W!SE review quiz

when someone goes to a pawn shop to sell an item for cash, what type of loan is it?

• secured loan

• unsecured loan

• collaeralized loan

Answer explanation

collateralized - there is an asset at risk of being lost (a necklace, a ring, etc). think of the item being "collateral damage".

uncollateralized means there is not an asset to cover the loan amount.

what is considered open-ended credit?

• car payment

• grocery store credit card charge

• mortgage payments

Answer explanation

open-ended means that it is not the same price every single time (ex: grocery store bill). a car payment is a fixed price - it never changes.

when you put money into a savings account - you are making a

• loan

• good choice

• deposit

do stocks and real estate have predictable outcomes?

• no

• yes

Answer explanation

they do not have predictable outcomes - there is risk involved with these.

an example of a predictable outcome would be a certifcate of deposit, or a monthly paycheck.

if you want to insure a very expensive item, such as a watch that ring that has been passed down for generations, you would want a

• jewerly insurance

• homeowner's insurance

• personal property rider

Answer explanation

rider insurance can be added to your already existing insurance policy whenever you want - it can also be removed.

does whole life insurance accumulate interest for the cash value?

• no

• yes

Answer explanation

when you decide to cash out your whole life insurance, you would get more than what you originally paid for.

ex: if you have a $10,000 whole life insurance policy, when you cash it out years later, you will recieve more than $10,000 due to premiums you've paid, as well as interest.

one way to improve your credit score

• buy more expensive things so that you can prove you have the money

• pay bills on time

• accumulate debt and then pay it off all at once

what should you do if you realize your credit is too much for you to pay on time

• call the IRS and ask to not pay taxes that year

• call your credit card company and cancel your card completely

• negociate a payment plan

Answer explanation

credit card companies are able to negociate payment plans when you reach out to them. this will hopefully get you back on track if followed strictly.

if you have multiple credit accounts open that you do not use, what could happen when applying for a mortgage

• it will be difficult for you to get a loan for a mortgage

• it will be easier for you to get a loan for a mortgage

• it should not have an affect since you have no outstanding payments on these cards

Answer explanation

credit companies want you to spend money - that is how they make their money. you want to use your credit cards, but you want to use them wisely.

which financial product pays the highest rate of interest?

• stocks

• savings account

• CD (certificate of deposit)

Answer explanation

CD is referred to "certificate of deposit" (you need to know this lol)