WISE PRACTICE TEST- EXAM WITH 100- CORRECT ANSWERS.

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mmCorrect mmAnswers

Question : To qualify for a Federal Housing Administration (FHA) loan, a
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person must generally
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A: have at least a high school diploma.
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B: have one-quarter of the cost of the home
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for a down-payment.
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C: fulfill income guidelines.
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D: provide two individuals to co-sign the loan. - correct answer-C: fulfill
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income guidelines.
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A high school student has begun to investigate the field of finance as a
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career choice. In deciding about the field, the student should focus on
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which question first?
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A: Will I find a balance between financial rewards and personal satisfaction
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from work?
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B: How many people do I know who work in this field?
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C: Once I train for this area, how long before I will be
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at the top of the field?
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D: Are there people in this field who are dissatisfied
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with their jobs? - correct answer-A: Will I find a balance between financial
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rewards and personal satisfaction from work?
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A: Will I find a balance between financial rewards and personal satisfaction
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from work?
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Reason : It is important to investigate a career with the idea of not only
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getting a sense of earning potential, types of positions available and the
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training necessary to acquire these positions but what are the chances that
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the individual will enjoy working in this field. - correct answer-D: An ATM
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transaction
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A company offers a defined-contribution pension plan which means that upon
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retirement the employee will receive
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A: one-half of the employee's last year's salary.
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B: the total amount of money contributed plus investment
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earnings.
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C: an amount of money based only on the length of time
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the employee worked for the company.
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, mmv D: a specified amount of money based totally on the profit
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mmv earned by the company while the employee worked
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mmv there. - correct answer-B: the total amount of money contributed plus
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The interest earned on United States Series EE Savings Bonds is
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A: exempt from state and local taxes.
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B: paid in a lump sum at the time the face value on the bond is
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reached.
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C: equal to the money paid to purchase it. - correct answer-A: exempt
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from state and local taxes.
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Reason : The interest rate on US savings bonds is exempt from state and
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local taxes.
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Buying a treasury bill (T-bill) is best for investors who are looking for
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A: a place to invest between $100-$500.
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B: a secure, low risk investment.
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C: a higher yield on their investment than corporate bonds offer.
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D: an investment that matures in 10-30 years. - correct answer-B: a
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secure, low, risk investment.
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Reason : These bills are backed by the full faith and credit of the US
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government, therefore considered relatively risk free.
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Using a brokerage firm, a qualified investor buys 1000 shares of a common
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stock at $50 a share on 50% margin. This means that the
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A: investor will pay only $5000 for the shares.
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B: investor is buying 2000 shares.
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C: brokerage firm is lending the investor 50% of the money.
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D: brokerage firm will own 50% of the 1000 shares of stock that were
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purchased. - correct answer-C: brokerage firm is lending the investor 50%
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of the money.
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Reason : Margin is a speculative method whereby an investor borrows up
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to 50% of the money needed from a brokerage firm in order to buy a
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wanted stock and pays a fee for the privilege.
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To determine the time value of depositing $100 in a savings account, a
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person needs to know the interest rate and
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A: her total income.
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B: the rate of inflation.
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C: whether the account is FDIC protected.
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D: whether the bank offers overdraft protection. - correct answer-B: the
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rate of inflation.
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The amount a lender charges to borrow money is called the:
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A: Principal
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B: Annual Percentage Rate (APR)
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