WISE TEST

1. If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the
Correct Answer: A: US Treasury Department

2. The best reason for depositing money in a bank or credit union savings account instead of keeping your money "under the mattress" is that:
Correct Answer: A: Money deposited in savings accounts are F.D.I.C. insured

3. The financial institution where Ms. Sanchez has her checking account will continue to pay out money for the checks she writes as long as:
Correct Answer: C: There is enough money in Ms. Sanchez's account to cover the amount of the checks

4. Which financial product can you buy for $25, is safe, and will be worth $50 at a future date?
Correct Answer: A: Series EE savings bond

5. The best suggestion you gave a friend who is writing a check for the first time is:
Correct Answer: A: Date the check because it is usually proof of payment

6. When a person brings an item to a pawnshop to obtain cash, the transaction is considered
Correct Answer: A: a collateralized loan

7. A person has three credit cards with very large outstanding balances and is unable to make payments on any of them. Which action should the person take?
Correct Answer: C: Notify the credit card companies in order to negotiate a new payment plan

8. To qualify for a Federal Housing Administration (FHA) loan, a person must generally
Correct Answer: C: fulfill income guidelines

9. When a person declares bankruptcy that fact will appear on the person’s credit report
Correct Answer: B: for a 10 year period

10. What is meant by an uncollateralized loan?
Correct Answer: B: A personal loan without assets to cover the loan amount

11. Which of the following is considered to be open-end credit?
Correct Answer: C: Department store charge cards

12. If you have been denied credit, a job, a license, an insurance policy, or a loan based on your credit report, you are entitled to receive a free copy of that credit report within how many days of denial?
Correct Answer: B: 60

13. Consumer Credit Counseling Services (CCCS) offer:
Correct Answer: B: Debt repayment plans

14. Which of the following does the Federal Reserve use to regulate the nation's money supply?
Correct Answer: C: Monetary policy

15. Which statement is FALSE about most ATM (Automated Teller Machine) cards?
Correct Answer: B: You can always get cash anywhere in the world with no fee

16. Which of the following provides an increase in assets or wealth?
Correct Answer: C: Having capital gains

17. When money is not used and goods and services are exchanged for other goods and services, this system is called:
Correct Answer: C: Barter

18. Scott just got an ATM card to use and must choose a PIN. How should he select a PIN that will give him maximum protection?
Correct Answer: B: Use a random selection of letters and numbers

19. Cigarettes are expensive in part because
Correct Answer: D: the government imposes an excise tax on them

20. A person's debt ratio shows the relationship between debt and net worth. The lower the ratio the
Correct Answer: A: better off financially the person is

21. One benefit of holding an investment for over a year is that the
Correct Answer: A: capital gains on the investment will be taxed at a lower rate

22. A man budgeted $200 a month for clothing but spent $150. This is called
Correct Answer: C: a budget variance

23. Financial plans need to:
Correct Answer: B: be changed during different stages in life

24. Ben's annual income is $30,000, and he contributed $3,000 to a traditional IRA. His taxable income is:
Correct Answer: C: $27,000

25. You can set up an Individual Retirement Account at:
Correct Answer: B: a bank

26. A good example of a well-stated financial goal is:
Correct Answer: B: Pay off $5,000 in credit card debt in two years

27. Julian is a recent graduate with a new job. His first financial goal should be:
Correct Answer: C: establishing a fund for emergencies

28. Money set aside to grow is typically called:
Correct Answer: D: savings or investments

29. A defined-contribution pension plan means the retiree receives:
Correct Answer: B: the total amount of money contributed plus investment earnings

30. After five years of owning a Roth IRA, a person can withdraw money to buy a first home:
Correct Answer: A: tax and penalty free

31. What is the largest equities market in the world?
Correct Answer: C: New York Stock Exchange (NYSE)

32. A person reinvesting a $2.00 dividend will be buying:
Correct Answer: A: more of the same stock

33. The interest earned on Series EE Savings Bonds is:
Correct Answer: A: exempt from state and local taxes

34. Before issuing stocks or bonds, a company must register with:
Correct Answer: D: The Securities and Exchange Commission (SEC)

35. After a 2-for-1 stock split of 40 shares at $80, an investor would own:
Correct Answer: C: 80 shares of the stock and the price of each share is $40

36. Buying stock on 50% margin means the:
Correct Answer: C: brokerage firm is lending the investor 50% of the money

37. A pharmacy is to drugs as the American Stock Exchange is to:
Correct Answer: C: Securities

38. The profit from owning rental apartments may be lower than expected if:
Correct Answer: D: one of the apartments is not rented

39. Buying a T-bill is best for investors who are looking for:
Correct Answer: B: a secure, low risk investment

40. A steady decline in stock prices over time is called a:
Correct Answer: C: Bear market

41. To determine the time value of depositing $100, a person needs to know the interest rate and:
Correct Answer: B: the rate of inflation

42. The information that must be disclosed to consumers applying for a cash loan is:
Correct Answer: B: The annual percentage rate (APR), and/or the finance charge

43. The federal law requiring credit cost disclosure in bold print is:
Correct Answer: C: Truth in Lending Act

44. If charged too high a loan interest rate, a person should:
Correct Answer: C: Notify the lending institution about state usury laws

45. The "Rule of 72" is used to:
Correct Answer: B: Calculate how fast your savings will double in value at given interest rates

46. A woman with expensive jewelry should say to her insurance agent:
Correct Answer: A: "I think I need a personal property floater."

47. A personal property floater should be added to cover:
Correct Answer: D: To cover the cost of replacement should the television get damaged or stolen

48. On surrendering a whole life insurance policy, the person will receive:
Correct Answer: C: a calculated amount of money which includes the premiums paid as well as the interest

49. The money Mr. Akon received as a life insurance beneficiary is called:
Correct Answer: B: Death benefit or face value

50. Which of the following insurance covers vehicles?
Correct Answer: C: Automobile

1. If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the
✅ Correct Answer: A: US Treasury Department

2. Which financial product typically pays the highest rate of interest?
✅ Correct Answer: C: Certificate of deposit

3. A bank Certificate of Deposit is a:
✅ Correct Answer: B: Savings instrument that requires a deposit for a period of time during which there is a penalty for withdrawals

4. Which documents should be stored in a safe-deposit box?
✅ Correct Answer: D: Mortgage loan papers

5. You have a checking account balance of $100 and you deposit a personal $200 check from your brother in your checking account. When will you be able to withdraw $150 in cash?
✅ Correct Answer: B: 3 to 7 days later, depending on your bank's check clearance policy

6. A person is depositing $20 in cash and a check for $50. On the checking account deposit slip, the person should:
✅ Correct Answer: D: List the cash deposit separately from the check as well as the total of the deposit

7. Money orders are:
✅ Correct Answer: C: A purchased certificate to pay a specified amount to a specific payee

8. When James received his paycheck, he planned to cash it at a check cashing store. You advise him to cash it at his own bank if possible. Why?
✅ Correct Answer: B: They typically charge high fees

9. Travelers checks, often used for vacations:
✅ Correct Answer: C: Function as cash and are easily replaced if lost

10. The term used to describe the ease and speed with which you can convert savings or an investment to cash is:
✅ Correct Answer: C: Liquidity

1. To determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and
✅ Correct Answer: B: the rate of inflation

2. Why might rising interest rates depress stock prices?
✅ Correct Answer: B: Rising interest rates can result in lower business profits

3. Lamar believes that interest rates are going to fall in the near future and remain low for a considerable period of time. She should invest in:
✅ Correct Answer: C: A long-term, fixed rate certificate of deposit

4. The cost to use someone else's money for a period of time is called the:
✅ Correct Answer: A: Interest rate expressed as a percentage

5. The "Rule of 72" is an easy way to:
✅ Correct Answer: B: Calculate how fast your savings will double in value at given interest rates

6. The time value of money refers to the concept that money:
✅ Correct Answer: A: Received today is worth more than the same amount of money received in the future

7. What should a person do when he believes he is being charged too high a rate of interest for a loan by a lending institution?
✅ Correct Answer: C: Notify the lending institution about state usury laws

8. Which type of financial institution usually pays the highest rate of interest on savings account balances?
✅ Correct Answer: C: Credit unions

9. Interest earned on interest is known as:
✅ Correct Answer: C: Compounded interest

10. If a person has $1,000 in a savings account and earns $20 a year in interest on that account, the rate of return on the money is close to:
✅ Correct Answer: B: 2%