WISE Financial Literacy Certification Test
UPDATED ACTUAL Questions and
CORRECT Answers
Sources of Income - CORRECT ANSWER - Wages, rentals, interest, capital, profit,
investments, entrepreneurship
Exemption (allowance) and how it works - CORRECT ANSWER - Allowance is used to
reduce amount of taxed income
Liquidity - CORRECT ANSWER - The degree of ease in which the assets can be sold
Gift cards and how they work (a monthly inactivity fee may begin after 12 months) - CORRECT
ANSWER - closed loop system and open loop system
Discretionary income or budget surplus - CORRECT ANSWER - Not allocated for food
or shelter
Money orders (high rate of counterfeits) - CORRECT ANSWER - A payment order for a
pre-specified amount of money and is purchased at different types of stores--it is used like a
check. They are usually limited in maximum face value to some specific figure.
Example. The United States Postal Service limits domestic postal money orders to U.S.
$1,000.00. U.S. Postal money orders are hard to counterfeit
Why does the U.S. currency have value even though it is not tied to a commodity - CORRECT
ANSWER - There is a belief that money has value and there fore is accepted
Opportunity cost - CORRECT ANSWER - Next best alternative--it is what is given up
when a choice is made
, Who is hurt the most and the least with inflation - CORRECT ANSWER - Creditors,
people living on fixed income, and people trying to save are hurt the most. People who owe a
significant debt are benefitted
Role of the Treasury Department - CORRECT ANSWER - Collects taxes, prints money,
issues treasury bonds
Pay yourself first - CORRECT ANSWER - Automatically route money from paycheck to
savings (before paying bills)
CD: What is it and what happens if you cash it before maturity - CORRECT ANSWER - 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, and tax preparers
Which institution(s) charge the highest interest rates on loans - CORRECT ANSWER -
Pawnshops, payday lenders, tax refund lenders, and finance companies
What is a credit union and the advantage of using it - CORRECT ANSWER - Member
owned co-operative financial institution--advantage is lower interest rates on loans
Overdraft protection (opt in regulation) and how it works - CORRECT ANSWER -
Overdraft protection is a feature offered by banks to keep your checking account from over-
drafting when you write a check or swipe your debit card but don't have enough money in your
account. It is a loan that is paid back
Compound interest - CORRECT ANSWER - Interest added to principal--interest earned
on interest
UPDATED ACTUAL Questions and
CORRECT Answers
Sources of Income - CORRECT ANSWER - Wages, rentals, interest, capital, profit,
investments, entrepreneurship
Exemption (allowance) and how it works - CORRECT ANSWER - Allowance is used to
reduce amount of taxed income
Liquidity - CORRECT ANSWER - The degree of ease in which the assets can be sold
Gift cards and how they work (a monthly inactivity fee may begin after 12 months) - CORRECT
ANSWER - closed loop system and open loop system
Discretionary income or budget surplus - CORRECT ANSWER - Not allocated for food
or shelter
Money orders (high rate of counterfeits) - CORRECT ANSWER - A payment order for a
pre-specified amount of money and is purchased at different types of stores--it is used like a
check. They are usually limited in maximum face value to some specific figure.
Example. The United States Postal Service limits domestic postal money orders to U.S.
$1,000.00. U.S. Postal money orders are hard to counterfeit
Why does the U.S. currency have value even though it is not tied to a commodity - CORRECT
ANSWER - There is a belief that money has value and there fore is accepted
Opportunity cost - CORRECT ANSWER - Next best alternative--it is what is given up
when a choice is made
, Who is hurt the most and the least with inflation - CORRECT ANSWER - Creditors,
people living on fixed income, and people trying to save are hurt the most. People who owe a
significant debt are benefitted
Role of the Treasury Department - CORRECT ANSWER - Collects taxes, prints money,
issues treasury bonds
Pay yourself first - CORRECT ANSWER - Automatically route money from paycheck to
savings (before paying bills)
CD: What is it and what happens if you cash it before maturity - CORRECT ANSWER - 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, and tax preparers
Which institution(s) charge the highest interest rates on loans - CORRECT ANSWER -
Pawnshops, payday lenders, tax refund lenders, and finance companies
What is a credit union and the advantage of using it - CORRECT ANSWER - Member
owned co-operative financial institution--advantage is lower interest rates on loans
Overdraft protection (opt in regulation) and how it works - CORRECT ANSWER -
Overdraft protection is a feature offered by banks to keep your checking account from over-
drafting when you write a check or swipe your debit card but don't have enough money in your
account. It is a loan that is paid back
Compound interest - CORRECT ANSWER - Interest added to principal--interest earned
on interest
