General Financial Literacy Course -
Utah, Financial Literacy State Test Exam
Questions with Correct Answers
401K - Answer-A qualified plan established by employers to which eligible employees
may make salary deferral (salary reduction) contributions on a post-tax and/or pretax
basis. Employers offering a 401(k) plan may make matching or non-elective
contributions to the plan on behalf of eligible employees and may also add a profit-
sharing feature to the plan. Earnings accrue on a tax-deferred basis.
403 (b) - Answer-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 - Answer-The Utah Educational Savings Plan (UESP) is a nonprofit 529
college savings plan. 529 plans are tax-advantaged savings vehicles designed to
encourage individuals to begin to save for the future costs of higher education. You do
not have to be a Utah resident to save with UESP.
Advertising - Answer-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 - Answer-A schedule of payments showing the amounts of
principal and interest that make up each payment.
Annual Percentage Rate (APR) - Answer-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.
Bank - Answer-A financial institution licensed as a receiver of deposits. There are two
types of banks: commercial/retail banks and investment banks. In most countries, banks
are regulated by the national government or central bank.
Bankruptcy - Answer-A legal proceeding involving a person or business that is unable to
repay outstanding debts. The bankruptcy process begins with a petition filed by the
debtor (most common) or on behalf of creditors (less common).
Beneficiary - Answer-A person who benefits or is expected to benefit from something;
the person who receives the insurance money when policy funds are dispersed.
,Benefits - Answer-Include various types of non-wage compensation provided to
employees in addition to their normal wages or salaries.[1] In instances where an
employee exchanges (cash) wages for some other form of benefit is generally referred
to as a 'salary packaging' or 'salary exchange' arrangement. In most countries, most
kinds of employee benefits are taxable to at least some degree. Examples include
housing (employer provided or employer paid), group insurance (health, dental, life),
disability income protection, retirement benefits, daycare, tuition reimbursement, sick
leave, vacation (paid and non-paid) social security, profit sharing, funding of education
and other specialized benefits. The purpose of employee benefits is to increase the
economic security of staff and members, and doing so, improve worker retention across
the organization.
Budget - Answer-A financial plan used to forecast and track income and expenses.
Career - Answer-Profession or field of employment for which one trains, such as
financial services or medicine.
Certificate of Deposit (CD) - Answer-A savings certificate entitling the bearer to receive
interest. A CD bears a maturity date, a specified fixed interest rate, and can be issued in
any denomination. CDs are generally issued by commercial banks and are insured by
the FDIC. The term of a CD generally ranges from one month to five years.
Charitable Contributions - Answer-In general, [money given to] a charitable organization
that exists to benefit society as a whole rather than to enrich individual owners or
shareholders.
Chex-Systems - Answer-The Chex Systems, Inc. network is comprised of member
financial institutions that regularly contribute information on closed checking and
savings accounts. ChexSystems shares this information among its member institutions
to help them assess the risk of opening new accounts.
Closing Costs - Answer-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-signers - Answer-The act of signing for another person's debt which involves a legal
obligation made by the cosigner to make 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.
Collateral - Answer-Security pledged for the payment of a loan: He gave the bank some
stocks and bonds as collateral for the money he borrowed.
Commisions - Answer-A service charge assessed by a broker or investment advisor in
return for providing investment advice and/or handling the purchase or sale of a
security.
, Comparison Shopping - Answer-Examining different brands or models of a product (to
learn about variations in quality, size, etc.), or the prices charged by different sellers (to
learn about possible cost-savings), before deciding what to buy.
Compound Interest - Answer-Interest paid or to be paid both on the principal and on
accumulated unpaid interest.
Direct Deposit and Direct Debit - Answer-Being paid or paying electronically via ACH.
Remote Check Deposit - Answer-Imaging and depositing a check using a smartphone.
on-line bill pay.
Mobile Payments - Answer-Through Apple Pay, Softcard, Google Wallet.
Consumer to Consumer (C2C) - Answer-Payments through services such as PayPal,
Popmoney, Square Cash.
Reloadable Prepaid Debit Cards - Answer-Such as Green Dot and American Express
Serve.
Truth in Lending Act - Answer-Consumer Protection Laws -a regulation by the federal
government that requires uniform methods for computing the cost of credit and
disclosing credit terms.
Fair Debt Collection Practices Act - Answer-Consumer Protection Laws - Federal law
that limits the behavior and actions of debt collectors who are attempting to collect the
debt for another person or entity.
Fair Credit Reporting - Answer-Consumer Protection Laws - a United States federal law
(codified at Title 15 United States Code Section 1681 and following) that regulates the
collection, dissemination, and use of consumer information, including consumer credit
Equal Credit Opportunity Act - Answer-Consumer Protection Laws - a United States law
(codified at 15 U.S.C. § 1691 et seq.), enacted in 1974, that makes it unlawful for any
creditor to discriminate against any applicant, with respect to any aspect of a credit
transaction, on the basis of race, color, religion, national origin, sex, marital status or
age.
Home Mortgage Disclosure Act - Answer-Consumer Protection Laws - (or HMDA,
pronounced HUM-duh) is a United States federal law that requires certain financial
institutions to provide mortgage data to the public. Congress enacted HMDA in 1975.
Right to Financial Privacy Act - Answer-Consumer Protection Laws - a United States
federal law, Title XI of the Financial Institutions Regulatory and Interest Rate Control Act
