wise financial literacy certification

Question 1

the amount a lender charges to borrow money is called the?

Answer 1

finance charge

Question 2

the cost to use someone else’s money for a period of time is called?

Answer 2

interest rate expressed as a percentage

Question 3

interest earned on interest is known as?

Answer 3

compounded interest

Question 4

money received today is worth more than the same amount of money received sometime in the future is?

Answer 4

the time value of money

Question 5

the annual percentage rate (APR) is?

Answer 5

the true cost of credit that must be disclosed on a loan agreement

Question 6

a 60 year old makes a withdrawal from his roth individual retirement account (IRA). The money withdrawn will be

Answer 6

tax free

Question 7

Mr. Akon’s wife died. That money he received as the beneficiary on her life insurance is called?

Answer 7

death benefit or face value

Question 8

this statement best describes the relationship between a person’s educational level and that person’s potential earning power.

Answer 8

a person with a professional degree is likely to earn at least four times as much per year as a person who did not complete high school

Question 9

to determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and

Answer 9

the rate of inflation

Question 10

is the federal law that requires the cost of credit to be disclosed to consumers in bold print on loan agreement

Answer 10

truth in lending act

Question 11

when securities are traded in the secondary market, who makes or looses money?

Answer 11

investors

Question 12

patty is selling her car through a newspaper advertisement. When she finds a buyer, she wants a form of payment which is guaranteed to be good. Which form of payment should she avoid?

Answer 12

a check

Question 13

before the kiss corporation can issue stocks or bonds, it must register the issue with

Answer 13

the securities and exchange commission (SEC)

Question 14

a person is convinced that a lending institution is charging too much interest for a loan. this person should be aware that

Answer 14

there are state usury laws

Question 15

when money is not used and goods and services are exchanged for other goods and services, this system is called

Answer 15

barter

Question 16

a company offers a defined-contribution pension plan which means that upon retirement the employee will receive

Answer 16

the total amount of money contributed plus investment earnings

Question 17

an investor bought 40 shares of ABC corporation’s stock at $80 a share. Two weeks later, the investor receives notice that the corporation has approved a 2 for 1 stock split. Based on information, the investor would own at the moment of the split

Answer 17

80 shares of the stock and the price of each share is $40

Question 18

if a person makes a deposit of $10,00 or more into a bank account, the bank must notify the

Answer 18

U.S. treasury department

Question 19

a consumer is having a dispute regarding a unfulfilled building contract. It is decided that the case will go to mediation, which means that

Answer 19

a neutral third party will hear both sides, then try to resolve the conflict

Question 20

when an investor buys zero coupon bond, the investor

Answer 20

purchases the bond at a discount from the face value of the bond

Question 21

which documents should be stored in a safe deposit box?

Answer 21

mortgage loan papers

Question 22

a student’s grandmother has decided to buy a long term health care insurance policy. The student’s grandmother’s decision is most likely related to the fact that this type of coverage

Answer 22

is not offered by medicare

Question 23

the amount a lender charges to borrow money is called the

Answer 23

finance chagre

Question 24

a type of electronic funds transfer (EFT) is

Answer 24

an ATM transaction

Question 25

in which situation us a corporation most likely to call (buy back) a bond?

Answer 25

it issued bonds at a 7.5% interest rate, but its current corporate bonds are now being issued at a 5% rate

Question 26

a person has three credit cards with very large outstanding balances and is unable to make payments on any of them. What action should the person take?

Answer 26

notify the credit card companies in order to negotiate a new payment plan

Question 27

debbie owns a clothing store. She is concerned that a customer who is injured in the store will sue. Which type of insurance should debbie purchase

Answer 27

liability insurance

Question 28

troy has $50 a month transfered electronically from his checking account to his savings account. This is ab example of

Answer 28

a savings plan

Question 29

a person owns a stock that pays a $2. a share dividend. If the person chooses the reinvest that dividend, this means that the $2.00 will go toward buying

Answer 29

more of the same stock

Question 30

a person is depositing $20 in cash and a check for $50. On the checking account deposit slip, the person should

Answer 30

list the cash deposit separately from the check as well as the total of the deposit

Question 31

why might rising interest rates depress stock prices?

Answer 31

rising interest rates can result in lowers business profits

Question 32

margaret wants to store a valuable coin collection and important papers. Generally, consumers should

Answer 32

rent a safe deposit box for their valuables

Question 33

a pharmacy is to drugs as the American stock exchange is to

Answer 33

securities

Question 34

a cash card generally

Answer 34

is purchased with a specific amount of money that can be used to pay goods or services

Question 35

using a brokerage firm, a qualified investor buys 1000 shares of a common stock at $50% a share of %50 margin. This means that the

Answer 35

brokerage firm is lending the investor %50 of the money

Question 36

a high school student begun to investigate the field of finance as a career choice. In deciding about the field, the student should focus on what first?

Answer 36

will I find a balance between financial rewards and personal satisfaction from work?

Question 37

pat has a savings account and a a car loan from a not for profit financial institution owned by its members. She is probably a member of what type of financial institution?

Answer 37

credit union

Question 38

consumer finance companies, which are often advertised on TV, are also known as

Answer 38

small loan companies

Question 39

an example of closed end credit is a

Answer 39

mortgage

Question 40

which of the following statements is usually true about individuals who are financially literate?

Answer 40

they understand the basics of personal finance and money management

Question 41

for the past five years, a person has had a $20,000 whole life insurance policy that has a cash value clause. The person decides to surrender the policy. at the time of surrender, the person will receive

Answer 41

a calculated amount of money which includes the premiums paid as well as the interest on that money

Question 42

who benefits the most from inflation

Answer 42

long term fixed rate borrowers

Question 43

interest earned on interest is known as

Answer 43

compounded interest

Question 44

to qualify for a federal housing administration (FHA) loan, a person must generally

Answer 44

fulfill income guidelines

Question 45

a high school student has begun to investigate the field of finance as a career choice. in deciding about the field, the student should focus on which question first

Answer 45

will I find a balance between a financial rewards and personal satisfaction from work?

Question 46

the interest earned on united states series EE savings bonds is

Answer 46

exempt from the state and local taxes

Question 47

buying a treasury bill (T-bill) is best for investors who are looking for

Answer 47

a secure, low risk investment

Question 48

a person buys a flat screen, plasma, theater like TV. the person has homeowner’s insurance. why would it be appropriate to add a personal property floater to that insurance?

Answer 48

to cover the cost of replacement should the TV get damaged or stolen

Question 49

which statement does NOT accurately describe a characteristic of cash value for whole life insurance?

Answer 49

a policy that accumulates cash value is less expensive than a policy that does not accumulate cash value

Question 50

in terms of taxes, when stock dividends are reinvested, the owners of the stock

Answer 50

still has to pay income taxes on the dividends

Question 51

employees prefer direct deposits because

Answer 51

the money is generally deposited in their checking account sooner or than it would be if they had to deposit it in person

Question 52

the financial institution where Mrs. Sanchez has her checking account will continue to pay out money for the checks she writes as long as

Answer 52

there is enough money in Ms. Sanchez’s account to cover the amount of the checks

Question 53

the interest earned on united states series EE savings bonds is

Answer 53

exempt from state and local taxes

Question 54

before a person borrows money from a bank to make a major purchase, which question is considered most important for the person to answer?

Answer 54

do the benefits of making the purchase outweigh the costs of borrowing the money?

Question 55

financial plans need to

Answer 55

be changed during different stages of life

Question 56

when a person declares bankruptcy it will appear on your credit card report

Answer 56

for a 10 year period

Question 57

new coins and currency makes their way into the general economy, consumers and businesses, through the distribution system of the

Answer 57

federal reserve system

Question 58

a woman just received a very expensive piece of jewelry. the woman has homeowner’s insurance. which statement would it be most appropriate for her to make to her insurance agent?

Answer 58

I think I need a personal property floater

Question 59

one of the benefits of holding an investment for over a year rather than selling it in less than a year is that the

Answer 59

profits on the investment can be averaged over the length of time the investment id held

Question 60

a person’s debt ratio shows the relationship between debt and net worth. the lower the ratio

Answer 60

the better their financial health; meaning they have a smaller proportion of their net worth tied up in debt

Question 61

which of the following careers would be possible choices for someone interested in money a finace?

Answer 61

insurance actuary

Question 62

a neon oil corporation tanker spilled oil in the ocean around Australia. as result of this accident, the share price of the is likely to

Answer 62

decrease

Question 63

after five years of owning a roth individual retirement account (IRA), a person wants to buy his first home, the person can withdraw money from the roth IRA

Answer 63

but must pay a set penalty at the time of withdraw