Wise Practice Test Study Guide 2023 with complete
solution
budget variance.
the difference between the budgeted amount and the actual amount that you spend
debt ratio
shows the relationship between debt and net worth.
debt ratio
The lower the ratio the better off financially the person is.
debt ratio
calculated by dividing liabilities by net worth
excise tax
government imposes a tax on specific goods and services such as alcohol, cigarettes,
gasoline, and airline
capital gains
are profits made from the sale of capital assets such as stocks and bonds
Capital gains
tax deferred until the asset is sold,
Capital Gains Tax
If held over one year are considered long-term capital gains and are taxed at a lower tax
rate or in some cases are not taxed at all.
variable expenses
change from one period to another,examples Electricity and food expenditures
get advice from your friends
will help you the least in managing your money?
Financial planning
the process of developing and implementing a coordinated series of actions to achieve
financial success.
Financial planning
need to be reviewed and adjusted to accommodate changing needs and goals.
emergency fund
Should be an important consideration when saving money
liquidity
being in cash or easily convertible to cash, How easily an asset can be converted into
cash
Social Security
benefits depends on the person?s earnings over a lifetime of work
Department store charge cards.
open-end credit
Department store charge cards.
is a revolving live of credit that is offered by banks There is a limit set on the line of
credit and the funds
mortgage loan
closed-end credit,made at a specified interest rate for a specified time period.
collateralized loan.
, A loan that is secured by collateral, properties or assets that are subject to seizure on
default.
collateralized loan.
When a person brings an item to a pawnshop to obtain cash, the transaction is
considered
Federal Housing Administration (FHA) loan
insures lenders who make mortgage loans that are riskier than regular bank loans
because
uncollateralized loan
A personal loan without assets to cover the loan amount.
Collateral
tangible asset that is used to secure a loan. In the case of a mortgage, the actual house
or apartment serves as the collateral for that loan.
bankruptcy
will appear on the person?s credit report for 10 years
Notify the credit card companies in order to negotiate a new payment plan.
Notify the credit card companies in order to negotiate a new payment plan.
Installment loan
a loan repaid with interest in equal periodic payments
dispose of a credit card
Cut up the card, put parts in different garbage bags, and instruct the credit card
company in writing or by phone to close the account
Garnishment
Occurs when a creditor obtains a court order requiring an employer to attach an
employee's earnings in order to pay back a debt.
rate of inflation
determines the time value of depositing into a savings account, and the interest rate and
Rising interest
Can lower stock prices because of lower business profits
Short-term savings instruments
your money will be available to invest in a higher interest instrument in the near future.
Short-term savings instruments
Which investment would you choose today if you believe interest rates will go up?
Credit unions
Credit unions usually pay the highest rates of interest because they have lower risks
and costs of operation. They are not-for-profit organizations
Truth in Lending Act
The Truth in Lending Act requires that the finance charge and annual percentage rate
be disclosed to the consumer in advance
Finance charge
The finance charge is the amount charged by the lender for any kind of credit
Finance charge
Finance charge = principal x stated interest rate x time (in years). The finance charge is
used to calculate the annual percentage rate (APR)
The annual percentage rate (APR)
The true cost of credit that must be disclosed on a loan agreement
solution
budget variance.
the difference between the budgeted amount and the actual amount that you spend
debt ratio
shows the relationship between debt and net worth.
debt ratio
The lower the ratio the better off financially the person is.
debt ratio
calculated by dividing liabilities by net worth
excise tax
government imposes a tax on specific goods and services such as alcohol, cigarettes,
gasoline, and airline
capital gains
are profits made from the sale of capital assets such as stocks and bonds
Capital gains
tax deferred until the asset is sold,
Capital Gains Tax
If held over one year are considered long-term capital gains and are taxed at a lower tax
rate or in some cases are not taxed at all.
variable expenses
change from one period to another,examples Electricity and food expenditures
get advice from your friends
will help you the least in managing your money?
Financial planning
the process of developing and implementing a coordinated series of actions to achieve
financial success.
Financial planning
need to be reviewed and adjusted to accommodate changing needs and goals.
emergency fund
Should be an important consideration when saving money
liquidity
being in cash or easily convertible to cash, How easily an asset can be converted into
cash
Social Security
benefits depends on the person?s earnings over a lifetime of work
Department store charge cards.
open-end credit
Department store charge cards.
is a revolving live of credit that is offered by banks There is a limit set on the line of
credit and the funds
mortgage loan
closed-end credit,made at a specified interest rate for a specified time period.
collateralized loan.
, A loan that is secured by collateral, properties or assets that are subject to seizure on
default.
collateralized loan.
When a person brings an item to a pawnshop to obtain cash, the transaction is
considered
Federal Housing Administration (FHA) loan
insures lenders who make mortgage loans that are riskier than regular bank loans
because
uncollateralized loan
A personal loan without assets to cover the loan amount.
Collateral
tangible asset that is used to secure a loan. In the case of a mortgage, the actual house
or apartment serves as the collateral for that loan.
bankruptcy
will appear on the person?s credit report for 10 years
Notify the credit card companies in order to negotiate a new payment plan.
Notify the credit card companies in order to negotiate a new payment plan.
Installment loan
a loan repaid with interest in equal periodic payments
dispose of a credit card
Cut up the card, put parts in different garbage bags, and instruct the credit card
company in writing or by phone to close the account
Garnishment
Occurs when a creditor obtains a court order requiring an employer to attach an
employee's earnings in order to pay back a debt.
rate of inflation
determines the time value of depositing into a savings account, and the interest rate and
Rising interest
Can lower stock prices because of lower business profits
Short-term savings instruments
your money will be available to invest in a higher interest instrument in the near future.
Short-term savings instruments
Which investment would you choose today if you believe interest rates will go up?
Credit unions
Credit unions usually pay the highest rates of interest because they have lower risks
and costs of operation. They are not-for-profit organizations
Truth in Lending Act
The Truth in Lending Act requires that the finance charge and annual percentage rate
be disclosed to the consumer in advance
Finance charge
The finance charge is the amount charged by the lender for any kind of credit
Finance charge
Finance charge = principal x stated interest rate x time (in years). The finance charge is
used to calculate the annual percentage rate (APR)
The annual percentage rate (APR)
The true cost of credit that must be disclosed on a loan agreement
