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WISE Financial Literacy Certification Test Practice Verified Study Questions And Answers
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WISE Financial Literacy Certification Test Practice Verified Study Questions And Answers
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WISE Financial Literacy CertificationTest Practice Verified Study Questions
And Answers
Sources of Income CORRECT ANSWERS Wages, rentals, interest, capital, profit,
investments, entrepreneurship
Exemption (allowance) and how it works CORRECT ANSWERS Allowance is used to
reduce amount of taxed income
Liquidity CORRECT ANSWERS The degree of ease in which the assets can be sold
Gift cards and how they work (a monthly inactivity fee may begin after 12 months)
CORRECT ANSWERS closed loop system and open loop system
Discretionary income or budget surplus CORRECT ANSWERS Not allocated for food or
shelter
Money orders (high rate of counterfeits) CORRECT ANSWERS A payment order for a
pre-specified amount of money and is purchased at different types of stores--it is used
like a check. They are usually limited in maximum face value to some specific figure.
Example. The United States Postal Service limits domestic postal money orders to U.S.
$1,000.00. U.S. Postal money orders are hard to counterfeit
Why does the U.S. currency have value even though it is not tied to a commodity
CORRECT ANSWERS There is a belief that money has value and there fore is
accepted
Opportunity cost CORRECT ANSWERS 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 ANSWERS Creditors,
people living on fixed income, and people trying to save are hurt the most. People who
owe a significant debt are benefitted
Role of the Treasury Department CORRECT ANSWERS Collects taxes, prints money,
issues treasury bonds
Pay yourself first CORRECT ANSWERS Automatically route money from paycheck to
savings (before paying bills)
CD: What is it and what happens if you cash it before maturity CORRECT ANSWERS It
is a time deposit offered at financial institutions--penalty if cashed before maturity
, Institutions that give loans CORRECT ANSWERS Banks, credit unions, pawnshops,
finance companies, payday lenders, and tax preparers
Which institution(s) charge the highest interest rates on loans CORRECT ANSWERS
Pawnshops, payday lenders, tax refund lenders, and finance companies
What is a credit union and the advantage of using it CORRECT ANSWERS Member
owned co-operative financial institution--advantage is lower interest rates on loans
Overdraft protection (opt in regulation) and how it works CORRECT ANSWERS
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
Compound interest CORRECT ANSWERS Interest added to principal--interest earned
on interest
Time value of money CORRECT ANSWERS 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
Liquid financial products vs. products that are less liquid CORRECT ANSWERS
Savings and checking accounts are most liquid, and certificate of deposit and money
markets are less liquid
Rule of 72 CORRECT ANSWERS How long (years) will take to double an investment?
Divide by the interest rate to be earned: 72 divided by 3% interest = 24 years (if you are
given the number of years and need to determine the interest rate needed to double
your money, then divide 72 by the given number of years: 72 divided by 24 years = 3%
interest
Reconciling a checking account CORRECT ANSWERS 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
Repayment of student loans CORRECT ANSWERS 6 month grace period (after leaving
school) before you can start making payments
Tax anticipation loans CORRECT ANSWERS A refund anticipation loan (RAL) is a
short-term consumer loan secured by a taxpayer's expected tax refund
Credit card cash advantages CORRECT ANSWERS Provided by credit card
companies--withdraw cash with credit card--you pay a higher interest rate
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