Financial Literacy Exam #2 with
verified correct answers
If you get a mortgage, the following expenses will likely be put in "ESCROW" each month - so be
prepared for this! (check all that apply) - correct answer ✔✔ Homeowners Insurance
Real Estate Tax
Financing is a marketing technique used for large purchases. It can benefit you because you pay
less interest and bring down the total cost of the item. - correct answer ✔✔ False
Insurance on a leased car is lower because you don't really own the car. The leasing company
does. - correct answer ✔✔ False
Once you pay for your car, the only additional expense is fuel and insurance. - correct answer
✔✔ False
An offer to purchase all new furniture at 0% interest for 12 months is a good idea because you
don't have to pay it all off at once. - correct answer ✔✔ False
To determine affordability when purchasing a car, you should (check all that apply) - correct
answer ✔✔ Find a reliable car that will fit your needs.
Be sure you have saved up enough cash to pay for it.
Eleanor and Eric are buying their first home. They have spent the last 3 years paying off all their
debt, they have a fully-funded emergency fund, they have saved enough to put 20% down (to
avoid PMI). Both of them have solid, full-time careers. What mortgage option would you
suggest to them: - correct answer ✔✔ 20% down, 15-year Fixed
, When you purchase a car, it is more important to consider what monthly payment you can
afford rather than the price of the car. - correct answer ✔✔ False
When you lease a car, the following are some fees that you might be responsible for. Check all
that apply: - correct answer ✔✔ Mileage overage fees.
Additional wear and tear.
Early termination fees.
When considering whether to rent or purchase a home, which of the following are benefits to
renting: (check all that apply) - correct answer ✔✔ Little or no maintenance costs
Flexibility
I can pay my taxes every other year if I can't afford them. The IRS won't mind. - correct answer
✔✔ False
The following are possible tax deductions - check all that apply: - correct answer ✔✔ Property
Taxes
Medical and Dental Expenses
Mortgage Interest
You can refuse to pay federal income tax because you don't agree with the federal budget and
do not want to support some of the government's initiatives. - correct answer ✔✔ False
Reagan is a 24 year old, single, and lives in an apartment. He has no dependents. Last year he
earned $50,000 as a professor teaching history. He also earned $150 in interest income from his
money market account. He paid $300 in student loan interest. He deposited $100 a month
($1200) into his tax deferred 401K. He also contributed to his ROTH account (which is not a tax
advantaged account, but growth is not taxed). He decides to take the standard deduction. He
had no tax credits. Calculate his Gross income, Adjusted Gross income, and taxable income. -
verified correct answers
If you get a mortgage, the following expenses will likely be put in "ESCROW" each month - so be
prepared for this! (check all that apply) - correct answer ✔✔ Homeowners Insurance
Real Estate Tax
Financing is a marketing technique used for large purchases. It can benefit you because you pay
less interest and bring down the total cost of the item. - correct answer ✔✔ False
Insurance on a leased car is lower because you don't really own the car. The leasing company
does. - correct answer ✔✔ False
Once you pay for your car, the only additional expense is fuel and insurance. - correct answer
✔✔ False
An offer to purchase all new furniture at 0% interest for 12 months is a good idea because you
don't have to pay it all off at once. - correct answer ✔✔ False
To determine affordability when purchasing a car, you should (check all that apply) - correct
answer ✔✔ Find a reliable car that will fit your needs.
Be sure you have saved up enough cash to pay for it.
Eleanor and Eric are buying their first home. They have spent the last 3 years paying off all their
debt, they have a fully-funded emergency fund, they have saved enough to put 20% down (to
avoid PMI). Both of them have solid, full-time careers. What mortgage option would you
suggest to them: - correct answer ✔✔ 20% down, 15-year Fixed
, When you purchase a car, it is more important to consider what monthly payment you can
afford rather than the price of the car. - correct answer ✔✔ False
When you lease a car, the following are some fees that you might be responsible for. Check all
that apply: - correct answer ✔✔ Mileage overage fees.
Additional wear and tear.
Early termination fees.
When considering whether to rent or purchase a home, which of the following are benefits to
renting: (check all that apply) - correct answer ✔✔ Little or no maintenance costs
Flexibility
I can pay my taxes every other year if I can't afford them. The IRS won't mind. - correct answer
✔✔ False
The following are possible tax deductions - check all that apply: - correct answer ✔✔ Property
Taxes
Medical and Dental Expenses
Mortgage Interest
You can refuse to pay federal income tax because you don't agree with the federal budget and
do not want to support some of the government's initiatives. - correct answer ✔✔ False
Reagan is a 24 year old, single, and lives in an apartment. He has no dependents. Last year he
earned $50,000 as a professor teaching history. He also earned $150 in interest income from his
money market account. He paid $300 in student loan interest. He deposited $100 a month
($1200) into his tax deferred 401K. He also contributed to his ROTH account (which is not a tax
advantaged account, but growth is not taxed). He decides to take the standard deduction. He
had no tax credits. Calculate his Gross income, Adjusted Gross income, and taxable income. -
