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W!SE Moneypower Review Flashcards | StudBud
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W!SE Moneypower Review
W!SE Moneypower Review
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Review using the moneypower questions
Flashcards
50 cards
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Practice quiz
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Questions
50
Answers
1
Who benefits the most from inflation?
Long-term fixed rate borrowers
The government
Persons on fixed incomes
Lenders
2
When a person declares bankruptcy that fact will appear on the person's credit report
for a 10 year period.
for a 3 year period.
until the person repays all debts owed.
until the person is able to receive a new credit card.
3
The amount a lender charges to borrow money is called the:
Annual Percentage Rate (APR)
Finance charge
Loan balance
Principal
4
The cost to use someone else's money for a period of time is called the:
Minimum payment
Inflation rate
Opportunity cost
Interest rate expressed as a percentage
5
Which of the following will help you the least in managing your money?
set goals and keep a budget for your net income
pay your rent/mortgage payment and utility bills on time
plan ahead for large expenses and resist impulse buying
get advice from your friends
6
Another term for the dollar amount of your paycheck after taxes and other withholdings is:
Adjusted gross income
Discretionary income
Net income
Gross income
7
Joan wants to open a checking account and wonders if checking accounts pay interest.
Some types of checking accounts pay interest
All checking accounts pay interest
Checking accounts pay interest if they have a high balance
Checking accounts never pay interest
8
One of the benefits of holding an investment for over a year rather than selling it sooner is
money earned on the investment will be considered tax-free.
profits on the investment can be averaged over time
capital gains on the investment will be taxed at lower rate
fees will not be charged by brokers for selling it
9
Money for saving, investing, or spending cannot be from:
Capital losses from the sale of stock
Capital gains from a sale of stock
Discretionary income or a gift of money
An inheritance from someone who has died
10
The bank where Sam has his account will continue to pay out money for the checks he writes if:
The financial institution has sufficient funds
He uses checks from her checkbook
There is enough money in Sam's account to cover the checks
He maintains a good record of deposits and acts responsibly
11
Sam owns stock that pays a $2.00 a share dividend. Sam reinvests the dividend The $2.00 goes to
more of the same stock.
preferred stock in the corporation.
stocks that are similar to those already owned.
bonds in the corporation.
12
I had to make a long-distance call and didn't have cash. I was able to make the call by using:
Identification card
Credit card
Cash card
Traveler's check
13
I had the main income for my family. I died with no life insurance. My wife won't worry about
The loss of my income
A reduction in the family's standard of living
An increase in income and expenses
Death-related expenses to be paid
14
A pharmacy is to drugs as the American Stock Exchange is to:
Mutual Funds
Stock Advisors
Interest
Securities
15
A man budgeted $200 a month for clothing. This month the man spent $150 on clothing. This is
an outflow deficit.
a budget deficit.
an income overage.
a budget variance.
16
Which of the following is considered to be open-end credit?
Installments loans.
A car loan.
Department store charge cards.
A mortgage.
17
Ben's income is $30,000. He contributed $3,000 to a traditional IRA. What's his taxable income?
$0 because he contributed to an IRA
$27,000
$30,000
$33,000
18
Frankie's savings account has earned a lot of interest. Does he have to pay taxes on interest?
Savings account interest is taxable
A sales tax will be charged on the interest earned
Interest earned on savings accounts is not taxable
If the interest is under $50, it is not taxable
19
I had a $2,000 loss. My insurance company pays me $1,500. I didn't get $500 because of a:
Premium
Co-insurance clause
Hazard clause
Deductible
20
A blank endorsement on a check:
Creates a check that can be cashed by anyone
Cancels the check
Restricts the use of the check
Has no effect on the check
21
A debt ratio shows the relationship between debt and net worth. The lower the ratio the
less liquid assets the person has.
better off financially the person is.
worse off financially the person is.
more liquid assets the person has.
22
Sam bought 40 shares at $80 a share. The corporation does a 2-for-1 stock split. Sam now owns
80 shares of the stock and the price of each share is $40.
40 shares of the stock and the price of each share is $40.
80 shares of the stock and the price of each share is $80.
20 shares of the stock and the price of each share is $80.
23
Spreading assets across several types of saving and investment products to manage risk is
Budgeting
Allocation
Diversification
Pooling
24
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)
25
Loan that puts all debts into one loan with lower payments, longer repayment period, lower APR
Balloon payment loan
Collateralized loan
Consolidation loan
Predatory loan
26
If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the
State Banking Commission
Federal Deposit Insurance Corporation (FDIC)
US Treasury Department
Federal Reserve Board
27
Which of the following provides an increase in assets or wealth?
Running in the marathon
Having capital gains
Volunteering at a hospital
Taking out a loan
28
When the market has a steady decline in stock prices over a period of time, it is known as a:
Bull Market
Fluctuating Market
Bear Market
Risky Market
29
With a broker, an investor buys 1000 shares of a common stock at $50 a share on 50% margin
investor will pay only $5000 for the shares.
brokerage firm is lending the investor 50% of the money.
brokerage firm will own 50% of the 1000 shares of stock.
investor is buying 2000 shares.
30
Sam buys a house with three rental apartments. The profits may be lower than expected if
one of the apartments is not rented.
mortgage on the house is paid off.
tenant in an apartment decides to paint the hallways.
taxes on the house are lowered.
31
A defined-contribution pension plan means that upon retirement the employee will receive
total amount of money contributed and investment earnings
amount of money based totally on the profit by the company
amount of money based only on how long they worked there
one-half of the employee's last year's salary.
32
What is the largest equities market in the world?
New York Stock Exchange (NYSE)
NASDAQ market
American Stock Exchange (AMEX)
Over-the-counter (OTC) market
33
Sam gets a very expensive piece of jewelry. He has homeowner's insurance. What should he do?
Get speculative risk insurance
Know if it's stolen it'll be considered vicarious liability
Get a personal property floater
Deduct the cost of the jewelry from his premium
34
Buying a treasury bill (T-bill) is best for investors who are looking for
higher yield on their 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.
35
A person has a lot of outstanding credit and is unable to make payments. What can they do?
Contact the IRS to avoid paying income tax this year
File for bankruptcy to maintain ones current credit score.
Notify a credit reporting agency to avoid a late fee
Notify the credit companies to negotiate a new payment plan.
36
To find the time value of depositing $100 in a savings account, you need the interest rate and
whether the account is FDIC protected.
the rate of inflation.
her total income.
whether the bank offers overdraft protection.
37
Which of the following does the Federal Reserve use to regulate the nation's money supply?
Regulations
Monetary policy
Fiscal policy
Proposing legislation
38
I had a $20,000 whole life insurance policy with a cash value clause. I surrender it. I get
an amount that must be converted to a term life policy.
a calculated amount including premiums paid and interest.
$20,000 less the premiums paid.
one-fifth of the $20,000 face value.
39
After five years of owning a Roth IRA, Sam buys his first home, he can withdraw money
tax and penalty free.
and have penalties deferred until retirement.
and owed taxes are deferred until retirement.
but must pay a set penalty at the time of withdrawal.
40
Can Cathy withdraw money from her IRA savings account?
Money cannot be withdrawn from an IRA before age 59
She can take it out at any time since she made the deposits
There is a 10% penalty on any money taken out before age 59
50% penalty for not starting to withdraw money at age 59
41
One of the reasons cigarettes are so expensive is that
their cost is controlled by the Food and Drug Administration
the tobacco supply is controlled by the FTC
the government imposes an excise tax on them
the tobacco industry imports most of the tobacco
42
Sam buys a big TV. He has homeowner's insurance. Why should he add a personal property floater?
To cover cost of replacement if it gets damaged or stolen.
To reduce the premium on the homeowner's insurance.
To protect the himself from liability for damages.
To show his insurance he made a good faith investment
43
To qualify for a Federal Housing Administration (FHA) loan, a person must generally
have one-quarter of the cost of the home for a down-payment.
have at least a high school diploma.
provide two individuals to co-sign the loan.
fulfill income guidelines.
44
What is meant by an uncollateralized loan?
A loan taken on a life insurance policy.
A loan not backed by a co-signer
A home equity loan.
A personal loan without assets to cover the loan amount.
45
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.
a collateralized loan.
46
Interest earned on interest is known as:
True Interest
Simple interest
Compound Interest
Variable Interest
47
Who uses consumer credit reports in making decisions?
Brokers
Schools
Lenders
Churches
48
The interest earned on United States Series EE Savings Bonds is
exempt from state and local taxes
paid in a lump sum when the bond matures
deducted at the time of the bond's purchase
equal to the money paid to purchase it
49
A stock broker or financial consultant:
Sells money orders and certified checks
Do not have to be licensed
Guarantee a return on investment
Gives financial advice to clients
50
I lost my debit card and didn't report it for 3 months. My maximum liability is:
No liability because she notified the financial institution
$500
Unlimited liability
$50
