WISE Practice Problems 1-10

21. A person owes $200 on credit card A with an APR of 20%, and owes $400 to credit card B with an APR of 10%. After paying the minimum balance due, the person has $100 to use toward paying money owed. Which of the following is recommended? *

• Pay $100 to credit card A

• Pay $100 to credit card B

• Pay $50 to credit card A and $50 to credit card B

• Put the $100 in a savings account

Which of the following choices lists assets from MOST liquid to least liquid? *

• Savings account, certificate of deposit (CD), real estate

• Money market account, bonds, checking account

• Stocks, savings account, money market account

• Bonds, real estate, certificate of deposit

A person, without checking account overdraft protection, writes a check for $152 when the checking account balance is $125. The bank will generally take which of these actions.

• Return the check because of insufficient funds and charge a fee.

• Keep the check and require that the person makes an additional deposit

• Charge the difference to the person's debit card

• Notify credit reporting agencies of the overdraft.

When considering purchasing renters insurance. a person should know that the *

• premium is based on the tenant's income.

• purpose is to cover monetary losses related to fire, theft, and personal injury

• landlord's insurance pays the tenant for any personal property loss

• landlords must approve any insurance policy that the renter intends to buy

A form of payment that is guaranteed to be as good as cash is a

• personal check

• Social Security card

• money order

• certificate of deposit (CD)

When a credit card company increases a person's line of credit, it may

• Help the person pay his outstanding debt on that credit card

• Discourage the person from using that credit card to make a small purchase

• Prevent the person from paying more than the monthly minimum balance due on the credit card

• Encourage the person to use that credit card to buy more than he can afford

7. If a person earns an annual interest rate of 4% on a savings account, how many years will it take for the person's money to double?

• 18 years

• 20.4 years

• 24 years

• 28 years

What happens to the interest rate during the life of a ten year bond that a person purchased paying six percent interest?

• The interest rate changes when the bond is sold to another investor

• The interest rate decreases each year

• The interest rate increases each year

• The interest rate remains the same for the life of the bond

Which statement is true about a whole life insurance policy?

• It accumulates cash value for the policy holder

• The annual premium needs to be paid in full in one payment

• The policy holder needs to own a home

• It can only be bought by people under the age of 50

When a person has a balanced budget the

• Net income = disposable income

• Total income = Total expenses - savings

• Total expenses = savings

• Total expenses + savings = total income