WISE PRACTICE TEST- COMPLETE STUDY GUIDE QUESTIONS AND ANSWERS 2023 NEW UPDATE
Question : To qualify for a Federal Housing Administration (FHA) loan, a person must generally
A high school student has begun to investigate the field of finance as a career choice. In deciding about the fiel...
WISE PRACTICE TEST - COMPLETE STUDY GUIDE QUESTIONS AND ANSWERS 2023 NEW UPDATE Question : To qualify for a Federal Housing Administration (FHA) loan, a person must generally A: have at least a high school diploma. B: have one -quarter of the cost of the home for a down -payment. C: fulfill income guidelines. D: provide two individuals to co -sign the loan. - Answer C: fulfill income guidelines. A high school student has begun to investigate the field of finance a s a career choice. In deciding about the field, the student should focus on which question first? A: Will I find a balance between financial rewards and personal satisfaction from work? B: How many people do I know who work in this field? C: Once I train for this area, how long before I will be at the top of the field? D: Are there people in this field who are dissatisfied with their jobs? - Answer A: Will I find a balance between financial rewards and personal satisfaction from work? A: Will I find a balance between financial rewards and personal satisfaction from work? Reason : It is important to investigate a career with the idea of not only getting a sense of earning potential, types of positions available and the training necessary to acqu ire these positions but what are the chances that the individual will enjoy working in this field. - Answer D: An ATM transaction A company offers a defined -contribution pension plan which means that upon retirement the employee will receive A: one -half of the employee's last year's salary. B: the total amount of money contributed plus investment earnings. C: an amount of money based only on the length of time the employee worked for the company. D: a specified amount of money based totally on the profit earned by the company while the employee worked there. - Answer B: the total amount of money contributed plus investment earnings. The interest earned on United States Series EE Savings Bonds is A: exempt from state and local taxes. B: paid in a lump sum at the time the face value on the bond is reached. C: equal to the money paid to purchase it. - Answer A: exempt from state and local taxes. Reason : The interest rate on US savings bon ds is exempt from state and local taxes. Buying a treasury bill (T -bill) is best for investors who are looking for A: a place to invest between $100 -$500. B: a secure, low risk investment. C: a higher yield on their investment than corporate bonds offer. D: an investment that matures in 10 -30 years. - Answer B: a secure, low, risk investment. Reason : These bills are backed by the full faith and credit of the US government, therefore considered relatively risk free. Using a brokerage firm, a q ualified investor buys 1000 shares of a common stock at $50 a share on 50% margin. This means that the A: investor will pay only $5000 for the shares. B: investor is buying 2000 shares. C: brokerage firm is lending the investor 50% of the money. D: brokerage firm will own 50% of the 1000 shares of stock that were purchased. - Answer C: brokerage firm is lending the investor 50% of the money. Reason : Margin is a speculative method whereby an investor borrows up to 50% of the money needed from a brokerage firm in order to buy a wanted stock and pays a fee for the privilege. To determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and A: her total income. B: the rate of inflation. C: wh ether the account is FDIC protected. D: whether the bank offers overdraft protection. - Answer B: the rate of inflation. The amount a lender charges to borrow money is called the: A: Principal B: Annual Percentage Rate (APR) C: Loan balance D: Finance charge - Answer Correct Answer : D: Finance charge The cost to use someone else's money for a period of time is called the: A: Interest rate expressed as a percentage B: Opportunity cost C: Minimum payment D: Inflation rate - Answer A: Interest rate expressed as a percentage Reason : Consumers usually pay a price for the goods and services they buy. The cost to buy the right to use someone else's money for a period of time is called the interest rate. Interest earned on interest is kn own as: A: Simple interest B: True interest C: Compounded interest D: Variable interest - Answer C: Compounded interest Reason : Compound interest enables the saver to earn interest on the interest that was earned earlier. Money received today is worth more than the same amount of money received sometime in the future is: A: The Rule of 72 B: The time value of money C: Not true D: Investing - Answer B: The time value of money Reason : The time value of money is the concept that money received today is worth more than the same amount of money received in the future. If you receive $100 today, you can put it to w ork immediately through savings or investing immediately. A person buys a flat screen, plasma, theater -like television. The person has homeowner's insurance. Why would it be appropriate to add a personal property floater to that insurance? A: To reduce the premium on the homeowner's insurance. B: To protect the person who owns the television from liability for damages. C: To show the insurance company a good faith investment has been made. D: To cover the cost of replacement should the television get damaged or stolen. - Answer D: To cover the cost of replacement should the television get damaged or stolen.
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