DSST Personal Finance Practice Questions Answer Key

Use this answer key after completing the DSST Personal Finance practice questions. Review the explanation for each question you miss so you understand the underlying personal-finance concept rather than simply memorizing an answer letter.

Some questions in this older practice set use dated or imperfect wording. The explanations below identify those issues where they affect the accuracy of an answer.

1. B — Taking a long vacation

A financial goal is a specific financial objective you plan to achieve in the future. Saving enough money for a significant vacation can be such a goal. This question is somewhat loosely worded, however, because another purchase could also become a financial goal if it were defined as a specific planned objective.

2. D — Has a relatively long life

D is the intended answer. More precisely, real property consists of land and property permanently attached to land, such as a house. A vehicle and a dishwasher are examples of personal property because they are movable rather than permanently attached to real estate.

3. B — Assets minus debts owed

A personal balance sheet lists assets and liabilities at a particular point in time. Subtracting total liabilities from total assets gives your net worth. An income and expense statement, by contrast, measures financial activity over a period of time.

4. C — It included protections for personal financial information

The Financial Services Modernization Act of 1999 is commonly known as the Gramm-Leach-Bliley Act (GLBA). Among its provisions are requirements concerning the privacy and safeguarding of consumers’ personal financial information. The law also made broader changes to financial-services regulation, so privacy protection was not its only purpose.

5. A — A dollar today is worth more than the same dollar received later

The time value of money recognizes that money available today can potentially earn a return, making it more valuable than the same nominal amount received in the future. Present value, future value, interest rates, and compounding are all closely related to the time value of money.

6. C — Using a credit card or cash advance to pay other debts

Regularly borrowing more money to pay existing debt can be a warning sign that your financial obligations are exceeding your available income. Doing so can also increase interest costs and make the total debt more difficult to repay.

7. This Question Should Be Replaced

The original answer key identifies B — notifying a lender when you are unable to make a payment, but that action does not itself build a strong credit history.

Contacting a lender before missing a payment can be a responsible step and may help you discuss available payment arrangements. However, strong credit history is generally built by consistently making required payments on time and managing credit responsibly. None of the choices states that clearly enough to be considered a strong answer.

Question 7 should be replaced on the corresponding practice-question page rather than continuing to present B as a technically correct credit-building strategy.

8. A — Reduce the number of credit cards you carry

A is the best answer among the choices because keeping the number of accounts you use manageable can make it easier to track spending, balances, and due dates. There is no universal rule that a person should have no more than two credit cards. Responsible use matters more than a specific number of cards.

9. D — Do not provide unnecessary personal information on a sales or charge slip

D is the best answer among these choices. Limiting unnecessary disclosure of personal information can reduce opportunities for misuse. Current fraud-prevention practices also include protecting account credentials, reviewing transactions, using account alerts, and quickly reporting suspicious or unauthorized charges.

10. C — Over-the-limit fee

An over-the-limit fee is associated with a transaction that causes a credit-card balance to exceed the account’s credit limit. Under current federal rules, however, a card issuer generally cannot charge an over-the-limit fee unless the cardholder has affirmatively opted in to the issuer’s over-the-limit service.

• Foundations of Personal Finance — 6%
• Credit and Debt — 15%
• Major Purchases — 15%
• Taxes — 15%
• Insurance — 15%
• Investments — 21%
• Retirement and Estate Planning — 13%

Official DSST Personal Finance Page — Review current exam and credit information.

Official DSST Personal Finance Fact Sheet — Review the current blueprint, recommended references, and official sample questions.

DSST Personal Finance Practice Questions — Return to the questions that correspond with this answer key.