D363 - Personal Finance

Question 1: What is the "Federal Insurance Contributions Act" (FICA) tax?

A tax that funds Medicare and Social Security programs

A tax that only applies to high-income earners

A voluntary tax that individuals can choose to pay

A tax used to fund the federal government's defense budget

Question 2: What does the "maximum taxable yearly earnings" (MTYE) cap mean in the context of FICA taxes?

The highest amount that can be taxed for federal income tax

The maximum amount of earnings subject to Social Security tax

The highest amount a person can earn without paying taxes

The minimum earnings required to qualify for Medicare benefits

Question 3: What is the primary function of "Medicare tax"?

To provide health coverage for low-income families

To fund health insurance for retirees and disabled individuals

To pay for private health insurance policies

To cover the administrative costs of Social Security

Question 4: What are "Social Security credits" used for?

To determine eligibility for Social Security benefits

To calculate how much income tax a person owes

To track an individual's medical expenses

To determine the amount of retirement savings required

Question 5: What does it mean to have "fully insured Social Security status"?

You are entitled to receive both Social Security and Medicare benefits

You have earned enough credits to qualify for retirement, survivors, and disability benefits

You are guaranteed full Social Security benefits regardless of future earnings

You are covered under both private and government insurance programs

Question 6: What are "disability benefits" under Social Security?

Payments to cover medical expenses for disabled individuals

Payments to workers who become disabled and cannot work before reaching retirement age

Payments made only to individuals who are permanently disabled

Payments to individuals who are unable to work for more than five years

Question 7: What is the "Social Security Estimate"?

A projection of future tax liability

A document showing your earnings history and estimated future benefits

A calculation of how much you will need to retire comfortably

A summary of your financial investments

Question 8: What is the "basic retirement benefit" under Social Security?

The full amount of Social Security benefits a worker would receive at their full-benefit retirement age

A supplemental benefit provided to low-income retirees

The minimum amount of retirement savings required by law

A tax-free pension provided by the federal government

Question 9: What is "full-benefit retirement age" for Social Security?

The age at which you can begin receiving Medicare benefits

The age at which a retiree is entitled to receive full Social Security benefits

The age at which retirement savings become fully vested

The age at which private pension benefits are paid out

Question 10: What is the "retirement savings goal" or "retirement nest egg"?

The minimum amount of income needed to cover basic living expenses after retirement

The total amount of savings and investments required to support a desired retirement lifestyle

The maximum amount that can be contributed to retirement accounts annually

The total value of Social Security benefits received over a lifetime

Question 11: What is the "replacement ratio" in retirement planning?

The percentage of retirement savings that should be invested in stocks

The percentage of pre-retirement income that a retiree will need to maintain their standard of living

The percentage of retirement income provided by Social Security

The percentage of retirement savings used to pay off debt

Question 12: What is a "consolidation loan"?

A loan used to combine multiple debts into a single payment

A loan designed to pay off medical expenses

A loan that can only be used for retirement planning

A loan with the highest interest rate available

Question 13: What is a "credit application"?

A request for a new credit card from a bank

A form used to request information about credit scoring

A form or interview that requests information on your ability and willingness to repay debts

A legal contract between a borrower and a lender

Question 14: What is a "credit bureau"?

A government agency that provides financial advice

A private firm that collects and maintains borrowers' credit histories

A financial institution that offers loans and credit cards

A company that provides tax preparation services

Question 15: What does "prescreened" mean in the context of a credit card offer?

The credit card offer is sent to individuals with poor credit histories

The credit card offer is sent to individuals based on their borrowing history, with likely approval

The credit card offer guarantees approval

The credit card offer requires a full credit report before any decision is made

Question 16: What is an "invitation-to-apply" for a credit card?

A guaranteed offer of a credit card without the need for application

A credit card offer sent without any prior screening

A credit card that requires full financial documentation before approval

A credit card that requires a co-signer for approval

Question 17: What does it mean when a credit card is "preapproved"?

The cardholder is guaranteed the highest credit limit available

The issuer has conditionally approved the credit card offer based on a preliminary credit report

The credit card is automatically issued without the need for an application

The cardholder must pay a higher interest rate than other applicants

Question 18: What is a "credit agreement"?

A document that specifies the terms and conditions of credit use

A contract that must be signed before receiving any loan

A verbal agreement between a borrower and lender

A list of all debts owed by a borrower

Question 19: What is a "promissory note"?

A formal agreement to transfer ownership of assets

A contract that specifies repayment terms for a loan

A document that waives a borrower’s obligation to repay debt

A legal notice of bankruptcy

Question 20: What is "tiered pricing" in lending?

The practice of offering the same interest rate to all borrowers

Charging lower interest rates to borrowers with higher credit scores and higher rates to riskier borrowers

Offering a single fixed rate for all loans, regardless of credit history

Charging higher interest rates for loans with longer repayment periods

D363 Personal Finance - Set 5 - Part 1