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Wise Test Study Guide questions with correct answers
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Wise Test Study Guide questions with correct answers
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Wise Test Study Guide questions withcorrect answers
What are the sources of income? - correct answer -wages, rentals, interest, capital,
profits, investments, entrepreneurship
What is exemption (allowance) and how does it work? - correct answer -allowance is
used to reduce amount of taxed income
What are Gift Cards and how do they work? - correct answer -they are a closed loop
system and open loop system
What is a money order? - correct answer -it is a payment order for a pre-specified
amount of money and is purchased at different types of stores -- it is used as a
check.
Why does the U.S. currency have value even though it is not tied to a commodity? -
correct answer -there is a belief that money has value and therefore is accepted.
what is opportunity cost? - correct answer -the next best alternative -- it is what is
given up when a choice is made.
who is hurt the most and the least with inflation? - correct answer -most hurt are
lenders (banks) and people living on a fixed income. Least hurt are those who owe
large amounts of money.
What is the role of the Treasury Department? - correct answer -collects taxes, prints
money, issues treasury bonds
What does it mean when you Pay-Yourself-First? - correct answer -automatically
route money from paycheck to savings (before paying bills)
What is a CD and what happens if you cash it before maturity? - correct answer -it is
a time deposit offered at financial institutions -- penalty if cashed before maturity.
, Which institutions give loans? - correct answer -banks, credit unions, pawnshops,
finance companies, payday lenders, tax preparers
which institution(s) charge the highest interest rates on loans? - correct answer -
pawnshops, payday lenders, tax refund lenders, finance companies
what is a credit union and the advantage of using a credit union? - correct answer -
member owned co-operative financial institution -- advantage is lower interest rates
on loans
what is overdraft protection and how does it work? - correct answer -overdraft
protection is a feature offered by banks to keep your checking account from over-
drafting when you write a check or swipe your debit card but don't have enough
money in your account. It is a loan that is paid back.
what is compound interest? - correct answer -interest added to principal -- interest
earned on interest
what is the time value of money? - correct answer -is calculated by value of money
with given amount of interest earned over a period of time; the longer the time you
keep your money invested, the more interest you will earn.
what is the difference between Liquid financial products vs. products that are less
liquid? - correct answer -savings and checking accounts are most liquid, certificate
of deposit and money market accounts are less liquid.
what is the Rule of 72? - correct answer -how long will it take to double an
investment? Divide 72 by the interest rate to be earned.
What does it mean when you Reconciling a checking account? why? and when? -
correct answer -to view what activity has occurred in your account. keep current
with your check register to know what your current balance is at all times. When
you receive your bank statement, you reconcile your check register against the
statement to be sure no errors have been made and to record any bank fees and/or
interest earned in your register.
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