By Vera Wilson

Do you remember taking a test early in the school year so a teacher could see how much you retained (or forgot) over the summer? Let’s do it now to see what you gleaned from those summertime beach reads I suggested a couple of months ago.

Here’s a brief financial literary quiz: Sharpen those pencils and get to it; answers are at the bottom of the page.

Question 1: You’re buying a house and your monthly payment will be $2,222 on a 30-year mortgage. Your aunt suggests taking out a 15-year loan. What would your payment be?

• (A) Double the $2,222
• (B) Higher than $2,222, but not twice the amount.

Question 2: Will applying for a credit card impact your credit score?

• (A) Yes
• (B) No

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Question 3: How much life insurance should you have?

• (A) 10 times your income.
• (B) Multiply your salary times the number of years left until you retire.
• (C) Enough to cover your debts, income replacement and provide for your dependents.

Question 4: Financial gurus recommend an emergency fund equal to three to six months of your salary. Where should you put this money?

• (A) In a savings or money market account.
• (B) In the stock market.
• (C) In a certificate of deposit.

Answer Key:

• Q1: (B) Higher than $2,222, but not twice the amount. Although you have less time to pay off the loan, your interests cost are significantly less with a 15-year loan, so you save money over the life of the loan.
  
  
• Q2: (A) Yes. An application submitted for a card (or any kind of credit) will negatively impact your score whether you get the card or not. The good news is that it’s a relatively small ding.
  
  
• Q3: (C) To ensure proper coverage, you should document what debts your estate would need to pay off and what kind of support your loved ones would need. A lot depends on age and where you are in life’s journey — a young, single Marine wouldn’t necessarily need additional coverage above what’s provided automatically by the military, but when he gets married and has twins, he’ll likely want to increase coverage. By the way, although (C) is the best answer, (A) and (B) are generally acceptable as well.
  
  
• Q4: (A) The savings or money market account may be boring, but it’s the correct approach. If the stock market goes down, your fund will become diluted and might put you at risk. If you need to take your money out of a CD early, you’ll pay penalties.

If you didn’t score 100%, it’s time to buckle down and study!