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