W!SE Financial Literacy Practice Test Questions with Complete Solutions Rated A+

Which of the following does the Federal Reserve use to regulate the nation's money supply? - Monetary policy Identify the background color of a U.S. $5.00 bill. - Green A type of electronic funds transfer (EFT) is: - An ATM transaction Scott just got an ATM card to use and must choose a PIN (Personal Identification Number). How should he select a PIN that will give him maximum protection against anyone else being able to find out what the PIN is? - Use a random selection of letters and numbers Which statement is FALSE about most ATM (Automated Teller Machine) cards? - You can always get cash anywhere in the world with no fee. A high school student has begun to investigate the field of finance as a career choice. In deciding about the field, the student should focus on which question first? - Will I find a balance between financial rewards and personal satisfaction from work? Money for saving, investing, or spending cannot be from: - Capital losses from the sale of stock Which statement best describes the relationship between a person's educational level and that person's potential earning power? - A person with a professional degree is likely to earn at least four times as much per year as a person who did not complete high school Purchases made with your debit card are usually: - Deducted immediately from your checking account Jami lost her debit card. She did not report it missing for 3 months. If an unauthorized person used her debit card, her maximum liability is: - Unlimited liability The interest earned on United States Series EE Savings Bonds is - exempt from state and local taxes. Buying a treasury bill (T-bill) is best for investors who are looking for - a secure, low risk investment. A pharmacy is to drugs as the American Stock Exchange is to: - Securities As an investment, a person decides to buy a small house that has three rental apartments. The profits from this investment may be lower then expected if the - one of the apartments is not rented. What is the largest equities market in the world? - New York Stock Exchange (NYSE) A person owns a stock that pays a $2.00 a share dividend. If the person chooses to reinvest that dividend, this means that the $2.00 will go toward buying - more of the same stock. Using a brokerage firm, a qualified investor buys 1000 shares of a common stock at $50 a share on 50% margin. This means that the - brokerage firm is lending the investor 50% of the money. An investor bought 40 shares of ABC corporation's stock at $80 a share. Two weeks later, the investor receives notice that the corporation has approved a 2-for-1 stock split. Based on this information, the investor would own at the moment of the split - 80 shares of the stock and the price of each share is $40. Before the Kiss Corporation can issue stocks or bonds, it must register the issue with: - The Securities and Exchange Commission (SEC) If a business wants to raise capital but not create debt, it can: - Issue common stock If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the... - US Treasury Department In order to track large deposits, the federal government requires that deposits of $10,000 or more be reported to the Treasury Department. Some concerns may be that a person might be trying to avoid paying taxes on game winnings or perhaps illegal gains. - State Banking Commission Which is the best example of a way to reduce fees paid for ATM transactions? - When making supermarket purchases with a debit card, a person adds $50 in cash to the transaction instead of using an ATM machine. The most liquid type of investment is: - A money market account The best suggestion you gave a friend who is writing a check for the first time is: - Date the check because it is usually proof of payment Consumer finance companies, which are often advertised on TV, are also known as: - Small loan companies The financial institution where Ms. Sanchez has her checking account will continue to pay out money for the checks she writes as long as: - There is enough money in Ms. Sanchezs account to cover the amount of the checks Frankie's savings account has earned a lot of interest. He wants to know if he must pay taxes on the interest earned. What would the IRS tell him? - Savings account interest is taxable Margaret wants to store a valuable coin collection and important papers. Generally, consumers should: - Rent a safe deposit box for their valuables Which documents should be stored in a safe-deposit box? - Mortgage loan papers. Money orders are: - A purchased certificate to pay a specified amount to a specific payee A woman has just received a very expensive piece of jewelry. The woman has homeowner's insurance. Which statement would it be most appropriate for her to make to her insurance agent? - "I think I need a personal property floater."