wise test question flash cards

a person buys a ford motor company $1,00, 20 year bond paying 9% interest for his daughter. if he waits the full 20 years to redeem the bond for his daughter, the value of the bond will be

$1,000. a corporate bond investor generally has the right to receive semi-annual interest until maturity and the $ 1,00 principle at the maturity date. this bond will pay 9 percent interest yearly and the $1,00 principal at its maturity date to the bond owner.

which of the following is the safest investment ?

(t bills)The US government has never defaulted on its debt obligations to its bondholders, therefor treasury is highly confident that the principal and interest will be paid if held until the treasury bill matures. preferred stocks and corporate bonds carry a risk that the dividends or interest will not be paid.

the securities and exchange commission (SEC) and financial industry regulatory authority(infra) are both involved with?

FINRA and the sec are both involved with monitoring the buying and selling of stocks. firms is the largest independent regulator for all securities firms doing business in the us and its goal is to protect the investor and maintain market integrity. the SEC protects the investing public against impractical in the securities markets

most payday loans ?

The disadvantages of takings a payday loan are that interest and fees are extremely high and the borrower gets into an ongoing cycle of needing to borrow against future income.

this year, a person earned $50 in interest from his savings account. this interest income must be reported to the?

The interest earned on savings is considered taxable income. all taxable income must be reported to the internal revenue service(IRS) the federal agency in charge of collecting taxes owed to the government.

which of the following is the safest investment ?

U.s government has never defaulted on its debt obligations to its bondholders. therefore in a Treasury bill are highly confident that the principal and interest will be paid if held until the Treasury matures. preferred stocks and corporate bonds carry risk that dividends or interest will not be paid.

the main difference between a personal check and a cashier check is that a cashier check?

a cashier check is a financial certification that offers more security because they are guaranteed by the issuing financial institution. a cashier check can be mailed can be and/or written to any person or institution. they are often used to make large payments.

the advantage of mutual funds is that they are ?

a mutilate funds investments portfolio between 100 and 200 different types of investment, including, for example, stocks, bonds, and money market securities. this diversification minimizes the investor's risk. a mutual funds portfolio is managed by a professional fund manager which may be advantageous to an inexperienced investor, they are not guaranteed to increase in value.

a financial product that allows a person to invest his money in a variety of stocks, bonds, and other securities is a?

a mutual find is a diversified portfolio of stocks, bonds, other type of securities that are managed by a professional.

Does a person want to start contributing to a traditional individual retirement account (traditional IRA) which of the followings statement is true?

a person can only contribute the legal limit set by the government each year. a traditional IRA serves as a way to save for retirement.

a person wants to start contributing to a traditional retirement account( traditional ira) which of the following statement is true?

a person can only contribute up to the legal limit set by the government each year. traditional IRA servers as a way to save for retirement

financial well being means that a person has?

a person has good financial health/ wellness when he has a positive net worth. thus, his assets have monetary value) total more than his liabilities(debt) assets can include but are not limited to money, stocks, bonds and real estate.

when a person needs health care, she goes to her doctor. She charged a co-pay. what type of health insurance does she have?

a person who has a health maintenance organization (HMO) has a pay a low co-payment fee for visiting their doctors and specialists.

if a shareholder cannot attend the annual stockholder meeting, she can assign her common stock voting rights to someone else by signing and returning to?

a proxy, which is kind of absentee ballet, is written authorization given by a shareholder ( person who owns shares of stocks in the public corporation) to someone else, usually the corporate board of directors, to represent him/her and vote shares at a stockholders meeting. it is usually easier for shareholders to vote by email, or the Internet through a proxy than attend the annual,l meeting.

generally, how does advertising influence the price of a product?

advertisement cost of money. these costs are passed on to the consumer. This means that when buying a popularly advertised brand product the proceed paid include the cost associated with that advertising.

a person has a student loan that he has to repay after he graduates. he will make his monthly payments over ten years. what type of loan does he have?

an installment loan is paid back in monthly payments for one or more years. this loan is a ten-year loan.

the main advantage of paying with a money order instead of paying with a personal check is that?

anyone, with or without a bank account, can purchase a money order, money orders can generally be replaced if they are lost. they are generally purchased at any post office or other issuing agency.

a person who owns 10 shares of stocks in a public corporations is entitled to?

as a share owner, a person has certain privileges with the corporation . one of these privileges is the right to vote for the board of directors of the corporation. a share owner does not however, have the right to be involved in the day to day decision making of the corporation such as hiring employees.

a true statement about the relationship between budgeting and a person's stage of life is that ?

as stages or periods in a person's life change, their needs and desires change too and their budgets need to reflect their priorities.

a true statement about the relationship between budgeting and a person stage of life is that?

as stages or periods of life change, their needs and desires change too and their budget must reflect their priorities.

when applying to borrow money, capacity is generally referring to the borrower?

capacity measures a borrower's ability to repay a loan by comparing current income against recurring debt payments. current income is the factor most closely associated with a borrower's ability to repay a loan.

a good practice when using credit cards is to ?

credit card companies charge considerable interest for not paying the complete balance each month. therefore, not paying each month's balance in full is a bad habit that should be avoided. it shows the person is spending more money than she can afford, which is a sign of a poor money manager.

a person borrowing money for a new car is likely to find the most favorable interest rate at?

credit unions are not for profit organizations that exist to serve the needs of their members and their interest rate is generally better than other financial institutions. a consumer should shop for the lowest interest rate available.

current events covered in the news and media may have an impact on the?

current events( for example, war or major oil spill) can affect the business outlook for a company and the price of its stocks. good news( a new product being launched for example) generally causes an uptick in prices and negative news(like an oil spill) generally results in price going down.

the dollar amount of a debit card purchase is usually?

debit card purchases are immediately deducted from a person checking account balance. the person must have at least the amount of the purchase in the account to which the debit card is linked.

a recession is characterized by ?

during a recession, there is a decline in employment, total output, income, and trade lasting from six months to a year. the recession phase is described as a decline in business activity or a downturn in the economy. if a recession becomes the server, it is called a depression.

an example of an electronic funds transfer (lEFT) is a ?

electronic funds (EFT) are requested through an electronic terminal. telephone or computer and authorize a person's financial institution to transfer from or to the account. direct deposit of a paycheck is an example of an eft whereby a paycheck is automatically deposited into a person's bank account. EFTS can also be used to pay the electricity bill and make installment loan payments or transfer money between accounts.

which of the following should not influence financial decision?

financial advice is given in newspaper advertisement people should not rely on the information given in an advertisement or talk show to make financial decisions

an employer gets a court order to garnish an employee wages to pay defaulted loan. what does this mean >

garnishment is an action taken when a person has debt that has not been paid for a long time. when an employee s salary is garnished, it means that the employer is given a court order to withhold all or part of an employee's wages and must send the money to the court, the government, or to the person who has won a lawsuit against the employee. an employee's salary will be garnished until the debt is paid in full.

a person with health insurance received a $300 medical bill. the insurance company will not consider paying a claim unless the?

health insurance policies generally have a deductible that the policyholders has to pay first before they will paying medical claims. the medical insurance company pays the remaking 80% of the allowable medaka bill.

when a person's savings in bank accounts are earning 2% interest and inflation is 5%. the purchasing power of the person's savings is?

if the annual rate of inflation is 5% and the earned money in the savings is going to have less purchasing power at the end of the year. when interest rates are greater than inflation, the purchasing power of the savings increases.

when a person's savings in a bank account are earning 2% interest and inflation is 5%, the purchasing power of the person's savings is?

if the annual rate of inflation is 5% and the interest earned on money is 2%, the money in the savings is going to have less purchasing power at the end of the year. when interest is greater than inflation, the purchasing power of the savings increases.

a person has minor accident with her car. although her insurance would have covered the cost of repairs, she would not to report the accidents. what is the likely reason she not to report the accidents?

if the person does not report an accident, no claims are filed, and the company is not responsible to pay any money. it is illegal not to report an accident. people may not want to report an accident in fear that their auto policy premium will be increased because accidents is one the factors insurance companies use to determine the level of risk and cost and the premium for a person,

if a person has a health maintenance organization(HMO) health insurance plan, does it means that the person will?

in an HMO, the insured person pays co pay , a part of the fee for medical service, when he sees a doctor within the HMO network of doctors.

if a person has a $250 deductible on a homeowners insurance policy, it means that the?

in this case, the deductible is $250 and the insured person must pay before the insurance company will pay toward a claim.

who benefits from trading securities in the secondary market?

investors benefit from trading stocks in the secondary market. most stocks and bonds are bought and sold by investors on the secondary market

investors willing to accept high risk are ?

investors who are risk tolerant accept the high risk of loss of their investment typically for the possibility of very high returns.

an inexperienced investor wants to begin buying stocks. she would buy stock?

it is financially smart for an inexperienced person to buy shares of stocks through a stockbroker who is knowledgeable about stocks, can answer questions, and make reasoned recommendations. the online broker simply executes the trades and does not answer questions. Neither nor the securities and exchanges commission buy or sell securities for clients.

a person takes a job that offers a 5% matching contribution to a 401(k). Does this mean that for every dollar the employee contributes to the 401(k) the employer?

many employers offer their employees the opportunity to join a matching 401(k) retirement plan this require employers to match the contribution made by the employee to the 401(k) up a maximum amount, which in this case is 5% of the employee salary, if the employee contributes 15% of salary, the minimum amount will contribute 5% of the employee salary. it is good for employees to contribute at least the minimum amount that maximizes his employer contribution.

checking account overdraft protection at a bank is an optional service that is?

overdraft protection is a short term loan with a very high interest rate for checking account owners that applied for and make use of the service. this service will pay checks when there are not sufficient funds in the checking account.

why is important to take a driver education course?

people who have completed driver education classes will have lower insurance premiums, this is because insurance companies predict that people who take driver education classes will have fewer accidents and speeding tickets, which reduces the risk for an insurance company.

which example is a predatory lending situation ?

predatory lending uses abusive practices in any type of credit and tends to occur in low-income neighborhoods, particularly those with a large number of elderly or minority residents who have a poor credit history, or need cash quickly. these lenders use deceptive advertising and high-pressure salespeople to give repayment terms that the borrower can't afford.

a person contacted a mortgagee about refinancing her mortgage. the mortgage company gave her a home loan with an unusually high cost and without regard to her ability to repay, this practice is called?

predatory lending uses abusive practices in any type of credit. including applicants for home mortgages. the practices tend to occur in low income neighborhoods, particularly those with many elderly or minority homeowners who have poor credit history or need cash quickly. these lenders use deceptive advertising and high pressure salespeople and give repayment terms that borrowers cannot afford.

if a public corporation wants to raise capital debt not create debt it can?

public corporatism raises capital( money) when it issues stock shares in the ownership of the company, issuing stock does not create debt. issuing bonds or borrowing money from a financial institution or the government does create debt for the company.

an example of a short-term financial goal for high school sophomores would be?

short term one year or less to achieve such as going to a concert or getting a paid internship

a good reason to get a credit card from a credit union is that their credit cards?

since credit unions are organized as nonprofit organizations, their stated goal is to provide services for their members at cost. this usually includes charging a lower interest rate and fee on credit card purchases not paid off completely each month. they may also offer members loans at lower rates than banks.

one service a stockbroker provide is?

stockbrokers or financial advisors help their individual investors by giving them financial advice. and buying or selling stocks, bonds and other securities. they work for securities firms also known as a brokerage firm or broker dealer.

a person was told by her insurance agent that need she needs renters insurance to cover the potential loss?

tenants who rent needs renters insurance to cover catastrophic damage, caused by fire, theft or vandalism. personal belongs such as couch, camera computer equipment, are covered in the apartment or away form home. Walls and floors of an apartment are the responsibility of the one landlor.

which of the following investment products is considered safe because it is backed by the federal government?

the US government issues Treasury notes which are considered safe because they are backed ( not guaranteed) by the government that is unlikely to go out of business. common stock, corporate bonds and preferred stock are all issued by public corporations that go bankrupt, the entire investment can be lost

which of the following statements is true about the interest rate paid on the money in a bank savings account?

the banks savings accounts interest rates change are influenced by the federal reserve system.

a person who owned $ 10,000 whole life insurance policy died. the cash value of the insurance policy is $3,000. the person borrowed $2,000 from the policy. how much money will the beneficiary of the policy receive?

the beneficiary will receive $8,000. the cash value of a policy is only available to a policyholder while alive. once the policyholder dies, any cash value if forfeited. any loan outstanding has to be paid back form the proceeds of the policy first. the remaining money, if any, goes to the beneficiary.

why might someone decide to invest in a company bond rather than company stock?

the benefit of investing in bonds is a regular payment of interest that the investor receives for lending money to a company. The disadvantage is that the bond value does not go up if the company makes a profit and owing a bond does not give the bondholder the right to vote at annual meetings. buying a bond may or may not be safer than buying blue chip stocks.

a married couple had a joint credit card with both their names on the card. when they got divorced ,there was a balance owed of $2,00 who is responsible for the balance owed on that card?

the creditor can collect form the husband or wife. since they had a joint account, they are both legally responsible for paying the balance due on the account. joint accounts are co-regarded regardless of marital relationship or status.

a person bought a $50,00 life insurance policy. the $50,00 amount of coverage is called the?

the face value or death benefit is the amount of money that a life insurance policy will pay to the beneficiary on the death of the insured person.

an organization that provides students loan for students in need of financial assistance?

the federal government is the likely place for a student loan, for a government loan, a FAFSA ( free application for federal student aide) has to be completed.

the more risk an insurance company has taken when insuring a person,the?

the insurance company will charge a higher premium for taking more risk, the higher the risk for an insurance company, the more likely the insurance will have to pay on loss. for example, a driver who has had multiple accidents and speeding tickets is a high risk and more likely to have an accident. the insurance company will generally charge this driver higher premium because they are taking on greater risk with this driver than a driver with a record of safe driving.

to get lowest cost loan for a an automobile , it would be wise to?

the most important factor in calculating the cost of the loan is the interest rates. it is wise for a person to comparison shop for the lowest rated interest since the higher the interest rate, the more expensive the loan.

a person has several open department store charge cards she has not used in two years. there are no credit balances on these accounts. these charge cards may impact her application for a loan because they ?

the person could use these open accounts and, this will be considered in any credit application. if the maximum credit on the unused accounts together with the maximum credit on her active accounts adds up to more than she is likely to pay, it could be difficult for her to get a loan.

a person has several open department store charge cards she has not used in two years. there are no credit balances on these accounts. these charge cards may impact the application for a loan because they ?

the person could use these open accounts. and this will be considered in any application for credit. if the maximum credit on the unsure accounts together with the maximum credit on her active accounts add up to more than she is likely to pay. it could be difficult to get a loan.

a person pays $400 each year on her renter's insurance policy, the $400 is the?

the premium is the amount of money the insured person has to pay each year to have the renters insurance policy. if the renters insurance premium is not paid, the insurance policy will be cancelled.

the main reason for buying life insurance is provide money to the?

the purpose of life insurance is to provide money to replace the income that is lost due to the death of an income provider. it is protection for the insured beneficiaries(often his/her spouse and children)who will suffer financially without the income from the insured.

a person is applying for a car loan. a friend told him to compare the actual cost of one year car loan expressed as a percentage from three banks?

the true cost of credit/ borrowing expressed as a percentage is the annual percentage rate(APR)

which statements best describes the relationship between a person's educational level and that person potential earning power?

there is a direct positive relationship between educational level and potential earning power. a person with a professional degree/ higher level of education, for example, is likely to earn a great deal more than a person who never completed high school.

when interest rates are low, it a good time to?

when interest rates are low, it is generally a good idea to borrow for a large purchase like a car or a home.

before a person borrows money from a bank to make a major purchase, which question is most important for the person to answer?

when making a major purchase that requires a person to borrow money the individual needs to consider the cost of borrowing money in addition to the actual cost of the item. thus, he needs to consider the real total cost of the item bought by adding the interest that willl paid over the life of the loan to the price to determine whether he should borrow

a person bought 200 shares of general electric at $18 per share. she sold them for $28 share realizing a?

when stock is sold for a higher price than it was purchased, the profit is called a capital gain. in this case, the purchase price was $3,600($18share 200share) and the sale price was 5,6000( $28 sharex 200share). the investor capital gain was $ 2,00 captial gain.