Wise Practice Test

certificate of deposit

If you believe interest rates are going to fall in the near future and remain low for a considerable period of time. You should invest in:

Savings account interest

Is taxable

No insurance

First get insurance against Losses resulting from an illness, accident, or disability

Department store charge cards.

is a revolving live of credit that is offered by banks There is a limit set on the line of credit and the funds

debt ratio

shows the relationship between debt and net worth.

Rising interest

Can lower stock prices because of lower business profits

usury laws

Charging excessive interest rates on loans

New York Stock Exchange (NYSE)

The largest of these markets is the New York Stock Exchange,Also known as the "Big Board"

The annual percentage rate (APR)

The true cost of credit that must be disclosed on a loan agreement

treasury bill (T-bill)

These bills are backed by the full faith and credit of the US government, therefore considered relatively risk free

Deposit slips

list the cash deposit separately from the check as well as the total of the deposit

Financial planning

need to be reviewed and adjusted to accommodate changing needs and goals.

deductible

the amount of money that the policy holder pays when a claim is settled.

budget variance.

the difference between the budgeted amount and the actual amount that you spend

bankruptcy

will appear on the person?s credit report for 10 years

get advice from your friends

will help you the least in managing your money?

Short-term savings instruments

your money will be available to invest in a higher interest instrument in the near future.

dividend reinvestment

using dividends previously earned on the stock to buy more shares

Notify the lending institution about state usury laws

when he believes he is being charged too high a rate of interest for a loan by a lending institution?

The Securities and Exchange Commission SEC

Before a company can raise capital by issuing stocks or bonds, it must register the stock or bond issue with the

liquidity

being in cash or easily convertible to cash, How easily an asset can be converted into cash

Social Security

benefits depends on the person?s earnings over a lifetime of work

cash value of a whole life insurance

calculated amount of money which includes the premiums paid as well as the interest on that money.

stock split

A division of shares of a company into a larger number of shares. A 2 for 1 _____ allows a shareholder to double the number of shares but worth one half of their previous value.2-for-1 ______on 40 shares that is worth $80 would result in 80 shares at $40 at the time

common stock

the most basic form of ownership, including voting rights on major issues, in a company

Financial planning

the process of developing and implementing a coordinated series of actions to achieve financial success.

Securities

All of the investments, including stocks, bonds, mutual funds, options, and commodities, that are traded.

electronic funds transfer (EFT) is:

An ATM transaction,authorize a financial institution to debit or credit an account

Series EE Savings Bonds

Are exempt from state and local taxes.

Credit unions

Are insured by National Credit Union Administration (NCUA),up to $100,000

Monetary policy

The Federal Reserve uses to regulate the nation's money supply?

ATM (Automated Teller Machine)

a computer terminal that you can use to make deposits, withdraw cash, transfer money between accounts, check your account balances, and pay some kinds of bills

Installment loan

a loan repaid with interest in equal periodic payments

treasury bill (T-bill)

a secure, low risk investment

mortgage loan

closed-end credit,made at a specified interest rate for a specified time period.

Money in the United States includes:

consists of coins, paper currency, checking account balances on which checks can be drawn, savings deposits, and time deposits such as CDs and money market funds.

Automobile insurance

covers motor vehicles, including automobiles, trucks, and motorcycles, the injuries to the driver and passengers

rate of inflation

determines the time value of depositing into a savings account, and the interest rate and

Identity Theft

exposes consumers to greater likelihood of fraud and/or identity theft.

premiums

Low cost items given to the consumer at a discount or for free.

emergency fund

Should be an important consideration when saving money

debt ratio

The lower the ratio the better off financially the person is.

Department store charge cards.

open-end credit

Financially literate?

They understand the basics of personal finance and money management

uncollateralized loan

A personal loan without assets to cover the loan amount.

collateralized loan.

When a person brings an item to a pawnshop to obtain cash, the transaction is considered

preferred stock

stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights

Certificate of deposit

has the most predictable income?

Truth in Lending Act

The Truth in Lending Act requires that the finance charge and annual percentage rate be disclosed to the consumer in advance

deductible

250 deductible, means the person will have to pay the first $250 which will be deducted from the claim settlement paid by the insurance company.

Securities

A pharmacy is to drugs as the American Stock Exchange is to:

Money orders are:

A purchased certificate to pay a specified amount to a specific payee

The Securities and Exchange Commission SEC

Agency created in 1934 that monitors the stock market and enforces laws regulating sales of stocks and bonds

Finance charge

Finance charge = principal x stated interest rate x time (in years). The finance charge is used to calculate the annual percentage rate (APR)

Capital Gains Tax

If held over one year are considered long-term capital gains and are taxed at a lower tax rate or in some cases are not taxed at all.

Garnishment

Occurs when a creditor obtains a court order requiring an employer to attach an employee's earnings in order to pay back a debt.

cash value for whole life insurance

Policy that accumulates cash value is more expensive than a policy that does not accumulate cash value

debit card

Purchases made with your debit card are usually Deducted immediately from your checking account

How to reduce fees paid for ATM transactions?

When making supermarket purchases with a debit card, a person adds $50 in cash to the transaction instead of using an ATM machine.

Short-term savings instruments

Which investment would you choose today if you believe interest rates will go up?

personal property floater

Would be appropriate for a woman receiving a very expensive piece of jewelry, but has homeowners insurance.

ATM Pin number

You should never write any PIN on something that might be stolen. Write your PIN down and keep it in a secure place in your home.

personal property floater

additional property insurance that covers the damage or loss of a specific item of high value

stock split

an increase in the number of outstanding shares of a corporation without changing the shareholders' equity

capital gains

are profits made from the sale of capital assets such as stocks and bonds

Notify the credit card companies in order to negotiate a new payment plan.

Notify the credit card companies in order to negotiate a new payment plan.

US Treasury Department.

must notify be to track large deposits, the federal government requires that deposits of $10,000 or more

certificate of deposit

A long-term, fixed rate

Series EE savings bond

financial product can you buy for $25, is safe, and will be worth $50 at a future date?

excise tax

government imposes a tax on specific goods and services such as alcohol, cigarettes, gasoline, and airline

Federal Housing Administration (FHA) loan

insures lenders who make mortgage loans that are riskier than regular bank loans because

purpose of Insurance

is to insure major potential losses and handle small losses from one's own resources.

A person is depositing $20 in cash and a check for $50. On the checking account deposit slip, the person should

list the cash deposit separately from the check as well as the total of the deposit.

direct deposits

money is generally deposited in their checking account sooner, Directly from your paycheck

debt ratio

calculated by dividing liabilities by net worth

variable expenses

change from one period to another,examples Electricity and food expenditures

Capital gains

provides an increase in assets or wealth?

Collateral

tangible asset that is used to secure a loan. In the case of a mortgage, the actual house or apartment serves as the collateral for that loan.

Capital gains

tax deferred until the asset is sold,

Why does a corporation issue bonds?

To raise money for expansion or other company operations

Liability insurance

insurance that provides protection from claims arising from injuries or damage to other people or property

collateralized loan.

A loan that is secured by collateral, properties or assets that are subject to seizure on default.

Credit union

Credit unions are not-for-profit savings and lending financial institutions, owned by its members

Credit unions

Credit unions usually pay the highest rates of interest because they have lower risks and costs of operation. They are not-for-profit organizations

dispose of a credit card

Cut up the card, put parts in different garbage bags, and instruct the credit card company in writing or by phone to close the account

Certificate of deposit

Most certificates of deposit (CDs) are issued with an interest rate that is fixed at a specified rate for the entire term of the deposit.

Interest rate

The cost to use someone else's money for a period of time is

Finance charge

The finance charge is the amount charged by the lender for any kind of credit