A benefit of using a debit card is that it provides a way to

limit the amount of cash a person needs to carry

One advantage of having a bank savings account is that it

is a reliable way to earn interest while establishing a personal financial history

The Rule of 72 is used to determine

how long it takes for money to double at a given interest rate

When thinking about taking a loan from a non-bank consumer finance company, a person needs to know that he should first compare rates with banks and credit unions.

should first compare rates with banks and credit unions

What happens if a person always pays the minimum balance due instead of the full balance on her monthly credit card bill?

it will take a longer time for her to pay the amount owed on the credit card

Why will a person investing 3% of a $31,000 salary each year in a 401(k) starting at age 25 have much more money at age 70 than someone who waited until age 50 to invest 3% each year of a $55,000 salary?

The invested money has had a longer period of time to benefit from compounding and investment gains.

A college student has a joint credit card with her mother. During the first semester, the student charges a total of $1,500 for gas, food, and books. The credit card bill for $1,500 will have to be paid by the

mother and/or the student since both individuals are responsible for repaying any debt

When a person wins $5,000 in the lottery, the person will

have to report the $5,000 to the Internal Revenue Service (IRS) as income for that year

A person received an email from his bank requesting his Social Security number. The first action the person should take is to

check with his bank by calling the phone number on his bank statement.

The bank foreclosed on a person’s home which means that the homeowner

failed to make mortgage loan payments and the bank took possession of the home

A person with a job just had a baby. She is able to increase her paycheck by

adding the baby to her payroll exemptions (allowance)

What is a good reason for people to contribute to traditional individual retirement accounts (IRAs)?

The money in traditional IRAs is not taxed until it is withdrawn.

A high school senior should consider going to an in-state or city public college if he is concerned about having excessive student loans to repay after graduation.

is concerned about having excessive student loans to repay after graduation

The line of credit on a person’s credit card has been increased from $10,000 to $15,000. What does this increase mean?

The credit card owner can charge purchases up to $15,000

A person generally spends $100 a month on groceries, if this year’s inflation rate is 5%, the person can expect to

spend more for the same amount of groceries

Which financial advisor is recommending a long-term investment that lowers investment risk? Options: Advisor A: Purchase a used car, Advisor B: Purchase a computer, Advisor C: Invest in mutual funds, Advisor D: Invest in speculative stock

Advisor C: Invest in mutual funds

It is important for a person to have a legal document known as a will to

designate who gets what she owns after she dies

The US government uses a progressive/graduated income tax method. This means that the income tax a person has to pay is based on the idea that the

more the person earns, the more the person pays.

What occurs when a person writes a check that is returned as a result of insufficient funds?

The person is charged a fee which could be $30 or more.

A person had an $11,000 hospital bill. The person’s health insurance company paid $10,000 to the hospital. What is the most like reason the person received a bill to pay the $1,000 balance due? Options: Insurance companies are not allowed to pay 100% of hospital bills, The person’s monthly income is $1,000 higher than the hospital bill, the insurance policy has a $1,000 deductible, The person has not paid the premium this year

the insurance policy has a $1,000 deductible

Bank A offers 3% interest compounded monthly on saving accounts, while Bank B offers 3% interest compounded quarterly on its savings accounts. Which bank offers the best deal?

Bank A, because the more frequently the balance is compounded the better the return on the money

When a financial advisor says that everyone should follow the principle of “Pay yourself first”, the advisor means that a person should

put aside money for savings and investing from each paycheck before spending

A person with renters’ insurance can submit a claim on her policy if

her television is stolen from her apartment

A person finds an error when reviewing her credit report. What can she do?

Contact the credit reporting agency immediately about the error.

W!SE TEST REVIEW 60 Flashcards

Student preview

64 questions

Show all answers

1.

FLASHCARD QUESTION

Front

A person receives a $200 gift card. It is important for the person to

Back

read the conditions on the card or packaging about inactivity fees

2.

FLASHCARD QUESTION

Front

Which is the most important question to ask when comparing credit card offers? Options: What is the annual percentage rate (APR) on the credit card?, Can credit card payments be made before the due date?, How many people are using the card?, What time of the month are the payments due?

Back

What is the annual percentage rate (APR) on the credit card?

3.

FLASHCARD QUESTION

Front

A person has a car loan with a 10% interest rate. The loan would cost the least amount if it is paid back in

Back

3 years

4.

FLASHCARD QUESTION

Front

Which approach to money management indicates an understanding of the time value of money? Options: saving money in a safe at home, saving money in an account that earns interest, using a prepaid credit card for all purchases, using debit card for all purchases

Back

saving money in an account that earns interest

5.

FLASHCARD QUESTION

Front

A stock is characterized as a “growth” stock because the expectation is for the corporation to

Back

have significant increases in sales and earnings

6.

FLASHCARD QUESTION

Front

The value of buying insurance for a cell phone is to

Back

be able to replace the cell phone if it is lost or stolen

7.

FLASHCARD QUESTION

Front

A person who is interested in earning investing income from stocks is generally advised to buy stocks that pay

Back

dividends

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