WISE Certification Test review questions with correct answers

Who benefits the most from inflation Answer Long-term fixed rate borrowers Reason : Inflation reduces the purchasing power of money, so every dollar you spend in the future has less value than it has now. Since the payments on long-term fixed rate loans, like 30-year mortgages remain the same for the term of the loan, future payments will take place with dollars that have less purchasing power. Inflation also raises long-term interest rates, so if you are already locked into a fixed rate loan. your interest rate looks more and more favorable. What should a person do when he believes he is being charged too high a rate of interest for a loan by a lending institution Answer Notify the lending institution about state usury laws. Charging excessive interest rates on loans is known as ?usury? and that practice is prohibited by law. The first thing the person should do is inform the institution that he is aware of the law and will not pay the exorbitant rates. A person is convinced that a lending institution is charging too much interest for a loan. This person should be aware that Answer there are state usury laws. Reason : Charging excessive interest rates on loans is known as ?usury? and that practice is prohibited by law. To determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and Answer the rate of inflation. Reason : The ?time value of money? is a way of looking at how