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Financial Literacy: Prep for the W!SE Test Flashcards | StudBud
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Financial Literacy: Prep for the W!SE Test
Financial Literacy: Prep for the W!SE Test
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Financial Literacy Review from Everfi and MoneyPower #financialmgmt #wise #review
Flashcards
100 cards
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Questions
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Answers
1
A bankruptcy can appear on a person's credit report for as long as
8 years.
20 years.
10 years.
5 years.
2
It's best to start saving for retirement when you're about 15 years away from retirement
True
False
3
Committing money to an enterprise in order to earn a financial return is known as___.
Income
Plan of action
Investing
Saving
4
The ______ tells you how many years it will take an investment to double.
Rule of 72
Doublemint twin rule
Bank
5
What is a mortgage?
A measure of your credit rating
A type of rent used to pay for housing
A measure of the value of a home
A type of loan used to buy property
6
What are pensions and 401(K)s?
Ways to save for retirement
Taxes you pay
Insurance you buy
7
The person who you go to to invest in a mutual fund is a
banker.
financial actuary.
stock broker.
professional portfolio manager.
8
When you buy a ______________, YOU are lending money to an organization.
Index Fund
Bond
Stock
Mutal Fund
9
Jan pays $70 each month for her auto insurance policy.This regular payment is called a:
deductible
co-pay
premium
claim
10
Which type of life insurance never expires as long as you pay your premium?
Term
Whole
11
What are the three major credit report bureaus?
Credit Karma, Credit Fax, Car Fax
Credit Fax, Equifax, Transunion
TransUnion, Credit Karma, Experian
Equifax, TransUnion, Experian
12
Corporate bonds are exempt from federal taxes and state taxes
False
True
13
Which of the following will charge the highest interest rate?
Banks
Credit unions
Pawn shops and payday lenders
14
A few things auto comprehensive covers is
another car, deer
vandalism, hail
uninsured and underinsured driver
15
What is a cashier's check?
A check you write to the bank
A check guaranteed by the bank that then writes the check
A check you receive from your friend out of their checkbook
16
You have homeowner's insurance but want to ensure coverage on a $2000 media center. You should
have a watch dog.
increase your premium.
purchase a home security system.
add on a rider or floater.
17
What of the following investments has the highest risk?
Savings Account
Penny stock
Blue chip stock
18
Which of the following can help you keep your auto insurance premiums down?
Increase your deductible.
Decrease your deductible.
Make good grades.
Buy a red car.
19
Which asset has the highest liquidity?
a house
money in a savings account
a U.S. savings bond
money in a certificate of deposit
20
To know the time value of depositing $100 in an account, a person must know interest rate and
whether the account is FDIC protected.
her total income.
whether the bank offers overdraft protection.
the rate of inflation
21
One of the reasons cigarettes are so expensive is that
the government imposes a vice or sin tax on them.
their cost is controlled by the Food and Drug Admin (FDA).
the tobacco industry imports most of the tobacco.
the tobacco supply is controlled by the FTC.
22
The R in SMART goal stands for
revelant.
reasonable.
reliable
reachable.
23
When you purchase a municipal bond, you are:
investing in an index fund
diversifying your portfolio
loaning money to a city
24
What does FICO stand for?
Fair Issac Corporation
Fair Isle Corporation
Financial Institution Consortium
Federal Income Collateral
25
Which endorsement does this illustrate?
special endorsement
blank endorsement
optional endorsement
restrictive endorsement
26
What is deflation?
when the general level of prices goes up
When there is a reduction in the supply of money or credit
The rate at which the general level of prices goes down
27
What protects the person's car you hit when you are in a car accident?
rider
liability
comprehensive
collision
28
T/F: One can write a check (as many as 3) against their money market account.
True
False
29
If the person chooses to reinvest an earned dividend, this means it will go towards buying
bonds in the corporation.
preferred stock in the corporation.
stocks that are similar to those already owned.
more of the same stock.
30
Which document puts you at the least risk of identity theft?
Pre-approved credit card offers
Old tax records
Cash receipts
paycheck stubs
31
T/F: With a perfect budget, total income = total expenses.
False
True
32
The federal law that requires the cost of credit be disclosed to consumers is
Fair Debt Collection Practices Act
Equal Credit Opportunity Act
Truth in Lending Act
Fair Credit Reporting Act
33
Bankruptcy also known as Liquidation Bankruptcy.
Chapter 13
Chapter 7
Chapter 11
Chapter 5
34
A pharmacy is to drugs as the American Stock Exchange is to:
Mutual funds
Securities
Interest
Stock advisors
35
The main trade-off that all investors must consider is:
diversity vs uniformity
risk vs return
stocks vs bonds
income vs cost
36
When depositing more than $10,000 into the bank _______________ must be notified.
the FDIC
Internal Revenue Service
the Secret Service
the Federal Reserve
37
Which of the following covers damage to YOUR car when you cause an accident?
Collateral
Collision
Liability
Comprehensie
38
If you budget $200/month for clothes but you spend less, you have a
a budget deficit.
an outflow deficit.
an income overage.
a budget variance.
39
The profit made from stocks is known as
shares.
capital gains.
profit.
dividends.
40
A creditor may deny credit because of
Age
Bad credit history
Political affiliaion
Marital status
41
Which of the following is generally true about a 401(k) retirement plan?
it offers some tax benefits
it is a plan offered through employers
it restricts when you can withdraw your money
all are correct
42
Which earns you more money over time?
Compound interest
Multiple
Simple interest
43
The form you complete to determine how much tax to withhold from your paycheck is the_______.
1099
W-2
1040 EZ
W-4
44
Diversification is __________.
buying many different types of investments to have less risk
having compound interest.
buying one type of stock
45
Purchases made with your debit card are usually:
Put on your credit card bill as a cash advance
Deducted from your credit card balance
Deducted immediately from your checking account
Added to your credit card balance
46
The largest secondary market for stocks/securities in the U.S, is the_________.
NASDAQ
AMEX
New York Stock Exchange
Dow Jones
47
Which represents the most secure PIN creation?
using your birthdate
use the name of a friend, family member, or pet
made up of your first initial and last namae
use a random selection of letters and numbers
48
A_________is generally considered an appreciating asset bcuz it will_________in value over time
house; decrease
house; increase
car; increase
car; decrease
49
Which type of insurance requires you to have an in-network physician?
PPO
HMO
50
Which of the following institutions give loans?
payday lender
credit union
pawn shop
all are correct
51
When a person brings an item to a pawnshop to obtain cash, the transaction is considered
a sales agreement.
an collaterized loan.
an unsecured loan.
a custodial payment.
52
Which is an example of an installment loan?
monthly mortgage payment
monthly credit card payment
monthly utility payments
monthly car payment
53
What is the safest way to dispose of old bank account statements?
Keep them bundled together in a folder
Throw them out in trash
Put them in the trash unopened
Shred them in a paper shredder
54
Which of the following insures the money people deposit at the bank?
FICO
FDIC
SEC
FICA
55
What is the major responsibility of the Federal Reserve?
to be the central bank of the U.S.
to print currency
to manage monetary policy
to oversee the Internal Revenue Service
56
When you buy insurance, you and the insurance company are_______________.
entering into a contract
breaking the law
sharing the risk
57
Which of the following has the most influence on your credit score?
Your amount of total debt
Your number of credit accounts
Your credit to debt ratio
Your payment history
58
Insurance can help you:
protect against unexpected accidents
reduce the chances of getting into accident
minimize monthly expenses
cover all out of pocket costs
59
The lower the credit to debt ratio the
less liquid assets the person has.
better off financially the person is.
more liquid assets the person has.
worse off financially the person is.
60
Buying a treasury bill (T-bill) is best for investors who are looking for
a higher yield on investment than corporate bonds offer.
a place to invest between $100-$500.
a secure, low risk investment.
an investment that matures in 10-30 years.
61
Which of the following are offered through a bank?
Certificates of Deposit
Money Markets
Mutual Funds
Stock
62
The M in SMART goal stands for
measurable.
marketable.
moderate.
meaningful.
63
What is not included in a homeowner's insurance policy?
wind damage
flood damage
broken glass
hail damage
64
Which investment offers the lowest risk?
Savings Account
Bonds
Stocks
65
You own 30 shares of X, bought it at $30, and it is now $60. It splits. What do you have now?
60 shares valued at $30
15 shares valued at $60
60 shares valued at $15
66
Raising your insurance deductible (out of pocket cost) will result in
lower interest rates.
higher group risks.
lower premiums.
higher premiums.
67
When you purchase an item in a store, you may be charged__________.
capital gains tax
sales tax
income tax
property tax
68
Compound interest allows the principal to grow at a(n) ____ rate than simple interest.
exchange
slower
faster
69
The value of today's money is based on
Federal Reserce policy.
gold bullion
good faith
70
Which of the following is considered to be open-end credit?
a car loan
installment loan
a mortgage
a bank or store credit card
71
T/F: A tax exemption is the same as an allowance.
False
True
72
Which is the correct order of investments from
Lowest
risk to
Highest
risk?
Diversified mutual fund−Treasury bond−Stock
Stock−Treasury bond−Diversified mutual fund
Treasury bond−Diversified mutual fund–Stock
Treasury bond−Stock−Diversified mutual fund
73
It's important to reconcile your checking account with your bank statement,
True
False
74
What is a credit union?
Where people with bad credit acquire loans
Non-profit institution that is owned by its members
It's the same as a bank
75
Which is less expensive, term or whole life insurance?
Term
Whole
76
Which statement is
false
about most ATM's?
You can obtain info about your acct balance.
You must have an account with a financial institution.
You can get cash 24 hours a day, seven days a week.
You can always get cash anywhere in the world with no fee.
77
Discretionary income is:
A capital gain
Wages plus investment income
The difference betw total income and basic living expenses
Income that has been spent
78
The tax form you fill out when first employed and claiming your exemptions.
W2
W4
F4
1040EZ
79
Capital gains are exempt from federal state taxes
True
False
80
What is a recession?
A period of economic prosperity
A period when the economy goes up
A period when the economy goes down
81
How much should you pay for coverage monthly? Premium $300 month; deductible $500
$800
$300
$500
$200
82
Insurance can help you:
minimize monthly expenses
reduce the chances of getting into an accident
cover all out of pocket costs
protect against unexpected accidents
83
Which is better, a bull market or a bear market?
Bear
Bull
84
What is a company's primary reason to issue shares of stock to the public?
increase investor awareness of the company
distribute the risk of bankruptcy to the investors
to raise money to grow the company
to help investors earna high rate of return
85
Which of the following is a timed deposit investment?
Precious metals
Stock
Savings account
Certificate of Deposit
86
When buying stock in a company, you are:
loaning money to a company
buying a portion of the company
investing in an index fund
diversifying your portfolio
87
Which of the following represents the three main C's of credit?
Capacity, character, conditions
Character, capacity, collateral
Character, conditions, capacity
Capacity, character, capital
88
An advantage of holding on to an investment for more than one year is that
fees will not be charged by brokers for selling the investmt
capital gains on the investmt will have a lower tax rate.
it is out of the way of temptation..
money earned on the investment will be considered tax-free
89
Carmen sold her stock for a higher price per share than she bought it for. She realized a
dividend.
capital loss.
capital surplus.
capital gain.
90
Before the Kiss Corporation can issue stocks or bonds, it must register the issue with:
The Federal Reserve
Its Board of Directors
The Securities and Exchange Commission (SEC)
The World Bank
91
The return investment (ROI) from education is typically the highest for:
Someone with a 4-year degree
A high school graduate
Someone with a 2 year degreee
A college applicant
92
What is liquidity in business?
ice that has melted
how quickly you can convert an asset to cash
money invested in a house
93
A business owned by a group of stockholders
Partnership
Sole proprietor
Wall Street
Corporation
94
In terms of their finances, when a couple has a baby, they will
receive an additional tax exemption because of the baby.
automatically start paying S. S. payments for the baby.
need to obtain a W-2 form for the baby.
have to file a separate income tax form for the baby.
95
Where can you find information about Financial Aid?
Town hall
College Financial Aid Officer
Counselor
Online
96
Which of the following are NOT deductions on a typical paystub:
State Income Tax
Social security tax
Sales tax
Medicare tax
97
Which choice is better for the insured - actual cost value or replacement value?
Replacement value
Actual cost value
98
Which of the following is NOT a basic peril on an insurance policy?
Falling Aircraft
Bungee Jumping
Hurricane
Wind
99
Which factor would most likely tncrease the interest rate on a person's credit card?
number of purchases
total amount charged
late payments
number of cash advances
100
An investment portfolio should always be diverse.
False
True
