W!SE PRE TEST

For the past two years, a person has been able to save 5% of her income. This year, her income is the same as last year. She is purchasing the same goods and services but she has no money left for savings. What is the most likely reason that she is unable to save money?

• Deflation

• Recession

• Inflation

• Depression

401 (k) Contribution is a Retirement Plan

• True

• False

John puts his $100 birthday gift in a savings account. Mary puts her $100 birthday gift in her piggy bank. By the time of their next birthdays, John has $106 and Mary only has $100. The six dollars in John's account is an example of

• the Rule of 72

• diversification

• interest earned

• liquidity

In determining a person's net worth, which of the following is considered an asset?

• A certificate of deposit (CD)

• A credit report

• A medical bill

• A student loan

All effective financial goals should

• be solely based on current needs

• be achieved in five years

• have target dates for achievement

• have the approval of a financial advisor

A person has been contributing regularly to her company's 401(k) plan. She decides to leave the company. It would be financially advisable for her to

• move the money from the 401(k) plan into another qualified retirement plan

• withdraw the money from the 401(k) plan and use it as an emergency fund

• withdraw the money from the 401(k) and deposit it into her savings account

• use the money from the 401(k) plan to make home repairs

What happens if a person loses a $30 store gift card that a friend bought with cash?

• There is no loss since the card is restricted to use by the owner

• There is no loss if the card owner reports the loss to the police or the store

• The owner can redeem 50% of the card if the owner files a claim with the store

• The owner has actually lost $30 unless he has the card number or proof of use

Which action is an example of a person following the advice to "pay yourself first"?

• Paying monthly bills then depositing any money available into a savings account

• Taking $40 from each paycheck to deposit into a savings account before paying bills

• Investing in blue chip stocks once a year

• Comparing prices when making a large purchase

Predatory lending is defined as

• giving a person a loan with unfair terms, a high interest and fees

• paying a person below the minimum wage that is required by law

• stealing a person's property and identity

• taking a person's money without permission

In order to be a stockbroker, a person must have

• a license earned from passing a test

• experience as a volunteer

• a law degree

• worked in a bank for at least 2 years