Personal Finance WISE Test questions and answers already passed

Personal Finance WISE Test questions and answers already passed If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the: US Treasury Department The term used to describe the ease and speed with which you can convert savings or an investment to cash is: Liquidity Which financial product typically pays the highest rate of interest? Certificate of Deposit What action should a person take who must make a tuition payment at the end of August each year? Decide how much money will be needed and then place 1/12 of that amount in a separate account each month A person is depositing $20 in cash and a check for $50. On the checking account deposit slip, the person should list the cash deposit separately from the check as well as the total of the deposit Which of the following is considered to be open-end credit? Department store charge cards To qualify for a Federal Housing Administration (FHA) loan, a person must generally fulfill income guidelines A person has three credit cards with very large outstanding balances and is unable to make payments on any of them. Which action should they take? Notify the credit card companies in order to negotiate a new payment plan When a person declares bankruptcy that fact will appear on the person's credit report for a 10 year period What is meant by an uncollateralized loan? A personal loan without assets to cover the loan amount When a person brings an item to a pawnshop to obtain cash, the transaction is considered a collateralized loan Claire got a new credit card from American Bank and wants to cancel her USA credit card. The best method is to dispose of her USA credit card is to: 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 A credit card finance charge is: The dollar amount it costs to use credit Which of the following does the Federal Reserve use to regulate the nation's money supply? Monetary policy 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 Which of the following statements is usually true about individuals who are financially literate? They understand the basics of personal finance and money management Which of the following provides an increase in assets or wealth Having capital gains When money is not used and goods and services are exchanged for other goods and services, this system is called: Barter One of the benefits of holding an investment for over a year rather than selling it in less than a year is that the Capital gains on the investment will be taxed at a lower rate A man budgeted $200 month for clothing. This month the man spent $150 on clothing therefore that budget item is considered to have: A budget variance A person's debt ratio show the relationship between debt and net worth. The lower the ratio: The better off financially the person is: A person complains about how expensive it is to be a cigarette smoker. One of the reasons cigarettes are so expensive is that. The government imposes an excise tax on them A term that best describes your net pay after taxes are deducted is : Take home pay Jane saw a breakfast cereal being advertised on TV and insisted that her mother purchase this cereal. This is an example of advertising's: Power of persuasion in creating demand An example of a fixed expense is Apartment rent Electricity and food expenditures are: variable expenses that change from one period to another discretionary income is: The difference between your total income and your essential living expenses. Expenditures that remain constant from one time period to another are: Fixed expenses A company offers a defined contribution pension plan which means that upon retirement the employee will receive: The total amount of money contributed plus investment earnings After five years of owning a Roth Individual Retirement Account (IRA), a person wants to buy his first home, the person can withdraw money from the Roth IRA: Tax and penalty free 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 The brokerage firm is lending the investor 50% of the money As an investment, a person decides to buy a small house that has three rental apartments. The profits from this investment may be lower than expected if: 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 The interest earned on United States Series EE Savings Bonds is: Exempt from state and local taxes 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 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 A pharmacy is to drugs as the American Stock Exchange is to: Securities Buying a treasury bill (T-bill) is best for investors who are looking for A secure, low risk investment The price of a security may be affected by: current events To determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and: The rate of inflation Which of the following is the federal law that requires the cost of credit be disclosed to consumers in bold print on loan agreement? Truth in Lending Act Who benefits the most from inflation? Long-term fixed rate borrowers Why might rising interest rates depress stock prices: Rising interest rates can result in lower business profits The information that a lender must disclose to consumers applying for a cash loan is: The annual percentage rate (APR) and/or the finance charge A person buys a flat screen, plasma, theater like television. The person has homeowner's insurance. Why would it be appropriate to add a personal property floater to that insurance? To cover the cost of replacement should the television get damaged or stolen A women has just received a very expensive piece of jewelry. The woman has homeowner's insurance. Which statement would it be most appropriate: "I think I need a personal property floater" For the past five years, a person has had a $20,000 whole life insurance policy that has a cash value clause. The person decides to surrender the policy. At the time of surrender, the person will receive A calculated amount of money which includes the premiums paid as well as the interest on that money Debbie owns a clothing store. She is concerned that a customer who is injured in the store will sue. Which type of insurance should Debbie purchase? Liability insurance Lucy has no insurance. The situation(s) should she consider insuring against first are: Losses resulting from an illness, accident, or disability When a person declares bankruptcy that fact will appear on the person's credit report for years 10 years Most of the adverse information on a credit report appears for years 7 years A high school student has begun to investigate the field of finance as a career choice. In deciding about the field, what question does the student focus on first? Will I find a balance between financial rewards and personal satisfaction? To make sure you will always remember your automated teller machine (ATM) card personal identification number (PIN) you write the PIN and keep it In a secure place at home Which types of financial institution pays the highest rate of interest on savings account balances? Credit Unions A person is convinced that a lending institution is charging too much interest for a loan. This person should be aware that There are state usury laws A person believes that interest rates are going to fall in the near future and remain low for a considerable period of time. This person should invest in A long-term, fixed rate certificate of deposit Generally, the higher the deductible on an insurance policy, the Lower the premium A man's job provided the main income for his family. He died unexpectedly and had no life insurance. The probable financial consequence for his wife and two children DOES NOT include: An increase in income and expenses Financial services and products generally offered by banks and credit unions include: Savings and loans Employees prefer direct deposits because: The money is generally deposited in their checking account sooner than it would be if they had to deposit it in person