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Students take Financial Challenge

By Marcie Geffner · Bankrate.com
Monday, March 26, 2012
Posted: 9 am ET

High school students who've learned a thing or two about personal finance can test their knowledge by taking a new voluntary online exam known as the National Financial Capability Challenge.

The exam, given annually, is designed to enhance students' financial capabilities by strengthening their understanding of saving, budgeting and investing, among other concepts. The exam is available to students now through April 13.

Supporters include high-ranking officials at the U.S. Departments of Education and Treasury.

In a statement, Deputy U.S. Treasury Secretary Neal S. Wolin called the challenge an "exciting way to educate students" about personal finance and "encourage them to make smart money management part of their everyday behavior."

U.S. Education Secretary Arne Duncan added that the challenge was "an excellent tool" to help educators teach personal finance skills, so all students will be prepared to make sound financial decisions, even at a young age.

"So many of the challenges we face today, both individually and as a nation, are because we have not taught these basic lessons about managing finances and making smart investments," Duncan said.

The two departments also have developed an Educator Toolkit to help teachers prepare students for the exam.  Educators can offer the exam in libraries, after-school settings and home-school environments as well as classrooms. Department of Defense schools overseas are also encouraged to participate.

Last year, more than 84,000 students and 2,500 educators from 1,692 schools in all 50 states participated in the National Financial Capability Challenge. On average, students took less than 30 minutes to complete last year's exam, according to a Treasury statement.

The department also released two sample questions with the correct answers.

1. Which one of the following best describes the relationship between the interest rate charged to a person for a loan and that person's risk of nonpayment of the loan?

A. Lower interest rates are charged on loans with a lower risk of nonpayment.

B. Higher interest rates are charged on loans with a lower risk of nonpayment.

C. Lower interest rates are charged on loans with a higher risk of nonpayment.

D. I don't know.

The correct answer is A.

2. John drove his car to the local Gas and Shop store. On the way to the store, he got distracted while talking to his friend in the car and hit a street sign. Neither he nor his friend was hurt in the accident, but the front end of the car was damaged. What type of automobile insurance coverage will provide reimbursement for damages to his car?

A. Liability

B. Collision

C. Comprehensive

D. I don't know

The correct answer is B.

Follow me on Twitter: @marciegeff.

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