Wise Exam practice
Sources of income
Various revenue streams like wages, rentals, and investments
Exemption
Reduces taxable income; also known as an allowance
Liquidity
Ease of selling assets; liquid products are easily tradable
Gift cards
Closed loop or open loop systems with p...
wise exam practice sources of income various reven
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Wise Exam practice
Sources of income
Various revenue streams like wages, rentals, and investments
Exemption
Reduces taxable income; also known as an allowance
Liquidity
Ease of selling assets; liquid products are easily tradable
Gift cards
Closed loop or open loop systems with potential inactivity fees
Discretionary income
Money not allocated for essential needs like food or shelter
Money orders
Payment orders for specified amounts, similar to checks
Value of U.S. currency
Accepted belief in the currency's value despite lack of commodity backing
Opportunity cost
Value of the next best alternative foregone when a choice is made
Inflation impact
Lenders and fixed income earners are most affected; debtors least
Treasury Department role
Responsible for tax collection, money printing, and issuing bonds
Pay Yourself First
Automatically saving a portion of income before other expenses
CD
Time deposit with penalties for early withdrawal
Loan providers
Entities like banks, credit unions, pawnshops, and payday lenders
Credit union
Member-owned financial institution offering lower loan rates
, Overdraft protection
Prevents account overdrafts by providing a loan for insufficient funds
Compound Interest
Interest calculated on both the initial principal and accrued interest
Time value of money
Value of money considering interest earned over time
Liquid financial products
Highly tradable assets like savings accounts
Rule of 72
Estimates time to double an investment by dividing 72 by interest rate
Reconciling a Checking account
Matching bank statement with check register to identify errors
Repayment of student loans
Begins after a 6-month grace period post-school
Tax anticipation loans
Short-term loans secured by expected tax refunds
Insurance polocies
Transfer financial impact of unexpected events to a group.
Insurance deductible
Amount insured pays before insurer covers a claim.
Collision coverage
Repairs vehicle damages from collisions.
Term life insurance
Pays lump-sum if policyholder dies during coverage.
Renters Insurance
Protects belongings from theft, fire, or disasters.
Whole life insurance
Permanent policy with investment component.
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