W!SE Test Big Review

Why would a corporation issue bonds?

• To raise money for expansion or other company operation

• To fund the 401(k) plan

• To pay the salaries of employees

• To give ownership of the company to others

Which of the following is a financial institution but not a bank or credit union?

• Bank of America

• Walmart

• BB&T Bank

• Apple Federal Credit Union

A consumer should consider paying bills automatically or online from a checking account because

• The bank holds the payment until the consumer tells the bank to release payment

• Payments will take longer to process compared to if a check was written and mailed

• It allows the person to pay bills faster and more efficiently, helping to avoid late payments

• The consumer gets money from the bank for using the bill paying service

Person #1 invests 5% of their $50,000 salary into a 401(k) retirement account at the age of 22. Person #2 waits until they are 50 years old to invest 5% of their $75,000 salary in a 401(k) account. Both accounts have the same interest rate. True or False: Person 1 will still have more money at the age of 70 than Person 2.

• False because time has nothing to do with how much an investment grows

• True because of the Time Value of Money, which means the earlier you invest, the more time that money has to grow and earn compound interest

• False because the 50-year-old is investing more than the 22-year-old each year

• True because $75,000 is more than $50,000

Which of the following actions is an unauthorized use of a credit card?

• The card is used to purchase something on Amazon

• A person finds a credit card on the street and uses it to purchase a snack at Sheetz

• The consumer spends less than their credit limit

• The consumer allows a family member to use the credit card

When computing a consumer’s credit score, which of the following options has the largest impact?

• Obtaining new credit

• Length of credit

• Payment history

• Outstanding debt

Joe pays a premium of $100 per month for auto insurance with a $1000 deductible. Sammy pays a premium of $200 per month for the same level of coverage. How does Sammy’s deductible compare to Joe’s?

• Sammy’s deductible will be the same as Joe’s

• Sammy has a higher premium, so his deductible is probably lower

• There is no relationship between deductibles and insurance premiums

• Sammy has a higher premium, so his deductible is probably higher

If a person has a baby, what should they do in order to change the amount of taxes deducted from their paycheck?

• Update the payroll exemptions on a W-4 form

• Send an email to their employer asking them to please lower their taxes

• Call the IRS

• Fill out a new W-2 form

Which budget category is correctly matched with its example?

• Variable Expense - $250 per month car payment

• Variable Expense - PYF

• Fixed Expense - $120 per month car insurance bill

• Fixed Expense - monthly grocery shopping trips

When a person subtracts what they owe from what they own, they are computing their

• Net worth

• Assets

• Liabilities

• Character