WISE Financial Literacy Certification Term
Review
sources of income - ANS-wages
gifts
government benefits
capital gains
exemption - ANS-a deduction allowed by law to reduce the amount of income that
would otherwise be taxed
liquidity - ANS-the ease in which an asset can be bought or sold
ex. cash, stocks/bonds, checks, gold/precious metals, checking and savings acounts
gift cards - ANS-a card with a specified amount of credit on it redeemable at a specific
store
discretionary income/budget surplus - ANS-the amount of income left for spending after
taxes
money orders - ANS-exchangeable for cash
works like a check
bought if you don't have a bank account
why US currency has value - ANS-the government has declared that money is
acceptable for paying debts
opportunity cost - ANS-the value of the best alternative given up
who is and is not hurt by inflation - ANS-companies and borrowers (not hurt)
workers, recipients of fixed incomes, and savers (hurt)
US treasury department - ANS-manages government revenue
they issue bonds, notes, and bills
pay yourself first - ANS-put money into savings and retirement accounts to avoid
spending it
, certificate of deposit (CD) - ANS-a certificate issued by a bank to a person depositing
money for a specified length of time (at a set interest rate)
avoids holders from withdrawing funds on demand (before it matures)
maturity- when the term ends
if redeemed before matured, you may have to pay a fine or forfeit a portion of the
interest you earned on it
institutions that give loans - ANS-banks, credit unions (low interest)
pawnshops, finance companies, payday lenders, tax preparers (high interest)
credit union - ANS-a non profit-making money cooperative whose members can benefit
from lower interest rates on loan and higher interest rates on investments
overdraft protection - ANS-when you write a check for more than is in your account, the
bank covers it but you have to pay them back for the amount that they covered
compound interest - ANS-interest on the initial deposit + accrued interest
time value of money - ANS-money is less valuable over time unless invested (inflation)
it's better to have money now rather than later
rule of 72 - ANS-72 / interest rate (in %) = doubling time
Endorsement - ANS-Signing the back of a check
reconcile - ANS-Comparing your bank statement to you check register for differences
tax anticipation loans - ANS-loans to be payed back by an anticipated tax return
credit card cash advances - ANS-cash from an ATM charged to a credit card
high interest rates
truth in lending act - ANS-federal law designed to assure that every customer who
needs consumer credit is given meaningful information concerning the cost of such
credit
consequence of paying minimum payment of paying a credit card bill - ANS-credit score
falls
interest rate increases - never seems to be able to pay off card
Review
sources of income - ANS-wages
gifts
government benefits
capital gains
exemption - ANS-a deduction allowed by law to reduce the amount of income that
would otherwise be taxed
liquidity - ANS-the ease in which an asset can be bought or sold
ex. cash, stocks/bonds, checks, gold/precious metals, checking and savings acounts
gift cards - ANS-a card with a specified amount of credit on it redeemable at a specific
store
discretionary income/budget surplus - ANS-the amount of income left for spending after
taxes
money orders - ANS-exchangeable for cash
works like a check
bought if you don't have a bank account
why US currency has value - ANS-the government has declared that money is
acceptable for paying debts
opportunity cost - ANS-the value of the best alternative given up
who is and is not hurt by inflation - ANS-companies and borrowers (not hurt)
workers, recipients of fixed incomes, and savers (hurt)
US treasury department - ANS-manages government revenue
they issue bonds, notes, and bills
pay yourself first - ANS-put money into savings and retirement accounts to avoid
spending it
, certificate of deposit (CD) - ANS-a certificate issued by a bank to a person depositing
money for a specified length of time (at a set interest rate)
avoids holders from withdrawing funds on demand (before it matures)
maturity- when the term ends
if redeemed before matured, you may have to pay a fine or forfeit a portion of the
interest you earned on it
institutions that give loans - ANS-banks, credit unions (low interest)
pawnshops, finance companies, payday lenders, tax preparers (high interest)
credit union - ANS-a non profit-making money cooperative whose members can benefit
from lower interest rates on loan and higher interest rates on investments
overdraft protection - ANS-when you write a check for more than is in your account, the
bank covers it but you have to pay them back for the amount that they covered
compound interest - ANS-interest on the initial deposit + accrued interest
time value of money - ANS-money is less valuable over time unless invested (inflation)
it's better to have money now rather than later
rule of 72 - ANS-72 / interest rate (in %) = doubling time
Endorsement - ANS-Signing the back of a check
reconcile - ANS-Comparing your bank statement to you check register for differences
tax anticipation loans - ANS-loans to be payed back by an anticipated tax return
credit card cash advances - ANS-cash from an ATM charged to a credit card
high interest rates
truth in lending act - ANS-federal law designed to assure that every customer who
needs consumer credit is given meaningful information concerning the cost of such
credit
consequence of paying minimum payment of paying a credit card bill - ANS-credit score
falls
interest rate increases - never seems to be able to pay off card
