Financial Literacy Test Review
questions n answers rated A+
60, 20, 10, 10 Rule - ANS ✔✔60% for Spending, 20% for Savings, 10% for Investing, 10%
Charitable Contributions
$1,000 - ANS ✔✔Minimum amount for an emergency/opportunity fund. First Priority of a
Budget.
401K - ANS ✔✔Employers can allow employees to contribute from their salary on a post-tax
and/or pretax basis.
Employers may match employee contributions.
Earnings accrue on a tax-deferred basis.
403 (b) - ANS ✔✔A U.S. tax-advantaged retirement savings plan available for public education
organizations, some non-profit employers (only Internal Revenue Code 501(c)(3) organizations),
cooperative hospital service organizations, and self-employed ministers in the United States.
529 Plans - ANS ✔✔Tax-advantaged savings plan designed to encourage saving for future
education costs that are sponsored by states, state agencies, or educational institutions.
Advertising - ANS ✔✔To call public attention to, especially by pointing out desirable qualities so
as to create a desire to buy or do business with.
, Amortization Table/Schedule - ANS ✔✔A schedule of payments showing the amounts of
principal and interest that make up each payment.
Annual Percentage Rate (APR) - ANS ✔✔The annual rate that is charged for borrowing (or made
by investing), expressed as a single percentage number that represents the actual yearly cost of
funds over the term of a loan. This includes any fees or additional costs associated with the
transaction.
Bankruptcy - ANS ✔✔A legal proceeding involving a person or business that is unable to repay
outstanding debts. It begins with a petition filed by the debtor (most common) or on behalf of
creditors (less common).
Beneficiary - ANS ✔✔A person who benefits or is expected to benefit from something; the
person who receives the insurance money when policy funds are dispersed.
Budget - ANS ✔✔A financial plan used to forecast and track income and expenses.
Career - ANS ✔✔Profession or field of employment for which one trains, such as financial
services or medicine.
Charitable Contributions - ANS ✔✔In general, money is given to a charitable organization that
exists to benefit society as a whole rather than to enrich individual owners or shareholders.
Closing Costs - ANS ✔✔Closing costs are fees paid at the closing of a real estate transaction.
This point in time called the closing is when the title to the property is conveyed to the buyer.
Closing costs are incurred by either the buyer or the seller.
Co-Signer - ANS ✔✔The act of signing for another person's debt which involves a legal
obligation made by the cosigner to make a payment on the other person's debt should that
person default. Having a cosigner is way for individuals with a low income or poor/limited credit
history to obtain financing.
questions n answers rated A+
60, 20, 10, 10 Rule - ANS ✔✔60% for Spending, 20% for Savings, 10% for Investing, 10%
Charitable Contributions
$1,000 - ANS ✔✔Minimum amount for an emergency/opportunity fund. First Priority of a
Budget.
401K - ANS ✔✔Employers can allow employees to contribute from their salary on a post-tax
and/or pretax basis.
Employers may match employee contributions.
Earnings accrue on a tax-deferred basis.
403 (b) - ANS ✔✔A U.S. tax-advantaged retirement savings plan available for public education
organizations, some non-profit employers (only Internal Revenue Code 501(c)(3) organizations),
cooperative hospital service organizations, and self-employed ministers in the United States.
529 Plans - ANS ✔✔Tax-advantaged savings plan designed to encourage saving for future
education costs that are sponsored by states, state agencies, or educational institutions.
Advertising - ANS ✔✔To call public attention to, especially by pointing out desirable qualities so
as to create a desire to buy or do business with.
, Amortization Table/Schedule - ANS ✔✔A schedule of payments showing the amounts of
principal and interest that make up each payment.
Annual Percentage Rate (APR) - ANS ✔✔The annual rate that is charged for borrowing (or made
by investing), expressed as a single percentage number that represents the actual yearly cost of
funds over the term of a loan. This includes any fees or additional costs associated with the
transaction.
Bankruptcy - ANS ✔✔A legal proceeding involving a person or business that is unable to repay
outstanding debts. It begins with a petition filed by the debtor (most common) or on behalf of
creditors (less common).
Beneficiary - ANS ✔✔A person who benefits or is expected to benefit from something; the
person who receives the insurance money when policy funds are dispersed.
Budget - ANS ✔✔A financial plan used to forecast and track income and expenses.
Career - ANS ✔✔Profession or field of employment for which one trains, such as financial
services or medicine.
Charitable Contributions - ANS ✔✔In general, money is given to a charitable organization that
exists to benefit society as a whole rather than to enrich individual owners or shareholders.
Closing Costs - ANS ✔✔Closing costs are fees paid at the closing of a real estate transaction.
This point in time called the closing is when the title to the property is conveyed to the buyer.
Closing costs are incurred by either the buyer or the seller.
Co-Signer - ANS ✔✔The act of signing for another person's debt which involves a legal
obligation made by the cosigner to make a payment on the other person's debt should that
person default. Having a cosigner is way for individuals with a low income or poor/limited credit
history to obtain financing.
