Most Americans Can’t Pass This Tricky Finance Quiz — Can You? – Yahoo Finance


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Think you know your stuff when it comes to money, banking, and personal finance? You wouldn’t be the only one. Plenty of people are confident in their money smarts, but as it turns out, that confidence is often misplaced.

Find Out: What Is the GDP – and What Does It Have to Do With You?

GOBankingRates came up with the following six questions about the fundamentals of finance. Fewer than half of the people surveyed could answer five correctly, which is a B grade of 83 percent. Most couldn’t even get a passing grade because they answered only four or fewer questions correctly for a grade of 66 or less.

Now it’s your turn.

Here are the exact same six questions with the same possible answers. Some are multiple-choice, others are true and false. All deal in primary, nuts-and-bolts basics that affect the lives of average people every day.

Maybe you’re as sharp as you think you are — or maybe you’ll find it’s time to brush up on your financial fundamentals.

Take the quiz, see how you do.

Last updated: April 15, 2021

http://finance.yahoo.com/

Question

What Are the 3 Major Credit Bureaus?

  • Capital One, Bank of America and JP Morgan

  • Deloitte, KPMG and Ernst & Young

  • Fannie Mae, Freddie Mac, and Sallie Mae

  • FICO, Moody’s, and Fitch

  • Transunion, Equifax, and Experian

  • Visa, MasterCard, American Express

Find Out: What Do Credit Reporting Agencies Do?

Businesswoman Checking Credit Score On Laptop At Office

Businesswoman Checking Credit Score On Laptop At Office

Answer

Transunion, Equifax and Experian

The three big credit bureaus gather financial information about individuals, maintain that information in databases, and package it into credit reports. Creditors, lenders, and sometimes even employers purchase those reports to learn about a person’s debts, payment histories, and other critical information.

Learn More: What Does the Fed Do, Anyway?

Elegant young woman looking away thoughtfully while holding notepad and leaning on table with laptop.

Elegant young woman looking away thoughtfully while holding notepad and leaning on table with laptop.

Question

True or false: A 401k refers to a tax credit for retirement.

Check Out: Understanding US Productivity and All the Ways It Affects You

Businessman

Businessman

Answer

False.

Although it’s not a tax credit, 401k plans certainly come with tax benefits. The most common and popular employer-based retirement plan in America, 401ks allow workers to contribute pre-tax earnings directly to these special accounts — often backed up by matching funds from their employers.

Read Next: How To Calculate Your Debt-to-Income Ratio

Pregnant Woman e-banking.

Pregnant Woman e-banking.

Question

Of the following, which describes what “APY” is?

  • Adjusted prices for inflation

  • Annual rate charged for borrowing or earned by an investment

  • Annual rate of return accounting for compound interest

  • Annualized principal payment amounts

  • Annuity payout per year

  • Automated payment

See: National Debt and Deficit — What Is It and How Does It Affect Me?

Millennial couple checking home finances at banking app from digital tablet.

Millennial couple checking home finances at banking app from digital tablet.

Answer

Annual rate of return accounting for compound interest.

APY stands for “annual percentage yield,” and it factors in both the interest rate and the compounding period on an investment.

Read: Understanding Interest Rates — How They Affect You and the US Market

woman reviewing her paycheck and FICA tax

woman reviewing her paycheck and FICA tax

Question

True or false: Income does not impact your credit score.

Check Out: What Is the Consumer Confidence Index and How Does It Affect Me?

1040 income tax form and w-2 wage statement with a federal Treasury refund check.

1040 income tax form and w-2 wage statement with a federal Treasury refund check.

Answer

True.

Your income will always play a role in how much money you can borrow, but it doesn’t factor into your creditworthiness. Lenders are concerned with things like your on-time payment history and outstanding debt, which have the biggest impact on your credit score.

Learn: What the Unemployment Rate Means for You and the Economy

An adult man bank customer making a financial transaction with a bank teller over the counter in a retail bank.

An adult man bank customer making a financial transaction with a bank teller over the counter in a retail bank.

Question

What does a CD offered by a bank stand for?

  • Capital deferment

  • Certificate of deposit

  • Collateral default

  • Collateralized discount

  • Commodity dividend

  • Credit dividend

Read: How Does the Exchange Rate Work and How Does It Affect Many Parts of Your Life?

Business meeting with financial advisor.

Business meeting with financial advisor.

Answer

Certificate of deposit

Banks issue CDs to customers looking for a safe place to park their cash for an extended period of time. In exchange for the deposit, banks pay them a modest interest rate.

See: Breaking Down the Basics of Cryptocurrency

http://finance.yahoo.com/

Question

What’s the difference between a checking account and a savings account? Select all that apply.

  • Only savings accounts earn interest

  • A savings account can’t be used for automatic bill pay

  • Only checking accounts have overdraft fees

  • You can only transfer money from checking accounts to savings

  • Checking accounts are designed for regular use

  • Savings accounts are designed for investing long term

Hedging Your Bet? Everything You Need To Know About Hedge Funds

Hand Putting a Coin in Piggy Bank.

Hand Putting a Coin in Piggy Bank.

Answer

You can only transfer money from checking accounts to savings and savings accounts are designed for investing long term.

A checking account is your go-to daily spending account — it’s linked to your debit card and you can write checks from it. Savings accounts pay higher interest rates, but you can only make so many withdrawals per month because they’re meant to be safe havens for accumulating cash over time.

More From GOBankingRates

This article originally appeared on GOBankingRates.com: Most Americans Can’t Pass This Tricky Finance Quiz — Can You?

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