Wise Financial Literacy Practice Test questions and answers

If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the A: 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. Banks use savings account deposits to: C: Give loans to consumers and businesses. The basic functions of banks and credit unions are to be an intermediary between savers and borrowers. Which financial product may pay a dividend? D: Common stock. All of these types of accounts and financial products except for common stock earn interest. Margaret wants to store a valuable coin collection and important papers. Generally, consumers should: B: Rent a safe deposit box for their valuables. Bank customers can rent safe deposit boxes from the bank. What action should a person take who must make a tuition payment at the end of August each year? A: Decide how much money will be needed and then place 1/12th of that amount in a separate account each month. The best way to save in order to make a yearly purchase, in this case a tuition payment, A bank Certificate of Deposit is a B: Savings instrument that requires a deposit for a period of time during which there is a penalty for withdrawals. A certificate of deposit (CD) is a savings instrument that requires a deposit for a period of time (term) during which the saver cannot withdraw money from the plan without a penalty. The phrase used for putting money into a savings account is C: Making a deposit. Putting money into an account is "making a deposit" and taking money out is "making a withdrawal." Which financial product has the most predictable income? C: Certificate of deposit. Most certificates of deposit (CDs) are issued with an interest rate that is fixed at a specified rate for the entire term of the deposit. Which financial product typically pays the highest rate of interest? C: Certificate of deposit. All of these types of accounts and financial products earn interest except for common stock. Financial services and products generally offered by banks and credit unions include: B: Savings and loans. The basic financial functions offered by banks and credit unions are checking accounts, savings accounts, and personal and business loans. The National Credit Union Administration (NCUA) insures accounts in: A: Credit unions. The National Credit Union Association (NCUA) insures each depositor's accounts up to $100,000 in one credit union. Money orders are C: A purchased certificate to pay a specified amount to a specific payee . A money order is a purchased certificate used to pay a specified amount to a specific payee. Which financial product can you buy for $25, is safe, and will be worth $50 at a future date? A: Series EE savings bond. Series EE savings bonds, which are issued and backed by the U.S. Treasury, are purchased for one-half of their face value. Which is the best example of a way to reduce fees paid for ATM transactions? A: When making supermarket purchases with a debit card, a person adds $50 in cash to the transaction instead of using an ATM machine. Most supermarkets have a policy permitting patrons to add a cash withdrawal to a purchase made with a debit card or check without charging a fee. Which documents should be stored in a safe-deposit box? D: Mortgage loan papers. The purpose of having a safe deposit box is to have a fireproof, secure place to store valuables and irreplaceable items including legal documents such as a birth certificate and precious jewelry. "The Fed" is short for: A: The Federal Reserve System. The Federal Reserve, or "the Fed," provides banking services to depository institutions, serves as the U.S. Government's fiscal agent, supervises and regulates most large banks, and formulates and implements monetary policy. A blank endorsement on a check C: Creates a check that can be cashed by anyone. A blank endorsement is your signature only and is like cash. Financial services and products generally offered by banks and credit unions include B: Savings and loans. The basic financial functions offered by banks and credit unions are checking accounts, savings accounts, and personal and business loans. You have a checking account balance of $100 and you deposit a personal $200 check from your brother in your checking account. When will you be able to withdraw $150 in cash? B: 3 to 7 days later, depending on your bank's check clearance policy. Checks deposited into checking accounts need to be on deposit for several days before the money can be withdrawn as cash because the check needs to clear.