MONEYSCHOOL Financial Education for Real Life!

MONEYSCHOOL offers this quiz to help website visitors assess their own level of financial knowledge. The 20 questions in this quiz touch on topics that should be understood by anyone who is responsible for making financial decisions.

If you can answer at least 16 (80%) of the questions correctly, your knowledge is well above average for this level. Once you complete your answers, click on the button at the end of the quiz to get your score and to see the correct answers.

If you find that this quiz is not challenging enough for you, try our advanced quiz.

1. Whenever you start a new job, you are asked to fill out an IRS Form W-4. That form is used by your employer to figure out how much income tax to withhold from your paycheck. The withholding amount is based on the number of “withholding allowances” you enter on the W-4. If you want to have more tax withheld to be sure you don’t owe the IRS money at the end of the year, you should:

Increase the number of allowances claimed on the W-4
Decrease the number of allowances claimed on the W-4
Enter the same number of allowances you claimed last year
Mark the appropriate space on the W-4 to indicate that you are “exempt.”

2. Which of the following would NOT cause you to overdraw your checking account if you write a check equal to your current balance?

Checks that have not yet cleared your account
Service charges not yet posted to your account
Deposits not yet posted to your account
Automatic payments scheduled to be withdrawn from your account

3. If you are found to be at fault in an auto accident, which type of insurance coverage pays for the damage to your own car?

Collision coverage
Comprehensive coverage
Liability coverage
Uninsured motorist coverage

4. Which of the following is MOST important if you want to avoid interest charges on a credit card account?

The payment due date
The minimum payment
The grace period
The annual percentage rate (APR)

5. When a bank offers a “free” checking account, it waives certain fees you would otherwise have to pay. Which of the following probably would NOT be a feature of a free checking account:

No monthly service charges
No charge for bounced checks
No low balance fee
Free ATM access to your account

6. A corporation can raise money without going into debt by:

Selling bonds
Buying bonds
Selling stock
Buying stock

7. Which type of debt is considered unsecured:

Money owed on credit cards
Money owed on an auto loan
Money owed on a mortgage loan
None of the above

8. Which of the following is NOT a title that signifies ownership in a company:

Sole proprietor
Partner
Creditor
Shareholder

9. Which type of insurance is LEAST important for a young, single person with no dependents:

Medical insurance
Auto liability insurance
Renter’s insurance
Life insurance

10. To earn compounded interest on money kept in a savings account, you must:

Agree to leave your money in the account for a certain period of time
Leave your interest earnings in the account
Add more money to your account each month
Have more than $1,000 in your account

11. If you damage your credit rating by failing to make loan or credit card payments on time, you may find it more difficult to:

Get an auto loan
Find a job
Rent an apartment
All of the above

12. Insurance policies with high deductibles:

Generally provide more coverage
Tend to be less expensive
Protect the policyholder from out-of-pocket expenses
Are against the law in most states

13. Which of the following is NOT true for money you invest in a mutual fund?

A fund manager decides how to invest your money
The fund company can charge a fee for its expenses in managing the fund
Your investment is insured by the U.S. Government
Some mutual funds charge a fee when you sell your shares

14. If you have medical insurance coverage through a health maintenance organization (HMO), which of the following typically is NOT true?

Your out-of-pocket costs are higher than with traditional medical insurance
You must pay a fee for each office visit
You must choose a physician approved by the HMO
The HMO will pay for emergency treatment at any hospital

15. As commonly used, the term “inflation” means that which of the following is increasing?

Income taxes
Consumer prices
The federal budget deficit
The U.S. trade deficit

16. Which of the following investments carries the LOWEST risk of financial loss?

MicroSoft stock
A highly-rated mutual fund
U.S. treasury bills
Pork belly futures

17. The best reason for contributing part of your income to a 401(k) account or individual retirement account (IRA) is:

To protect savings against inflation
To defer income taxes on retirement savings
To save for a vacation
None of the above

18. Making a late payment on a credit card account can:

Cause the interest rate on the card to increase
Result in late fees
Lower your credit score
All of the above

19. When a corporation pays out a portion of its profits to shareholders, the term used to describe that payment is:

Earnings
Dividend
Rebate
Buyback

20. Which of the following does not affect your total cost of owning a car, from the time you buy it to the time you sell it?

Purchase price
Resale value
Monthly payment
Fuel efficiency

MONEYSCHOOL BASIC QUIZ