Unit 2 TEST

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Emily needs a bank account that allows her to easily access her money for daily transactions, such as paying bills and making purchases. She doesn’t need to earn a high interest rate but values the ability to access her funds without restrictions. Which of the following account types would best meet her needs?

Money Market Account

High-Yield Savings Account

Checking Account

Certificate of Deposit (CD)

Which of the following is an effective strategy for personal saving?

Spending all available income and saving any leftover money

Keeping all savings in a checking account for easy access

Avoiding the use of a budget and saving only when there is an excess of funds

Setting a specific savings goal and automatically transferring a portion of income into a savings account each month

You’ve misplaced a check that a friend gave you as payment. What is the most appropriate initial action to take?

Contact your friend to let them know the check is lost and request that they stop payment on it and issue a new one

Wait for the check to potentially be cashed and hope for the best

Visit the bank to ask if the check can be canceled and if you can get a refund

Call the bank to see if they can trace the check’s whereabouts

All of the following statements about bank accounts are true EXCEPT:

A checking account typically allows for unlimited transactions and provides easy access to funds.

A savings account generally provides higher interest rates than a checking account but may have limited transaction capabilities.

Money market accounts usually offer the highest interest rates and come with no transaction limitations.

A Certificate of Deposit (CD) usually offers higher interest rates but requires funds to be locked away for a set period.

All of the following are true about prepaid cards EXCEPT…

Prepaid cards can be used to make purchases up to the amount loaded onto the card.

Prepaid cards often come with fees for activation, reloading, and transactions.

Prepaid cards require a credit check before they can be issued.

Prepaid cards can be used at any retailer that accepts the card network (e.g., Visa or Mastercard).

You are developing a savings plan and using short-, medium-, and long-term goals to motivate you. Which represents possible goals from short-term to long-term?

Save for a coffee maker, save for a major appliance, save for a luxury car

Save for a new smartphone, save for a vacation, save for a down payment on a house

Save for a meal out, save for a new car, save for retirement

Save for a movie ticket, save for a home renovation, save for a child’s education

Using the 50-30-20 rule of budgeting, which of the following correctly allocates your monthly income?

50% for entertainment, 30% for utilities, 20% for savings

50% for transportation, 30% for dining out, 20% for rent

50% for savings, 30% for debt repayment, 20% for groceries

50% for needs, 30% for wants, 20% for savings and debt repayment

When is the most advantageous time to begin contributing to a retirement account?

When you have reached your peak earning years

Only when you receive a substantial bonus or windfall

As early as possible, even if you can only contribute a small amount

After you have paid off all your current debts

Which of the following accurately reflects the current state of financial readiness among most Americans?

Most Americans are well-prepared for retirement but lack an adequate emergency fund.

Most Americans have both an adequate emergency fund and ample savings for retirement.

Most Americans are neither sufficiently prepared for emergencies nor have enough saved for retirement.

Most Americans have managed to build an adequate emergency fund but fall short on retirement savings.

According to financial experts, how many months’ worth of expenses should you aim to have in your emergency fund?

6 to 12 months

1 to 2 months

12 to 18 months

3 to 6 months

Digital wallets and P2P payments have made the use of __________ less necessary.

checks

cash

credit cards

debit cards

Three of these statements best describe a checking account. Which statement best describes a savings account?

Provides easy access to funds with no limit on the number of transactions.

Allows for frequent deposits and withdrawals, usually comes with a debit card.

Offers higher interest rates and is typically used for setting aside money for future needs.

Generally used for managing everyday transactions and paying bills.

You overhear your Aunt Tina tell your mom that she, her husband, and their kids are "living paycheck to paycheck." What does Aunt Tina mean by that?

They are able to save a significant portion of their income each month.

They are consistently able to invest their surplus income in various financial assets.

They have enough income to cover their expenses but no extra money for savings or emergencies.

They have a substantial amount of savings set aside for future expenses.

You are at the checkout counter at the local supermarket and use your debit card to pay for your groceries. Where does the money for this purchase come from?

A credit line provided by the bank

A loan taken out from the bank

Your savings account balance

Your checking account balance

If inflation is higher than the interest rate on your savings account, what is the likely impact on your purchasing power?

Your purchasing power will decrease because inflation erodes the value of your savings.

Your purchasing power will remain the same as the interest rate matches inflation.

Your purchasing power will increase because your savings grow faster than inflation.

Your purchasing power will fluctuate depending on changes in the interest rate.

Taylor notices a $50 fee on her bank statement that she does not recognize. What is the best course of action for her to take?

Contact her bank to inquire about the fee and seek clarification or a possible reversal.

Wait until the end of the month to see if the fee is adjusted automatically.

Ignore the fee and focus on managing other transactions.

Immediately withdraw all her money from the bank to avoid further fees.

Which of the following transactions will REDUCE your checking account balance immediately?

Receiving a direct deposit from an employer

Writing a check to pay for a utility bill

Transferring funds from your savings account to your checking account

Depositing a paycheck into your account

Which of the following statements is an advantage of online banking?

It eliminates the need for electronic statements and online security measures.

It typically involves higher fees compared to traditional banking methods.

It provides 24/7 access to your account from anywhere with an internet connection.

It requires physical visits to the bank for all transactions.

Which of the following accurately describes FDIC Insurance?

A federal protection program guaranteeing up to $250,000 of a customer’s deposits per bank if the bank fails.

A type of insurance that banks purchase to cover their operational losses and fraud.

A requirement for customers to access online banking features or mobile banking apps.

 A service that banks offer for an additional fee to protect customers' deposits from loss.

When signing up for a new checking account, you answer "Yes" to receive overdraft coverage. On this day, you have $10 in your account and use your debit card to buy lunch for $12, a movie ticket for $12, and dinner for $15. What is likely to be the outcome resulting from these transactions?

All transactions will be declined because you have insufficient funds.

The bank will cover the transactions, but you will incur overdraft fees for each purchase.

The bank will apply a temporary credit to your account, and you will be charged an additional fee for each transaction.

The bank will automatically transfer funds from your savings account to cover the transactions.

How frequently do banks generally provide statements for checking accounts to their customers?

Annually

Once per calendar month

Every 180 days

Every 14 days

All of the following are ways banks contribute to the economy, EXCEPT:

Offering savings accounts that help individuals save money for the future

Facilitating financial transactions and payments between consumers and businesses

Providing loans to individuals and businesses to support economic growth

Collecting and storing physical cash for extended periods without using it

A person-to-person payment app could be used in each of the following scenarios EXCEPT:

Paying for a subscription service that automatically renews monthly

Reimbursing a colleague for a shared expense like office supplies

Sending a gift of money to a family member for a special occasion

Splitting the cost of a dinner bill with friends

What does direct deposit generally involve?

Your employer or payer sending your funds electronically into your bank account.

Depositing cash directly into a bank account at an ATM.

Writing and depositing checks to transfer funds between bank accounts.

Receiving a physical paycheck that you need to deposit manually at the bank.

All of the following are downsides of being unbanked EXCEPT:

Higher risk of carrying and handling large amounts of cash, which can be unsafe

Limited access to financial services such as loans and credit cards

Having more access to credit-building opportunities and financial education

Increased reliance on check-cashing services, which often come with high fees

Emily needs a bank account that allows her to easily access her money for daily transactions, such as paying bills and making purchases. She doesn’t need to earn a high interest rate but values the ability to access her funds without restrictions. Which of the following account types would best meet her needs?

Money Market Account

High-Yield Savings Account

Checking Account

Certificate of Deposit (CD)

Which of the following is an effective strategy for personal saving?

Spending all available income and saving any leftover money

Keeping all savings in a checking account for easy access

Avoiding the use of a budget and saving only when there is an excess of funds

Setting a specific savings goal and automatically transferring a portion of income into a savings account each month

You’ve misplaced a check that a friend gave you as payment. What is the most appropriate initial action to take?

Contact your friend to let them know the check is lost and request that they stop payment on it and issue a new one

Wait for the check to potentially be cashed and hope for the best

Visit the bank to ask if the check can be canceled and if you can get a refund

Call the bank to see if they can trace the check’s whereabouts

All of the following statements about bank accounts are true EXCEPT:

A checking account typically allows for unlimited transactions and provides easy access to funds.

A savings account generally provides higher interest rates than a checking account but may have limited transaction capabilities.

Money market accounts usually offer the highest interest rates and come with no transaction limitations.

A Certificate of Deposit (CD) usually offers higher interest rates but requires funds to be locked away for a set period.

All of the following are true about prepaid cards EXCEPT…

Prepaid cards can be used to make purchases up to the amount loaded onto the card.

Prepaid cards often come with fees for activation, reloading, and transactions.

Prepaid cards require a credit check before they can be issued.

Prepaid cards can be used at any retailer that accepts the card network (e.g., Visa or Mastercard).

You are developing a savings plan and using short-, medium-, and long-term goals to motivate you. Which represents possible goals from short-term to long-term?

Save for a coffee maker, save for a major appliance, save for a luxury car

Save for a new smartphone, save for a vacation, save for a down payment on a house

Save for a meal out, save for a new car, save for retirement

Save for a movie ticket, save for a home renovation, save for a child’s education

Using the 50-30-20 rule of budgeting, which of the following correctly allocates your monthly income?

50% for entertainment, 30% for utilities, 20% for savings

50% for transportation, 30% for dining out, 20% for rent

50% for savings, 30% for debt repayment, 20% for groceries

50% for needs, 30% for wants, 20% for savings and debt repayment

When is the most advantageous time to begin contributing to a retirement account?

When you have reached your peak earning years

Only when you receive a substantial bonus or windfall

As early as possible, even if you can only contribute a small amount

After you have paid off all your current debts

Which of the following accurately reflects the current state of financial readiness among most Americans?

Most Americans are well-prepared for retirement but lack an adequate emergency fund.

Most Americans have both an adequate emergency fund and ample savings for retirement.

Most Americans are neither sufficiently prepared for emergencies nor have enough saved for retirement.

Most Americans have managed to build an adequate emergency fund but fall short on retirement savings.

According to financial experts, how many months’ worth of expenses should you aim to have in your emergency fund?

6 to 12 months

1 to 2 months

12 to 18 months

3 to 6 months

Digital wallets and P2P payments have made the use of __________ less necessary.

checks

cash

credit cards

debit cards

Three of these statements best describe a checking account. Which statement best describes a savings account?

Provides easy access to funds with no limit on the number of transactions.

Allows for frequent deposits and withdrawals, usually comes with a debit card.

Offers higher interest rates and is typically used for setting aside money for future needs.

Generally used for managing everyday transactions and paying bills.

You overhear your Aunt Tina tell your mom that she, her husband, and their kids are "living paycheck to paycheck." What does Aunt Tina mean by that?

They are able to save a significant portion of their income each month.

They are consistently able to invest their surplus income in various financial assets.

They have enough income to cover their expenses but no extra money for savings or emergencies.

They have a substantial amount of savings set aside for future expenses.

You are at the checkout counter at the local supermarket and use your debit card to pay for your groceries. Where does the money for this purchase come from?

A credit line provided by the bank

A loan taken out from the bank

Your savings account balance

Your checking account balance

If inflation is higher than the interest rate on your savings account, what is the likely impact on your purchasing power?

Your purchasing power will decrease because inflation erodes the value of your savings.

Your purchasing power will remain the same as the interest rate matches inflation.

Your purchasing power will increase because your savings grow faster than inflation.

Your purchasing power will fluctuate depending on changes in the interest rate.

Taylor notices a $50 fee on her bank statement that she does not recognize. What is the best course of action for her to take?

Contact her bank to inquire about the fee and seek clarification or a possible reversal.

Wait until the end of the month to see if the fee is adjusted automatically.

Ignore the fee and focus on managing other transactions.

Immediately withdraw all her money from the bank to avoid further fees.

Which of the following transactions will REDUCE your checking account balance immediately?

Receiving a direct deposit from an employer

Writing a check to pay for a utility bill

Transferring funds from your savings account to your checking account

Depositing a paycheck into your account

Which of the following statements is an advantage of online banking?

It eliminates the need for electronic statements and online security measures.

It typically involves higher fees compared to traditional banking methods.

It provides 24/7 access to your account from anywhere with an internet connection.

It requires physical visits to the bank for all transactions.

Which of the following accurately describes FDIC Insurance?

A federal protection program guaranteeing up to $250,000 of a customer’s deposits per bank if the bank fails.

A type of insurance that banks purchase to cover their operational losses and fraud.

A requirement for customers to access online banking features or mobile banking apps.

 A service that banks offer for an additional fee to protect customers' deposits from loss.

When signing up for a new checking account, you answer "Yes" to receive overdraft coverage. On this day, you have $10 in your account and use your debit card to buy lunch for $12, a movie ticket for $12, and dinner for $15. What is likely to be the outcome resulting from these transactions?

All transactions will be declined because you have insufficient funds.

The bank will cover the transactions, but you will incur overdraft fees for each purchase.

The bank will apply a temporary credit to your account, and you will be charged an additional fee for each transaction.

The bank will automatically transfer funds from your savings account to cover the transactions.

How frequently do banks generally provide statements for checking accounts to their customers?

Annually

Once per calendar month

Every 180 days

Every 14 days

All of the following are ways banks contribute to the economy, EXCEPT:

Offering savings accounts that help individuals save money for the future

Facilitating financial transactions and payments between consumers and businesses

Providing loans to individuals and businesses to support economic growth

Collecting and storing physical cash for extended periods without using it

A person-to-person payment app could be used in each of the following scenarios EXCEPT:

Paying for a subscription service that automatically renews monthly

Reimbursing a colleague for a shared expense like office supplies

Sending a gift of money to a family member for a special occasion

Splitting the cost of a dinner bill with friends

What does direct deposit generally involve?

Your employer or payer sending your funds electronically into your bank account.

Depositing cash directly into a bank account at an ATM.

Writing and depositing checks to transfer funds between bank accounts.

Receiving a physical paycheck that you need to deposit manually at the bank.

All of the following are downsides of being unbanked EXCEPT:

Higher risk of carrying and handling large amounts of cash, which can be unsafe

Limited access to financial services such as loans and credit cards

Having more access to credit-building opportunities and financial education

Increased reliance on check-cashing services, which often come with high fees