1. Investments in stocks have the potential for very high returns
Investments in stocks have the potential for very high returns. This also means that stocks have which other characteristic?
Guaranteed payments
High risk of losses
Pay low interest rates
Very difficult to purchase

2. Online transfer facility
Red Financial is a financial institution owned by a group of shareholders. They are insured by the FDIC and offer a large range of financial services and personal financial planning. Red financial also makes large profits, which the stockholders like. Based on this information, what type of financial institution is Red Financial?
Bank
Savings and loans
Credit union
Online transfer facility

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4. When dealing with investments, as risk of losing money increases
The rate of return is usually higher
It is more likely the investment is short term
More insurance is needed to protect the investment
More people take that risk

5. Banks pay depositors interest to put money in the bank
Banks pay depositors interest to put money in the bank. When someone takes a loan from a bank they must pay interest back to the bank. Which statement about these two interest rates is correct?
The rate banks pay is equal to the rate they charge.
The rate banks pay is regulated by the government and the rate they charge is not.
The rate banks charge is higher than the banks pay.
The rate banks charge is lower than the rate banks pay.

6. Which component of the Federal Reserve system holds the most power in regards to monetary policy?
Congress and the President
The Federal Open Market Committee
The Board of Governors
The 12 District banks

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8. When dealing with insurance, a person paying a higher deductible will typically have
Lower premiums
Higher inflation
Smaller returns
Greater risk

9. When the income in households increases, what is the likely result?
The supply curve becomes vertical
The demand curve shifts to the left
The supply curve will shift to the left
The demand curve shifts to the right

10. What is the typical relationship between education and income?
Higher education levels yield lower incomes over time
Higher education levels yield higher incomes over time
Higher income levels lead to higher education levels
The relationship between education and income is uncertain

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12. Which financial institution is MOST LIKELY to require membership and offer low loan rates to its members?
Bank
Savings and loan
Credit union
Retail store

13. Which is a primary benefit of all types of insurance?
Lawsuits are easier to settle
Insurance keeps prices low in a market
People can be more careless
It helps people share risk

14. Credit union Bank Savings and loan Credit card agency
Blue Financial is a financial institution owned by its members. It offers lower loan rates and easier application processes for its members. Based SOLELY on this information, Blue Financial is MOST LIKELY a
Credit union
Bank
Savings and loan
Credit card agency

15. Smithville Community Bank pays depositors 2
Smithville Community Bank pays depositors 2.5% interest for money put into savings accounts. When they make loans the bank charges 4% interest. Why is there a difference in these two rates?
The bank is not as concerned with attracting depositors as it is with making loans.
It is a source of profit for the banks to have a higher interest charged than interest earned.
The 2.5% rate is the minimum a bank is allowed to pay for deposits.
People taking out loans demand higher interest rates than those making deposits.

16. A savings account Checking account Stock market Real estate
Shondelle has a large sum of money to invest. She is not concerned with large return, but is very sensitive to risk. Which would be the best investment for her?
A savings account
Checking account
Stock market
Real estate

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18. Bill is choosing between two different savings accounts
Bill is choosing between two different savings accounts. One has simple interest and the other has compound interest. If Bill is planning on saving money for a long period of time and he wants the most return on his savings he should choose the account with
Compound interest because it will pay an increasing amount of interest based on the amount of the original deposit
Simple interest because that account will pay interest on the total amount in the account at all times
Simple interest because it is easier to calculate
Compound interest because it will pay interest on the original deposit plus interest earned over time

19. Which factor will have the LEAST impact on whether a person gets credit or not?
Collateral, how much the person’s assets are worth
Character, how willing the person is to pay back the loan
Capacity, how able the person is to pay back the loan
Compatibility, how much the loan officer likes the person

20. Which shows the correct order of investments going from MOST risky to LEAST risky?
Savings accounts, mutual funds, stocks, bonds
Stocks, mutual funds, bonds, savings accounts
Stocks, savings accounts, mutual funds, bonds
Savings accounts, bonds, mutual funds, stocks

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22. Regressive Proportional Sales Progressive
Bailey makes $20,000 a year and pays 5% in taxes. Felicia makes $85,000 a year and pays 2.6% in taxes. This type of tax system is
Regressive
Proportional
Sales
Progressive

23. Property Life Health Disability
Which type of insurance does a person need if they wish to continue to receive a paycheck when they are out of work due to an injury?
Property
Life
Health
Disability

24. Stock Mutual funds A savings account Treasury bonds
Mr. Jones has a large sum of money he wishes to invest. He wants the largest return possible and is not very concerned with high risk. Based solely on this information, the best type of investment of Mr. Jones would be
Stock
Mutual funds
A savings account
Treasury bonds

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