Spring 2025 SSEPF3 Financial Systems and Banking Test Review

In which of the following situations might it be best to pay with a debit card?

• When renting a car or purchasing airline tickets.

• When making everyday purchases at the grocery store or coffee shop.

• When paying for a service, such as lawn service, a haircut, or leaving a tip at a restaurant.

• When making a purchase at a yard sale.

In which of the following situations might it be best to pay with cash?

• In a small transaction, such as purchasing a coffee from a café.

• When making a large purchase for an expensive item.

• When purchasing an item online.

• When paying a recurring monthly bill.

(a)   best describes a key difference among banks, credit unions, title pawns, and payday lenders.

• A. Banks and credit unions primaril
• B. Credit unions are for-profit ins
• C. Title pawn and payday lenders ge
• D. Banks and credit unions typicall

(a)   provides guaranteed income in retirement based on salary and years of service, while a 401(k) is funded by employee contributions and employer matching.

• A. A pension
• B. A 401(k)
• C. A Traditional IRA
• D. A Roth IRA

What is a major disadvantage of using a title pawn or payday lender?

• They typically offer loans with very low interest rates.

• They can lead to a cycle of debt due to high fees and interest rates.

• They require extensive documentation and a lengthy approval process to get a loan.

• They provide loans without any credit history checks.

What is the Rule of 72?

• It is a way to calculate how long it will take you to pay off your credit card.

• It is a way to calculate how long it will take for an investment to double given a fixed annual rate of interest.

• It is the way that banks determine which fees to charge your account.

• It is a way to determine the risk associated with an investment.

How does investing in the stock market differ from putting money in a savings account at a bank?

• Investing is always less risky than saving.

• Investing is best for short-term situations like emergency funds; savings is best for the long-term.

• Investing typically earns between 1-2% while saving generally earns between 5-7% interest.

• Investing allows you to accumulate wealth for retirement while saving is best for short-term purchases or emergency funds.

What is one question to consider when deciding whether to open a Roth IRA or a Traditional IRA?

• Do I want a guaranteed return of 6% or 8%?

• Do I want to pay taxes now or later?

• Do I want to take advantage of my employer's matching contribution?

• Do I want to take on more or less risk?

All of the following are downsides to being unbanked EXCEPT:

• Lack of access to credit

• Lost time paying bills

• Lack of fees associated with banks

• Difficulty making cashless purchases

Match the following scenarios with the appropriate payment method that would not typically use a person-to-person payment app.

• Paying a business for an online order

• Rafael writes a check to cover the entire month's rent, and his roommates Valerie and Carlos pay Rafael for their share of the monthly rent.

• Players reimbursing a coach for a team fee

• Tina pays her neighbor $200 for accidentally breaking his window with a softball

• Roommates settling rent payments

• Mia pays Cheesy Pizza Co. for a pizza she ordered on their website.

• Paying a neighbor for damages

• Ahmed's soccer coach pays the team registration fee for the big tournament, and each player then owes him $35 for their share of the registration fee.