PRACTICE TEST - Financial Literacy Test

What is Gross Pay?

• Income after taxes/deductions

• Income before taxes/deductions

• Income after bonuses

• Income after retirement contributions

What does a W-4 Form indicate?

• Annual earnings and tax withheld

• Identity and employment authorization

• How much federal tax to withhold

• Added cost at purchase

What is required to open a bank account?

• Proof of income

• Government-issued ID

• Credit score

• Employment verification

Which account type typically offers higher interest than a savings account but requires money to be left untouched for a fixed term?

• Traditional Savings Account

• Money Market Account

• Certificate of Deposit (CD)

• Checking Account

What does APR stand for in financial terms?

• Annual Payment Rate

• Annual Percentage Rate

• Annual Principal Rate

• Annual Profit Rate

What is the impact of a credit score?

• Determines eligibility for government benefits

• Affects ability to get loans

• Influences car insurance rates

• Sets the interest rate for savings accounts

What is an overdraft fee?

• A fee for early loan repayment

• A charge for spending more than the account balance

• A penalty for late credit card payments

• A service fee for account maintenance

What does PMI stand for in the context of mortgages?

• Personal Mortgage Insurance

• Private Mortgage Insurance

• Public Mortgage Insurance

• Premium Mortgage Insurance

Which type of insurance pays dependents after death?

• Health Insurance

• Life Insurance

• Disability Insurance

• Umbrella Insurance

What is the Rule of 72 used for?

• Calculating mortgage interest

• Estimating years to double an investment

• Determining insurance premiums

• Planning retirement savings