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WISE FINANCIAL LITERACY CERTIFICATION TEST TOPIC CHECKLIST QUESTIONS AND ANSWERS
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WISE FINANCIAL FINANCIAL LITERACY CERTIFICATION TEST TOPIC CHECKLIST QUESTIONS AND ANSWERS
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Name: Score:92 Multiple choice questions
Definition 1 of 92
Identity theft, use of your credit
*In the event that your credit card is stolen in the United States, federal law limits the liability of
card holders to $50 regardless of the amount charged on the card by the unauthorized user.
In today's world of electronic fraud, if just the credit card account number itself is stolen,
federal law guarantees that the card holder has a zero liability to the issuer.
* As a card holder, you should notify the issuer immediately if you notice that your credit card
is missing or stolen. This early notification will give the issuer time to help you with the
following:
1. Verify if and where fraud has occurred.
2. Remove unauthorized charges from your credit.
3. Close down your account to prevent future
fraudulent charges.
4. Issue you a new card and account number.
Consequences of a lost or stolen credit card
Reconciling a Checking account - why and when
Institutions that give loans- Payday lenders
Money orders - high rate of counterfeits
,Definition 2 of 92
Prepaid cards, gift cards, and gift certificates cannot expire within five years of activation or
unless the terms of the expiration are clearly disclosed. The law bans dormancy fees, inactivity
fees or service fees on gift cards unless there has been no activity in a 12-month period and
the issuer clearly discloses all fees before the gift card is purchased.
Money market accounts:
Gift cards - fees?
Securities and equities
Investment Portfolio
,Definition 3 of 92
What you give up when you make one choice over another.
Example: You decide to spend $80 on some great shoes and do not pay your electric bill. The
opportunity cost is having the electricity turned off, having to pay an activation fee and late
charges. You might also have food in the fridge that gets ruined and that would add to the
total cost.
Opportunity cost
Sunk cost
Marginal cost
Time value of money
Definition 4 of 92
Credit legislation that is federal they have to tell you the truth about their lending. Have to tell
the whole truth in lending practices. A federal law enacted in 1968 with the intention of
protecting consumers in their dealings with lenders and creditors. The Truth in Lending Act was
implemented by the Federal Reserve through a series of regulations.
Truth in Lending Act
Equal Credit Opportunity Act
Fair Credit Reporting Act
Debt to Credit Ratio
, Definition 5 of 92
If you are not claimed as a dependent on another
taxpayer's return, then you can claim one personal tax
exemption. The exemption reduces your taxable income just like a deduction does, but has
fewer restrictions to claiming it. If you are married and file a joint tax return, both you and your
spouse each get an exemption.
Exemptions (aka allowance) and how they work
Who is hurt the most and least with inflation?
Whole life insurance
Rule of 72
Definition 6 of 92
When individuals, businesses, and governments borrow, it is usually at a fixed rate of Interest
that had some expected level of inflation built into it. If higher than expected inflation occurs,
then the real value of the borrower's debt is reduced. Assume that banks lend
billions of dollars at a fixed nominal interest rate of 5%. If inflation were to unexpectedly
increase from 2% to 4%, then borrowers' real interest rate paid would be reduced from 3% to
1%. In simpler terms, the money that was lent was more precious than the money being repaid.
Who is hurt the most and least with inflation
Rule of 72
Mutual funds - what they are, how they work, who manages the fund
Cd - what is it and what happens if you cash it before maturity
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