DECA Personal Financial Literacy (PFL) Practice Exam

These questions are part of the practice quiz. Start practicing

• What is the first step to get spending under control?
• What is the best strategy for shopping for life insurance?
• What benefit allowed a person to buy a new Apple computer after hers was destroyed in a fire?
• What is a 529 plan designed for?
• Which type of car insurance would cover damage from a flood?
• What is true about loans regarding down payments?
• What does the term "liquidity" refer to in finance?
• Which best describes a mutual fund?
• What does 'risk tolerance' mean in the context of investing?
• What type of income can someone earn from a savings account at a commercial bank?
• What do we call the profit made from the sale of stocks, bonds, or real estate?
• What does APR stand for, and why is it important?
• What is one benefit of buying a home instead of renting an apartment?
• What constitutes consumer debt?
• How does interest work in a savings account?
• What is one potential benefit of investing in a tax-advantaged account?
• What happens when a person buys a company's bond?
• How do taxes influence personal finance decisions?
• What factor is commonly considered when determining someone’s creditworthiness?
• A person choosing a mortgage usually selects a fixed-rate loan because?
• What is the likely effect on car insurance cost if a driver receives several traffic tickets?
• Which option most accurately describes a debit card?
• What does 'paying yourself first' mean?
• Purchasing furniture with a plan that requires 12 equal payments over a year is an example of what?
• Which of the following types of financial aid requires repayment?
• What is the primary source of income for most individuals aged 20-35?
• Which statement is true regarding credit cards?
• How can financial knowledge benefit consumers?
• What is the primary goal of personal financial literacy?
• What type of investment is a mutual fund?
• What term describes the money a person pays to an insurance company for a policy?
• Which of the following describes what happens during a depression?
• Which of the following best describes the purpose of diversification in investment?
• How can investing in education impact an individual's earning potential?
• What is the purpose of an emergency fund?
• When might individuals be encouraged to seek credit counseling?
• What is typically considered a key benefit of having a budget?
• Before a person begins investing, what is a recommended first step?
• What can result from defaulting on a loan?
• What is the term for a method that helps reduce investment risk?
• What role does insurance play in personal finance?
• Why do many investors choose to buy a stock mutual fund?
• What is identity theft in relation to personal finance?
• What is compounding interest?
• Students applying for financial aid to attend college usually need to?
• What must a person do to receive money for damages from a car accident?
• Which of the following is an example of a long-term debt?
• What is the difference between needs and wants in budgeting?
• What is the definition of a securities market?
• What does a balanced budget that includes savings imply?
• What does it mean to live within your means?
• A debit card allows a person to do which of the following?
• Which of the following individuals could be considered to have financial problems?
• What is a primary benefit of using a financial calculator?
• A person decided to have six months of income in an emergency savings account. Is this a good decision?
• What does a budget variance indicate?
• What is the main purpose of a financial statement?
• What is an example of an opportunity cost?
• What is the main outcome of having a good credit score?
• What commonly influences a person’s decision to purchase life insurance?
• Why does a bank pay interest to a depositor?
• What is likely to improve when a consumer regularly checks their credit report?
• Which of the following best describes financial literacy?
• What happens when someone overdrafts their account?
• In financial planning, what is typically the first step before choosing an insurance policy?
• What is the definition of personal financial literacy?
• What qualifies as a short-term financial goal?
• How can a savings account benefit you?
• What is a major consequence of having a low credit score?
• When the amount of income on a budget is greater than the amount actually spent on expenses, the person has a?
• Why is comparison shopping for a car important?
• Which of the following can be considered a fixed expense?
• A person strongly feels that going into debt is wrong. This is an example of the influence of?
• What typically causes a corporation's stock price to increase?
• How is the actual cash value of an item typically calculated?
• What is the primary purpose of retirement accounts like 401(k)s and IRAs?
• Investments that carry higher potential returns typically come with:
• Which deductions are considered mandatory from a person’s paycheck?
• Which of the following is an example of a variable expense?
• How does a low credit score affect an individual?
• What are the two main types of life insurance policies?
• What are fixed expenses typically identified by?
• How is 'net worth' defined?
• Deposits in bank savings accounts are insured by the FDIC up to what amount?
• Which agency is tasked with the collection and enforcement of federal taxes in the U.S.?
• What financial skill is important to develop for long-term success?
• What can a person expect as a customer of a credit union?
• How often should you review your personal budget?
• Which type of establishment typically charges the highest interest rate on a loan?
• What does it mean to be a cosigner on a loan?
• Why do financial advisors suggest saving at least 10% of each paycheck?
• How can the New York Stock Exchange (NYSE) best be described?
• Why is it essential to pay credit card bills on time?
• Which financial statement is crucial for understanding a person’s net worth?
• What is the term for the possibility that a borrower fails to repay a loan on time?
• What can help reduce an individual's personal risk of loss?
• Before purchasing a new cell phone, what should a college student first consider?
• What advantage does having a financial plan provide?
• What is the benefit of having a diversified investment portfolio?
• What information must borrowers be provided with according to the Truth-in-Lending Act?
• In a banking context, what does 'stop-payment' refer to?
• What strategy can assist an individual in reaching the goal of buying a house?
• When applying for a loan, what type of information do borrowers typically need to provide?
• What does the grace period refer to in credit card usage?
• What does it mean to have a negative budget variance?
• What components are typically included in a personal budget?
• What is the most likely consequence of not saving for retirement early?
• What is a recommended action to reduce impulse spending?
• What does the "time value of money" indicate?
• How can an individual build credit effectively?
• What is the difference between debit and credit cards?
• What does liquidity refer to in finance?
• What distinguishes a debit card from a credit card?
• What is the main purpose of a credit monitoring service?
• Which statement best reflects the relationship between risk and return in investing?
• How can lifestyle choices affect financial literacy?
• Which term refers to the amount of money a borrower must pay on a loan that has been borrowed?
• What is a key characteristic of a 529 savings plan?
• What economic condition decreases purchasing power?
• How should someone determine the amount of renters insurance coverage needed?
• What key factor do insurance companies consider when setting policy costs?
• Why is car insurance typically more expensive for teenage males than for teenage females?
• If a person has assets worth $15,000 and liabilities totaling $5,000, what is her net worth?
• If a person writes a check for more money than he has in his checking account, what does he need for the check to be paid by the bank?
• What does it mean to have financial literacy?
• What is one advantage of using a financial planner?
• What is a common result of filing multiple insurance claims?
• When a check is returned due to insufficient funds, what term is used to describe it?
• What is the rate imposed by the lender for a borrower to pay on a loan known as?
• Which one of the following statements is the most accurate about the use of ATM cards?
• Why do investors often purchase stocks?
• Why is tracking expenses important?
• What distinguishes a traditional IRA from a Roth IRA?
• A person earned a salary of $70,000 last year. Additionally, he had $1,000 in interest income and $2,000 in dividend income. What is his total income for this year?
• When interest is computed once on a dollar amount (the principal), it is referred to as?
• A student living on a tight budget should prioritize which of the following questions before a purchase?
• What feature is typically associated with a regular checking account?
• When a person asks her bank not to honor a specific check, what is this action called?
• Who is likely to pay a lower finance charge based on credit scores?
• What is the primary purpose of life insurance?
• How can establishing a good credit history benefit an individual?
• What is an essential component of a financial plan?
• What is one effective strategy for managing a budget?
• Which factors can impact an individual's investment decisions?
• Why is it beneficial to start investing early?
• Which of the following is a common characteristic of a financial goal?
• Which type of investment typically has the highest potential return?
• What is a tax deduction?
• What is commonly affected by a poor credit score?
• What type of payment is guaranteed to be as good as cash?
• What type of information is not found on a consumer's credit report?
• Which quote reflects sound financial advice?
• What is a notable advantage of using a credit card?
• When is it generally a good idea to borrow money and repay it with future income?
• An example of identity theft is when an individual...
• Which of the following is true about credit unions compared to commercial banks?
• Which type of credit card is most beneficial for someone who pays their balance in full each month?
• What is the arrangement called that allows you to receive cash, goods, or services now and pay for them in the future?
• Why is it important to review financial goals regularly?
• What is a diversified investment portfolio?
• Which of the following factors can impact your credit score?
• Why is budgeting important?
• What is the primary purpose of an emergency fund?
• What is the purpose of asset allocation?
• What does financial resilience mean?
• Why are credit scores considered important?
• What might John have to do when withdrawing money early from a certificate of deposit (CD)?
• Which of the following financial products is good to have so that a person can cover cash needs today?
• What type of corporation sells shares of ownership through a stock exchange?
• Which financial product typically has the highest risk?
• What is the best suggestion for building and maintaining a good credit score?
• Why is creating a will important?
• What strategy is referred to when it is advised to "pay yourself first"?
• What is crucial for maximizing savings and investments?
• What does a 'spending freeze' entail?
• What can a person do with a bookstore gift card?
• Which of the following would be considered an asset?
• What type of expenses are variable expenses?
• What is a major risk associated with payday loans?
• How do installment loans differ from revolving credit?
• What is a credit line?
• What does "financial independence" refer to?
• When a person cashes a $300 check and only receives $285, she most likely went to what type of location?
• What are fixed expenses?
• How does inflation impact personal finance?
• Why might a lender deny a loan application?
• Which financial service typically helps individuals manage and invest their money?
• What do financial planners emphasize about saving and investing?
• Which of the following defines a credit report?
• Who is likely to pay the lowest finance charge: Scott, who borrowed for a vacation, or Eric, who borrowed for a truck?
• In order for a person's assets to be distributed as desired after death, what is necessary?
• If a person is behind on debt payments, what help is likely to be offered by a credit counseling service?
• What is the main aim of credit counseling?
• What characterizes a good financial goal?
• Which investment product is generally considered the lowest risk?
• What is a computer scam that tricks consumers into revealing personal information called?
• What is an example of a financial goal?
• What helps in building a strong credit history?
• If Sally wants to save her $200 cash prize for three years, what is the best option?
• What type of tax is deducted from an employee's paycheck to fund social security and Medicare?
• What is the service called that allows companies to electronically deposit an employee's net pay into his designated bank account?
• Why is it important to set financial priorities?
• Which of the following best describes a benefit of financial literacy?
• What does electronic banking allow customers to do?
• What is the role of a credit reporting agency?
• What happens to life insurance when the insured individual passes away?
• Which financial instrument provides spending flexibility by allowing deductions from a checking account?
• What should you do if you suspect you are a victim of identity theft?
• How can individuals effectively protect their personal information online?
• How are dividends typically paid to shareholders?
• When selecting a bank, which of the following should you prioritize?
• What is a common financial goal for young adults?
• What financial obligation does a car owner have after causing an accident?
• Which statement is true regarding market conditions?