Download Personal Finance Concepts and Terminology and more Exams Nursing in PDF only on Docsity! Wise Certification Test If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the - correct answer ✔✔US Treasury Department Margaret wants to store a valuable coin collection & important paper. Generally, consumers should: - correct answer ✔✔Rent a safe deposit box for their valuables Troy has $50 a month transferred electronically from his checking account to his savings account. This is an example of: - correct answer ✔✔A savings plan Employees prefer direct deposits because: - correct answer ✔✔The money is generally deposited in their checking account sooner than it would be if they had to deposit it in person A person is depositing $20 in cash and a check for $50. On the checking account deposit slip, the person should - correct answer ✔✔List the cash deposit it separately from the check as well as the total of the deposit 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 ✔✔Notify the credit card companies in order to negotiate a new payment plan To qualify for a Federal Housing Administration (FHA) loan, a person must generally - correct answer ✔✔Fulfill income guidelines When a person declares bankruptcy that fact will appear on the person's credit report - correct answer ✔✔For a 10 year period Which of the following is considered to be open-end credit? - correct answer ✔✔Department store charge cards What is meant by an uncollateralized loan? - correct answer ✔✔A person loan without assets to cover the loan amount Which of the following does the Federal Reserve use to regulate the nation's money supply? - correct answer ✔✔Monetary policy Money for saving, investing, of spending cannot be from: - correct answer ✔✔Capital losses from the sale of stock Susan gives Marie her ABC Credit Union debit card & personal identification number (PIN) so Marie could get $25 from Susan's bank account. Marie withdrew $100 instead of the agreed $25. How can Sudan get the $75 back? - correct answer ✔✔No bank or government agency is obligated to reimburse Susan because she authorized Marie to use her ATM card & PIN Which of the following is a disadvantage of using phone cards, debit cards, electronic transfers, and ATM cards? - correct answer ✔✔They expose consumers to greater likelihood of identify theft A person complains about how expensive it is to be a cigarette smoker. Once of the reasons cigarettes are so expensive is that - correct answer ✔✔The government imposes an excise tax on them One of the benefits of holding an investment for over a year rather than selling it in less than a year is that the - correct answer ✔✔Capital gains on the investment will be taxed at a lower rate A man budgeted $200 a month for clothing. This month the man spent $150 on clothing therefore that budgeted item is considered to have - correct answer ✔✔A budget variance A persons debt ration shows the relationship between debt and net worth. The lower the ratio the - correct answer ✔✔Better off financially the person is After five years of owning a Roth Individual Retirement Account (IRA) a person wants to buy his first home, the person can withdraw money from the Roth IRA - correct answer ✔✔Tax & penalty fee One of the benefits of holding an investment for over a year rather than selling it in less than a year is that the - correct answer ✔✔Capital gains on the investment will be taxed at a lower rate Buying a Treasury Bill (T-Bill) is best for investors who are looking for - correct answer ✔✔A secure, low- risk investment What is the largest equities market in the world? - correct answer ✔✔New York Stock Exchange (NYSE) To determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and the - correct answer ✔✔Rate of Inflation For the past 5 years, a person has had a $20,000 whole life insurance policy that has a cash value clause. The person decides to surrender the policy. At the time of the surrender, the person will receive - correct answer ✔✔A calculated amount of money which includes the premiums paid as well as the interest on that money Which of the following does the Federal Reserve use to regulate the nations money supply - correct answer ✔✔Monetary policy The denominations of coins in the US are: - correct answer ✔✔$.01, $.05, $.10, $.25, $.50, $1.00 New coins and currency make their way into the general economy, consumers and businesses, through the distribution system of the: - correct answer ✔✔Federal Reserve System Which statement best describes the relationship between a person's educational level and that person's potential earning power - correct answer ✔✔A person with a professional degree is likely to earn at least 4 times as much per year as a person who did not complete high school A type of electronic funds transfer (EFT) is: - correct answer ✔✔An ATM transaction The primary source of income for most people between the ages of 20 and 35 who are not living on a pension or social security are: - correct answer ✔✔Salaries, wages, and tips When money is not used and goods and services are exchanged for other goods and services this system is called: - correct answer ✔✔Barter Nora needed to make a long-distance call from a pay phone and did not have the cash. She was able to make the call by using her: - correct answer ✔✔Cash card Money in the US includes: - correct answer ✔✔Checking account balances on which checks can be drawn Jami lost her debit card. She did not report it missing for 3 months. If an unauthorized person used her debit card, her maximun liability is: - correct answer ✔✔Unlimited liability A person owns a stock that pays a $2.00 a share dividend. If the person chooses to reinvest that dividend, this means that the $2.00 will go toward buying - correct answer ✔✔More of the same stock The interest earned on US series EE Savings Bonds is - correct answer ✔✔exempt from state and local taxes An investor bought 40 shares of ABC corporations stock at $80.00 a share. Two weeks later, the investor receives a notice that the corporation has approves a 2-for-1 stock split. based on this info, the investor would own at the moment of the split - correct answer ✔✔80 shares of the stock and the price of each share is $40.00 Using a brokerage firm, a qualified investor buys 1,000 shares of a common stock at $50 a share on %50 margin. This means that the - correct answer ✔✔brokerage firm is lending the investor %50 of the money Before the Kiss Corporation can issue stocks or bonds, it must register the issue with: - correct answer ✔✔The Securities and Exchange Commission (SEC) A pharmacy is to drugs as the American Stock Exchange is to: - correct answer ✔✔Securities Buying a treasury bill (T-Bill) is best for investors who are looking for - correct answer ✔✔A secure, low- risk investment As an investment, a person decides to buy a small house that has three rental apartments. The profits from this investment may be lowers that expected if the - correct answer ✔✔one of the apartments is not rented What is the largest equities market in the world? - correct answer ✔✔New York Stock Exchange (NYSE) Investors select "blue chip" stocks because they: - correct answer ✔✔Have a reputation for quality management and sometimes pay dividends If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the - correct answer ✔✔US Treasury Department Which is the best example of a way to reduce fees paid for ATM transactions - correct answer ✔✔When making supermarket purchases with a debit card, a person adds $50 in cash tot he transaction instead of using an ATM machine Financial services and products generally offered by banks and credit unions include: - correct answer ✔✔Savings and loans Employees prefer direct deposits because - correct answer ✔✔The money is generally deposited into their checking account sooner than it would be if they had to deposit it in person The phrase used for putting money into a savings account is: - correct answer ✔✔Making a deposit Margaret wants to store a valuable coin collection and important papers. Generally she should: - correct answer ✔✔Rent a safe deposit box for her valuables The most liquid type of investment is: - correct answer ✔✔A money market account Who benefits from inflation? - correct answer ✔✔Long-term fixed rate borrowers Which type of financial institution usually pays the highest interest rate on savings account balances - correct answer ✔✔Credit unions 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 ✔✔A long-term, fixed rate certificate of deposit A person has 3 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 ✔✔Notify the credit card companies in order to negotiate a new payment plan When a person declares bankruptcy that fact will appear on their credit report for - correct answer ✔✔a 10 year period Which of the following is considered to be open-end credit? - correct answer ✔✔Department store charge cards To qualify for a Federal Housing Administration (FHA) loan, a person must generally - correct answer ✔✔Fulfill income guidelines When a person brings an item to a pawnshop to obtain cash, the transaction is considered - correct answer ✔✔A collateralized loan What is meant by an uncollateralized loan - correct answer ✔✔A personal loan without assets to cover the loan amount When Mary bought a DVD player, she charged it on her credit card. Her purchase created a(n): - correct answer ✔✔Debt Sharon is 20 years old. She has one gas, 2 banks, and 2 department store credit cards, Her application for another credit card has been declined. The probable reason is: - correct answer ✔✔The total amount she can charge on her cards is more than her ability to repay A creditor determines your creditworthiness based on: - correct answer ✔✔Address Claire got a new credit card from the American Bank and wants to cancel her USA credit card. The best method to dispose of the USA credit card is to: - correct answer ✔✔Cut up the card, put parts in different garbage bags, and instruct the credit card company in writing or by phone to close the account A persons debt ratio also shows the relationship between debt and net worth. The lower the ratio the - correct answer ✔✔better off financially the person is A person complains about ow expensive it is to be a cigarette smoker. One of the reasons cigarettes are so expensive is that - correct answer ✔✔the government imposes an excise tax on them One of the benefits of holding an investment for over a a year rather than selling it in less than a year is that the - correct answer ✔✔capital gains on the investment for over a year rather than selling it in less than a year is that the A man budgeted $200 a month for clothing. This month the man spent $150 on clothing therefore that budget item is considered to have - correct answer ✔✔a budget variance Another term for the dollar amount of your paycheck after taxes and other withholding is: - correct answer ✔✔Net income In terms of retirement income, a person should realize that the amount of money the person will receive from the Social Security system's benefits depends on the person's - correct answer ✔✔earnings over a lifetime of work What does a well designed, successful financial plan include? - correct answer ✔✔Retirement planning Rossi has a part time job delivering pizzas to raise money for college in 2 years. Going to college is one of Rossi's - correct answer ✔✔Goals Spreading one's assets across several types of saving and investment products to manage risk is called: - correct answer ✔✔Diversification Discretionary income is: - correct answer ✔✔The difference between your total income and your essential living expenses If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the - correct answer ✔✔US Treasury Department An example of closed-end credit is a - correct answer ✔✔Mortgage Before a person borrows money from a bank to make a major purchase, which question is considered most important for the person to answer? - correct answer ✔✔Do the benefits of making the purchase outweigh the costs of borrowing the money? When a person declares bankruptcy that fact will appear on the person's credit report - correct answer ✔✔for a 10 year period When an unmarried individual makes a contribution to a Roth individual Retirement Account (IRA) it is - correct answer ✔✔not currently tax deductible A 60-year old makes a withdraw from his Roth Individual Retirement Account (IRA.) The money withdrawn will be - correct answer ✔✔Tax free When an investor buys a zero-coupon bond, the investor - correct answer ✔✔purchases the bond at a discount from the face value of the bond When security are traded in the secondary market, who makes or loses money? - correct answer ✔✔Investors Which product is considered to be an investment - correct answer ✔✔a corporate bond