FINANCIAL EMPOWERMENT PROGRAM
Financial literacy assessment
Where Are You Now?
Financial planning doesn’t take place in a vacuum. It’s a good idea to manage your financial affairs holistically, as they relate to you,
your family and your future. This quiz will help you get a feel for the areas where financial issues may touch your life, as well as
determine the areas you feel most comfortable with, and those about which you might want to learn more.
The box at the end of the quiz shows how the questions align with relevant areas of this Financial Empowerment Program.
If you would like more information in any of these areas, check the Topics at a glance page for helpful direction on specific
issues. Additionally, your U.S. Trust® team is available to help you and to work with you to address any questions and provide
further information on how you can become more financially empowered.
1. I f you’re looking to save money for six to 12 months
and want to earn some interest with limited risk to
your principal, where should you put your money?
a.
b.
c.
d.
FDIC-insured certificate of deposit
Hedge fund
Line of credit
Mutual fund
2. A checking account is best used for:
a.
b.
c.
d.
Storing all of your savings
Earning interest on your money on a short-term basis
Earning interest on your money on a long-term basis
Accessing your money for simple day-to-day transactions
3. O
nline banking is an effective tool for all of the
following, except:
a.
b.
c.
d.
Paying bills automatically
Viewing your balances in real time
Transferring funds
Managing a trust
4. It’s important to have a budget because it:
a. Helps you evaluate your spending habits
b. Helps you set targets for savings
c. Helps you achieve your short-term and long-term
financial goals
d. All of the above
5. Y
ou want to take control of your spending by creating
a budget. The first step is:
a. Cut up all your debit and credit cards
b. S ell possessions and cancel memberships to free up cash
c. Assess your current financial situation by calculating how
much you make and spend each month
d. Use all your savings to pay off your debt immediately
6. W
hen determining your financial net worth, which
of these should be considered an asset?
a. Investment accounts
b. A leased car
c. Your parents’ condo, where you live
d. All of the above
7. Having a good credit score is important because it:
a. Lowers the interest rate you’ll have to pay on loans
b. Enables you to borrow more than you can really afford
c. Allows you to lend money through your online bank
d. Lets you get life insurance at a 50% discount
8. A good way to reduce your income tax liability is to:
a. Contribute fully to your company’s 401(k) program
b. Claim your parents as dependents on your W-4
c. Claim zero exemptions when you file your income tax
d. Invest in foreign companies through common stock
9. W
hich of the following is not a typical financial goal for
20- to 30-year-olds?
a. Funding a start-up business
b. Transferring wealth to younger generations
c. Saving for a child’s education
d. Purchasing a first home
10.The following organization insures stocks that you purchase
against loss in the stock market:
a. Federal Deposit Insurance Corporation
b. The Securities and Exchange Commission
c. The U.S. Department of the Treasury
d. No organization insures stocks against
market losses
11. If you’re building an investment portfolio, it is important to:
a. Invest primarily in one or two large company stocks
b. S elect a diverse range of investments that meet your goals
and appetite for risk
c. Trade your stocks at least quarterly
d. Start by investing only in bonds, as they are more stable
12.If you are looking for a tax-advantaged investment,
you might consider:
a.
b.
c.
d.
Buying a mutual fund through a Roth IRA
Investing in a corporate bond fund
Renting instead of buying a home
All of the above
13.Diversifying your assets can help protect you against:
a.
b.
c.
d.
Inflation
Political risk
Stock market volatility
All of the above
14.If you are planning to get married and you and your
fiancé have very different levels of wealth, it would
be wise to consider:
a.
b.
c.
d.
A prenuptial agreement
Filing your taxes individually
Buying a home together before getting married
All of the above
15.When you are planning to start a family, it is wise
to have:
a.
b.
c.
d.
A will
Life insurance
Disability insurance
All of the above
16.When you are looking to buy your first home, what
do you need to do first?
a.
b.
c.
d.
Make an offer on the property you like
Get preapproved for a mortgage
Change your postal address
Sign the promissory note, mortgage, truth-in-lending
disclosure and HUD-1 settlement statement
17.You found the house you want and are ready to make a down
payment. You saved enough money for a 20% down payment.
This level of down payment may allow you to:
a. Get a lower rate of interest on your mortgage
b. Avoid having to pay for private mortgage insurance
c. Avoid having to escrow for real estate taxes and insurance
d. All of the above
19.If your grandparents set up an irrevocable trust for you,
the assets in the trust may be protected from:
a. Stock market losses
b. Your creditors
c. A failed marriage
d. Both B and C
20.A revocable living trust is used to:
a. Save income taxes
b. Handle your financial needs if you are incapacitated
c. Designate the beneficiary of your life insurance
d. All of the above
21.A trustee:
a. Must follow the terms of the written trust document
b. Is usually responsible for investment decisions for the trust
c. Must provide beneficiaries with a periodic accounting of
the trust
d. All of the above
22.A will is important if:
a. You want to control the transfer of your wealth
b. You have a large retirement plan
c. You want to avoid probate at your death
d. All of the above
23.What type of insurance should you have in addition to
auto insurance to protect you financially if you cause
an auto accident?
a. Homeowners insurance
b. Umbrella liability insurance
c. Disability insurance
d. Long-term-care insurance
24.What is a charitable foundation?
a. A
not-for-profit organization created by a donation from
an individual/business, which then makes distributions
to other charities
b. An organization created by ten Fortune 500 companies that
lend out money each year to not-for-profits
c. A volunteer organization that does mission work in countries
outside the United States
d. None of the above
25.When starting your own business, you will need:
a. A joint checking account, a PayPal account and power of attorney
b. A
n attorney, accountant, business checking account, and line
of credit or business credit card
c. A personal credit card, a certificate of deposit and
professional liability insurance
d. A website, a cool logo and a garage
18.All of the following may be benefits of buying a home except:
a.
b.
c.
d.
Guaranteed profit when you sell it
Building equity toward a valuable asset
Deductible interest on a home equity loan
Tax-advantaged investment
ustrust.com
U.S. Trust operates through Bank of America, N.A., and other subsidiaries of Bank of America Corporation.
Bank of America, N.A., Member FDIC.
© 2013 Bank of America Corporation. All rights reserved. | ARFB8YQS | SHEET-10-13-0169.31 | 12/2013
FINANCIAL EMPOWERMENT PROGRAM
Financial literacy assessment
Where Are You Now?
Answers:
1a, 2d, 3d, 4d, 5c, 6a, 7a, 8a, 9b, 10d, 11b, 12a, 13d, 14a, 15d, 16b, 17d, 18a, 19d, 20b, 21d, 22a, 23b, 24a, 25b
How did you do?
Perhaps you only answered a few of the questions correctly, or maybe you scored a perfect 100%. There is no grading or score
for this quiz.
However, the chart below indicates the Financial Empowerment category that corresponds to each question. Note which areas are
particularly weak and prioritize focusing on those — or choose to focus on the areas in which you have particular interest. In either
case, your U.S. Trust team can help you learn more.
Questions
Corresponding Financial Empowerment Categories
1–13
Personal Financial Basics
14–18
Life Events
19–21
Trusts
22–23
Protecting Your Wealth
24
Giving Back
25
Managing Business
ustrust.com
U.S. Trust operates through Bank of America, N.A. and other subsidiaries of Bank of America Corporation.
Bank of America, N.A., Member FDIC.
© 2013 Bank of America Corporation. All rights reserved. | ARWLJ7YL | SHEET-10-13-0169.32 | 12/2013