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Wise Financial Literacy Practice Test Flashcards | StudBud
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Wise Financial Literacy Practice Test
Wise Financial Literacy Practice Test
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1
Which of the following provides an increase in assets or wealth?
Volunteering at a hospital
Having capital gains
Running in a marathon
Taking out a loan
2
The Truth in Lending Act of 1968 requires creditors to:
Have a clean record of services to credit card holders
Limit the amount of money charged for credit
Adhere to federal fixed interest rates and state the monthly finance charge
State the monthly finance charge and the APR on the monthly statement
3
A pharmacy is to drugs as the American Stock Exchange is to:
Securities (stocks)
Stock advisors
Mutual funds
Interest
4
Money in the United States includes
diamonds
barter
Checking account balances on which checks can be drawn
Gold
5
True or False: In most cases, money you contributed to an IRA can be withdrawn tax and penalty free
True
False
6
Troy has $50 a month transferred electronically from his checking to his savings account- this is an example of
savings plan
an ATM Transaction
Installment payment
a debit card transaction
7
If a person receives a salary raise of 3% and the rate of inflation is 5%, which statement is true?
The rate of inflation did not keep up with salary increases
The raise isn't enough for the person to buy as much as the previous year
The rate of inflation is lower than it was the previous year
The person who received the salary increase won't be affected by inflation
8
What is the largest equities (stock) market in the world?
New York Stock Exchange (NYSE)
American Stock Exchange (AMEX)
NASDAQ market
Over the counter market
9
To determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and
whether the bank offers overdraft protection
whether the account is FDIC protected
the rate of inflation
total income
10
Which product is considered to be an investment?
A corporate bond
A certificate of deposit
A new car
An initial public offering of stock
11
A person complains about how expensive it is to be a cigarette smoker. One of the reasons cigarettes are so expensive is
the tobacco supply is controlled by the Federal Trade Commission (FTC)
their cost is controlled by the Food and Drug Administration (FDA)
the government imposes an excise tax on them
the tobacco industry imports most of the tobacco
12
Which of the following does the Federal Reserve use to regulate the nation's
MON
ey supply?
Proposing legislation
Fiscal policy
Monetary policy
Regulations
13
If you are required to pay $500 of medical costs before the company will pay, this policy provision is the:
Premium
co-insurance clause
Major medical benefit
Annual deductible
14
A person who owns stocks decide to buy bonds and mutual funds in order to
reduce her variable expenses
avoid paying taxes on capital gains
diversify their investment portfolio
eliminate the need for retirement planning
15
What is meant by an uncollateralized loan?
A loan not backed by a co-signer who agrees to cover the amount of the loan
A personal loan without assets to cover the loan amount
A home equity loan
A loan taken on a life insurance policy
16
A person who wants to cash his paycheck is advised to go to his bank rather than to a check cashing store because
the check cashing store have a 48-hour waiting period before they cash it
the check cashing stores charge high fees for their services
the check cashing store requires the person to have a co-signer
the check cashing store will not cash checks written for more than $100
17
The annual percentage rate (APR) is:
The true cost of credit that must be disclosed on a loan agreement
Required by the Comptroller of the Currency
Always expressed in dollars
Required by the Securities and Exchange Commission
18
To qualify for a Federal Housing Administration (FHA) Loan, a person must generally
provide two individuals to co-sign the loan
have at least a high school diploma
have one-quarter of the cost of the home for a down-payment
fulfill income guidelines
19
The financial planning process:
guarantees that assets will increase
includes lifetime goals
does not need to be revised for changing income and needs
needs to be adjusted for changing needs & goals in different stages of life
20
Margaret wants to store a valuable coin collection and important papers. Generally, consumers should:
Hand valuables over to their attorney
Rent a safe deposit box for their valuables
Store valuables in a cabinet at home
Store valuables in a locked drawer
21
Frankie earned money in the stock market and sold his shares for profit Does he have to pay taxes on his earnings?
Yes
No
22
When a person declares bankruptcy that fact will appear on the person's credit report
until the person repays all debts owed
until the person is able to receive a new credit card
for a 10 year period
for a 3 year period
23
Which financial product typically pays the highest amount of interest?
Certificate of Deposit
savings account
money market account
Common stock
24
When securities (stocks) are traded in the secondary market, who makes or loses money?
The SEC
Creditors
Investors
Small businesses
25
Which of the following is considered to be open-end credit?
Department store charge cards/credit cards
Car Loan
Installment loans
Mortgage
26
Which should be the first financial goal for a recent college graduate who is single and has a full time job?
Create a stock portfolio
Have a three to six month emergency fund
Buy a life insurance policy
Buy a house
27
An example of closed-end credit is a
major credit card
debit card
mortgage
cash card
28
A person who is following the advice to "pay yourself first"
puts aside money for saving before spending money on entertainment
will be able to buy more goods and services this year
will have more money available for savings this year
did not receive a salary increase to keep up with the cost of living
29
A person's debt ratio shows the relationship between debt and net worth. The lower the ratio the
better off financially the person is
less liquid assets the person has
worse off financially the person is
more liquid assets the person has
30
A person is depositing $20 in cash and a check for $50. On the checking account deposit slip, the person should
include the reason that both cash and a check are being deposited
list the cash deposit separately from the check as well as the total
indicate what bank issued the check that is being deposited
indicate the amount of money that is currently in account to cover check
31
Which type of financial institution usually pays the highest rate of interest on savings account balances?
Commercial banks
Savings and loan associations
Investment firm money market accounts
Credit unions
32
If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the
Federal Reserve Board
State Banking Commission
Federal Deposit Insurance Corporation (FDIC)
US Treasury Department
