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