W!SE Financial Literacy Certification
Exam Review
Liquidity - Correct Answer - The ability to convert an asset to cash quickly
Products that are liquid - Correct Answer - Stocks and Money Market accounts
Gift Cards - Correct Answer - a card that is given as a gift with a specified amount of money. There is a
monthly inactivity fee that may begin after 12 months.
Discretionary income - Correct Answer - The amount of an individuals income that is left for spending
investing or saving after taxes and personal necessities.
Money orders - Correct Answer - a certificate that allows the stated payee to receive cash on-demand,
usually issued by government and banking institutions.
Opportunity Cost - Correct Answer - The cost of an alternative that must be forgone in order to pursue a
certain action.
Who is the most hurt and the least hurt with inflation? - Correct Answer - Winners-
Fixed-rate mortgage holders, Auto-loan holders, Investors in stocks
Losers-
The American economy, Savers, Credit card debt holders, Consumers
, Pay Yourself First - Correct Answer - PYD: automatically route your specified savings contribution from
each paycheck at the time it is received.
CD - Correct Answer - certificate deposit- it is a time deposit offered at financial institutions - penalty if
cashed before maturity
Institutions that give loans - Correct Answer - banks, credit unions, pawnshops, finance companies,
payday lenders, tax preparers.
Which institutions charge the highest interest rates on loans? - Correct Answer - pawnshops, payday
lenders, tax refund lenders, finance companies
Overdraft protection - Correct Answer - a line of credit that banks offer to their customers to cover their
overdrafts. Ovedraft protection kicks in when a customer writes a check for more than the amount in
their account
Compound interest - Correct Answer - Interest calculated on the initial principal and also on the
accumulated interest of previous periods of a deposit or loan
Liquid financial products vs. products that are less liquid: - Correct Answer - savings and checking
accounts are most liquid, certificate of deposit and money market accounts are less liquid.
Rule of 72 - Correct Answer - how long will it take to double an investments? Divide 72 by the interest
rate to be earned: 72 divided by 3% interest = 24 years.
Repayment of student loans - Correct Answer - 6 month grace period(after leaving school) before you
start making payments.
Tax anticipation loans - Correct Answer - is a short term consumer loan in the United States provided by
a third party against an expected tax refund for the duration it takes the tax authority to pay the refund.
Exam Review
Liquidity - Correct Answer - The ability to convert an asset to cash quickly
Products that are liquid - Correct Answer - Stocks and Money Market accounts
Gift Cards - Correct Answer - a card that is given as a gift with a specified amount of money. There is a
monthly inactivity fee that may begin after 12 months.
Discretionary income - Correct Answer - The amount of an individuals income that is left for spending
investing or saving after taxes and personal necessities.
Money orders - Correct Answer - a certificate that allows the stated payee to receive cash on-demand,
usually issued by government and banking institutions.
Opportunity Cost - Correct Answer - The cost of an alternative that must be forgone in order to pursue a
certain action.
Who is the most hurt and the least hurt with inflation? - Correct Answer - Winners-
Fixed-rate mortgage holders, Auto-loan holders, Investors in stocks
Losers-
The American economy, Savers, Credit card debt holders, Consumers
, Pay Yourself First - Correct Answer - PYD: automatically route your specified savings contribution from
each paycheck at the time it is received.
CD - Correct Answer - certificate deposit- it is a time deposit offered at financial institutions - penalty if
cashed before maturity
Institutions that give loans - Correct Answer - banks, credit unions, pawnshops, finance companies,
payday lenders, tax preparers.
Which institutions charge the highest interest rates on loans? - Correct Answer - pawnshops, payday
lenders, tax refund lenders, finance companies
Overdraft protection - Correct Answer - a line of credit that banks offer to their customers to cover their
overdrafts. Ovedraft protection kicks in when a customer writes a check for more than the amount in
their account
Compound interest - Correct Answer - Interest calculated on the initial principal and also on the
accumulated interest of previous periods of a deposit or loan
Liquid financial products vs. products that are less liquid: - Correct Answer - savings and checking
accounts are most liquid, certificate of deposit and money market accounts are less liquid.
Rule of 72 - Correct Answer - how long will it take to double an investments? Divide 72 by the interest
rate to be earned: 72 divided by 3% interest = 24 years.
Repayment of student loans - Correct Answer - 6 month grace period(after leaving school) before you
start making payments.
Tax anticipation loans - Correct Answer - is a short term consumer loan in the United States provided by
a third party against an expected tax refund for the duration it takes the tax authority to pay the refund.
