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W!SE Financial Practice Exam 2 With Correct Answers
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W!SE Financial Practice Exam 2 WithCorrect Answers
If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the - Correct
Answer - US Treasury Department.
In order to track large deposits, the federal government requires that deposits of $10,000 or more be
reported to the Treasury Department. Some concerns may be that a person might be trying to avoid
paying taxes on game winnings or perhaps illegal gains.
A bank Certificate of Deposit is a: - Correct Answer - Savings instrument that requires a deposit for a
period of time during which there is a penalty for withdrawals,
A certificate of deposit (CD) is a savings instrument that requires a deposit for a period of time (term)
during which the saver cannot withdraw money from the plan without a penalty. CDs are issued with
terms from 31 days up to eight years. The longer the consumer agrees to loan the money to the bank or
credit union, generally the higher the interest rate. It is considered a form of savings because the
consumer is paid interest based on the dollar amount and term of the CD. If the consumer does not
collect his/her money at the end of the term, the money may be rolled over into another CD.
The phrase used for putting money into a savings account is: - Correct Answer - Making a deposit,
Putting money into an account is "making a deposit" and taking money out is "making a withdrawal." An
account owner can deposit additional money into the account at any time.
"The Fed" is short for: - Correct Answer - The Federal Reserve System,
The Federal Reserve, or "the Fed," provides banking services to depository institutions, serves as the
U.S. Government's fiscal agent, supervises and regulates most large banks, and formulates and
implements monetary policy.
, Margaret wants to store a valuable coin collection and important papers. Generally, consumers should: -
Correct Answer - Rent a safe deposit box for their valuables,
Bank customers can rent safe deposit boxes from the bank. They are metal boxes kept in the bank vault
where customers often keep valuable papers, financial records, jewelry, and collections.
How can individuals be prepared for losing their job or having a large medical expense? - Correct
Answer - Save at least three months of income,
People generally need three to six months' of income in a savings account to cover unknown and
unexpected events and expenses.
Which financial product typically pays the highest rate of interest? - Correct Answer - Certificate of
deposit,
All of these types of accounts and financial products earn interest except for common stock. They all
earn interest at different rates. Generally, certificates of deposit have the highest interest rate and
savings accounts the lowest. Some companies declare and pay dividends to their shareholders.
Safe-deposit boxes are - Correct Answer - Safe and can be accessed only by the owner of the box ,
Safe-deposit boxes are metal boxes in a bank's vault. Taking two keys, one owned by the bank and one
by the customer, to open the safe-deposit box provides more safety for the customer. Only the owner
can access the box. The bank customer pays a small annual rental fee to the bank for use of the safe-
deposit box.
Which financial product has the most predictable income? - Correct Answer - Certificate of deposit,
Most certificates of deposit (CDs) are issued with an interest rate that is fixed at a specified rate for the
entire term of the deposit. The main virtue of a fixed-rate CD is its predictability. The investor knows
exactly how much interest will be received annually and over the life of the CD.
The National Credit Union Administration (NCUA) insures accounts in: - Correct Answer - Credit unions,
The National Credit Union Association (NCUA) insures each depositor's accounts up to $100,000 in one
credit union. For example, if a customer has a checking account of $1,000 and a savings account of
$8,000 in the same credit union, the customer will have total insurance coverage of $9,000.
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