Financial Literacy Assessment (College-Adult)

Jump$tart Questions

This 31 question assessment, prepared by Jump$tart Coalition, will tell you your level of financial literacy. This has been taken by thousands of students nation-wide. We request that you complete it as quickly as possible. This means that you shouldn't look up answers or spend more than a couple of minutes thinking about each answer. If you have any questions, please write us. Good Luck!

Name

Inflation can cause difficulty in many ways. Which group would have the greatest problem during periods of high inflation that last several years?

Older, working couples saving for retirement.

Older people living on fixed retirement income.

Young couples with no children who both work.

Young working couples with children.

None

Which of the following is true about sales taxes?

The national sales tax percentage rate is 6%.

The federal government will deduct it from your paycheck.

You don’t have to pay the tax if your income is very low.

It makes things more expensive for you to buy.

None

Rebecca has saved $12,000 for her college expenses by working part-time. Her plan is to start college next year and she needs all of the money she saved. Which of the following is the safest place for her college money?

Locked in her closet at home.

Stocks.

Corporate bonds.

A bank savings account.

None

Which of the following types of investment would best protect the purchasing power of a family’s savings in the event of a sudden increase in inflation?

A 10-year bond issued by a corporation.

A certificate of deposit at a bank.

A twenty-five year corporate bond.

A house financed with a fixed-rate mortgage.

None

Under which of the following circumstances would it be financially beneficial to you to borrow money to buy something now and repay it with future income?

When you need to buy a car to get a much better paying job.

When you really need a week vacation.

When some clothes you like go on sale.

When the interest on the loan is greater than the interest you get on your savings.

None

Which of the following statements best describes your right to check your credit history for accuracy?

Your credit record can be checked once a year for free.

You cannot see your credit record.

All credit records are the property of the U.S. Government and access is only available to the FBI and Lenders.

You can only check your record for free if you are turned down for credit based on a credit report.

None

Your take home pay from your job is less than the total amount you earn. Which of the following best describes what is taken out of your total pay?

Social security and Medicare contributions.

Federal income tax, property tax, and Medicare and Social Security contributions.

Federal income tax, social security and Medicare contributions.

Federal income tax, sales tax, and social security contribution.

None

Retirement income paid by a company is called:

401 (k).

Pension.

Rents and profits.

Social Security.

None

Many people put aside money to take care of unexpected expenses. If Juan and Farida have money put aside for emergencies, in which of the following forms would it be of LEAST benefit to them if they needed it right away?

Invested in a down payment on a house.

Checking account.

Stocks.

Savings account.

None

10.

Malik just found a job with a take-home pay of $2,000 per month. He must pay $900 for rent and $150 for groceries each month. He also spends $250 per month on transportation. If he budgets $100 each month for clothing, $200 for restaurants and $250 for everything else, how long will it take him to accumulate savings of $600.

3 months.

4 months.

1 month.

2 months.

None

11.

Sara and Carlos just had a baby. They received money as baby gifts and want to put it away for the baby’s education. Which of the following tends to have the highest growth over long periods of time (10+ years)?

A checking account.

Stocks.

A U.S. Govt. savings bond.

A savings account.

None

12.

Lola has just applied for a credit card. She is an 18-year-old high school graduate with few valuable possessions and no credit history. If Lola is granted a credit card, which of the following is the most likely way that the credit card company will reduce ITS risk?

It will make Lola’s parents pledge their home to repay Lola’s credit card debt.

It will require Lola to have both parents co-sign for the card.

It will charge Lola twice the finance charge rate it charges older cardholders.

It will start Lola out with a small line of credit to see how she handles the account.

None

13.

Chelsea worked her way through college earning $15,000 per year. After graduation, her first job pays $45,000. The total dollar amount Chelsea will have to pay in federal income taxes in her new job will:

Almost double from when she was in college.

Go up a little from when she was in college.

Stay the same as when she was in college.

Be lower than when she was in college.

None

14.

Which of the following best describes the primary sources of income for most people age 20-35?

Dividends and interest.

Salaries, wages, tips.

Profits from business.

Rents.

None

15.

If you are behind on your debt payments and go to a responsible credit counseling service such as the Consumer Credit Counseling Services, what help can they give you?

They can cancel and cut up all of your credit cards without your permission.

They can get the federal government to apply your income taxes to pay off your debts.

They can work with those who loaned you money to set up a payment schedule that you can meet.

They can force those who loaned you money to forgive all your debts.

None

16.

Peter and Mary are the same age. At age 25 Mary began saving $2,000 a year while Rob saved nothing. At age 50, Peter realized that he needed money for retirement and started saving $4,000 per year while Mary kept saving her $2,000. Now they are both 75 years old. Who has the most money in his or her retirement account?

They would each have the same amount because they put away exactly the same

Peter, because he saved more each year

Mary, because she has put away more money

Mary, because her money has grown for a longer time at compound interest

None

17.

Many young people receive health insurance benefits through their parents. Which of the following statements is true about health insurance coverage?

You are covered by your parents’ insurance until you marry, regardless of your age.

If your parents become unemployed, your insurance coverage may stop, regardless of your age.

Young people don’t need health insurance because they are so healthy.

You continue to be covered by your parents’ insurance as long as you live at home, regardless of your age.

None

18.

Don and Diego work together in the finance department of the same company and earn the same pay. Diego spends his free time taking work-related classes to improve his computer skills; while Don spends his free time socializing with friends and working out at a fitness center. After five years, what is likely to be true?

Don will make more because he is more social.

Don will make more because Diego is likely to be laid off.

Diego will make more money because he is more valuable to his company.

Don and Diego will continue to make the same money.

None

19.

If your credit card is stolen and the thief runs up a total debt of $1,000, but you notify the issuer of the card as soon as you discover it is missing, what is the maximum amount that you can be forced to pay according to Federal law?

$500

$1000

Nothing.

$50

None

20.

Which of the following statements is NOT correct about most ATM (Automated Teller Machine) cards?

You can generally get cash 24 hours-a-day.

You can generally obtain information concerning your bank balance at an ATM machine.

You can get cash anywhere in the world with no fee.

You must have a bank account to have an ATM Card.

None

21.

Matt has a good job on the production line of a factory in his home town. During the past year or two, the state in which Matt lives has been raising taxes on its businesses to the point where they are much higher than in neighboring states. What effect is this likely to have on Matt’s job?

Higher business taxes will cause more businesses to move into Matt’s state, raising wages.

Higher business taxes can’t have any effect on Matt’s job.

Matt’s company may consider moving to a lower-tax state, threatening Matt’s job.

He is likely to get a large raise to offset the effect of higher taxes.

None

22.

If you have caused an accident, which type of automobile insurance would cover damage to your own car?

Comprehensive.

Liability.

Term.

Collision.

None

23.

Scott and Mario are young men. Each has a good credit history. They work at the same company and make approximately the same salary. Scott has borrowed $6,000 to take a foreign vacation. Mario has borrowed $6,000 to buy a car. Who is likely to pay the lowest finance charge?

Mario will pay less because the car is collateral for the loan.

They will both pay the same because the rate is set by law.

Scott will pay less because people who travel overseas are better risks.

They will both pay the same because they have almost identical financial backgrounds.

None

24.

If you went to college and earned a four-year degree, how much more money could you expect to earn than if you only had a high school diploma?

About 10 times as much.

No more; I would make about the same either way.

A little more; about 20% more.

A lot more; as much as 70% more.

None

25.

Many savings programs are protected by the Federal government against loss. Which of the following is not?

A U. S. Savings Bond.

A certificate of deposit at the bank.

A bond issued by one of the 50 States.

A U. S. Treasury Bond.

None

26.

If each of the following persons had the same amount of take home pay, who would need the greatest amount of life insurance?

An elderly retired man, with a wife who is also retired.

A young married man without children.

A young single woman with two young children.

A young single woman without children.

None

27.

Which of the following instruments is NOT typically associated with spending?

Debit card.

Certificate of deposit.

Cash.

Credit card.

None

28.

Which of the following credit card users is likely to pay the GREATEST dollar amount in finance charges per year, if they all charge the same amount per year on their cards?

Jessica, who pays at least the minimum amount each month and more, when she has the money.

Vera, who generally pays off her credit card in full but, occasionally, will pay the minimum when she is short of cash

Maria, who always pays off her credit card bill in full shortly after she receives it.

Erin, who only pays the minimum amount each month.

None

29.

Which of the following statements is true?

Banks and other lenders share the credit history of their borrowers with each other and are likely to know of any loan payments that you have missed.

People have so many loans it is very unlikely that one bank will know your history with another bank.

Your bad loan payment record with one bank will not be considered if you apply to another bank for a loan.

If you missed a payment more than 2 years ago, it cannot be considered in a loan decision.

None

30.

Maria must borrow $12,000 to complete her college education. Which of the following would NOT be likely to reduce the finance charge rate?

If she went to a state college rather than a private college.

If her parents cosigned the loan.

If her parents took out an additional mortgage on their house for the loan.

If the loan was insured by the Federal Government.

None

31.

If you had a savings account at a bank, which of the following would be correct concerning the interest that you would earn on this account?

Earnings from savings account interest may not be taxed.

Income tax may be charged on the interest if your income is high enough.

Sales tax may be charged on the interest that you earn.

You cannot earn interest until you pass your 18th birthday.

None

Time's up