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