withdrawal restrictions, a checking account allows Hannah to easily deposit and withdraw money as needed for her everyday purchases. It provides her with immediate access to her funds, making it a suitable choice for managing her everyday expenses.Rate this question:
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- 30.
What is inflation?
- A.
The rise in the general level of prices.
- B.
The uncertainty the return on an investment will deviate from what is expected.
- C.
The number of times something happens to money.
- D.
The projected value of an investment at the end of a specified time frame.
Correct Answer
A. The rise in the general level of prices.Explanation
Inflation refers to the increase in the overall prices of goods and services in an economy over a period of time. It is a measure of how much the purchasing power of money decreases, as the same amount of money can buy fewer goods and services. This can be caused by various factors such as increased production costs, excessive money supply, or changes in consumer demand. Inflation is an important economic indicator that affects the cost of living, interest rates, and the overall health of an economy.Rate this question:
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- 31.
The relationship between risk and return in investing can be stated as:
- A.
Higher risk indicates lower return.
- B.
Higher risk indicates higher return.
- C.
Lower risk indicates higher return.
- D.
No relationship exists between risk and return.
Correct Answer
B. Higher risk indicates higher return.Explanation
The correct answer is "higher risk indicates higher return." This means that when an investment carries a higher level of risk, it also has the potential for higher returns. This is because investors require a higher return as compensation for taking on greater risk. In other words, they expect to be rewarded for the possibility of losing money by the potential for higher profits. This relationship between risk and return is a fundamental principle in finance and is often used to guide investment decisions.Rate this question:
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- 32.
A diversified portfolio is desirable because it:
- A.
Increases the risk/return ratio
- B.
Limits investors choices to only one or two investment tools
- C.
Indicates an investor is a good predictor of the return an investment will have
- D.
Decreases risk by investing money in a variety of investment tools
Correct Answer
D. Decreases risk by investing money in a variety of investment toolsExplanation
A diversified portfolio decreases risk by investing money in a variety of investment tools. By spreading investments across different asset classes, industries, and geographical regions, the portfolio becomes less susceptible to the performance of any single investment. This diversification helps to mitigate the impact of any potential losses and increases the likelihood of achieving more stable returns over time.Rate this question:
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- 33.
The value of a stock can change when:
- A.
Dollar value of a stock increases or decreases
- B.
A stock split occurs
- C.
A merger happens between two companies
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
The value of a stock can change due to various reasons. Firstly, the dollar value of a stock can increase or decrease based on market conditions and investor sentiment. Secondly, a stock split can also impact the value of a stock. In a stock split, the number of shares increases, but the price per share decreases, potentially affecting the overall value. Lastly, when two companies merge, it can lead to changes in the stock value of both companies involved. Therefore, all of the mentioned factors can contribute to fluctuations in the value of a stock.Rate this question:
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- 34.
Which of the following is an act of identity theft?
- A.
Receiving permission to use a parents’ credit card for school clothes
- B.
Wrongfully acquiring and using someone’s personal identification
- C.
Taking the identity of another individual as inspiration for a costume
- D.
Having the same name as another person
Correct Answer
B. Wrongfully acquiring and using someone’s personal identificationExplanation
Wrongfully acquiring and using someone's personal identification is an act of identity theft. This involves obtaining and using someone else's personal information, such as their name, social security number, or credit card details, without their consent or knowledge. This can be done for various fraudulent purposes, such as making unauthorized purchases, opening fraudulent accounts, or committing other forms of financial fraud. It is a serious crime that can result in severe consequences for the perpetrator.Rate this question:
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- 35.
Which of the following actions will not make an individual vulnerable to identity theft?
- A.
Purchasing an item online with a credit card
- B.
Responding to an e-mail from your depository institution
- C.
Paying cash for a movie ticket
- D.
Throwing mail in the garbage
Correct Answer
C. Paying cash for a movie ticketExplanation
Paying cash for a movie ticket will not make an individual vulnerable to identity theft because it does not involve sharing personal information or financial details. Unlike purchasing an item online with a credit card or responding to an email from a depository institution, paying cash for a movie ticket does not require providing any personal or financial information that could be potentially stolen by identity thieves. Additionally, throwing mail in the garbage can put individuals at risk of identity theft if it contains sensitive information, such as bank statements or credit card offers.Rate this question:
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- 36.
An individual can decrease the risk of fraudulent use of their credit cards by:
- A.
Carrying all credit cards in their wallet so they do not get lost
- B.
Signing the back of card with a signature and “Please see ID”
- C.
Giving out account numbers over the phone rather than on the Internet
- D.
All of the above
Correct Answer
B. Signing the back of card with a signature and “Please see ID”Explanation
By signing the back of the card with a signature and adding "Please see ID", the individual adds an extra layer of security to their credit card. This makes it more difficult for someone else to use the card if it is lost or stolen, as the merchant would be prompted to check the ID of the person using the card. The other options mentioned, such as carrying all credit cards in the wallet and giving out account numbers over the phone, may help in certain situations but do not directly address the risk of fraudulent use as effectively as signing the back of the card.Rate this question:
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- 37.
Chris has just discovered that he has been a victim of identity theft. What should he do to resolve the theft?
- A.
File a police report in the community where the theft occurred
- B.
Leave all fraudulent accounts open as proof
- C.
Contact one of the three credit bureaus
- D.
All of the above
Correct Answer
A. File a police report in the community where the theft occurredExplanation
Chris should file a police report in the community where the theft occurred. This is important as it will create an official record of the identity theft and can be used as evidence in resolving the issue. Additionally, filing a police report can help in initiating an investigation and potentially catching the perpetrator.Rate this question:
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- 38.
If a credit card is used fraudulently, what is the cardholder’s personal liability for the unauthorized charges?
- A.
The cardholder has no liability for unauthorized charges if they are reported within 60 days
- B.
The cardholder’s liability is limited to $50.00 for unauthorized charges if they are reported within 60 days
- C.
The cardholder’s liability will vary depending on the amount that was fraudulently charged to the card
- D.
The card holder is liable for all unauthorized charges to the card
Correct Answer
B. The cardholder’s liability is limited to $50.00 for unauthorized charges if they are reported within 60 daysExplanation
The cardholder's personal liability for unauthorized charges is limited to $50.00 if they are reported within 60 days.Rate this question:
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- 39.
Which of the following is NOT included in an individual’s credit report?
- A.
Current and past addresses
- B.
Employment history
- C.
Bankruptcies and foreclosures
- D.
Medical information
Correct Answer
D. Medical informationExplanation
An individual's credit report includes information about their financial history, such as current and past addresses, employment history, bankruptcies, and foreclosures. However, medical information is not included in a credit report. This is because an individual's medical history is not relevant to their creditworthiness or ability to repay debts. The inclusion of medical information in a credit report would be a violation of privacy laws and could potentially lead to discrimination against individuals based on their health status.Rate this question:
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- 40.
A consumer will develop a positive credit history if they:
- A.
Pay phone and utility bills on time
- B.
Maintain reasonable amounts of unused credit
- C.
Pay cash for the majority of purchases
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
A consumer will develop a positive credit history if they pay phone and utility bills on time because this demonstrates responsible financial behavior and reliability in meeting payment obligations. Maintaining reasonable amounts of unused credit also contributes to a positive credit history as it shows that the consumer is not relying heavily on credit and has the ability to manage their finances effectively. Paying cash for the majority of purchases may not directly impact credit history, but it can help in managing debt and avoiding unnecessary interest charges, which indirectly contributes to a positive credit history.Rate this question:
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- 41.
A low credit score will affect an individual financially because the _______________.
- A.
Interest rate of loans will be lower
- B.
Purchase price of an item will be higher
- C.
Monthly payments will be lower
- D.
The interest rate of loans will be higher
Correct Answer
D. The interest rate of loans will be higherExplanation
A low credit score will affect an individual financially because it indicates a higher risk for lenders. Lenders are more likely to charge higher interest rates on loans to individuals with low credit scores as a way to compensate for the increased risk. This means that individuals with low credit scores will have to pay more in interest over the life of their loans, making them more expensive overall.Rate this question:
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- 42.
Jenny is 18 years old and has applied for credit for the first time. Her credit application was declined, because she had no credit history. What should Jenny do to begin to build a positive credit history?
- A.
Acquire a small loan from a depository institution
- B.
Obtain a credit card with a co-signer
- C.
Obtain a secured credit card
- D.
Any of the above
Correct Answer
D. Any of the aboveExplanation
Jenny should consider any of the options mentioned above to begin building a positive credit history. Acquiring a small loan from a depository institution can help her establish a credit record by making regular payments. Obtaining a credit card with a co-signer can also be a good option as it allows her to start building credit while having someone with an established credit history vouch for her. Lastly, obtaining a secured credit card can be beneficial as it requires a cash deposit as collateral, making it easier for Jenny to be approved and start building credit.Rate this question:
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- 43.
When may a person view his/her credit report for free?
- A.
At any time and an unlimited number of times
- B.
Once a year, from each of the three main credit reporting agencies
- C.
A person may not review his/her credit report
- D.
If a person has sufficient financial resources
Correct Answer
B. Once a year, from each of the three main credit reporting agenciesExplanation
A person may view his/her credit report for free once a year from each of the three main credit reporting agencies. This is because the Fair Credit Reporting Act (FCRA) requires these agencies to provide individuals with a free copy of their credit report annually upon request. This allows individuals to monitor their credit history and ensure that there are no errors or fraudulent activities affecting their credit.Rate this question:
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- 44.
How can a cardholder avoid paying interest on a credit card?
- A.
Pay the minimum balance every month
- B.
Pay the balance in full every month
- C.
Only use a credit card for balance transfers
- D.
Interest is always paid on a credit card
Correct Answer
B. Pay the balance in full every monthExplanation
Paying the balance in full every month is the correct answer because when the cardholder pays the full balance by the due date, they are not carrying over any unpaid balance to the next billing cycle. This means that no interest will be charged on the credit card as there is no outstanding balance to accrue interest on. By consistently paying the balance in full, the cardholder can avoid paying any interest charges and maintain a good credit standing.Rate this question:
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- 45.
If a credit card is used properly, what benefits does it have for the cardholder?
- A.
The cardholder will pay higher interest rates on other forms of credit
- B.
The cardholder will develop a positive credit history
- C.
The cardholder will develop a negative credit history
- D.
There are no benefits for the cardholder
Correct Answer
B. The cardholder will develop a positive credit historyExplanation
Using a credit card properly can benefit the cardholder by helping them develop a positive credit history. This means that they are demonstrating responsible borrowing and repayment behavior, which can be advantageous when applying for loans or other forms of credit in the future. A positive credit history can lead to lower interest rates, higher credit limits, and better loan terms, ultimately saving the cardholder money and improving their financial standing.Rate this question:
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- 46.
Only making the minimum payment on a credit card every month will:
- A.
Only pay a small percentage of the total balance owed
- B.
Make the final amount paid substantially higher than the amount initially charged to the card
- C.
Result in slow progress towards paying off the total balance on the card
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
Making only the minimum payment on a credit card every month will result in only paying a small percentage of the total balance owed. This means that the remaining balance will continue to accrue interest, making the final amount paid substantially higher than the amount initially charged to the card. Additionally, by only making the minimum payment, progress towards paying off the total balance on the card will be slow. Therefore, all of the given statements are true.Rate this question:
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- 47.
The type of insurance that is the minimum required by law for automobiles is:
- A.
Medical payment insurance
- B.
Physical damage insurance
- C.
Liability insurance
- D.
Uninsured or underinsured motorists insurance
Correct Answer
C. Liability insuranceExplanation
Liability insurance is the type of insurance that is legally required for automobiles. This insurance provides coverage for any damages or injuries caused by the insured driver to others. It ensures that the driver is financially responsible for any harm they may cause while operating their vehicle. Medical payment insurance, physical damage insurance, and uninsured or underinsured motorists insurance are not mandatory by law, although they may be recommended or required by lenders or leasing companies.Rate this question:
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- 48.
Health insurance coverage usually excludes __________________.
- A.
Cosmetic surgery
- B.
Routine medical procedures
- C.
Prescriptions
- D.
Medical emergencies
Correct Answer
A. Cosmetic surgeryExplanation
Health insurance coverage usually excludes cosmetic surgery because it is considered an elective procedure rather than a necessary medical treatment. Insurance companies typically only cover procedures that are deemed medically necessary to treat or prevent a health condition. Cosmetic surgery is often performed for aesthetic reasons and is not considered essential for maintaining or improving a person's health. Therefore, individuals who wish to undergo cosmetic surgery would typically need to pay for it out of pocket.Rate this question:
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- 49.
Renter’s insurance is not required, but is a good idea because:
- A.
The renter would have double coverage because of the landlord’s policy
- B.
It will protect the renter from being evicted
- C.
The renter should protect themselves from damage caused by guests
- D.
The landlord’s insurance does not cover the renter’s personal possessions
Correct Answer
D. The landlord’s insurance does not cover the renter’s personal possessionsExplanation
Renter's insurance is not required but is a good idea because the landlord's insurance does not cover the renter's personal possessions. This means that if there is any damage or loss to the renter's belongings, they would not be covered by the landlord's insurance. Renter's insurance provides protection for the renter's personal possessions in case of theft, fire, or other covered events. It ensures that the renter is financially protected and can replace their belongings if necessary.Rate this question:
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- 50.
Tiffany was recently involved in a vehicle accident. In order to get her car fixed, her insurance company is requiring her to pay the first $500 of the repair bill because:
- A.
She did not call her agent and report the accident quickly enough
- B.
Her policy's deductible is $500
- C.
She will be reimbursed by the insurance company later
- D.
The cost of the repairs is higher than her policy covers
Correct Answer
B. Her policy's deductible is $500Explanation
Tiffany is required to pay the first $500 of the repair bill because her policy has a deductible of $500. A deductible is the amount that the policyholder must pay out of pocket before the insurance coverage kicks in. In this case, Tiffany's insurance policy states that she is responsible for the first $500 of any repairs. Once she pays this amount, the insurance company will cover the remaining cost of the repairs.Rate this question:
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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.
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Current Version
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Mar 21, 2023Quiz Edited by
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Oct 14, 2010Quiz Created by
Msmoxie
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