Wise Financial Literacy Test Prep (Part 2 of 4)

Front

When the amount of income on a budget is greater than the amount actually spent on expenses, the person has a

Back

surplus.

Front

When interest is computed once on a dollar amount (the principal), it is

Back

simple interest.

Front

A person decided to have six months of income in an emergency savings account. Is this a good decision?

Back

Yes, because the money in the emergency account can be used if he loses his job.

Front

Students applying for financial aid to attend college usually need to

Back

complete a Free Application for Federal Student Aid (FAFSA) form.

Front

A person choosing a mortgage usually selects a fixed-rate loan because she knows that

Back

the interest rate remains the same for the life of the mortgage.

Front

Why does a bank pay interest to a depositor?

Back

The bank is able to use deposits to earn profits.

Front

It is generally better for a person to buy a home that she can afford than to rent an apartment because she will

Back

build equity.

Front

Which of the following would be considered an asset? A. Credit card account. B. Checking account. C. Car loan. D. Student loan.

Back

Checking account.

Front

“Paying yourself first” is a strategy to

Back

build savings.

Front

What kind of income can a person earn from savings accounts at a commercial bank?

Back

Interest.