Financial Literacy Exam (Treca) Prep
Questions with Complete Rationales
2026-2027 Edition.
mortgage loan companies - Answer offer home loans at competitive rates
credit unions - Answer Banks that are owned by their members to create a pool of money for
low-interest loans.
brokerage firm - Answer Facilitates the buying and selling of investments from a stock
exchange
financial service companies - Answer offer loans to high-risk borrowers
insurance companies - Answer sell policies that compensate for catastrophic events
trust companies - Answer financial institutions that specialize in managing the money and
property of others
commercial banks - Answer Privately owned financial institutions that accept demand deposits
and make loans and provide other services for the public
savings and loan association - Answer use money from savings accounts to provide home
loans to customers. Customers deposit their money at the savings and loan association, which
supplies cash for others to borrow from
asset management firms - Answer Investment companies that invest people's funds in
securities
The Federal Reserve Board - Answer A seven-member board that sets member banks reserve
requirements, controls the discount rate, and makes other economic decisions.
Federal Deposit Insurance Corporation - Answer the government agency that insures customer
deposits if a bank fails
,Financial Industry Regulatory Authority - Answer an independent not-for-profit organization
that oversees firms that sell securities. It was established in 2007 to help create and enforce
rules concerning securities brokers. administers the official exams that brokers must pass
Securities and Exchange Commission (SEC) - Answer monitors the stock market and enforces
laws regulating the sale of stocks and bonds
Commodity Futures Trading Commission - Answer a government agency that regulates
commodity, futures, and options markets in the United States. It protects investors from fraud
and promotes competition within the market.
Office of the Comptroller of the Currency - Answer regulates and supervises national and
foreign banks operating branches in the United States. Its mission is to ensure that the banking
system is stable, treats customers fairly, and provides fair access to financial services.
Financial Stability Oversight Council - Answer The FSOC is responsible for monitoring the risks
associated with large banks in the financial system.
Consumer Financial Protection Bureau - Answer tasked with preventing predatory mortgage
lending practices
Bankruptcy Abuse Prevention and Consumer Protection Act - Answer prevents the abuse of
bankruptcy laws, including Chapter 7 bankruptcy. Chapter 7 bankruptcy allows most unsecured
debt to be forgiven, while Chapter 13 requires debtors to make a long-term repayment plan
before the remaining balance is forgiven.
Community Reinvestment Act - Answer Required banks to make loans available in low income,
minority communities
Dodd-Frank Wall Street Reform and Consumer Protection Act - Answer This law strengthened
the regulations in the financial sectors that were believed to have caused the 2008 crisis,
including mortgage lenders and banks. It created new government agencies to oversee these
financial institutions, such as the Financial Stability Oversight Council and the Consumer
Financial Protection Bureau. Both these agencies are responsible for the enforcement of this
legislation.
The Dodd-Frank Act also allows consumers to "freeze" their credit free of charge
Fair and Accurate Credit Transactions Act - Answer gives consumers the right to request a free
copy of their credit report every year. One provision of the Act allows consumers to place fraud
alerts on their credit.
, Equal Credit Opportunity Act - Answer A law that protects consumers from discrimination in
the granting or denying of credit
Federal Deposit Insurance Act - Answer This law has rules about which banks the FDIC is
authorized to loan to, and one of those stipulations is that the bank has to be considered
essential to the local community. The FDI Act also authorizes the FDIC to evaluate national and
state banks for their insurance risk.
Gramm-Leach Bliley Act - Answer requires financial institutions to ensure the security and
confidentiality of customer data
Home Ownership and Equity Protection Act - Answer prevents abuse in the home equity
lending and refinancing markets specifically. A home equity loan is using your equity as
collateral (a base) for a loan. "Equity" refers to how much your home is worth subtracted by
how much you still owe on your mortgage.
Right to Financial Privacy Act - Answer Protects the records of financial institutions' customers
from unauthorized scrutiny by the federal government.
Sarbanes-Oxley Act - Answer Federal legislation passed in 2002 that sets higher ethical
standards for public corporations and accounting firms. Key provisions limit conflict-of-interest
issues and require financial officers and CEOs to certify the validity of their financial statements.
Mike is a busy CEO of a large company. He is a wealthy individual with a number of investments
and properties to his name. Which of the following financial institutions could help him manage
all of his investments and properties? - Answer asset management firm
Carol wants to purchase a used car, but she does not have a good credit score. Which of the
following financial institutions is most likely to give her a loan despite her low credit score? -
Answer credit union
Which two of the following are important factors in a company's decision to produce and sell a
good or service? - Answer whether the company can make a profit from producing and selling
the good/service and consumers' needs and wants.
GDP - Answer Gross Domestic Product- the total market value of all final goods and services
produced annually in an economy
free enterprise system - Answer An economic system in which people are free to operate their
businesses as they see fit, with little government interference.
Questions with Complete Rationales
2026-2027 Edition.
mortgage loan companies - Answer offer home loans at competitive rates
credit unions - Answer Banks that are owned by their members to create a pool of money for
low-interest loans.
brokerage firm - Answer Facilitates the buying and selling of investments from a stock
exchange
financial service companies - Answer offer loans to high-risk borrowers
insurance companies - Answer sell policies that compensate for catastrophic events
trust companies - Answer financial institutions that specialize in managing the money and
property of others
commercial banks - Answer Privately owned financial institutions that accept demand deposits
and make loans and provide other services for the public
savings and loan association - Answer use money from savings accounts to provide home
loans to customers. Customers deposit their money at the savings and loan association, which
supplies cash for others to borrow from
asset management firms - Answer Investment companies that invest people's funds in
securities
The Federal Reserve Board - Answer A seven-member board that sets member banks reserve
requirements, controls the discount rate, and makes other economic decisions.
Federal Deposit Insurance Corporation - Answer the government agency that insures customer
deposits if a bank fails
,Financial Industry Regulatory Authority - Answer an independent not-for-profit organization
that oversees firms that sell securities. It was established in 2007 to help create and enforce
rules concerning securities brokers. administers the official exams that brokers must pass
Securities and Exchange Commission (SEC) - Answer monitors the stock market and enforces
laws regulating the sale of stocks and bonds
Commodity Futures Trading Commission - Answer a government agency that regulates
commodity, futures, and options markets in the United States. It protects investors from fraud
and promotes competition within the market.
Office of the Comptroller of the Currency - Answer regulates and supervises national and
foreign banks operating branches in the United States. Its mission is to ensure that the banking
system is stable, treats customers fairly, and provides fair access to financial services.
Financial Stability Oversight Council - Answer The FSOC is responsible for monitoring the risks
associated with large banks in the financial system.
Consumer Financial Protection Bureau - Answer tasked with preventing predatory mortgage
lending practices
Bankruptcy Abuse Prevention and Consumer Protection Act - Answer prevents the abuse of
bankruptcy laws, including Chapter 7 bankruptcy. Chapter 7 bankruptcy allows most unsecured
debt to be forgiven, while Chapter 13 requires debtors to make a long-term repayment plan
before the remaining balance is forgiven.
Community Reinvestment Act - Answer Required banks to make loans available in low income,
minority communities
Dodd-Frank Wall Street Reform and Consumer Protection Act - Answer This law strengthened
the regulations in the financial sectors that were believed to have caused the 2008 crisis,
including mortgage lenders and banks. It created new government agencies to oversee these
financial institutions, such as the Financial Stability Oversight Council and the Consumer
Financial Protection Bureau. Both these agencies are responsible for the enforcement of this
legislation.
The Dodd-Frank Act also allows consumers to "freeze" their credit free of charge
Fair and Accurate Credit Transactions Act - Answer gives consumers the right to request a free
copy of their credit report every year. One provision of the Act allows consumers to place fraud
alerts on their credit.
, Equal Credit Opportunity Act - Answer A law that protects consumers from discrimination in
the granting or denying of credit
Federal Deposit Insurance Act - Answer This law has rules about which banks the FDIC is
authorized to loan to, and one of those stipulations is that the bank has to be considered
essential to the local community. The FDI Act also authorizes the FDIC to evaluate national and
state banks for their insurance risk.
Gramm-Leach Bliley Act - Answer requires financial institutions to ensure the security and
confidentiality of customer data
Home Ownership and Equity Protection Act - Answer prevents abuse in the home equity
lending and refinancing markets specifically. A home equity loan is using your equity as
collateral (a base) for a loan. "Equity" refers to how much your home is worth subtracted by
how much you still owe on your mortgage.
Right to Financial Privacy Act - Answer Protects the records of financial institutions' customers
from unauthorized scrutiny by the federal government.
Sarbanes-Oxley Act - Answer Federal legislation passed in 2002 that sets higher ethical
standards for public corporations and accounting firms. Key provisions limit conflict-of-interest
issues and require financial officers and CEOs to certify the validity of their financial statements.
Mike is a busy CEO of a large company. He is a wealthy individual with a number of investments
and properties to his name. Which of the following financial institutions could help him manage
all of his investments and properties? - Answer asset management firm
Carol wants to purchase a used car, but she does not have a good credit score. Which of the
following financial institutions is most likely to give her a loan despite her low credit score? -
Answer credit union
Which two of the following are important factors in a company's decision to produce and sell a
good or service? - Answer whether the company can make a profit from producing and selling
the good/service and consumers' needs and wants.
GDP - Answer Gross Domestic Product- the total market value of all final goods and services
produced annually in an economy
free enterprise system - Answer An economic system in which people are free to operate their
businesses as they see fit, with little government interference.
