WISE Financial Literacy Certification Term
Review UPDATED Questions and
CORRECT Answers
sources of income - CORRECT ANSWER - wages
gifts
government benefits
capital gains
tax exemption - CORRECT ANSWER - a deduction allowed by law to reduce the amount
of income that would otherwise be taxed
liquidity - CORRECT ANSWER - the ease in which an asset can be bought or sold
ex. cash, stocks/bonds, checks, gold/precious metals, checking and savings acounts
discretionary income/budget surplus - CORRECT ANSWER - the amount of income left
for spending after taxes
money orders - CORRECT ANSWER - exchangeable for cash
works like a check
bought if you don't have a bank account
opportunity cost - CORRECT ANSWER - the value of the best alternative given up
US treasury department - CORRECT ANSWER - manages government revenue
they issue bonds, notes, and bills
, pay yourself first - CORRECT ANSWER - put money into savings and retirement
accounts to avoid spending it
certificate of deposit (CD) - CORRECT ANSWER - 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 - CORRECT ANSWER - banks, credit unions (low interest)
pawnshops, finance companies, payday lenders, tax preparers (high interest)
credit union - CORRECT ANSWER - a non profit-making money cooperative whose
members can benefit from lower interest rates on loan and higher interest rates on investments
overdraft protection - CORRECT ANSWER - 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 - CORRECT ANSWER - interest on the initial deposit + accrued
interest
time value of money - CORRECT ANSWER - money is less valuable over time unless
invested (inflation)
it's better to have money now rather than later
rule of 72 - CORRECT ANSWER - 72 / interest rate (in %) = doubling time
Endorsement - CORRECT ANSWER - Signing the back of a check
Review UPDATED Questions and
CORRECT Answers
sources of income - CORRECT ANSWER - wages
gifts
government benefits
capital gains
tax exemption - CORRECT ANSWER - a deduction allowed by law to reduce the amount
of income that would otherwise be taxed
liquidity - CORRECT ANSWER - the ease in which an asset can be bought or sold
ex. cash, stocks/bonds, checks, gold/precious metals, checking and savings acounts
discretionary income/budget surplus - CORRECT ANSWER - the amount of income left
for spending after taxes
money orders - CORRECT ANSWER - exchangeable for cash
works like a check
bought if you don't have a bank account
opportunity cost - CORRECT ANSWER - the value of the best alternative given up
US treasury department - CORRECT ANSWER - manages government revenue
they issue bonds, notes, and bills
, pay yourself first - CORRECT ANSWER - put money into savings and retirement
accounts to avoid spending it
certificate of deposit (CD) - CORRECT ANSWER - 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 - CORRECT ANSWER - banks, credit unions (low interest)
pawnshops, finance companies, payday lenders, tax preparers (high interest)
credit union - CORRECT ANSWER - a non profit-making money cooperative whose
members can benefit from lower interest rates on loan and higher interest rates on investments
overdraft protection - CORRECT ANSWER - 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 - CORRECT ANSWER - interest on the initial deposit + accrued
interest
time value of money - CORRECT ANSWER - money is less valuable over time unless
invested (inflation)
it's better to have money now rather than later
rule of 72 - CORRECT ANSWER - 72 / interest rate (in %) = doubling time
Endorsement - CORRECT ANSWER - Signing the back of a check
