Mastering Financial Literacy Basics

What is a budget?

• A plan for managing income and expenses

• A type of investment

• A credit score

• An insurance policy

Which of the following is a fixed expense?

• Groceries

• Rent

• Entertainment

• Clothing

What is the primary purpose of a credit score?

• To determine your income

• To assess your creditworthiness

• To calculate your taxes

• To evaluate your investment portfolio

Which factor has the largest impact on your credit score?

• Length of credit history

• Types of credit used

• Payment history

• New credit inquiries

What is a stock?

• A type of insurance

• A loan from a bank

• A share in the ownership of a company

• A savings account

Which of the following is a benefit of investing in a mutual fund?

• Guaranteed returns

• Professional management

• No risk involved

• Immediate liquidity

What is the difference between a savings account and a certificate of deposit (CD)?

• CDs typically offer higher interest rates but require funds to be locked in for a set period

• Savings accounts have higher interest rates and no withdrawal restrictions

• CDs allow unlimited withdrawals without penalties

• Savings accounts require a minimum balance, while CDs do not

How can a high school student start saving for college?

• By opening a 401(k) account

• By investing in real estate

• By setting up a 529 college savings plan

• By purchasing life insurance

What is the main advantage of a 529 college savings plan?

• Tax-free growth and withdrawals for qualified education expenses

• Guaranteed returns on investment

• No contribution limits

• Immediate access to funds

Which type of insurance is typically required by law for drivers?

• Health insurance

• Life insurance

• Auto insurance

• Homeowners insurance