W!SE Practice Test #1 Revised 11/13/24

Front

Maximum liability for unauthorized purchases on a stolen credit card reported after receiving the statement.

Back

$50

Answer explanation

Under the Fair Credit Billing Act, if a credit card is reported stolen, the maximum liability for unauthorized charges is $50. However, if reported promptly, the liability can be reduced to $25, making this the correct answer.

Front

Consumers who declare bankruptcy are still responsible for:

Back

Tax claims and student loans

Answer explanation

Consumers who file for bankruptcy are still responsible for tax claims and student loans, as these debts are typically not dischargeable. Other debts like mortgage loans, credit card balances, and car loans may be discharged.

Front

Mutual funds are:

Back

An investment that contains a wide range of different investment instruments, providing diversification

Answer explanation

Mutual funds are investment vehicles that pool money to invest in a diverse range of assets, which helps reduce risk through diversification. This makes the correct choice about their nature.

Front

Banks use savings account deposits to:

Back

provide loans to consumers and businesses

Answer explanation

Banks use savings account deposits primarily to give loans to consumers and businesses, as this is a key function of their operations, allowing them to earn interest and support economic activity.

Front

Why is term life insurance usually the least expensive type of life insurance?

Back

The policy only pays a death benefit

Answer explanation

Term life insurance is usually the least expensive type because it only pays a death benefit, without any cash value accumulation or lifetime coverage, making it simpler and cheaper than other types of life insurance.

Front

Neil will be traveling by plane through Southeast Asia for a six-week vacation. Which step will not provide protection during the trip?

Back

Carry his passport

Answer explanation

Taking his passport is essential for identification and travel but does not provide protection against risks like lost baggage or medical emergencies, unlike the other options which offer specific coverage.

Front

Do checking accounts pay interest?

Back

Some types of checking accounts pay interest

Answer explanation

Some checking accounts, known as interest-bearing accounts, do pay interest, while others do not. Therefore, the correct answer is that some types of checking accounts pay interest.

Front

The new coins and bills enter the general economy, consumers and businesses, through the distribution system of: Treasurer of the United States, Secretary of the Treasury Department, Federal Reserve System, United States Mint

Back

Federal Reserve System

Answer explanation

The U.S. Federal Mint , which is an operating bureau of the Department of the Treasury, makes new coins. The U.S. Bureau of Engraving and Printing prints new currency. The coins and currency are sent to the Federal Reserve Banks, which distribute it as needed. Most new coins and currency replace damaged or worn out coins and currency being taken out of circulation.

Front

A factor that is likely to affect the market price of a stock is: The age of the corporation, The number of corporate employees, Corporate earnings, Salaries

Back

Corporate earnings

Answer explanation

Corporate profits directly influence a company's financial health and growth potential, making them a key factor in determining stock market prices. Higher profits typically lead to increased stock prices.

Front

Credit Score

Back

A number used to determine how much credit to extend to a person.

Answer explanation

A credit score is a numerical representation of a person's creditworthiness, used by lenders to decide how much credit to extend. The correct choice accurately defines this purpose, unlike the other options.