W!SE 1-25 Practice Financial Literacy Certification Test

It is usually a good idea to borrow for

• Something that increases in value over time

• The amount needed to pay bills each month

• Anything that will make the person happy

• Anything if the interest rate is low

A person generally pays a lower interest rate on a car loan than on a personal loan because the

• Price of new cars increase each year

• Car is collateral for the loan

• Car is insured

• Loan on the car requires a cosigner

The Federal Reserve System (fed) helps protect depositors and its member banks by setting

• Requirements as to where a member bank may advertise their products and services

• Limits on the number of depositors a member bank may have

• Requirements as to the amount of money a member bank must have on deposit

• Limits on how many branches a member bank can have

The reason that a person should AVOID making a check payable to “cash” is that

• Anyone can cash the check if it is stolen

• Checks written to cash can only be written for amounts under $100

The government taxes cigarettes in order to raise revenue and to

• Encourage tobacco growing

• Discourage smoking

• Provide money to small store owners

• Pay for product advertising in the U.S.

A person refuses to open a savings account because he worries that the bank will fail and he will lose all of his money. What does this person need to know?

• Banks have to buy insurance to cover the total amount of money that is withdrawn each day

• Banks are not permitted by law to go bankrupt

• The Federal Reserve System (Fed) matches the amount of money that member banks have on deposit

• Accounts at the Federal Deposit Insurance Corporation (FDIC) member banks are insured up to $250,000

What is a good strategy to build wealth for the future?

• Pay for goods and services using credit cards

• Pay bills when received and use a checking account

• Deposit money into both savings and investment accounts each month

• Have paychecks automatically deposited into a checking account

When applying for a loan, the higher a person’s credit score/rating

What needs to be included in a will?

• The name(s) of beneficiaries

• The cause of death

• Where the will is to be read

• The person’s monthly budget

The reason corporations issue bonds is to

• Encourage Americans to save

• Increase their employee salaries

• Borrow money from investors

• Increase the number of their customers