FHCE 3200 STUDY GUIDE 2026 EXAM QUESTIONS AND
SOLUTIONS RATED A+
✔✔savings account - ✔✔an interest-bearing asset that allows you to earn a small return
on your deposit
insured up to $250,000
-allows easy access to funds (ATM or in person withdrawals)
✔✔money market account - ✔✔interest-bearing asset that allows you a higher return on
your deposit
-insured up to $250,000
-allows easy but slightly more restrictive, access to funds (ATM, in person, or a check)
with limited number of withdrawals
✔✔certificate of deposit - ✔✔an interest-bearing asset that allows you an even higher
return on your deposit
-insured up to $250,000 for individuals
-generally purchased with one lump-sum dollar amount
-restricted access to funds with penalties for early withdrawal
✔✔dedicated savings account - ✔✔popular variation of a traditional CD
allow contributions of money to the CD until the maturity date
-early withdrawal penalty
-better returns
-limited funds, allows multiple deposits
✔✔where can I get information on the best rates - ✔✔bankrate
nerdwallet
magnify money
smart asset
,✔✔Traditional IRA - ✔✔make a contribution
receive an income tax deduction
pay less tax today
money grows tax-deferred
-pay taxes on money taken out of the account in the future
✔✔Roth IRA - ✔✔make a contribution
no income tax deduction
postpone tax advantage to the future
does not lower taxable income
money grows tax-deferred
pay no taxes on money taken out of the account in the future
✔✔Advantages of a Roth IRA - ✔✔1. investments accumulate earnings tax-deferred
2. money taken out is tax-free for certain conditions
✔✔roth IRA withdrawals - ✔✔withdrawal of principal any time after the account is
initially funded with no penalty
-qualifying withdrawal of earnings
-non qualifying withdrawal of earnings
✔✔what are the two conditions when a qualifying withdrawal is tax-free - ✔✔1. you are
at least 59.5, disabled, or use the funds to purchase a first home (up to 10,000)
2. Roth IRA account has been open for at least 5 years
✔✔Traditional IRA withdrawals - ✔✔some or all future withdrawals will be fully taxable
-subject to early withdrawal penalties
✔✔what are some exceptions to Traditional IRA penalty - ✔✔withdrawals after 59.5
diability
, upon owner's death
first time home purchase
qualified higher education expenses
purchase medical insurance if unemployed
✔✔what are some advantages of U.S. Savings Bonds - ✔✔1. easy to buy
2. easy to redeem
3. tax advantaged
4. safe (backed by full faith of the U.S. Treasury)
✔✔what is a disadvantage of U.S. savings bonds - ✔✔once you purchase a savings
bond, you cannot cash in the bond for at least a year
✔✔difference between an EE and Series I savings bond - ✔✔Series EE bond has a
fixed interest rate
Series I bond has a variable rate based on inflation
Series I bond has a $50 minimum investment if purchased using a tax refund
✔✔what form # do you use when you purchase savings bond directly with federal
income tax refund - ✔✔Form 8888
paper bond
✔✔Uniform Gifts to Minors Act - ✔✔Law which allows gifts of money to be transferred to
a custodian rather than directly to the minor child.
✔✔Uniform Transfers to Minors Act - ✔✔A statute adopted by almost all states, that
provides a method for transferring property to minors and arranging for an adult to
manage it until the child is old enough to receive it.
✔✔ponzi schemes - ✔✔promises investors a low-risk, high rate of return, interest, or
dividends:
•The fraudsters pay early investors a rate of return (such as 10%) with money raised
from people who invest later.
SOLUTIONS RATED A+
✔✔savings account - ✔✔an interest-bearing asset that allows you to earn a small return
on your deposit
insured up to $250,000
-allows easy access to funds (ATM or in person withdrawals)
✔✔money market account - ✔✔interest-bearing asset that allows you a higher return on
your deposit
-insured up to $250,000
-allows easy but slightly more restrictive, access to funds (ATM, in person, or a check)
with limited number of withdrawals
✔✔certificate of deposit - ✔✔an interest-bearing asset that allows you an even higher
return on your deposit
-insured up to $250,000 for individuals
-generally purchased with one lump-sum dollar amount
-restricted access to funds with penalties for early withdrawal
✔✔dedicated savings account - ✔✔popular variation of a traditional CD
allow contributions of money to the CD until the maturity date
-early withdrawal penalty
-better returns
-limited funds, allows multiple deposits
✔✔where can I get information on the best rates - ✔✔bankrate
nerdwallet
magnify money
smart asset
,✔✔Traditional IRA - ✔✔make a contribution
receive an income tax deduction
pay less tax today
money grows tax-deferred
-pay taxes on money taken out of the account in the future
✔✔Roth IRA - ✔✔make a contribution
no income tax deduction
postpone tax advantage to the future
does not lower taxable income
money grows tax-deferred
pay no taxes on money taken out of the account in the future
✔✔Advantages of a Roth IRA - ✔✔1. investments accumulate earnings tax-deferred
2. money taken out is tax-free for certain conditions
✔✔roth IRA withdrawals - ✔✔withdrawal of principal any time after the account is
initially funded with no penalty
-qualifying withdrawal of earnings
-non qualifying withdrawal of earnings
✔✔what are the two conditions when a qualifying withdrawal is tax-free - ✔✔1. you are
at least 59.5, disabled, or use the funds to purchase a first home (up to 10,000)
2. Roth IRA account has been open for at least 5 years
✔✔Traditional IRA withdrawals - ✔✔some or all future withdrawals will be fully taxable
-subject to early withdrawal penalties
✔✔what are some exceptions to Traditional IRA penalty - ✔✔withdrawals after 59.5
diability
, upon owner's death
first time home purchase
qualified higher education expenses
purchase medical insurance if unemployed
✔✔what are some advantages of U.S. Savings Bonds - ✔✔1. easy to buy
2. easy to redeem
3. tax advantaged
4. safe (backed by full faith of the U.S. Treasury)
✔✔what is a disadvantage of U.S. savings bonds - ✔✔once you purchase a savings
bond, you cannot cash in the bond for at least a year
✔✔difference between an EE and Series I savings bond - ✔✔Series EE bond has a
fixed interest rate
Series I bond has a variable rate based on inflation
Series I bond has a $50 minimum investment if purchased using a tax refund
✔✔what form # do you use when you purchase savings bond directly with federal
income tax refund - ✔✔Form 8888
paper bond
✔✔Uniform Gifts to Minors Act - ✔✔Law which allows gifts of money to be transferred to
a custodian rather than directly to the minor child.
✔✔Uniform Transfers to Minors Act - ✔✔A statute adopted by almost all states, that
provides a method for transferring property to minors and arranging for an adult to
manage it until the child is old enough to receive it.
✔✔ponzi schemes - ✔✔promises investors a low-risk, high rate of return, interest, or
dividends:
•The fraudsters pay early investors a rate of return (such as 10%) with money raised
from people who invest later.
