WISE FINANCIAL LITERACY CERTIFICATION TEST QUESTIONS AND ANSWERS
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Course
Finance
Institution
Finance
WISE FINANCIAL LITERACY CERTIFICATION
TEST QUESTIONS AND ANSWERS
"Money orders - high rate of counterfeits - Correct Answer A certificate that allows the stated payee to receive cash
on-demand, usually issued by governments and banking institutions. A money order functions much like a check...
WISE FINANCIAL LITERACY CERTIFICATION
TEST QUESTIONS AND ANSWERS
"Money orders - high rate of counterfeits - Correct Answer A certificate that allows the stated payee to
receive cash
on-demand, usually issued by governments and banking institutions. A money order functions much like
a check, in that the person who purchased the money order may stop payment."
“Earned Income - Correct Answer Income derived from active participation
in a trade or business, including wages, salary, tips,
commissions and bonuses."
"Unearned Income - Correct Answer Any income that comes from investments and other sources
unrelated to employment services. Examples: interest from a savings account, bond interest, alimony,
and dividends from stock"
"Exemptions (aka allowance) and how they work - Correct Answer 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 PART 2 - Correct Answer The IRS allows you to take
additional exemptions for each dependent you claim. Frequently, the source of these exemptions are
the children who live with you for more than half the year, are under 19 years old (or under 24 if a full-
time student) and who don't provide more than half of their own financial support during the tax year."
"Institutions that give loans- Payday lenders - Correct Answer A payday lender allows you to borrow
against your future income. You give them a postdated
check, which is deposited if you do not pay back the loan. The APR (interest expressed as an annual
percent rate) is usually over 200 percent and can go much higher if you refinance the loan instead of
paying it off as soon as it comes due."
"Liquidity - what does it mean? - Correct Answer The ability to convert an asset to cash quickly and
with
minimal impact to the price."
"Liquidity - what financial products are liquid? - Correct Answer Examples: Cash, Most stocks, money
market instruments and government bonds."
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, "Roles of SEC, Federal Reserve (the Fed), FDIC, CFPB worth - Correct Answer FDIC (Federal Deposit
Insurance Corporation): The U.S.
Corporation insuring deposits in the U.S. against bank
failure. The FDIC was created in 1933 to maintain public
confidence and encourage stability in the financial system through the promotion of sound banking
practices. The FDIC will insure deposits of up to US$250,000 per institution as long as the bank is a
member firm."
"Roles of SEC, Federal Reserve (the Fed), FDIC, CFPB worth - Correct Answer CFPB (Consumer Fraud
Protection Bureau): A regulatory
agency charged with overseeing financial products and
services that are offered to consumers. Role is to protect and educate consumers about the various
types of financial products and services that are available."
"Gift cards - how do they work? - Correct Answer A gift card is a restricted monetary equivalent is
issued by retailers or banks to be used as an alternative to a non-monetary gift."
"Gift cards - how do they work - fees? - Correct Answer 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."
"Gift cards - how do they work - fees? (Exclusions) - Correct Answer Prepaid phone cards , re-loadable
cards, loyalty
or rewards cards, cards issued for admission to special
events or venues and certificates issued in paper form only are exempt."
"Discretionary income and budget surplus - Correct Answer The amount of an individual's income that
is left for
spending, investing or saving after taxes and personal
necessities (such as food, shelter, and clothing) have been paid. Discretionary income includes money
spent on luxury items, vacations and non-essential goods and services."
"Why does the US currency have value? - Correct Answer Its value is only based on what we can get in
exchange for it. Or put it another way, money has value as long as other people believe the money you
give them can be
exchanged for the goods and services they desire in the
future."
"Opportunity cost - Correct Answer The second-best alternative (or the value of that
alternative) that must be given up when scarce resources are used for one purpose instead of another"
"Who is hurt the most and least with inflation - Correct Answer Inflation is a general increase in prices
and a corresponding decrease in money's purchasing power."
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