W!SE Test
Lisa lost her debit card. She did not report it missing for one week. If an unauthorized person used her debit card, her maximum liability is:
$500
If you have been denied credit, a job, a license, an insurance policy, or a loan based on your credit report. You are entitled to receive a free copy of that credit report within how many days of denial?
60
Patty is selling her car through a newspaper advertisement. When she finds a buyer, she wants a form of payment which is guaranteed to be good. Which form of payment should she avoid?
A check
Why is maintaining a good credit history important to your future?
A good credit history can help your obtain a job, or a loan
Predatory lending practices do not include which of the following:
A loan that you can afford with an interest rate that is the same as the interest rate being charged by at least three other financial institutions
What is a credit score?
A number used to determine how much credit to extend to a person.
Which statement best describes the relationship between a person's educational level and that person's potential earning power?
A person with a professional degree is likely to earn at least four times as much per year as a person who did not complete high school
Troy has $50 a month transferred electronically from his checking account to his savings account. This is an example of:
A savings plan
A blue-chip stock can be described as:
A stock with a good reputation for quality management, products and services
The denominations of coins in the United States are:
$.01, $.05, $.10, $.25, $.50, and $1.00
The most liquid type of investment is:
A money market account
John's job provided the main income for his family. He died unexpectedly and had no life insurance. The probable financial consequence for his wife and two children does not include:
An increase in income and expenses
Mutual funds are:
An investment that holds a wide range of different investment instruments, providing diversification
David bought stock for $4,000 and one year later he sold it for $1,000. The sale resulted in a:
Capital loss
Nora needed to make a long-distance call from a pay phone and did not have the cash. She was able to make the call by using her:
Cash card
Which financial product may pay a dividend?
Common stock
A factor that is likely to affect the market price of a stock is:
Corporate profits
Using someone else's money, promising to repay at a future date, and paying a fee for use of the money, is the definition for:
Credit
If a business wants to raise capital but not create debt, it can:
Issue common stock
Which documents should be stored in a safe-deposit box?
Mortgage loan papers.
Ellen, Barbara, and Paul all charged $1,000 on their credit cards last year. Who paid the most in finance charges?
Paul, who only pays the minimum amount each month
Financial services and products generally offered by banks and credit unions include:
Savings and loans
A credit card finance charge is:
The dollar amount it cost to use credit
You used your credit card to buy flowers at the florist. The dollar amount of the purchase was:
Added to your credit card bill and you pay for it at a later date
A type of electronic funds transfer (EFT) is:
An ATM transaction
Which of the following insurance covers vehicles?
Automobile
How can you avoid becoming a victim of identity theft?
Avoid giving your Social Security number on a phone call you did not initiate
You have a checking account balance of $100 and you deposit a personal $200 check from your brother in your checking account. When will you be able to withdraw $150 in cash?
3 to 7 days later, depending on your bank's check clearance policy
A creditor may deny credit because of:
Bad credit history
How can you protect yourself against credit card fraud?
Be extremely careful about disclosing account information to unsolicited callers
When the market has a steady decline in stock prices over a period of time, it is known as a:
Bear market
When a corporation or government agency borrows money from an investor and pays interest and principal to that same investor, it is a:
Bond
Carmen sold her stock in ABC company for a higher price per share than she bought it for. She realized a:
Capital gain
A creditor determines your creditworthiness based on:
Character, collateral, and capacity
Most Consumer Credit Counseling Services (CCCS):
Charge a fee for setting up and administering a debt repayment plan
Erika and Mark received an inheritance of $100,000. They plan to invest their inheritance money to buy a house in six years. Which of the following carries the greatest risk?
Common stocks
Michele and Claudia have a seven year old son. They won $50,000 on a TV game show and want to put it away for their son's education. Which of the following has the highest potential growth and the highest risk?
Common stocks
Robyn is an investor. Which financial product makes her a shareholder in a corporation?
Common stocks
A blank endorsement on a check:
Creates a check that can be cashed by anyone
The National Credit Union Administration (NCUA) insures accounts in:
Credit unions
Claire got a new credit card from American Bank and wants to cancel her USA credit card. The best method is to dispose of her USA credit card is to:
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
The best suggestion you gave a friend who is writing a check for the first time is:
Date the check because it is usually proof of payment
Consumer Credit Counseling Services (CCCS) offer:
Debt repayment plans
You have a $2,000 loss. Your insurance company pays you $1,500 on the claim for the loss. The $500 the insurance did not pay is a result of your policy having a:
Deductible
The purpose of Insurance is NOT to:
Diversify an investment portfolio
Shares of stock are also known as:
Equities
New coins and currency make their way into the general economy, consumers and businesses, through the distribution system of the:
Federal Reserve System
Travelers checks, often used for vacations:
Function as cash and are easily replaced if lost
Debbie was behind on her stereo installment credit contract payments. As a result, the creditor seized and sold the stereo. The sale price did not cover all of the loan balance, the creditor got a court to order her employer to withhold part of her wages. This court order is called:
Garnishment
Identify the background color of a U.S. $5.00 bill
Green
John has a college student loan that he has to repay after he graduates. He will make his monthly payments over ten years. He has the following kind of loan:
Installment
Maxine has an auto loan that she has to pay. She will make monthly payments over five years. She has a(an):
Installment loan
Insurance is frequently described as a method of "sharing the risk" because the:
Insured shares the risk of loss with all the other policy holders
Jim is a college senior with $50,000 in student loans. He earned $2,000 last year. He has no savings so he charged a $5,000 vacation on his credit card. How would you characterize Jim's use of credit?
It is irresponsible use of credit because his current income is too low
Which factor would most likely lead to an increase the interest rate on a person's credit card?
Late payments
Who uses consumer credit reports in making decisions?
Lenders
Debbie owns a clothing store. She is concerned that a customer who is injured in the store will sue. Which type of insurance should Debbie purchase?
Liability insurance
The term used to describe the ease and speed with which you can convert savings or an investment to cash is:
Liquidity
Sara has invested in corporate bonds which are:
Loans to the issuer of the bond
Jane opened her credit card bill and was surprised by the amount she owed. She cannot pay the full amount of the bill this month. The lowest dollar amount Jane is required to pay by the credit card company is the:
Minimum payment
Susan gives Marie her ABC Credit Union debit card and personal identification number (PIN) so Marie could get $25 from Susan's bank account. Marie withdrew $100 instead of the agreed to $25. How can Susan get the $75 back?
No bank or government agency is obligated to reimburse Susan because she authorized Marie to use her ATM card and PIN
Dawn graduated from high school and wants to get a credit card. How can Dawn establish credit-worthiness?
Opening a checking account, making regular deposits, and avoiding penalties for insufficient funds
Which statement does NOT accurately describe a characteristic of cash value for whole life insurance?
Policy that accumulates cash value is less expensive than a policy that does not accumulate cash value
Gwen receives a bill from her auto insurance company, and she sends a check to the company to make sure her policy is not cancelled. The cost of her policy is called the:
Premium
Margaret wants to store a valuable coin collection and important papers. Generally, consumers should:
Rent a safe deposit box for their valuables
How can individuals be prepared for losing their job or having a large medical expense?
Save at least three months of income
Frankie's savings account has earned a lot of interest. He wants to know if he must pay taxes on the interest earned. What would the IRS tell him?
Savings account interest is taxable
Matthew and Alicia just had a baby. They received money as baby gifts and want to put it away for the baby's college tuition. Which of the following has the lowest potential growth rate over the next 18 years?
Savings accounts
The process of setting aside money and putting it to work by having it earn interest or dividends or gain value in the equities market with the idea of having additional funds to use in the future is described as:
Savings and investing
The federal agency that regulates the securities industry is the:
Securities and Exchange Commission
Which financial product can you buy for $25, is safe, and will be worth $50 at a future date?
Series EE savings bond
Consumer finance companies, which are often advertised on TV, are also known as:
Small loan companies
Neil will be traveling by air in Southeast Asia for a six-week vacation. Which step will not provide protection during the trip?
Take his passport
Doug wants to buy a car in two months, but does not have enough money. What is the best way for Doug to get the money he needs?
Take out a cash loan
Consumers who file for bankruptcy are still responsible for:
Tax claims and student loans
The only type of life insurance that does not develop a cash value is:
Term life insurance
You can continue to charge purchases on your credit card when:
The amount you owe on the card is below your credit limit.
When a borrower fails to repay a loan and there is a co-signer on the loan, the most likely result will be
The co-signer will be held responsible for the repayment of the entire loan plus fees or penalties
Victims of predatory lending practices are typically:
The elderly and people with a poor credit history
Employees prefer direct deposits because:
The money is generally deposited in their checking account sooner than it would be if they had to deposit it in person
Why is term life insurance usually the least expensive type of life insurance?
The policy only pays a death benefit
You are behind on your debt payments and go to a responsible credit counseling service, the Consumer Credit Counseling Services. How can they help you?
They can work with those who loaned you money to set up a repayment schedule you can afford to make
When James received his paycheck, he planned to cash it at a check cashing store. You advise him to cash it at his own bank if possible. Why?
They typically charge high fees
Which of the following statements is usually true about individuals who are financially literate?
They understand the basics of personal finance and money management
Why does a corporation issue bonds?
To raise money for expansion or other company operations
Which of the following investment products is guaranteed by the federal government?
U.S. Treasury notes
Jami lost her debit card. She did not report it missing for 3 months. If an unauthorized person used her debit card, her maximum liability is:
Unlimited liability
The price of a security may be affected by:
Wages
A high school student has begun to investigate the field of finance as a career choice. In deciding about the field, the student should focus on which question first?
Will I find a balance between financial rewards and personal satisfaction from work?
Which statement is FALSE about most ATM (Automated Teller Machine) cards?
You can always get cash anywhere in the world with no fee
A savings account earns the greatest amount of money when the interest on the account is compounded _______
daily
One example of a long-term retirement goal is to
deposit at least $100,000 in a retirement account
A company offers direct deposit of employees' earnings. The company will still provide each employee with a statement that lists the employees'
gross pay, the amount and type of deductions and net pay.
A person buys a homeowner's insurance policy with a $250 deductible, which means the person will
have to pay the first $250 which will be deducted from the claim settlement paid by the insurance company
A person buys a homeowner's insurance policy with a $250 deductible, which means the person will
have to pay the first $250 which will be deducted from the claim settlement paid by the insurance company.
A publicly held corporation announces it is planning to merge with another publicly held corporation. Based on this information, an investor should be aware that the price of the stock
is unpredictable
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
Generally, the higher the deductible on an insurance policy, the
lower the premium
When a self-employed person decides to purchase disability insurance it is generally to
protect against the financial effects of not being able to work
A teenage boy has opened a checking account. He is surprised to find that though he is getting a written bank statement each month he is not getting his cancelled checks returned. The teenager should be aware that the reason cancelled checks are NOT returned is to
save the bank money associated with returning copies of these checks.