WISE FINANCIAL LITERACY
CERTIFICATION PRACTICE
QUESTIONS WITH COMPLETE
SOLUTIONS
◉ length of debt repayment impact on cost
Answer: the longer you take to repay it, the higher the cost
◉ what to do if you become a victim of identity theft
Answer: call bank can cancel cards
call police and file a report
call FBI (optional)
◉ predatory loans
Answer: take advantage of desperate people
extremely high interest rates
◉ collateral (secured vs. unsecured loans)
Answer: an asset pledged by a borrower to a lender, usually in
return for a loan
secure- loans protected by an asset/collateral
, unsecured- loan with no property or assets to recover (high interest
rates, riskier)
◉ pawnshops
Answer: dangerous
pay wholesale value and sell at retail value
◉ how insurance works (concept of sharing risk)
Answer: transfers risk from an individual to an insurance
organization
◉ deductible
Answer: amount of money paid out of pocket by policyholder before
the insurance coverage begins
when the deductible is raised, the premium is lowered
when the deductible is lowered, the premium is raised
◉ collision coverage
Answer: a policy that protect you against damage to your own
vehicle if you hit another car or lose control and roll over
◉ term life insurance
Answer: coverage for a set period of time
CERTIFICATION PRACTICE
QUESTIONS WITH COMPLETE
SOLUTIONS
◉ length of debt repayment impact on cost
Answer: the longer you take to repay it, the higher the cost
◉ what to do if you become a victim of identity theft
Answer: call bank can cancel cards
call police and file a report
call FBI (optional)
◉ predatory loans
Answer: take advantage of desperate people
extremely high interest rates
◉ collateral (secured vs. unsecured loans)
Answer: an asset pledged by a borrower to a lender, usually in
return for a loan
secure- loans protected by an asset/collateral
, unsecured- loan with no property or assets to recover (high interest
rates, riskier)
◉ pawnshops
Answer: dangerous
pay wholesale value and sell at retail value
◉ how insurance works (concept of sharing risk)
Answer: transfers risk from an individual to an insurance
organization
◉ deductible
Answer: amount of money paid out of pocket by policyholder before
the insurance coverage begins
when the deductible is raised, the premium is lowered
when the deductible is lowered, the premium is raised
◉ collision coverage
Answer: a policy that protect you against damage to your own
vehicle if you hit another car or lose control and roll over
◉ term life insurance
Answer: coverage for a set period of time
