WISE Practice Test- Questions and Answers Graded A 2024

Question : To qualify for a Federal Housing Administration (FHA) loan, a person must generally A: have at least a high school diploma. B: have one-quarter of the cost of the home for a down-payment. C: fulfill income guidelines. D: provide two individuals to co-sign the loan. - C: fulfill income guidelines. A high school student has begun to investigate the field of finance as a career choice. In deciding about the field, the student should focus on which question first? A: Will I find a balance between financial rewards and personal satisfaction from work? B: How many people do I know who work in this field? C: Once I train for this area, how long before I will be at the top of the field? D: Are there people in this field who are dissatisfied with their jobs? - A: Will I find a balance between financial rewards and personal satisfaction from work? A: Will I find a balance between financial rewards and personal satisfaction from work? Reason : It is important to investigate a career with the idea of not only getting a sense of earning potential, types of positions available and the training necessary to acquire these positions but what are the chances that the individual will enjoy working in this field. - D: An ATM transaction A company offers a defined-contribution pension plan which means that upon retirement the employee will receive A: one-half of the employee's last year's salary. B: the total amount of money contributed plus investment earnings. C: an amount of money based only on the length of time the employee worked for the company. D: a specified amount of money based totally on the profit earned by the company while the employee worked there. - B: the total amount of money contributed plus investment earnings. The interest earned on United States Series EE Savings Bonds is A: exempt from state and local taxes. B: paid in a lump sum at the time the face value on the bond is reached. C: equal to the money paid to purchase it. - A: exempt from state and local taxes. Reason : The interest rate on US savings bonds is exempt from state and local taxes. Buying a treasury bill (T-bill) is best for investors who are looking for A: a place to invest between $100-$500. B: a secure, low risk investment. C: a higher yield on their investment than corporate bonds offer. D: an investment that matures in 10-30 years. - B: a secure, low, risk investment. Reason : These bills are backed by the full faith and credit of the US government, therefore considered relatively risk free. Using a brokerage firm, a qualified investor buys 1000 shares of a common stock at $50 a share on 50% margin. This means that the A: investor will pay only $5000 for the shares. B: investor is buying 2000 shares. C: brokerage firm is lending the investor 50% of the money. D: brokerage firm will own 50% of the 1000 shares of stock that were purchased. - C: brokerage firm is lending the investor 50% of the money. Reason : Margin is a speculative method whereby an investor borrows up to 50% of the money needed from a brokerage firm in order to buy a wanted stock and pays a fee for the privilege. To determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and A: her total income. B: the rate of inflation. C: whether the account is FDIC protected. D: whether the bank offers overdraft protection. - B: the rate of inflation. The amount a lender charges to borrow money is called the: A: Principal B: Annual Percentage Rate (APR) C: Loan balance D: Finance charge - Correct Answer : D: Finance charge The cost to use someone else's money for a period of time is called the: