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WorksheetsWISE TEST REVIEW
Total questions: 61
Worksheet time: 31mins
What gives fiat money its value in the United States?
Confidence in the U.S. government
The amount of gold backing it
Support from other countries
Its use in other countries
How do you calculate a person’s net worth?
Subtract liabilities from assets
Add income and expenses
Multiply savings by income
Subtract taxes from gross income
Which of the following is an example of a liability?
A car you own
Money in a savings account
A student loan
A paid-off house
What does depreciation mean?
A decrease in the value of an asset over time
An increase in bank interest
Paying off a loan early
Earning more income than last year
Which of the following is a SMART financial goal?
Save $500 for a new phone in 4 months
Become rich fast
Save whenever possible
Spend less on fun stuff
Which of these is an example of a fixed expense?
Groceries
Gasoline
Rent
Entertainment
What is net income?
Total pay before taxes
Money earned before deductions
Take-home pay after taxes and deductions
Income from a side job
What is a key benefit of a Roth IRA?
Withdrawals are tax-free in retirement
It's only for self-employed workers
You have to pay taxes when you take the money out in retirement
There is no limit on how much you can contribute each year.
What is a 401(k) employer match?
When your employer invests for you
When your employer matches some of your retirement contributions
When the government adds money to your account
When you are required to match company stock
What can you do with your 401(k) when changing jobs to avoid penalties?
Spend the money before switching
Let your employer keep it
Close the account
Roll it into a new retirement account
At what age can you withdraw from retirement accounts without a penalty?
55
59 ½
65
70 ½
Which agency is responsible for collecting income taxes?
FBI
Social Security Administration
Internal Revenue Service (IRS)
How much money should you ideally have in an emergency fund?
One month of income
3 to 6 months of essential expenses
10% of your annual salary
Enough to cover a vacation
What is the primary purpose of an emergency fund?
To invest in the stock market
To cover unexpected expenses like job loss or medical bills
To pay for planned purchases like a new car
To increase your credit score
What does liquidity refer to in personal finance?
The amount of interest earned on an investment
The ease of converting an asset into cash
The total value of one's assets
The interest rate on a loan
Which of the following is a key difference between banks and credit unions?
Banks are not-for-profit institutions
Credit unions typically offer higher interest rates on savings accounts
Banks offer membership to specific groups only
Credit unions are insured by the FDIC
What happens when you make a check payable to "Cash"?
Only the person named can cash it
It cannot be cashed
Anyone can cash or deposit it
It must be deposited into your own account
What is a primary feature of a checking account?
It earns high interest over time
It allows for frequent deposits and withdrawals
It has a fixed term length
It requires a minimum balance of $10,000
What is the main purpose of a savings account?
To provide loans to others
To facilitate daily transactions
To save money and earn interest over time
To invest in the stock market
What is a Certificate of Deposit (CD)?
A type of savings account but you earn no interest
A savings account that earns more interest than a typical savings account but the money is locked up for a specific period of time
An investment in the stock market
A loan provided by the bank
What does overdraft protection do?
Prevents unauthorized access to your account
Allows transactions to go through even if you don't have enough money. You will have to pay it back with interest.
Increases your credit limit
Automatically invests excess funds
What is a cashier's check?
A personal check written by an individual
A check issued and guaranteed by a bank
A check that can only be used at grocery stores
A check that requires two signatures
What is an outstanding check?
A check that has been cashed and cleared
A check that has been issued but not yet cleared by the bank
A check that has been canceled
A check that has been returned due to insufficient funds
Why might your checkbook not balance with your bank statement?
Because of outstanding checks not yet cleared
Due to bank errors
Because of deposits not yet made
Due to incorrect account numbers
What is the difference between simple and compound interest?
Simple interest is calculated on the principal only; compound interest is calculated on the principal and accumulated interest
Simple interest changes over time; compound interest remains the same
Simple interest is used for savings; compound interest is used for loans
There is no difference between the two
What does the Rule of 72 help you determine?
The amount of taxes owed on investments
The time it takes for an investment to double at a fixed annual interest rate
The best investment options available
The maximum contribution to a retirement account
What is considered a great credit score?
300–500
600–699
700–850
400-500
What are the 5 C's of credit that lenders evaluate?
Character, Capacity, Capital, Collateral, Conditions
Credit, Cash, Collateral, Capital, Conditions
Character, Credit, Cash, Collateral, Conditions
Capacity, Credit, Capital, Collateral, Cash
What is an installment loan?
A loan that requires a balloon payment at the end
A loan repaid in equal monthly payments over time
A loan that has no fixed repayment schedule
A loan that must be repaid in full within 30 days
What defines a secured loan?
A loan backed by a co-signer
A loan with a variable interest rate
A loan backed by collateral
A loan with no interest
Why should payday lenders and pawn shops generally be avoided?
They require a high credit score
They offer low-interest rates
They often charge extremely high interest rates
They have long repayment terms
What is foreclosure?
The process of selling a car due to nonpayment
The legal process where a lender takes possession of a home due to missed mortgage
What happens during a car repossession?
The car owner sells the vehicle voluntarily
The lender takes back the car due to missed loan payments
The car is returned at the end of a lease
The car is traded in for a new one
What does it mean to default on a loan?
Paying off a loan early
Making a late payment
Failing to repay a loan as agreed
Refinancing a loan
What is an Initial Public Offering (IPO)?
A company's first sale of stock to the public
A government bond issuance
A mutual fund's launch
A company's quarterly earnings report
Which stock exchange is known for listing many technology companies?
New York Stock Exchange (NYSE)
American Stock Exchange (AMEX)
Nasdaq
London Stock Exchange
What does the Dow Jones Industrial Average represent?
An index of 500 large U.S. companies
A collection of 30 major U.S. companies' stock performance
The total value of all U.S. stocks
The average price of all stocks on the Nasdaq
What is the S&P 500 Index?
An index tracking 500 large-cap U.S. companies
A bond market index
A measure of small-cap stock performance
A global stock index
What does owning a stock represent?
A. A loan to the company
B. Partial ownership in a company
C. A fixed income investment
D. A government bond
What are blue-chip stocks?
Stocks from new startup companies
Stocks from well-established, financially sound companies
Stocks with high volatility
Stocks that do not pay dividends
What characterizes income stocks?
They do not pay dividends
They are high-risk investments
They provide regular dividend payments
They are government-issued securities
What is a capital gain?
Earning interest from a savings account
Selling an asset (like a stock) for more than its purchase price
Receiving dividends from a stock
Purchasing a bond at a discount
What is a bond?
A share of ownership in a company
A loan you give to a government or company, and in return, they promise to pay you back with a little extra money (interest).
A type of savings account
A mutual fund investment
What is a Treasury Bill (T-Bill)?
A long-term government bond
A short-term government bond maturing in a year or less
A corporate bond
A municipal bond
What is a municipal bond?
A bond issued by a corporation
A bond issued by the federal government
A bond issued by local governments, often tax-exempt
A bond that matures in less than one year
What is a mutual fund?
A single stock investment
A collection of stocks and bonds managed by professionals
A government savings bond
A type of checking account
What does diversification in investing mean?
Investing all money in one stock
Spreading investments across various assets to reduce risk
What is the role of the Securities and Exchange Commission (SEC)?
To set interest rates
To collect taxes
To basically police the stock market
To insure bank deposits
What is a dividend?
A fee charged by brokers for trading stocks
A portion of a company's profits distributed to shareholders
A tax imposed on investment income
The interest earned on a savings account
What is an insurance premium?
The amount you pay out-of-pocket before insurance covers expenses
The amount you pay regularly to keep your insurance active
The amount the insurance company pays you
The amount you receive after filing a claim
What is an insurance deductible?
The amount your insurance pays for a claim
The amount you pay regularly to keep your insurance active
The amount you pay out-of-pocket before insurance covers expenses
The amount you receive after filing a claim
What does liability car insurance cover?
Damage to your own car from an accident
Damage to others' car or injuries you cause in an accident
Damage from natural disasters
Theft of your car
What does collision car insurance cover?
Damage to your car from hitting another vehicle or object
Damage to others' property
Theft of your car
Injuries you cause to others
What does comprehensive car insurance cover?
Damage from hitting another car
Damage from events like theft, vandalism, or natural disasters
Damage you cause to others
Routine maintenance costs
What is a health insurance copay?
A percentage of the total medical bill you pay
A fixed amount you pay for a medical service
The total cost of your medical treatment
The amount your insurance pays for your treatment
What is term life insurance?
Life insurance that lasts for your entire life
Life insurance that lasts for a specific period
Life insurance that builds cash value over time
Life insurance that covers only accidental death
What is whole life insurance?
Life insurance that lasts for a specific period
Life insurance that covers only accidental death
Life insurance that lasts your entire life and builds cash value
Life insurance that requires no premium payments
What is the cash value component of whole life insurance?
The amount you pay in premiums
The death benefit paid to beneficiaries
A savings component that grows over time and can be borrowed against
The total amount of premiums paid over the policy's life
Who are beneficiaries in a will?
People who witness the signing of the will
Lawyers who draft the will
Individuals designated to receive assets from the will
Executors who manage the estate
What is the purpose of a will?
To avoid paying taxes
To distribute your property and assets after death
To declare bankruptcy
To apply for insurance
How does the Federal Reserve (The FED) control inflation?
By raising or lowering interest rates to influence borrowing and spending
By printing more money to increase the money supply
By setting fixed prices for goods and services
By controlling wages and salaries
