WISE Financial Literacy Certification Practice Questions with 100% Complete Solutions, A+

A+ 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 type of electronic funds transfer (EFT) is: A: A transaction made with a check B: A deposit made with a bank teller C: Not widely used by consumers D: An ATM transaction - 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. 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. 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 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: A: Interest rate expressed as a percentage B: Opportunity cost C: Minimum payment D: Inflation rate - A: Interest rate expressed as a percentage Interest earned on interest is known as: A: Simple interest B: True interest C: Compounded interest D: Variable interest - C: Compounded interest Money received today is worth more than the same amount of money received sometime in the future is: A: The Rule of 72 B: The time value of money C: Not true D: Investing - B: The time value of money A person buys a flat screen, plasma, theater-like television. The person has homeowner's insurance. Why would it be appropriate to add a personal property floater to that insurance? A: To reduce the premium on the homeowner's insurance. B: To protect the person who owns the television from liability for damages. C: To show the insurance company a good faith investment has been made. D: To cover the cost of replacement should the television get damaged or stolen. - D: To cover the cost of replacement should the television get damaged or stolen. For the past five years, a person has had a $20,000 whole life insurance policy that has a cash value clause. The person decides to surrender the policy. At the time of surrender, the person will receive A: one-fifth of the $20,000 face value. B: $20,000 less the premiums paid. C: a calculated amount of money which includes the premiums paid as well as the interest on that money. D: a calculated amount of money that must be converted to a term life insurance policy. - C: a calculated amount of money which includes the premiums paid as well as the interest on that money. If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the A: US Treasury Department. B: Federal Deposit Insurance Corporation. (FDIC). C: State Banking Commission. D: Federal Reserve Board. - A: US Treasury Department.