W!SE Practice test questions

T Or F: Personal choices about education, training, and skill development impact earnings

True

T or F: People can recieve income from a variety of sources

True

T or F: The information a worker provides on the W-4 form does not impact federal tax deductions and personal income.

False

Net pay is

a Equal to gross pay

b Greater than gross pay

c What remains after deductions are subtracted from gross pay

d None of the above

C: What remains after deductions are subtracted from gross pay

Financial Planning calls for

A Short term goals

B Long term goals

C Both A and B

D None of the above

C: Both A and B

Which of the following is the best example of irregular income?

A full time job

B part time job

C graduation gift

D all of the above

C: Graduation gift

The W4 form:

A Lists the number of people who claim the worker as as dependent on their tax returns

B is filled out by each employee, stating the number of withholding allowances claimed

C Is a report sent from the employer to both the irs and the employee showing gross wages

D Should be attached to the tax return with a staple when filling

B is filled out by each employee, stating the number of withholding allowances claimed

Which factor is most important in securing well-paying jobs throughout your career?

A Having a car

B Having good education

C Having a clean driving record

D Having established credit

B Having good education

Why is it harder to estimate expenses than to estimate income?

A Expenses often change more from month to month

B you can never truly know how much you spend

C Your income will never change

D None of the above

A Expenses often change more from month to month

A budget can help you reach a financial goal by:

A Showing you how you can earn more income

B Allowing you to see where you can cut back on spending

C Giving you the tools to change more fixed expenses to flexible expenses

D All of these

B Allowing you to see where you can cut back on spending

Preparing a budget is:

A an ongoing process

B something you only have to do once in your lifetime

C not an effectve way to save money

D a method for calculating take home pay

A an ongoing process

Money in your emergency fund could be wisely used:

A To buy a new pair of shoes that went on sale

B To lend money to a friend to pay off credit card debt

C To pay for an unforeseen health expense

D To put money down on a new car

C To pay for an unforeseen health expense

T or F: Student loans often don't require you to start paying them back until after you've completed the course(s)

True

T or F: Some sources of income and expenses are unanticipated

True

T or F: A net worth statement shows one's financial position

True

T or F: A budget is an important tool for managing one's money to achieve short- and long-term goals

True

T or F: Government actions, such as changes in taxes, do not affect personal financial planning

False

T or F: Economic understanding and economic conditions do not affect a personal financial plan

False

T or F: Insurance can reduce financial risk

True

T or F: Insurance does not play a role in financial planning

False

T or F: Individuals have few choices to make when selecting insurance

False

Which of the following is a type of insurance?

A auto

B health

C life

D property

E all of the above

E all of the above

Most insurance companies sell you insurance because:

A The government requires them too

B They are charitable institutions with a mission to reduce hardship

C They generally take in more premiums than they pay out

C They generally take in more premiums than they pay out

A deductible is:

A The discount you deduct from your premium

B The amount of the loss you pay

C The amount that is deducted when you buy a policy

D The discount received by a health care provider

B The amount of the loss you pay

If your MP3 player is stolen from the aprartment you are leasing, what type of insurance would it be covered under?

A Auto

B Homeowners

C Renters

D Life

C Renters

This type of insurance pays to fix damages that you cause, but does not cover your own car.

A No-fault

B Collision

C Liability

D None of the above

C Liability

Without health insurance, a routine checkup at the doctor's office can cost you:

A Nothing because doctors don't charge you if you don't have insurance

B Several hundred dollars

C Almost as much as a car

D Nothing, because you can't get treated without insurance

B Several hundred dollars

Buying a home includes:

A Choosing a home

B Signing a contract

C Securing a down payment

D Financing a home

E All of the above

E All of the above

Which of the following best describes a lease?

A A legal document that contains all the details of the agreement between the landlord and renter which is signed by both parties

B An informal agreement between the renter and the landlord in which the renter signs it when he or she is thinking about renting an apartment

C A document that describes in detail the apartment for rent

D An agreement between someone searching for an apartment to rent and his or her real estate agent

A A legal document that contains all the details of the agreement between the landlord and renter which is signed by both parties

Which of the following utilities may be billed separately from your rent?

A Water

B Electricity

C Phone service

D All the above

D All the above

How much of your take-home paycheck should be budgeted for all housing related expenses?

A 10%

B 33%

C 60%

D 80%

B 33%

32. Most landlords require the renter to pay a security deposit at the beginning of the rental agreement. Which of the following is true about the security deposit?

a. The deposit is kept by the landlord to cover his management costs

b. The deposit can never be greater than $100

c. The deposit can be used to repair damage caused by the tenant during the term of the lease

d. None of these

c.The deposit can be used to repair damage caused by the tenant during the term of the lease

33. The most important thing to consider when choosing an apartment is:

a. Whether or not pets are allowed

b. How many bedrooms there are

c. Whether or not the apartment is located on a bus line

d. If you can afford to pay your rent and other costs on an ongoing basis

d. If you can afford to pay your rent and other costs on an ongoing basis

34. Which of the following information would not be found in a typical lease?

a. The amount of the monthly rent

payment and the day of the month it is due

b. The name of the previous tenant

c. The address of the unit being rented

d. The beginning and ending dates of the rental agreement

b. The name of the previous tenant

35. A landlord can refuse to rent you an apartment if which of the following is true?

a. You are married

b. Your ancestors were immigrants

c. You own a cat and a dog

d. You are a member of a faith group

c. You own a cat and a dog

36. Which of the following are considerations in choosing an apartment:

a. Cost

b. Proximity to work

c. Availability of mass transit

d. All of the above

d. All of the above

37. The location of a home is important because:

a. A good location will make a home easier to sell later

b. Homes in good locations will usually appreciate in value

c. Not all locations have good school systems or the same amenities

d. All of the above

d. All of the above

38. A real estate agent is able to

a. Get you a lower price on a home

b. Arrange for you to tour homes that

you are interested in purchasing

c. Assist you at closing

d. Both b and c

d. Both b and c

39. This will allow you to borrow money to buy a car, but you will have to pay it back with interest over time:

a. Gift

b. Lease

c. Lend-lease

d. Loan

d. Loan

40. This allows you to use a car for a specified period of time for a specified monthly payment:

a. Loan

b. Contract

c. Lease

d. Gift

c. Lease

T or F: There are costs and benefits to both renting and buying a home

True

T or F: Independent living involves ongoing housing costs such as utilities and maintenance

True

T or F: Basic economic concepts can be used to understand the pricing of products

True

T or F: Basic economic concepts can be used to understand consumer spending.

True

T or F: The use of decision models can hinder purchase decision making

False

T or F: Conspicuous consumption can lead to financial troubles

True

T or F: Advertising and marketing do not affect consumer demand and decision making

False

T or F: There are costs and benefits to both buying and leasing a vehicle

True

T or F: Comparison shopping provides information that does not help consumers obtain the best quality for the best price.

False

T or F: Consumers should not weigh costs and benefits to prioritize discretionary spending decisions

False

T or F: Consumers have a responsibility to be vigilant

True

T or F: Individuals should set up and maintain a filing system

True

T or F: There are many types of identify theft and methods for avoiding becoming a victim

True

An important economic role for government is to ___________________ property rights.

a. Define

b. Establish

c. reinforce

d. All of the above

d. All of the above

A property right to a good or service includes the right to

a. Exclude others from using a good or service

b. Transfer ownership or the use of the resources to others

c. Both a and b

d. None of the above

c. Both a and b

Consumers have

a. Rights

b. Responsibilities

c. Remedies

d. All of the above

d. All of the above

Which is NOT a step in researching your purchase?

a. Comparing prices

b. Getting your friends' approval

c. Looking at customer reviews

d. Trying on apparel

b. Getting your friends' approval

How can you make the most of a tight budget?

a. Making a list before shopping

b. Buying on sale

c. Setting good priorities

d. All of these

d. All of these

59. Tax deductions and tax credits can __________________ tax liability

a. increase

b. reduce

c. not affect

d. none of the above

b. reduce

A Wage and Tax Statement, commonly known as a W-2 form, provides information for completing

a. State tax forms

b. Federal tax forms

c. Both a and b

d. None of the above

c. Both a and b

A paycheck has withholding tax taken out:

a. If a person earns more than $600 a year

b. That is paid to state and federal taxing authorities

c. That is automatically refunded to workers even without filing a 1040EZ form

d. That is always equal to $9.54

b. That is paid to state and federal taxing authorities

To file your taxes, you need:

a. Every pay stub from the entire year

b. Every deposit slip from your savings account

c. W2 and 1099INT reports, and charitable deduction receipts

d. A computer

c. W2 and 1099INT reports, and charitable deduction receipts

Tax refunds:

a. Occur when a taxpayer's income tax withholding exceeds what they owe

b. Come from extra money the federal government has left over at the end of the year, and are distributed around February 15

c. Come to taxpayers regardless of whether they file an income tax return or not

d. Include interest paid to the taxpayer by the federal government based on holding that money throughout the tax year

a. Occur when a taxpayer's income tax withholding exceeds what they owe

An overdraft fee:

a. Is a fee charged by a business when a check you write to them bounces

b. Is the minimum balance required to be held in a bank account

c. Is a fee paid to a payday loan company

d. Is the fee charged by a bank when your checking account balance goes below zero

d. Is the fee charged by a bank when your checking account balance goes below zero

A credit union:

a. Requires membership, but in other respects is like a bank

b. Can't keep savings accounts

c. Never has interest rates as good as a bank

d. Is only open to college students

a. Requires membership, but in other respects is like a bank

When writing a check:

a. Always print your signature

b. Sign on the line that says "Pay to the order of"

c. Spell out the dollars and cents on the long line that ends in "Dollars"

d. Spell out the dollars and cents in the short box next to the $ symbol

c. Spell out the dollars and cents on the long line that ends in "Dollars"

With online banking, you can:

a. Access accounts that are not your own and transfer money into your own account

b. Use a telephone to talk to a bank teller

c. Pay bills, check your balance, and see if checks have cleared on your bank's online Web site

d. Put a check through a scanner to pay bills automatically

c. Pay bills, check your balance, and see if checks have cleared on your bank's online Web site

Online bill payment:

a. Can happen automatically every month, even if you set it up just once

b. Will definitely cause an overdraft charge

c. Can only be set up by making an appointment with a bank branch manager

d. Cannot be set up online

a. Can happen automatically every month, even if you set it up just once

A good password:

a. Is an easily remembered number such as your phone number or Social Security number

b. Should be used for all your online accounts, including ones you share with friends

c. Includes a combination of letters and numbers that are memorable and meaningful to you

d. Should be written down in your wallet so you will have it wherever you go

c. Includes a combination of letters and numbers that are memorable and meaningful to you

You ran short of cash and borrowed $50 from your rich cousin. When you paid her back, she insisted that you owed $60. What is the extra $10 called?

a. Bribery

b. Interest

c. Principal

d. Credit

b. Interest

If you get your first credit card while you're a full-time student, what can you expect about the card's APR on outstanding balances?

a. It will probably be about the same as the APR on your parents' card

b. It will probably be low

c. It will probably be low until you

graduate, and then it will rise

d. It will probably be high

d. It will probably be high

Which of the following is the best definition of a minimum payment on a credit card?

a. A fee that must be paid whether the card is used or not

b. The smallest payment that will keep a credit card holder in good standing with the lender

c. The interest on the purchases that were made on the credit card

d. A low introductory payment offered by the lender for a few months until the card holder has established good credit

b. The smallest payment that will keep a credit card holder in good standing with the lender

You forgot to pay last month's credit card bill. Your creditor will probably:

a. Cancel your account

b. Send you a reminder to pay the bill

c. Add finance charges and late fees to your bill

d. Reduce your minimum payment

c. Add finance charges and late fees to your bill

A regular paycheck helps your credit score because:

a. It can be cashed and spent quickly

b. It has taxes pulled out

c. It shows you will not pay your bills on time

d. It indicates you are likely a good credit risk

d. It indicates you are likely a good credit risk

Negative items on a credit report that are not correct:

a. Can never be removed

b. Don't affect your credit rating

c. Are best ignored

d. Should be removed once the mistake is shown to the credit reporting company

d. Should be removed once the mistake is shown to the credit reporting company

Your credit history tells:

a. The history of your saving, borrowing, and repayment performance

b. The history of your grade report cards

c. The history of the formation of the Experian and Equifax companies

d. The history of your parents' saving, borrowing, and repayment performance

a. The history of your saving, borrowing, and repayment performance

You can order a copy of your credit report:

a. Free online from www.annualcreditreport.com once a year from each of the credit reporting companies

b. Free online from the Fair Isaac Corporation

c. Only if you have good credit because this service is not available if

you are a poor risk

d. Only if you are applying for a credit card

a. Free online from www.annualcreditreport.com once a year from each of the credit reporting companies

Improving your credit score will let you get:

a. Lower interest rates on loans

b. Higher interest rates on savings accounts

c. Neither of the above

d. Both of the Above

a. Lower interest rates on loans

True or False: All investments eventually increase in value if held long enough.

a. True

b. False

b. False

Inflation is:

a. A number set by the government that causes prices to rise

b. A number measured by the government that describes the changing prices of everyday goods.

c. Automatically subtracted from interest rates quoted by banks for their savings accounts

b. A number measured by the government that describes the changing prices of everyday goods.

Someone who can tolerate a risky investment would:

a. Wake up in the middle of the night worrying about the investment

b. Be very concerned that a downturn would wipe out the long-term gains

c. Understand that an investment that fell when the entire market fell was not necessarily a bad investment

d. Keep all money in a savings account at a bank for long-term growth

c. Understand that an investment that fell when the entire market fell was not necessarily a bad investment

Inflation is:

a. Always exactly 5% per year

b. The reason most people get ahead by saving money in a mattress

c. The rise in the cost of purchasing everyday goods

d. The annual rate of return on a savings account

c. The rise in the cost of purchasing everyday goods

Investing in a global stock fund is a good idea to:

a. Focus all risk on the U.S. economy

b. Keep your portfolio dependent solely on the U.S. dollar

c. Diversify into municipal and corporate bonds

d. Diversify holdings to spread risk outside the U.S. economy

d. Diversify holdings to spread risk outside the U.S. economy

If you have a long-time horizon for investing, you should:

a. Lean toward high-risk investments with high-return potential

b. Keep at least 75% cash or money market funds for immediate availability

c. Own only one stock

d. Diversify into savings accounts and U.S. savings bonds

a. Lean toward high-risk

True or False: If you buy enough different stocks, you can diversify out all risk in the stock market.

a. True

b. False

b. False

Diversification is good because:

a. It focuses investments on a single stock to take advantage of growth potential

b. Mutual funds have higher fees than individual stocks

c. Interest rates rise and fall

d. It spreads the risk of investment

d. It spreads the risk of investment

Long term investors:

a. Sit tight through bull markets and bear markets

b. Buy and sell on a daily basis

c. May adjust their holdings to sell when others are selling and markets are falling

d. Always lose money in the long run

a. Sit tight through bull markets and bear markets

Over about 40 years, your portfolio should probably:

a. Change from higher-risk to

lower-risk investments

b. Sell every holding each year to figure out how well you are doing

c. Grow equally well in all sectors, or it is a bad financial plan

d. Become less and less conservative, increasing in risk from year to year

a. Change from higher-risk to lower-risk investments

Your return with a diversified portfolio will:

a. Be exactly 11.3% every year

b. Rise and fall, but have less risk than a smaller number of stocks and a smaller number of sectors and asset classes

c. Fall if a single company in your portfolio goes out of business

d. Beat absolutely every other investor

b. Rise and fall, but have less risk than a smaller number of stocks and a smaller number of sectors and asset classes

When should you begin saving for retirement?

a. As soon as you enter the workforce

b. Before age 50 and not after

c. After age 50

a. As soon as you enter the workforce

Which of the following is a benefit of an employer-sponsored plan?

a. Contributions are not taxed

b. Employers often match contributions

c. All of the above

c. All of the above

Social Security replaces about what percent of most people's pre-retirement income?

a. 70%

b. 40%

c. 100%

b. 40%

Why is it not a good idea to make early withdrawals from your 401(k)?

a. You usually have to pay a strict penalty

b. You cannot put the money back in once you take it out

c. You will lose your tax-deferred status on the entire account

a. You usually have to pay a strict penalty