WISE! Test Practice 2 (39 Questions)

Why does a corporation issue bonds to the public?

• It wants to borrow money.

• It wants to lend money.

• It wants to decrease the price of its stock.

• It wants to increase the price of its stock.

Answer explanation

Remember, bonds are like loans that you as an individual can make to governments and businesses.

When a person increases the number of payroll exemptions, he will have

• an increase in his net income.

• a decrease in his net income.

• no change in his net income.

• a reduction in his Social Security payment.

Which of the following choices lists assets from MOST liquid to LEAST liquid?

• Savings account, certificate of deposit (CD), real estate.

• Money market account, bonds, checking account.

• Stocks, savings account, money market account.

• Bonds, real estate, certificate of deposit (CD).

What is the advantage for a person to have his paycheck directly deposited into his bank account?

• Check-cashing stores only cash personal checks, not paychecks.

• Paycheck funds are available faster than if the person brought the paycheck to the bank.

• Taxes deducted from gross pay are lower if the paycheck is sent directly to the bank.

• Paycheck funds will only be spent on budgeted items.

What might cause the price of a stock to change on a particular day?

• The corporation's finance committee changes the stock price quarterly.

• The company announces that it will release a new product.

• The president of the company declares an increase or decrease in the price of the stock.

• Nothing: prices are fixed at the time the stock is issued for sale to the public.

Answer explanation

Stock prices are ultimately determined by supply and demand and the perceived value of companies.

If raising the deductible on car insurance coverage for collision from $200 to $400, the premium will be

• a lower amount.

• the same amount

• a different amount each month.

• billed monthly instead of annually

Why are mutual funds considered a wise investment?

• They pay a fixed rate of interest over a set period of time.

• They are insured by the federal government.

• They diversify a person's portfolio among a number of stocks.

• They require a high rate of return.

If you only had liability car insurance and you were at fault in an accident, what would your insurance cover?

• Your car and your medical bills.

• The other person's car and medical bills.

• Nothing.

• Your car only.

If a person pays only the minimum monthly amount on a credit card bill, the person will

• be charged interest on the remaining balance.

• avoid interest charges completely.

• reduce the credit limit.

• raise his credit score quickly.

When a person uses a debit card:

• The money is loaned by the bank.

• The money is immediately deducted from the person's account.

• The person is charged interest.

• The person builds up a credit history.