Week 1 Quiz - Banking (24pts) (Answers)

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1 Week 1 Quiz - Banking (24pts) (Answers) 1. Money deposited into a 401k is not taxed; however it is taxed years later when it is withdrawn for retirement. So if the money is taxed either way, why do many experts recommend taxdeferred savings such as 401k? 2. What is overdraft protection (ODP)? 3. What type of accounts can be linked to a checking account for overdraft protection? 4. What happens if you do not have enough funds in your linked account to cover the overdraft? 5. If you have ODP, you won't ever bounce a check. Is this True or False? Why? 6. What is the best way to pay a bank fee: Cash, Debit Card, or Credit Card? Week 2 Quiz - Checks & Paychecks (24pts) 1. Increasing your 401k deduction will your federal taxes in the current year. 2. Increasing your 401k deduction will your gross pay. 3. If the interest rate at the bank for a savings account is 0.03%, how much money would you need to leave in the account for one year in order to earn $10 in interest? 4. The fee the bank charges the issuer of a bad check is a The fee the recipient of the bad check issues the originator of the check for giving them a bad check is a Which of the following payday frequencies provides employees with the smoothest cash flow?

2 Week 3 Quiz - Investments (28pts) 1. If you had $1,000 to invest into the following funds, which one would have the highest value (not including any fees) at the end of the second year? A. Orange Fund with Year 1 return of 0% & Year 2 return of 0%, B. Purple Fund with Year 1 return of +10% and Year 2 return of -9.5%, C. Green Fund with Year 1 return of -9.5% and Year 2 return of +10%, D. Yellow Fund with Year 1 return of +30% and a year 2 return of -25% 2. If you had a fund with a Year 1 return of +30% and a year 2 return of -25%, what is this fund's a) average annual return for the two years and b) actual return for the two year period? A. a)+2.5% b) -2.5% B. a) +2.5% b) +2.5% C. a) +5% b) +2.5% D. a) +5% b) 0% 3. Which type of investment typically charges the investor the lowest fees? A. Mutual fund - actively managed B. Index fund - passively managed C. Bond fund - actively managed D. International funds 4. What is a dividend? A. Money a company regularly (typically quarterly) charges shareholders to help profits B. Money a company regularly (typically quarterly) pays shareholders from its profits C. The interest from a corporate bond that a company pays the bond-holder D. The new company entity that results from a company merger

3 5. Suppose you have been employed for about a year and a half and have been offered a better job at a different employer. Assuming you have been taking advantage of the matching 401k plan, what will happen to your 401k if you leave your current job before you are fully vested? A. You will lose your entire 401k B. You may lose some or all of your 401k match, but will get to keep your contributions C. You will always get to keep the entire balance of your 401k, A judge will need to review the company charter to decide D. You may lose some or all of your 401k match, but will get to keep your contributions 6. What would happen to the buying power of your investment after one year if your rate of return was 8% and the rate of inflation was 3%? A. The buying power would increase by 8% B. The buying power would increase by 11% C. The buying power would increase by 5% D. The buying power would decrease by 1% 7. What is the intended purpose of a 401k account? A. Save money for emergencies B. Invest money for college, Invest money for retirement C. Save money for vacation D. Invest money for retirement

4 Week 4 Quiz - Insurance (24pts) 1. What happens if you don't pay your insurance premium for your car? A. The insurance claim isn't processed and your car doesn't get fixed B. You are driving illegally, You are not insured C. You are not insured and are driving illegally D. Your car payments will increase 2. What happens if you don't pay your insurance deductible for your car? A. The insurance claim isn't processed and your car doesn't get fixed B. You are driving illegally C. You are not insured D. You are not insured and are driving illegally E. Your car payments will increase 3. John, Alyson and Jared all selected identical new cars at the same price. John bought the car with some of his own money and the rest a car loan. Alyson bought the car with cash. Jared leased the car. What is true about their options for car insurance? A. John and Alyson are able to reduce the cost of insurance by selecting legal minimum coverage B. Alyson is able to reduce the cost of insurance by selecting legal minimum coverage C. John, Alyson and Jared are all able to select legal minimum coverage if they choose D. Alyson and Jared are able to reduce the cost of insurance by selecting legal minimum coverage 4. William pays $300 every 6 months for automobile insurance and his deductible is $750. William caused a minor accident that resulted in $800 of damages to his car and $1,100 of damages to the other car. How much will William pay to have both cars fixed? A. $300 B. $750 C. $800 D. $1,100 E. $1, Which of the following can help reduce the risks associated with unexpected bills? A. Auto insurance B. Emergency fund C. Renter's Insurance D. Health Insurance E. All answers are correct 6. What are some of the potential consequences of driving without auto insurance? A. Suspension of driver's license B. Traffic fines ranging from $100 to $1,000 C. Increased insurance rates, Points added on your license D. Community service hours E. All answers are correct

5 Week 5 Quiz - Interest and Credit Cards (16pts) 1. Select the most likely consequence of making credit card payments late. A. Fees and paying the default interest rate on the balance B. Fees and paying the introductory interest rate on the balance C. Paying higher interest rates D. None of these answers are correct 2. Zach is an authorized user on his parent s credit card. What may happen if Zach doesn't use the card in a responsible way? A. Zach's credit may be damaged B. Zach's parents credit may be damaged C. Zach and Zach's parents credit may be damaged D. None of these answers are correct 3. If interest rates rise, what will happen to the prices of bonds? A. Increase B. Decrease C. No change D. Interest rates and bond prices are not related 4. If the typical balance on Lucy's credit card is $500 and the interest rate on her credit card is 16%, how much in interest would you expect Lucy to be charged in a typical month? A. About $6.67 B. About $16.00 C. About $51.74 D. About $80.86

6 Week 6 Quiz - Credit and Credit Building (20pts) 1. Select the scenario most likely to build your credit (improve your credit score). A. Borrow 10%-30% of the credit limit on a credit card and make the minimum payment on time every month B. Use a debit card instead of a credit card C. Borrow 10%-30% of the credit limit on a credit card and pay the full balance on time every month D. Borrow more than 50% - 100% of the credit limit to show that you can handle more credit. 2. If Troy's credit card utilization is 35% and his current balance is $455, what is the credit limit on his only credit card? A. $1,300 B. $1,000 C. $ D. $1,900 E. $ After your loan application is submitted, who decides if you get approved for the loan? A. Credit agency B. Loan Underwriter C. Loan Undertaker D. Credit bureau 4. Which of the following are fast ways of improving your credit score (within 60 days)? A. Dispute any errors on credit reports B. Settle up any delinquent accounts with creditors and ask them to report the account as Paid As Agreed C. Check credit limits in credit report for accuracy and make sure that they are not listed lower than they actually are, Cancel all credit cards D. All answers can quickly improve credit score E. All answers except cancelling credit cards can quickly improve credit score 5. Whose responsibility is it to identify credit report errors? A. Federal Government B. Credit reporting agencies C. It is your responsibility to identify mistakes and report them D. There are 3 reporting agencies to make sure that there are no errors on credit reports

7 Week 7 Quiz - Financial Responsibility (20pts) 1. When John received his W2, he received several copies. Why was he sent multiple copies of this form? A. John gets 2 copies because this is a W-2. He would get 4 copies of a W-4 B. The government always prints multiple copies of forms C. The different copies are for John and each tax return he may file 2. Who sent John this W-2? A. The Federal Government B. John's employer - ProperLiving Widget Engineering & Design C. The Internal Revenue Service 3. How much did John make in wages in the 2014 tax year? (assuming this was John's only job) A. $48, B. $42, C. $31, How much did John 'take home' in net pay? (assuming this was John's only job)

8 A. $48, B. $42, C. $31, How much did John save in his 401(k) in the 2014 tax year? A. $1, B. $2, C. $1, Assume your employer provides health care insurance and deducts your portion of the premiums from your paycheck with pre-tax dollars. Are your health insurance premiums federally tax deductible? Yes or No 7. John earned $2,500 as a life guard over the summer. This was his only job and income taxes were deducted from his paychecks by his employer. For filing a tax return, what should John do? A. John should not file a tax return. John is legally not required to file because his income is less than the minimum requirement for filing. B. John should file a tax return. He can then get all of his taxed money refunded. C. John should report this income on his parent s tax return since he is still living at home. D. John should send a check for $50 to the IRS in case the employer didn't take out enough taxes. 8. Select what would happen to your 1) taxable income and 2) tax liability when you are able to claim a deduction such as student loan interest? A. lower 2) lower B. higher 2) higher C. higher 2) lower D. lower 2) higher 9. Which is tax deductible? A. Community service hours B. Student loan payments C. Medical Bills totaling $200, 401k gains D. None of the answers are correct E. All of the answers are correct