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Wise Test questions & answers graded A+
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Wise Test questions & answers graded A+
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Wise TestSources of income - correct answer ✔✔wages, rentals, interest, capital, profits, investments,
entrepreneurship
Exemption (aka an allowance) and how does it work - correct answer ✔✔allowance is used to reduce
amount of taxed income
Liquidity—what does it mean; what products are liquid - correct answer ✔✔the degree of ease in which
assets can be sold
Gift cards and how they work (a monthly inactivity fee may begin after 12 months - correct answer
✔✔closed loop system and open loop system
Discretionary income or budget surplus - correct answer ✔✔not allocated for food or shelter
Money orders (high rate of counterfeits): - correct answer ✔✔A money order is 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 specified figure (for example, the United States Postal
Service limits domestic postal money orders to US $1,000.00. US 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 answer
✔✔there is a belief that money has value and therefore is accepted
Opportunity cost - correct answer ✔✔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
, Role of the Treasury Department - correct answer ✔✔collects taxes, prints money, issues treasury bond
Pay Yourself First - correct answer ✔✔automatically route money from paycheck to savings (before
paying bills).
CD: What is it 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.
Institutions that 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
Overdraft protection (opt in regulation) and how it works - 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.
Compound Interest - correct answer ✔✔interest added to principal - interest earned on interest
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.
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
Rule of 72: how long (many years) will it take to double an investment? - correct answer ✔✔Divide 72 by
the interest rate to be earned: 72 divided by 3% interest = 24 years (if you are given the number of years
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