Download WISE PRACTICE SCRIPT UPDATED 2026 TESTED SOLUTIONS and more Exams Finance in PDF only on Docsity!
WISE PRACTICE SCRIPT UPDATED 2026
TESTED SOLUTIONS
⫸ Exemption Answer: Allowance reducing taxable income amount. ⫸ Liquidity Answer: Ease of selling assets for cash. ⫸ Gift Cards Answer: Closed/open loop systems with potential fees. ⫸ Discretionary Income Answer: Income not allocated for essentials. ⫸ Money Orders Answer: Pre-specified payment order, hard to counterfeit. ⫸ Opportunity Cost Answer: Next best alternative given up in choices. ⫸ Inflation Impact Answer: Lenders hurt most; borrowers least affected. ⫸ Treasury Department Answer: Collects taxes, prints money, issues bonds.
⫸ Pay Yourself First Answer: Route paycheck to savings before expenses. ⫸ Certificate of Deposit (CD) Answer: Time deposit with penalties for early withdrawal. ⫸ High Interest Lenders Answer: Pawnshops, payday lenders, finance companies. ⫸ Credit Union Answer: Member-owned institution with lower loan rates. ⫸ Overdraft Protection Answer: Loan feature preventing checking account overdraft. ⫸ Compound Interest Answer: Interest calculated on principal plus previous interest. ⫸ Time Value of Money Answer: Money's value increases with interest over time. ⫸ Liquid Financial Products Answer: Savings/checking accounts easily converted to cash. ⫸ Rule of 72 Answer: Years to double investment = 72 / interest rate.
⫸ Lost Credit Card Liability Answer: $50 liability if reported lost; none if reported stolen. ⫸ Loan Repayment Duration Answer: Longer repayment increases total interest paid. ⫸ Identity Theft Response Answer: Cancel cards, review accounts, report to bureaus. ⫸ Predatory Loans Answer: High-interest loans to poor credit risk customers. ⫸ Collateral Answer: Secured loans backed by an asset's value. ⫸ Insurance Answer: Transfer of risk to mitigate financial impact. ⫸ Insurance Deductible Answer: Amount paid before insurer covers a claim. ⫸ Collision Coverage Answer: Covers vehicle damage from collisions. ⫸ Term Life Insurance Answer: Policy paying lump sum upon policyholder's death.
⫸ Whole Life Insurance Answer: Permanent policy providing lifelong coverage and investment. ⫸ Health Insurance Answer: Coverage against medical expenses for individuals. ⫸ Co-Pay Answer: Out-of-pocket payment for covered medical services. ⫸ Renters Insurance Answer: Protects belongings against theft, fire, and disasters. ⫸ Disability Insurance Answer: Covers bills during periods of disability. ⫸ Auto Insurance Discounts Answer: Reduced rates for good grades and safe driving. ⫸ Securities Answer: Financial instruments representing ownership or debt. ⫸ Bull Market Answer: Extended period of rising financial market prices. ⫸ Bear Market Answer: Prolonged period of declining financial market prices.
⫸ 401(k) Plan Answer: Retirement account allowing tax-deferred savings. ⫸ Traditional IRA Answer: Tax-deductible retirement account with taxable withdrawals. ⫸ Roth IRA Answer: Retirement account with tax-free withdrawals. ⫸ Inflation Answer: General rise in price levels over time. ⫸ Deflation Answer: Decline in the cost of consumer goods. ⫸ Depression Answer: Severe economic downturn with high unemployment. ⫸ Graduated Income Tax Answer: Progressive tax rate increasing with income level. ⫸ SEC Answer: Regulatory body overseeing securities transactions. ⫸ Federal Reserve Answer: Central banking system regulating U.S. money supply. ⫸ Discount Rate Answer: Interest rate charged by Fed to banks.
⫸ Reserve Requirement Ratio Answer: Percentage of deposits banks must hold in reserve. ⫸ Open Market Operations Answer: Buying/selling treasury bonds to influence money supply. ⫸ FDIC Answer: Insures deposits up to $250,000 per depositor. ⫸ CFPB Answer: Agency regulating consumer financial protection. ⫸
