W!SE Review One

Collateral is

• required for all loans

• a form of credit

• something of value that secures a loan to protect the lender

• a measure of your net worth

When you put money into a savings account - you are making a

• loan

• good choice

• deposit

Does whole life insurance accumulate interest for the cash value?

• no

• yes

Answer explanation

when you decide to cash out your whole life insurance, you would get more than what you originally paid for.

ex: if you have a $10,000 whole life insurance policy, when you cash it out years later, you will recieve more than $10,000 due to premiums you've paid, as well as interest.

Gwen receives a bill from her auto insurance company, and she sends a check to the company to make sure her policy is not cancelled.  The cost of her policy is

• co-insurance

• co-pay

• deductible

• premium

The term that best describes money left over after paying taxes, fixed and other essential living expenses, is:

• Net Pay

• Net Surplus

• Play Money

• Discretionary Income

When someone goes to a pawn shop to sell an item for cash, what type of loan is it?

• secured loan

• unsecured loan

• collateralized loan

Answer explanation

collateralized - there is an asset at risk of being lost (a necklace, a ring, etc). think of the item being "collateral damage".

uncollateralized means there is not an asset to cover the loan amount.

Term used to describe turning an investment into cash

• cash value

• deposit

• liquidity

One way to improve your credit score

• buy more expensive things so that you can prove you have the money

• pay bills on time

• accumulate debt and then pay it off all at once

Cost of your insurance policy payment is called a

• premium

• insurance monthly payment

• insurance debt

Which factor would most likely lead to an increase in the interest rate on a person's credit card?

• number of purchases

• late payments

• number of cash advances

• total amount charged