Wise Practice Test Study Guide

Wise Practice Test Study Guide budget variance. - Answer-the difference between the budgeted amount and the actual amount that you spend debt ratio - Answer-shows the relationship between debt and net worth. debt ratio - Answer-The lower the ratio the better off financially the person is. debt ratio - Answer-calculated by dividing liabilities by net worth excise tax - Answer-government imposes a tax on specific goods and services such as alcohol, cigarettes, gasoline, and airline capital gains - Answer-are profits made from the sale of capital assets such as stocks and bonds Capital gains - Answer-tax deferred until the asset is sold, Capital Gains Tax - Answer-If held over one year are considered long-term capital gains and are taxed at a lower tax rate or in some cases are not taxed at all. variable expenses - Answer-change from one period to another,examples Electricity and food expenditures get advice from your friends - Answer-will help you the least in managing your money? EMILLECT 2024/2025 ACADEMIC YEAR ©2024 EMILLECT. ALL RIGHTS RESERVED FIRST PUBLISH OCTOBER, 2024 Page 2/9 Financial planning - Answer-the process of developing and implementing a coordinated series of actions to achieve financial success. Financial planning - Answer-need to be reviewed and adjusted to accommodate changing needs and goals. emergency fund - Answer-Should be an important consideration when saving money liquidity - Answer-being in cash or easily convertible to cash, How easily an asset can be converted into cash Social Security - Answer-benefits depends on the person?s earnings over a lifetime of work Department store charge cards. - Answer-open-end credit Department store charge cards. - Answer-is a revolving live of credit that is offered by banks There is a limit set on the line of credit and the funds mortgage loan - Answer-closed-end credit,made at a specified interest rate for a specified time period. collateralized loan. - Answer-A loan that is secured by collateral, properties or assets that are subject to seizure on default. collateralized loan. - Answer-When a person brings an item to a pawnshop to obtain cash, the transaction is considered EMILLECT 2024/2025 ACADEMIC YEAR ©2024 EMILLECT. ALL RIGHTS RESERVED FIRST PUBLISH OCTOBER, 2024 Page 3/9 Federal Housing Administration (FHA) loan - Answer-insures lenders who make mortgage loans that are riskier than regular bank loans because uncollateralized loan - Answer-A personal loan without assets to cover the loan amount. Collateral - Answer-tangible asset that is used to secure a loan. In the case of a mortgage, the actual house or apartment serves as the collateral for that loan. bankruptcy - Answer-will appear on the person?s credit report for 10 years Notify the credit card companies in order to negotiate a new payment plan. - Answer-Notify the credit card companies in order to negotiate a new payment plan. Installment loan - Answer-a loan repaid with interest in equal periodic payments dispose of a credit card - Answer-Cut up the card, put parts in different garbage bags, and instruct the credit card company in writing or by phone to close the account Garnishment - Answer-Occurs when a creditor obtains a court order requiring an employer to attach an employee's earnings in order to pay back a debt. rate of inflation - Answer-determines the time value of depositing into a savings account, and the interest rate and Rising interest - Answer-Can lower stock prices because of lower business profits Short-term savings instruments - Answer-your money will be available to invest in a higher interest instrument in the near future. EMILLECT 2024/2025 ACADEMIC YEAR ©2024 EMILLECT. ALL RIGHTS RESERVED FIRST PUBLISH OCTOBER, 2024 Page 4/9 Short-term savings instruments - Answer-Which investment would you choose today if you believe interest rates will go up? Credit unions - Answer-Credit unions usually pay the highest rates of interest because they have lower risks and costs of operation. They are not-for-profit organizations Truth in Lending Act - Answer-The Truth in Lending Act requires that the finance charge and annual percentage rate be disclosed to the consumer in advance Finance charge - Answer-The finance charge is the amount charged by the lender for any kind of credit Finance charge - Answer-Finance charge = principal x stated interest rate x time (in years). The finance charge is used to calculate the annual percentage rate (APR) The annual percentage rate (APR) - Answer-The true cost of credit that must be disclosed on a loan agreement certificate of deposit - Answer-A long-term, fixed rate certificate of deposit - Answer-If you believe interest rates are going to fall in the near future and remain low for a considerable period of time. You should invest in: Notify the lending institution about state usury laws - Answer-when he believes he is being charged too high a rate of interest for a loan by a lending institution? usury laws - Answer-Charging excessive interest rates on loans EMILLECT 2024/2025 ACADEMIC YEAR ©2024 EMILLECT. ALL RIGHTS RESERVED FIRST PUBLISH OCTOBER, 2024 Page 5/9 Interest rate - Answer-The cost to use someone else's money for a period of time is personal property floater - Answer-additional property insurance that covers the damage or loss of a specific item of high value personal property floater - Answer-Would be appropriate for a woman receiving a very expensive piece of jewelry, but has homeowners insurance. cash value of a whole life insurance - Answer-calculated amount of money which includes the premiums paid as well as the interest on that money. purpose of Insurance - Answer-is to insure major potential losses and handle small losses from one's own resources. premiums - Answer-Low cost items given to the consumer at a discount or for free. cash value for whole life insurance - Answer-Policy that accumulates cash value is more expensive than a policy that does not accumulate cash value deductible - Answer-the amount of money that the policy holder pays when a claim is settled. deductible - Answer-250 deductible, means the person will have to pay the first $250 which will be deducted from the claim settlement paid by the insurance company. No insurance - Answer-First get insurance against Losses resulting from an illness, accident, or disability EMILLECT 2024/2025 ACADEMIC YEAR ©2024 EMILLECT. ALL RIGHTS RESERVED FIRST PUBLISH OCTOBER, 2024 Page 6/9 Liability insurance - Answer-insurance that provides protection from claims arising from injuries or damage to other people or property Automobile insurance - Answer-covers motor vehicles, including automobiles, trucks, and motorcycles, the injuries to the driver and passengers US Treasury Department. - Answer-must notify be to track large deposits, the federal government requires that deposits of $10,000 or more Credit union - Answer-Credit unions are not-for-profit savings and lending financial institutions, owned by its members direct deposits - Answer-money is generally deposited in their checking account sooner, Directly from your paycheck Certificate of deposit - Answer-has the most predictable income? Certificate of deposit - Answer-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. Deposit slips - Answer-list the cash deposit separately from the check as well as the total of the deposit A person is depositing $20 in cash and a check for $50. On the checking account deposit slip, the person should - Answer-list the cash deposit separately from the check as well as the total of the deposit. EMILLECT 2024/2025 ACADEMIC YEAR ©2024 EMILLECT. ALL RIGHTS RESERVED FIRST PUBLISH OCTOBER, 2024 Page 7/9 How to reduce fees paid for ATM transactions? - Answer-When making supermarket purchases with a debit card, a person adds $50 in cash to the transaction instead of using an ATM machine. Series EE savings bond - Answer-financial product can you buy for $25, is safe, and will be worth $50 at a future date? Savings account interest - Answer-Is taxable Money orders are: - Answer-A purchased certificate to pay a specified amount to a specific payee Credit unions - Answer-Are insured by National Credit Union Administration (NCUA),up to $100,000 Monetary policy - Answer-The Federal Reserve uses to regulate the nation's money supply? debit card - Answer-Purchases made with your debit card are usually Deducted immediately from your checking account ATM (Automated Teller Machine) - Answer-a computer terminal that you can use to make deposits, withdraw cash, transfer money betw